Benefits-Drawbacks

What Is Traditional Marketing ?

Traditional marketing is a strategy that uses offline mediums such as radio, TV, newspapers, direct mail, telemarketing etc. for the promotion of products or services. It is the oldest and most commonly used mode of advertising. It has both benefits and drawbacks which are briefly discussed in this post.

Benefits Or Advantages Of Traditional Marketing

The main advantages of traditional marketing can be highlighted as follows:

1. It Is More Familiar Method Of Advertising

People can easily understand traditional marketing because it is one of the oldest and widely used techniques of product promotion. 

2. It Is Suitable And Accessible For All

One of the main drawback of digital marketing is that it is not suitable for those audience who do not have access to internet and social media platforms. But traditional marketing is suitable and accessible for everyone because it does not require internet service and digital devices. 

3. Reachable To Specific Audience Or Customers

Traditional marketing helps to target specific audience of certain location because it uses location radio, newspapers and TV channel to influence local people. So, it is suitable for the company to attract potential customers of certain region towards the products.

Drawbacks Or Disadvantages Of Traditional Marketing

The main disadvantages of traditional marketing can be described as follows:

1. It Is Expensive Method Of Advertising

Traditional marketing requires more cost and resources than internet marketing. It needs huge marketing budget to promote brand through radio, TV or newspapers.

       Also Read: 

Advantages And Disadvantages Of Digital Marketing

Advantages And Disadvantages Of Content Marketing

Advantages And Disadvantages Of Direct Marketing

2. Limited Number Of Audience

As we know that online marketing attracts large group of audience because it performs globally. But in traditional marketing gives emphasize to the specific audience of specific location. So, it is reachable to limited number of potential customers.

3. It Is Difficult To Measure The Performance

Performance of online marketing can be tracked and measured by using different online tools and applications. But in traditional marketing, it is difficult to collect data and information about the campaign. So, performance and conversion cannot be measured accurately in this mode of advertising.

Pros:

- It is the oldest method, therefore everybody can understand this strategy easily.

- This mode of advertising is accessible for all types of audience

- It is suitable to attract specific group of potential customers

- Product testing is possible through this strategy of marketing

- Success rate is higher than other forms of marketing

Cons:

- It requires more budget and resources 

- It cannot attract large number of audience like digital marketing

- Audience get limited information

- It is difficult to track and measure the performance

What Is Digital Marketing ?

It is a promotion of products or services through internet and digital media such as websites, search engine, mobile marketing, social media, affiliate marketing etc. This mode of advertising can attract audience more effectively than traditional marketing. Digital marketing has several advantages as well as some limitations which are discussed in this post.

Benefits Or Advantages Of Digital Marketing

The main advantages of digital marketing or online marketing can be described as follows:

1. It Is Easy And Convenience Method Of Brand Promotion

Digital marketing does not require more resources like in traditional marketing. By using internet and social media platform, message and information can be spread all over the world in just one click. So, it is simple and quick method of advertising.

2. It Requires Less Cost

Another benefit of online marketing is that it consumes less time, effort, resources and cost than traditional marketing approaches. It requires more marketing budget to promote through television, radio, newspapers and magazines. But in digital marketing, it can be done by using internet with small budget.

3. Digital Marketing Attracts Targeted Audience Effectively

Brands can be promoted through facebook, twitter, instagram, emails etc. Information can be shared globally within a minute which helps to increase targeted customers with less effort.

4. It Is Trackable And Measurable

Performance of this campaign can be tracked with the help of different online tools such as google analytics, sitemeter, statcounter, geovisite and other software. These tools and software provide different information like number of people visit the page or advertisement, their region, their response etc.

5. It Has High Conversion Rate

Internet marketing promotes products or services globally which attracts large group of potential customers. Because of more visibility, it increases engagement, leads and conversion rate.

6. Better Customer Relation

Digital marketing helps to understand the behavior and interests of customers. A marketer can treat them according to their behavior to satisfy them. It helps to build better customer relation which promotes customer loyalty.

Drawbacks Or Disadvantages Of Digital Marketing

The main disadvantages of digital marketing can be described as follows:

1. It Requires Special Skills And Knowledge

Digital marketing is not an easy task because it requires computer knowledge and social media managing skills. Good writing skill is required for content writing, photography and videography skill is required for video advertising. web development, search engine optimization skill is required to make websites and blogs. Marketers should handle social media platforms such as facebook, twitter, linkedin, pinterest etc. properly to promote products or services. 

2. It Is A Time Taking Campaign

It takes enough time to create and promote brand through digital marketing. It requires hard work and a lot of time to gains customer trust. 

       Also Read: 

Advantages And Disadvantages Of Direct Marketing

Advantages And Disadvantages Of Content Marketing

Advantages And Disadvantages Of Traditional Marketing

3. Very High Competition

Because of globalization, it is very difficult for the marketers to influence audience through online promotion. It is a complex task to create unique content and to grab people's attention in this competitive market.

4. It Is Not Suitable For All Customers

Digital marketing may not be suitable for all types of products. For example, if your product target elderly, it will be wise to advertise through traditional marketing because old people may not have access to internet and social media. This marketing strategy is not suitable for business such as beauty parlor, hair saloon, taxi service etc. 

Digital marketing is totally dependent on technology and trends. Any change in technology may affect its performance. If government makes changes in social media and internet policy, it may create big challenge for marketers. So, online marketing is affected by the change in technological and political environment.

Pros And Cons Of Digital Marketing In Short

Pros:

- It is simple, convenience and quick mode of advertising

- It can be performed by using less cost and resources

- It is environmental friendly because it does not use papers, plastics, boards etc. like in traditional marketing

- It can attract large group of audience 

- Its performance can be tracked and measured easily

- It is more flexible than other forms of advertising

Cons:

- It requires special skills and knowledge to carry out this strategy

- It takes a lot of time to make make content and materials

- Marketers have to face tough competition

- It is not accessible for all types of people

What Is Content Marketing ?

Content marketing is a process of creating and publishing online content such as blogs, videos, e-books, podcasts, articles, social media posts etc. to attract large group of audience. It is a long-term marketing strategy that helps to attract potential customers and generate online sales. Content marketing is one of the best alternatives of traditional marketing, in which marketers can earn long lasting income with less effort and cost.

Benefits Or Advantages Of Content Marketing

The main advantages of content marketing strategy can be described as follows:

1. It Attracts More Audience

You can promote your content through different social media platforms such as Facebook, twitter, pinterest, Linkedin, youtube TikTok , etc. Search engine optimization helps to drive more traffic to you blog or website. Publishing informative content, proper SEO and sharing in social media helps to attract large group of targeted audience. 

2. It Increases Conversion Rate

Because of high quality content and better promotion, it draws the attention of large audience. People start sharing your content through emails, and social media which makes the content viral on the internet. Because of wider coverage it increases visibility, generates leads and increases conversions.

3. It Is Simple And Cost Effect

If you have good writing skill, photography or videography skill then you can start content marketing. Content creators or bloggers can do their job from home. It is more cost effective than traditional marketing.

4. High And Long Lasting Income

Another benefit of content marketing is long lasting income. It can generate significant amount of income if you can produce better content because good content attracts more people. Evergreen contents (especially blog and website content) generate income for long period of time.

5. It Builds Customer Trust And Relationship

Content marketing helps to build trust and better relationship with customers. It increases customer loyalty, reputation and goodwill of your brand.

6. Best Alternative For Traditional Marketing

Most people feel irritated by display banners and other forms of traditional advertisements. They use ad blockers to get rid of such advertisements. But content marketing provides relevant information to the audience. So, it may be a good alternative for those clients who want to avoid display ads. 

Drawbacks Or Disadvantages Of Content Marketing

The main disadvantages of content marketing can be described as follows:

1. It Is Complex And Time Consuming

It requires very good writing skill to create written content, needs photography and videography skill to make audio visual content. Web development and SEO knowledge is required to promote the content on the internet. It takes more time to reach audience. So, content marketing is difficult and time taking process.

2. No Immediate Benefit

Producing valuable content is not an easy task. It requires good knowledge and research to find out useful content. It takes time to produce and promote the content in different social media platforms. So, it does not provide immediate benefit to the producer.

     Also Read: 

Advantages And Disadvantages Of Direct Marketing

Advantages And Disadvantages Of Digital Marketing

Advantages And Disadvantages Of Traditional Marketing

3. Requirement Of Special Skill And Knowledge

Content writing is a creative task. So, it requires adequate knowledge, good writing and other skills such as web development, search engine optimization skill, social media handling skill etc. 

4. It Is Not Suitable For All Types Of Business

Content marketing is not suitable for some business such as taxi service, hair salon, beauty parlor etc. 

5. It Is Influenced By The Change

Constant changes in trends, technology and peoples' interests, affects content marketing. It is very difficult to remain competitive in the changing environment.

Pros:

- It helps to reach more audience globally

- It consumes less time, effort and costs than traditional marketing

- It helps to increase traffic,which helps to generate lids, conversion and sales

- It improves brand awareness and customer loyalty

- It is far better than traditional marketing

Cons:

- It is a long term strategy, so it is a time consuming process

- There will be no immediate benefit 

- It requires special skills, knowledge and creativity

- Changes in trends ,technology and government policy may influence this marketing strategy

- It is not applicable for all businesses

What Is Direct Marketing ?

Direct marketing is a type of promotional campaign where companies directly communicate to a specific group of potential customers. Telemarketing, SMS marketing, email marketing, newspapers etc. are some examples of direct marketing. In this marketing strategy, companies try to attract customers by providing detail information about the product and services. It eliminates middlemen because producers directly make interaction with the customers.

Benefits Or Advantages Of Direct Marketing

The main advantages of direct marketing can be pointed out as follows:

1. Targeted Audience 

Direct marketing does not focus on large groups of audience. It tries to establish communication with potential customers and specific groups according to their interest and buying behavior. Direct contact with targeted audience increases that chance to succeed in the campaign.

2. It Avoids Middlemen

Direct marketing is business to customer (B2C) strategy that eliminates the role of middlemen and intermediaries such as distributors, dealers, wholesalers, retailers etc. in selling process.It sells products or services directly to the final consumers. It helps to save middlemen commission and shortens the selling process.

3. It Saves Costs

A company can establish direct communication with customers by using emails, telemarketing, internet etc. So, it saves marketing costs by lowering advertisements and promotional expenses. 

4. It Improves Profitability

Elimination of middlemen commission and less publicity and advertisement expenses can save significant amount of money. So, cost saving leads to increase in the profit of the firm.

5. Suitable For

Direct marketing is suitable for small and newly established companies with limited number of products. It is also suitable for those people who do not have time to visit retail stores for shopping purpose.

6. Effective Personal Interaction

It promotes personal interaction between the seller and buyer. It helps to gather information and feedback which helps to know the strength and weakness of the campaign. It helps the company to take appropriate steps to improve its operations.

7. Effective Measurement Of Performance

Direct marketing provides accurate feedback immediately to the seller. So, the effectiveness of marketing campaign can be measured by analyzing the result and feedback.

8. Helps To Increase Customer Loyalty

Because of personal touch and direct interaction, it helps to establish better relationship with customers. Personal connection between customer and company helps to improve customer loyalty.

Drawbacks Or Disadvantages Of Direct Marketing

The main disadvantages of direct marketing can be pointed out as follows:

1. Not Suitable For All Business

Direct marketing is not suitable to target large groups of customers. It is also not suitable for big business companies with strong brand value.

2. It Is Annoying And Intrustive Campaign

Most people feel annoying, irritating and intrustive because of unwanted telephone calls and emails received regularly from marketers. So, customers may dislike this marketing strategy.

        Also Read: 

Advantages And Disadvantages Of Digital Marketing

Advantages And Disadvantages Of Content Marketing

Advantages And Disadvantages Of Traditional Marketing

3. It Has Low Response Rate

Different marketing researches have proved that direct marketing has less conversion rate that other forms of marketing campaigns. It is difficult to identify potential customers and to collect data and information of an individual. If collected data lacks accuracy, then customer response rate becomes low and  campaign cannot be conducted properly. 

Pros:

- It only targets specific group of potential customers which helps to increase sales

- There will be a direct communication and personal touch with customers which eliminates middlemen

- It is a cost effective method of product promotion because it minimizes the advertising costs

- Earnings will be increased because of less marketing costs and elimination of middlemen

- It helps to maintain customer relation and increase customer loyalty

- Performance (success or failure) of the campaign can be easily measured

Cons:

- Some people may feel this marketing strategy irritating and annoying

- Although it lowers marketing expenses, it requires higher initial costs 

- Its response rate is lower than other forms of marketing

What Is Brand Extension ?

It is a marketing strategy in which producers launch new products or services in the market by using existing brand name. Brand extension helps the firms to introduce new products and influence customers because of  well-developed image of the core product and customer loyalty. There are some benefits as well as drawbacks of this marketing strategy which are discussed in this post.

Benefits Or Advantages Of Brand Extension

The main advantages of brand extension strategy can be described as follows:

1. Easy Market Entry

It is very difficult for new products to enter in the market because of cut throat competition. Brand extension helps the company to introduce new products because of the image and goodwill of the existing brand. 

2. It Increases The Chance Of Product Acceptance

As we know that good brand helps to increase the consumer trust and loyalty. Therefore, when company launches new product or service with existing brand name, it helps to increase the chance of product acceptance.

3. It Saves Costs

Brand extension eliminates costs required to develop new brand. It also minimizes advertising and promotional costs . So, it lowers marketing budget of the company.

4. Improve Brand Image 

Brand extension increases the visibility of the brand and helps to expand market by attracting new customers. So, it helps to increase image and goodwill of parent brand.

5. It Provides Premium Pricing Opportunity

Because of good reputation and image of the core product, company may charge premium price for its new product or service. So, company can earn more money from new product.

6. It Increases Profitability

It helps to widen the market of both core and newly launched product. It reduces marketing expenses related to advertising and promotional activities. Company may charge higher price for extended product. Market expansion, premium pricing and cost saving help to maximize the profitability of the firm.

Drawbacks Or Disadvantages Of Brand Extension

The main disadvantages of brand extension can be described as follows:

1. It May Damage The Reputation Of Core Brand

If new product fails to fulfill the expectation of customers, it loose the reliability of the core brand. Negative response of extended product may make huge damage to the image of core brand. 

       Also Read: 

Advantages And Disadvantages Of Branding

2. High Chance Of Confusion

Different variety of products or services under same brand name may create confusion to the customers. This may adversely affect the sale of both core and new product.

3. It Discourages Innovation

If producers only give focus on brand extension and try to introduce new products with same brand to save costs and time, it discourages research, development and innovation in the field of business.

4. Less Likely To Succeed

Different business and marketing research have proved that it is not suitable for all types of products. So, wrong practice of brand extension may lead to cannibalization, customer frustration and product failure. 

Pros:

- Due to the goodwill of the core brand, new product can be easily launched in the market and accepted by the customers

- It minimizes the marketing expenses such as advertising cost, packaging costs, promotional costs etc.

- It helps to widen the market

- It helps to increase the image of the company which encourages the company to launch more products with same brand name in the future

- Because of less marketing costs, market expansion and premium pricing, it increases the earnings

Cons:

- It increases the possibility of cannibalization

- It discourages innovation and company may lose the opportunity to create new brand

- Image and goodwill of original brand may be damaged

What Is Branding ?

Branding is a process of giving unique name, logo, symbol, mascots, design etc. to  products or services which helps to differentiate them in the market. Branding provides identity to the products which helps to create customer awareness. Coca-cola, Sony, Adidas, Nike, Puma etc. are some examples of successful brands in the market.

Benefits Or Advantages Of Branding

Main advantages of branding products can be highlighted as follows:

1. Branding Creates Customer Awareness

The main benefit of branding is that it helps create awareness by providing identity and differentiation of products and services. Customers can easily recognize and distinguish branded products in the market. For example, people can easily distinguish Coca Cola or Pepsi from other soft drinks.

2. It Promotes Customer Satisfaction And Loyalty

Branding ensures stability in taste, price, quality , design etc. of the products. Producers also give focus on regular supply of spares and parts of products so the customers cannot be cheated by low quality counterfeit products. So, stability in the price and quality and regular supply of necessary parts helps to increase customer satisfaction which leads to customer loyalty.

3. Branding Helps To Increase Profitability

Branding increases the image and goodwill of the company. So, a firm may charge premium price for its products and services. For example, price of iPhone and Macbook (products of Apple company) are higher than the price of mobile phones and laptops of other companies. So, high selling prices increases the profitability of the company.

4. Barrier For New Competitors

Because of customer satisfaction, social prestige and goodwill of the branded products, new companies hesitate to enter the market. So, strong brand creates barrier and discourage new competitors.

5. Easy To Introduce New Products

Established brand helps the company to introduce new products in the market easily because of loyal customers and strong image of the company. For example, PepsiCo (producer of Pepsi and Miranda) introduced Mountain Dew easily in the market because of the goodwill and reputation of Pepsi. 

Drawbacks Or Disadvantages Of Branding

The main disadvantages of branding can be highlighted as follows:

1. Requirement Of Huge Investment

Company has to invest huge amount of money for research and development purpose. It requires money to advertise the product in different media such as print media, radio, television, internet etc. Proper publicity strategy and promotional activities should be conducted to attract potential customers which needs adequate money. So, branding involves huge investment that leads to increase in the price of the products.

       Also Read: 

Advantages And Disadvantages Of Brand Extension

2. It lacks Flexibility

Customers become loyal and pay premium price because of specific quality, design, taste etc. of the branded product. So, company cannot alter or modify design, quality or composition of the product.

3. It May Create Monopoly

As we know that strong brands discourage other competitors to enter in the market. New companies don not want to compete with established brands. So, it may create brand monopoly in the market.

4. Consumes More Time And Effort

Branding process requires more time and effort to establish the product in the market. It consumes both time and effort to make market research, to design product and to influence or attract potential customers with the help of different promotional tools like advertisement, publicity, public relations etc. 

Pros:

- It provides unique identity to the products and services which helps the customers to recognize them easily

- Because of the stability in the quality, it helps to increase brand image and customer loyalty

- Company may charge higher price for branded products which increases the profitability of the firm

- It discourages new competitors/companies to enter in the market

- Branded products can be easily distinguished from other similar types of products in the market

Cons:

- It is very expensive because it requires huge investment

- There is a chance of brand monopoly in the market

- Branding process consumes more time, effort and resources

- It lacks flexibility because it is difficult for the company to change the quality of the product

What Is Cluster Sampling ?

Benefits Or Advantages Of Cluster Sampling

The main benefit of cluster sampling is that it requires less time and effort than other methods of sampling. It consumes fewer resources (limited number of clusters), and fewer costs ( travelling expenses, listing expenses ,administrative expenses etc.). It can be conducted quickly in less time than random and stratified sampling.

2. Suitability

This sampling is suitable for large population and wider geographical area because sample size can be increased as per the requirement. It is applicable for market research and to collect data and information from different institutions.

3. Most Feasible Method Of Sampling

Another advantage of cluster sampling is that it is more feasible than random sampling because each and every individual within a cluster represents the entire population because the population is carefully divided into homogeneous groups.

4. Larger Data

Cluster sampling provides large data to the researcher because of large population group.

5. Easy Implementation Of Data

Data and information collected from cluster sampling can be implemented easily and quickly.

Drawbacks Or Disadvantages Of Cluster Sampling

The main disadvantages of cluster sampling can be highlighted as follows:

1. Complex Method

It is more complicated than random sampling because it requires proper plan and attention to choose clusters from large population.

2. Less Accuracy

It may lack statistical accuracy in case of biased samples, over-representation or under-representation of data, and carelessness of the researcher.

      

       Also Read:

Advantages And Disadvantages Of Random Sampling

Advantages Of Sampling Method

Disadvantages Of Sampling Method

3. Possibility Of Sampling Error

Limited clusters are selected from very large population and from wider geographical area. It increases the chance of high sampling error.

4. Not Suitable

It is not suitable for small group of population. Another disadvantage of this method is that findings obtained from one population does not apply on other similar groups from other population. 

Pros And Cons Of Cluster Sampling In Short

Pros:

- It consumes fewer resources such as time, expenses and effort

- This method is more feasible than other sampling approaches

- It is appropriate for large population group and wider geographical area

- Large data sample can be obtained

Cons:

- There is a high chance of sampling error

-  It is complex than other sampling methods

- It is not appropriate in case of small population

- It may lack accuracy

What Is Team Work ?

Benefits Or Advantages Of Teamwork

2. Teamwork Increases Productivity

Suppose an individual can complete a task in 10 hours. But if it is performed by 5 people, it can be completed within 2 hours. It means more tasks can be completed if we work in a team. So, it helps to perform more tasks which leads to improve the productivity of the company.

3. Teamwork Provides Learning Opportunity

A team is a combination of different talents, different skills, different experience, different culture and different backgrounds. So, interaction among the members provides opportunity to learn new skills and gain knowledge which is very useful in personal growth and career development.

4. Better Quality Of Output

Another notable advantage of teamwork is that it ensures better quality of output. Because of division of work and specialization, minimization of errors, mistakes and wastage is possible. S, it helps to increase the quality of output. 

5. It Increases Employee Motivation And Morale

Teamwork decreases the workload which reduces the  burden and stress. It also provides learning opportunity that increases the skills and abilities. So, it helps to improve employee morale and motivation which leads to job satisfaction.

6. Teamwork Increases Interpersonal Skill

It promotes coordination and sense of commitment in the organization. Better coordination helps to improve communication and interpersonal skill of the employees.

7. It Encourages Innovation

Because of different minds and abilities, new idea and better solutions can be discovered to overcome the obstacles. So, teamwork promotes innovation.

Drawbacks Or Disadvantages Of Teamwork

The main disadvantages of teamwork can be expressed as follows:

1. Teamwork Lengthens Decision Making Process

One of the main drawbacks of teamwork is that it takes more time to make decisions. It requires the agreement of all members to make any decision. So, quick decision is not possible at the time of emergency.

2. High Chance Of Conflict

There exists a chance of conflict and misunderstanding between the team members. Conflict among the employees decreases the efficiency, disturbs the working environment and hampers the smooth flow of operation.

3. May Create Challenge To The Management

It may become difficult for the management assign tasks properly to the team, to handle conflict effectively and to evaluate employees' performance fairly.

4. Demoralization Of Team

Possibility of demoralization is another disadvantage of teamwork. Unequal distribution of work, unequal participation in the job, difference in the interests and opinions of members and presence of conflict and misunderstanding may lead to demoralization.

5. Possibility Of Factionalism

Disputes and misunderstanding between the team members leads to factionalism in the workplace. Factionalism creates conflict which negatively affects the performance and productivity of the organization. 

Pros And Cons Of Teamwork In Short

Pros:

- It simplifies large and complex tasks into small pieces of works which helps to decrease the workload and burden of  team members . 

- It helps to improve productivity and quality of output.

- It increases interpersonal skills, motivation, morale and job satisfaction

- It provides learning opportunity to the members which helps to improve their skills and abilities.

- Because of higher motivation and job satisfaction, it helps to lower employee turnover rate.

Cons:

- There is a possibility of conflict and misunderstanding among the members and factionalism in the workstation.

-  It takes long time and effort to make decision

- It may be difficult for the management to maintain better discipline in the workplace.

- There will be a chance of personality clash among the team members. 

Benefits Or Advantages Of Planning

The main advantages of planning can be expressed as follows:

2. Planning Ensures Proper Utilization Of Available Resources

Optimum utilization of resources is another advantage of planning. To obtain predetermined goals, all resources (human resources, physical resources and financial resources) should be properly utilized. Planning promotes better utilization of resource which helps to achieve desired output.

3. It Reduces Uncertainty

Planning is futuristic in nature. It is done on the basis of past results and future prediction. Efficient management can make better plan by eliminating past mistakes and predicting possible future events wisely. So, it helps to lower the risk of uncertainty in the future.

4. It Helps To Maintain Coordination And Control

As we know that all the efforts are directed towards the attainment of specific goals.  So, available resources are properly applied in a coordinated manner. All the activities are done according to the plan. So, it makes proper coordination, discipline and control in the organization.

5. It Improves Employee Motivation

Employee motivation is another notable benefit of better planning. It sets clear goals and objectives that should be obtained in the future and employs human resources (workers) as per their skills and ability. which promotes specialization and division of work. So, it increases employees motivation in the organization.

6. Planning Minimizes Costs

Minimization of unnecessary cost is another notable advantage of planning. Because of better utilization of resources, effective control and coordination, efficiency and performance can be increased. It leads to increase in the production which decreases the cost of production. It also minimizes the wastage and idle time in the workplace. So, it brings economy by minimizing operational costs,

7. Helps To  Improve Organizational Effectiveness

Maximum utilization of resources, improved motivation , better control and cost minimization increases organizational effectiveness. 

8. Planning Avoids Duplication

All the activities are clearly defined and assigned to the concern unit, department, section or employees properly that helps to avoid duplication and overlapping. 

Drawbacks Or Disadvantages Of Planning

The main constraints or disadvantages of planning can be expressed as follows:

1. Planning Is Costly And Time Consuming 

Planning process consumes money , adequate time and effort. It takes time to collect past data and information. Experts services (with high salary and allowance) is required to analyze obtained data , to predict future situation and to compare different alternatives. So, it is complex, expensive and costly process.

2. It May Lack Accuracy

Planning depends on the historical data and future forecast. Because of the lack of correct data and uncertainty of future trend, it may lack accuracy and not give desired output or goals. So, lack of accuracy is one of the main disadvantages of planning.

3. Not Suitable For Emergencies And Crisis

Prompt decision and quick action is required at the time of emergency and crisis. But planning is a time taking process. So, it is not useful for such situations.

4. It Is Influenced By External Factors

As we know that planning is dependent on future predictions and future is not certain. Changes in technology, changing government rules and regulations, change in market situation, natural calamities etc. may affect planning function.

5. Planning Is A Rigid Process

It is another disadvantage of planning that employees are forced to do their jobs as per the predetermined plan and policy of the organization. It may discourage freedom and creativity. There is less opportunity for personal development and growth. So, it is rigid and inflexible process.

Pros And Cons Of Planning In Short

Pros:

- It helps to achieve the goals and the objectives of the firms.

- It promotes optimum use of resources in the organization

- Proper planning helps to reduce risks and uncertainties

- It helps to minimize the operational costs

- It facilitates better coordination and control in the workplace

- It helps to increase motivation and employee satisfaction

Cons:

- It may become inaccurate because of the lack of reliable data and information

- It is costly, time consuming and rigid process

- Because of the lengthy decision making process, it is not suitable in the emergency situation

- It may discourage the creativity of the employees

- It lacks flexibility

Benefits Or Advantages Of Leasing

The main advantages of leasing can be described as follows:

1. It Promotes Entrepreneurship

2. It Enhances Liquidity

Leasing saves huge amount of fund which increases liquidity of the firm. Saved fund can be used to fulfill working capital requirement or can be invested in other profitable activities.

3. It Provides Tax Benefit

A company can enjoy tax benefit because lease rental payments are operating expenses and deducted from taxable income. So, leasing saves costs.

4. Convenience Method Of Financing

Leasing is cheaper and convenience than other sources of financing. It does not require various steps and formalities like borrowing loan from banks and financial companies.

5. Suitable For Small And New Business

Leasing is beneficial for small and newly established business firms because it helps to acquire assets without huge capital expenditure and formalities.

6. Provides Protection Against Obsolescence

Another advantage of leasing is that it avoids the risk of obsolescence. Lease agreement is beneficial for lessee (user of asset) because he does not need to bear the risk of obsolescence during the leasing period.

7. Flexible Source Of Financing

Lease rentals and period can be structured, changed or terminated with the mutual understanding between lessor and lessee. So, it is flexible than other sources of long term financing.

8. Not Affected By Inflation

Another notable advantage of leasing is that lease rental is not affected by inflation. Lessee pays same amount of rental payments till the end of the agreement.

Drawbacks Or Disadvantages Of Leasing

Some of the major disadvantages of leasing can be described as follows:

1. Decreases The Return On Equity

Lease rental is deducted from the net income of the company. So, it reduces return on the equity shares.

    

       Also Read: 

Advantages And Disadvantages Of Hire Purchase

Features Of Leasing

2. No Ownership

Leasing does not provide ownership of asset to the user (lessee). Such assets cannot be pledge to obtain loan from banks and financial institutions.

3. It May Increase Cost

Although lessee is not a owner of the asset, he is responsible for repairing and maintenance . So, it increases the cost for the company.

4. No Alteration

Another disadvantages of leasing is, user cannot alter the asset in any situation. If the asset is bought, a company can modify it or make changes to improve its efficiency. But in case of , assets should not be altered by user.

Pros And Cons Of Leasing In Short

Pros:

- It helps to improve the liquidity of the firm

- It is a convenience, flexible and cheaper method of long term financing

- It saves costs because lease rentals are tax deductible

-  It saves the lesser from the risk of obsolescence

Cons:

- It reduces the return of equity shareholders

- It is costlier than debt financing

- Ownership of the asset remains with lessor