Solution

PLANNING

Class 12 - Business Studies

1. Planning is a function whichis futuristic as:
(ii)Planning involves setting goals and preparing for future situations while assuming the upcoming opportunities and threats.
(ii) We forsee and plan the steps which will help the business to earn profits and acheive objectives.
(iii) It implies peeping into the future, analysing it and predicting it.
(iv) For example, sales forecasting is the basis on which a business firm prepares its annual plan for production and sales.
Planning is, therefore, regarded as a forward looking function.
2. Planning is forward-looking because it essentially involves looking ahead and preparing for the future. The purpose of planning is to meet future events effectively to the best possible advantage of the
organisation. It is always for the future and never for the past. It involves peeping into the future, analysing and then preparing plans accordingly. For e.g. on the basis of the sales forecasts, annual plans
for production are drawn.
3. Here one of the limitations of the ‘Planning’ function of management has been discussed. This is: ‘Planning does not guarantee success.’
Sometimes, Managers think that planning solves all their problems. Such thinking makes them neglect their real work and the adverse effect of such an attitude has to be faced by the organisation. In
this way, planning offers the managers a false sense of security and makes them careless. Hence, we can say that mere planning does not ensure success, rather efforts have to be made for it.
4. i. Budget- A type of plan which serves as a controlling device as well. A budget is a Single-used plan which is developed for a one-time project or event, which is changed almost every year.
ii. Method- A plan based on research and analysis and is concerned with physical and technical tasks. Method is a Standing plan as it is used for activities which occur regularly over a period of time
and hence methods are generally fixed and an example of standing plans.
5. Objectives as one of the types of plan are:
These are concrete expressions in quantifiable terms of what an organisation wants to achieve.
These are usually set by top level of management and are to be achieved within a given period of time.
These are the end points which explains "what for" an organisation exists.
Also they provide broad direction to the employees about what they should do.
They serve as a guide to overall business planning.
6. Planning facilitates decision-making:
(i) Planning helps the manager to look into the future and make a choice from amongst various alternative courses of action.
(ii) The manager has to evaluate each alternative and select the most appropriate plan after analysing all alternatives.
(iii) Planning involves setting targets and predicting future conditions, thus helping in taking rational decisions.

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Thus, by selecting the best amongst many alternatives, Planning shows decision making.
7. The difference between objective and strategy:
Objective Strategy ch
Objectives are concrete expressions in quantifiable terms of what an organization A strategy is a unified, comprehensive and integrated plan designed to ensure that the basic objectives of the
wants to achieve. enterprise are achieved.

It is an end. It is a means.
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It explains "what for" an organization exists. It explains "how" the organization may continue to exist.

It provides broad direction to employees about what they should do. It provides specific direction to employees about what they should do in a given situation.
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8. Basis Procedure Rule

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The term ‘Procedure’ is defined as a set of

chronological or sequentially arranged Rules are specific statements that in form what is to be done. They do not
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Meaning
steps determined in advance carrying for a allow for any flexibility or discretion.
certain routine and repetitive activity.
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Procedures are steps to be carried out

Statement within a broad policy framework .They Rules strictly define the guidelines and there is no scope for discretion.
are generally meant for insiders to follow.

Procedures are more flexible as compared

Flexibility Rules are rigid statements.
to rules.

There is no specific penalty for violation

Effect of violation The guilty has to face penalty in case of violation.
of procedure.

Procedure established for selection of

Example Rule of ‘No Smoking’ in the organisation.
employees by a company.

9. The three features of planning are as follows:

i. Planning is goal-oriented: Planning seeks to achieve certain objectives and all plans are linked with the goals of the organisation. Planning identifies the action that would lead to the desired results
quickly and economically.
ii. Planning is pervasive: Planning is required at all levels of management as well as in all departments of the organisation. It is not only for top management, but for middle and lower level as well.
iii. Planning is a mental exercise: Planning requires the application of mind involving foresight, intelligence, vision, imagination and sound judgement. It is basically an intellectual activity of
thinking rather than doing.
10. Planning restricts creativity because it is usually done by the top level management and rest of the organisation just implements it. All organisational activities are preconceived and predetermined at the
stage of planning so there is no or very little scope for middle and lower level managers to deviate from the plan. The existence of plans makes managerial operations inflexible and thus discourages
creativity. Everybody work as they have been directed to do. They are not allowed to think of any new alternatives other than those which are stated in the plans.
11. i. Planning does not work in a dynamic environment: Business operates in an environment which keeps on changing. Factors like technology, competitor's policy, government policy, taste and
preference, political conditions etc keep on changing. These rapidly changing situations makes planning difficult. Also, plans are rigid so they do not work in a dynamic environment.
ii. Planning does not guarantee success: Future is full of uncertainties, hence accurate prediction about the future is not possible. The plans which were successful earlier may not work again. Even if
plans are well laid down, the extent of their success depends upon various factors. Thus, mere planning doesn't ensure success.
12. According to Koontz and O' Donnell, "Planning is deciding in advance what to do, how to do it, when to do it and who is going to do it". It bridges the gap between where we are and where we want
to go.
The first two steps in the process of planning are:
1. Setting objectives
2. Developing premises

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 Setting objectives: The first and foremost step is setting an objective. Every organisation have objectives. These are the main reason for a firm's existence. Objectives may be set for the entire
organisation or for each department or unit within the organisation. Objectives or goals specify what the organisation wants to achieve. An objective is determined and all the activities are
directed towards the achievement of that objective.
Developing premises: Premises refers to making assumptions regarding the future. While making plans managers have to make certain assumptions like government policies, prices, taste and
preference etc. Premises are the base on which plans are made. It is a kind of forecast made, keeping in view existing plans and past information about various policies.
13. i. Objective: Objectives are the basics of every company and the desired objective/result that the company plans on achieving, so they are the endpoint of every planning activity.
'... bring the world cup after winning.'
ii. Strategy: A strategy is a complete and all-inclusive plan for achieving said objectives.
'For this he prepares a long-term plan and thinks the ways how to beat the competitors.'
iii. Method: Methods prescribe the ways in which in which specific tasks of a procedure must be performed.
'He coaches the girls to play in different ways like defensive, offensive, etc.'
14. a. Standardisation
b. The following two limitations of planning are being highlighted here:
i. Planning creates rigidity.
ii. Planning reduces creativity.
c. The following values are being violated here:
i. Violation of initiative.
ii. Reduction in the production of expert workers.
15. (i) Rigidity of planning mismatches the current performance with prevailing environment and thus, planning suffers from inflexibility in meeting its targets.
(ii) Policies and programmes of the enterprise have to be established in course of the preparation of the plan. Once these are finalised it is difficult to change them.
(iii) Secondly, commitments have to be made for long-term capital investment. This is done at the time of preparing the plan. Thus, capital investment is planned for future in terms of the forecasts
made now.
16. Management begins with planning and planning begins with the determination of objectives. In the absence of objectives no organization can survive. The ways to attain the objectives are stated in
planning. Under planning the objectives of firm are defined in simple and clear words. The obvious outcome of this is that all the employees get a direction and all their efforts are focused towards a
particular end. Thus, planning has an important role in the attainment of the objectives of the organization.
17. Policy: Policies are generic statements, which are basically a guide to channelize energies towards a particular strategy. It is an organization’s general way of understanding, interpreting and
implementing strategies. The manager of Panorama Ltd. is making the company’s Purchase Policy
Policies are general forms of standing plans that specifies the organisations response to a certain situation like the admission policy of an educational institution. If there is an established policy,
it becomes easier to resolve problems or issues. As such, a policy is the general response to a particular problem or situation.

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There are policies for all levels and departments in the organisation ranging from major company policies to minor policies. Major company policies are for all to know i.e., customers, clients,
competitors etc., whereas minor polices are applicable to insiders and contain minute details of information vital to the employees of an organisation.
18. i. “Taking it for granted ............. doubled the target from the previous year.”
In these lines, two stages of planning process have been mentioned. ch
Developing Premises
Setting Objectives
ii. “All the Departmental Managers................ to achieve this target.”
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Implementing Plans
iii. “After some time................ planning for improvement in it.”
Follow up
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19. The various types of plans being discussed in the above lines with regard to demonetization are detailed below:
a. Procedure: It is a fixed, step-by-step sequence of activities or course of action (with definite start and end points) that must be followed in the same order to correctly perform a task. Repetitive
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procedures are called routines.

b. Rule: It is an authoritative statement of what to do or not to do in a specific situation, issued by an appropriate person or body. It clarifies, demarcates, or interprets a law or policy.
20. Planning facilitates decision making in the following manner:
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Decision making is the process of developing and selecting a course of action from among the various alternatives available. Planning provides the framework for decision making by specifying
the organisational objectives and planning premises.
Planning lays down the criteria for evaluating the alternative course of action and selecting the most appropriate alternative.
Planning involves setting targets and predicting future conditions thereby helping in making a rational decision.
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21. Policy is a general statement that guides thinking or channelises energies towards a particular direction. Policy provides a basis for interpreting strategy as it guides to managerial action and decisions in
the implementation of strategy. For example, a company may have a recruitment policy, pricing policy, purchase policy, etc. within which objectives are set and decisions are made. If there is an
established policy, it becomes easier to resolve problems or issues. As such, a policy is the general response to a particular problem or situation. Policies are generic statements, which are basically a
guide to channelize energies towards a particular strategy. It is an organization’s general way of understanding, interpreting and implementing strategies. Like for example, most companies have a
return policy or recruitment policy or pricing policy etc.
22. A plan is a blueprint to achieve the desired objectives. Therefore, changing plan is too often not possible. Also, planning is done in a preconceived and predetermined manner, where little scope is left
for the managers and workers to use their ability and experience. Further, Changes are neither possible nor in the interest of the organisation, resulting in the rigidity in planning.
23. The aspect of management that is being ignored is:
Strategy
How does your business compete in the industry? How can you create a competitive advantage? Are you able to adapt to a changing business environment? The ability to take a high-level, strategic
view of a business is necessary to identify opportunities and to stay ahead of external forces such as new competition and changing consumer demand. In Strategic Management, you will learn how to
develop a business strategy including analyzing the competition and identifying ways that your business can gain a competitive edge.
24. Planning is always for the future and never for the past. It involves peeping into the future, analyzing and preparing plans accordingly. Planning is futuristic as it helps in meeting likely future events
effectively and efficiently to the best advantage of the organization. It is looking ahead because it foresees and anticipates the future. It helps to chalk down the future courses of actions to be followed
to achieve the objectives.
25. Difference between objectives and strategy:
Basis Objectives Strategy

Meaning An objective is an end towards which all activities of the organization are directed. Strategy refers to a comprehensive plan which provides direction scope in the long run.

Example To increase sales by 10% To study moves taken by competitors

Aim To determine "what is to be done." To determine "the environmental threats and opportunities."

Nature Objectives are standing plans which are derived from the goals. Strategies are single-use plans specially designed for a particular situation.
26. Bharti Airtel has adopted a Strategy. A strategy is created by keeping the business environment in mind. The strategy includes three dimensions:
1. Determining long term objectives
2. Adopting a particular course of action
3. Allocating resources necessary to achieve the objective
27. Planning is an intellectual process involving logical thinking, foresightedness, intelligence, imagination, vision and sound judgement. Planning is not merely a pure guess work rather it is thinking
before doing. A planner has to think about the following questions:
what to do
how to do

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 when to do
who is going to do etc.
28. The two steps that are involved in the planning function of management are:
i. Setting Objectives
ii. Developing premises
29. The differences between policy and rule are
Policy Rule

Policy is a guide to decision-making. A rule is a guide to human behaviour.

It is a general statement. It is the most specific statement.

The policy is subject to interpretation. In other words, it allows discretion during decision-making. Rules are rigid in nature and there is no scope for any

It reflects the attitude of management towards a situation. It indicaes what is to be done or not to be done.

For e.g. No sale on credit For e.g. No smoking

30. Planning is considered to be the most challenging function of the management as it guides all future actions and facilitates the growth and prosperity of the business organization. It is an intellectual
process which encourages managers to think creatively to generate innovative ideas and new and improved methods for work execution. Planning is the most challenging function. It requires logical
and systematic thinking and requires continuous application of innovative ideas on the part of managers. Thus, planning promotes innovativeness.
31. Rule:
(i) Rules are specific statements that inform or guides the employees what should or shouldn't be done in the organisation.
(ii)Rule is standing type of plan. They are generally formalised in writing and are not made for individual.
(iii) They do not allow for any flexibility or discretion. It reflects a managerial decision that a certain action must or must not be taken.
(iii) For example, 'No Smoking' is a rule in some work areas and other places. Similarly, organisations formulate service rules and work rules on recruitment, promotion, leave, transfer, discipline,
retirement, and so on.
Method:
(i) Methods provide the best possible way to do a task and are performed for achievement of the objective.
(ii) Selection of proper method saves time, money and effort and increases efficiency.
(iii) For example, there are a number of methods for training the new employees amongst all the organisation.For higher level management orientation programmes, lectures and seminars can be
organised whereas at the supervisory level, on the job training methods and work oriented methods are appropriate.
32. Objectives

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These are defined as end results which the management seeks to achieve by its operations
These are set by the top management of the organisation.
Different departments and units may have their own objectives.
These are expressed in quantifiable terms.
There must be a time limit for the achievement of objectives.
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For example, an increase in sales by 10% or decrease in rejections by 2%.
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Strateg
A strategy is a comprehensive plan to achieve organisational objectives.
The dimensions of strategy are:
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a. Determining long-term objective.

b. Adopting a particular course of action.
c. Allocating resources for achieving the objectives.
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A strategy is formulated after scanning the business environment.

It studies environmental opportunities and threats and tries to fix a match between them and the organization's resources.
33. Planning precedes the execution of all other managerial functions. After plans are made, other managerial functions like organizing, staffing, directing and controlling are performed within the
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framework of such plans. That is why, planning is the primary function of management as it is the base for all other functions.
34. While business planning is important and a requisite for every organization, it does have some limitations:
i. Rigidity: Once the planning function is complete and the action plan is set, then the manager tends to only follow the plan. The manager may not be in a position to change the plan according to
circumstances. Or the manager may be unwilling to change the plan. This sort of rigidity is not ideal for an organization.
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ii. Not ideal in Dynamic Conditions: In an economic environment rarely anything is stagnant or static. Economic, political, environmental, legal conditions keep changing. In such a dynamic
environment it becomes challenging to predict future changes. And if a manager cannot forecast accurately, the plan may fail.
iii. Planning can also reduce creativity: While making a plan takes creativity after that managers blindly follow the plan. They do not change the plan according to the dynamic nature of the business.
Sometimes they do not even make the appropriate suggestions to upper management. The work becomes routine.
35. The features of planning which are discussed in the given situation are:
i. Planning contributes to Objectives: Planning starts with the determination of objectives. We cannot think of planning in absence of objective.
ii. Planning is Primary function of management: Planning is the primary or first function to be performed by every manager.
Limitations:
i. Planning leads to rigidity: Once plans are made to decide the future course of action the manager may not be in a position to change them.
ii. Planning may not work in dynamic environment: Business environment is very dynamic as there are continuously changes taking place in economic, political and legal environment. It becomes
very difficult to forecast these future changes.
36. Planning is required at all the levels of management as well as in all departments of the organisation. It is not an exclusive function of top management nor of any particular department. But the scope of
planning differs at different levels and among different departments.Thus,planning is pervasive and it explains:
A. The top level plans policies and rules for whole organization.
B. Middle level of management plans the proper implementation of the policies designed by the top level of management.
C. Lower or operational level of management plans for assignment of tasks and duties to the non managerial level of management and assures smooth completion of tasks and activities.
D At the lowest level, day-to-day operational planning is done by supervisors.
Planning is required not only in business organizations but is needed in all types of organization whether it is a school, college or hospital.Thus planning is pervasive.
37. 1. Planning is the concept used above.
2. The steps involved are: Identifying alternative courses of action, Evaluating alternative courses and Selecting the best alternative.
3. Other steps which are to be taken in the planning process are
Implementing the plan -The step is concerned with putting the plan into action, i.e., doing what is required.
follow-up action-To see whether plans are being implemented and activities are performed according to schedule
38. a. Strategy: A strategy is a complete and all-inclusive plan for achieving said objectives.
b. Steps involved in preparing a strategy are:
i. Determining long-term objectives
'... it has planned to increase its production capacity at its Gurgaon plant ...'
ii. Adopting a particular course of action
'... manufacturing low priced eco-friendly cars for price sensitive consumers and introducing new models with added features for quality conscious consumers.'

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 iii. Allocating resources necessary to achieve the objectives
'... the company issues shares to the public and raises ₹150 crore. The company purchases more machinery required to increase production'
39. Planning provides direction for action and helps managers:
To decide in advance as what to do and how to do that.
It ensures that the objectives of an organization should be clearly stated so that they act as a guide for deciding what action should be taken and in which direction.
Employees, departments, and individuals can work better if they are aware of the organizational objectives and what is their role to achieve these objectives.
If there is no planning then there will be ambiguity regarding work and it will lead to chaos in the organization.
40. i. Planning provides directions: Planning ensures that the goals or objectives are clearly stated so that they act as a guide for deciding what action should be taken and in which direction.
ii. Planning reduces the risks of uncertainty: Planning is an activity that enables a manager to look ahead and anticipate changes. By deciding in advance the tasks to be performed, planning shows
the way to deal with changes and uncertain events.
iii. Planning reduces overlapping and wasteful activities: Planning serves as the basis of coordinating the activities and efforts of different divisions, departments and individuals. It helps in avoiding
confusion and misunderstanding. Since planning ensures clarity in thought and action, work is carried on smoothly without interruptions.
41. Planning is pervasive because it is the function of every manager to plan.
Planning is not the function of top management or any particular department only. It is required at all the levels of management and in all departments of an organisation. However, the scope
and nature of planning are different at different levels and in different departments. Plans made at different levels are like:
1. The top management lays down the plans for the organisation as a whole.
2. Middle-level management has to make plans for each department.
3. Plans regarding the daily operations of an organisation are laid down by operational management.
42. In the words of Koontz O'Donnell, Planning is deciding in advance what to do, how to do it, when to do it and who is going to do it. Planning bridges the gap from where we are and where we want to
go. It is a trap to capture the future.
Main points involved are:
Setting objectives
Time period
Formulating alternatives course of action
Selecting a course of action.
43. While making plans every manager has to make certain assumptions related to the future. These assumptions are known as premises.
Planning premises are assumptions relating to future conditions and events which are likely to have an effect on the achievement of organizational goals.
These are the bases upon which the entire structure of planning is built.
Every plan is drawn with certain assumptions. To make planning effective, it is necessary that the premises should be based on accurate forecasts..

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For example, demand for a product, the cost of raw materials, interest rates, state of technology, the intensity of competition, government policies etc.
44. Methods
These provide the best possible way in which a task has to be performed considering the objective.
It deals with a task comprising one step of a procedure and specifies how this step is to be performed.
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The method may vary from task to task.
Selection of proper method saves time, money and effort and therefore, increases efficiency.
For example, for the valuation of the stock, the organisation must decide in advance which method has to be adopted (LIFO or FIFO), so that everyone must follow the same.
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Rules
These are specific statements that inform what is to be done and what not to be done.
These do not allow any flexibility or discretion.
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It reflects a managerial decision that a certain action must or must not be taken.
These are the simplest type of plans.
For example, wearing gloves while working on machines
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45. i. Planning is a time consuming process: Many factors must be considered when developing a strategy, making it a lengthy process.
ABC Ltd. has devoted a lot of time and money to its plan.’
ii. Planning leads to rigidity: A well-defined plan is drawn up in an organization with specified goals to be reached within a specific time frame, but managers may not be able to amend it.
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'The competition starts increasing, so it could not change its plan to beat its competitors because huge amount of money had already been devoted to the pre-decided plan.*
46. 1. The type of plan, which the company needs to prepare, is “Strategy”.
Steps involved in this plan are:
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a) Determining the long-term objectives

b) Adopting a particular course of action
c) Allocating the resources
1. The limitations of such plan are:
i. It leads to rigidity
ii. It may not work in a dynamic environment
iii. It reduces creativity
iv. It involves huge costs
v. It is a time-consuming process
vi. It does not guarantee success
2. The above limitations can be removed through the following measures:
i. The company must specify its time limit to achieve the desired objectives.
ii. A proper budget should be prepared to meet the requirement of the plan.
iii. Business Environment should be carefully analyzed.
iv. SWOT Analysis(Strength, Weakness, Opportunities, Threats) should be applied by the managers.
v. Plans made should be flexible.
47. A method is a plan which determines how different activities of the procedure are completed.
It describes the best possible way to do a particular task considering the objectives to be achieved.
For e.g., Methods of Training employees in an organization, Method of Stock Calculation etc.
The method varies from task to task.
Selection of proper method saves time, money and efforts.
48. Objective is the main plan set by the top level of management :
(i) Objectives are the main targets, for which all other plans are directed.
(ii) Sub plans are made to acheive the desired objectives.Thus, different departments or units in the organisation may have their own objectives. For example, A school has an objective of giving 100
per cent results for which they have made a policy of giving admissions to the students having 60 per cent or above.
(iii) Objectives need to be expressed in specific terms i.e., they should be measurable in quantitative terms.
Thus,they represent the end point of planning. All other managerial activities are also directed towards achieving these objectives.
49. Policy
These are the general guidelines which bring uniformity in decision making.
It can be defined as an organisation's general response to a particular problem or situation.
Policies are made at every level because the managers at every level need to decide or predetermine the way of handling a situation.

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 These act as a guide to take decisions in an unexpected situation.
For example, a school may have a policy of giving admission to the students who have secured more than 60% marks.
Procedure
These are those plans which determine the sequence of any work to be performed.
They are specified in chronological order.
Procedures are designed to execute policies and achieve objectives.
For example, the procedure may be for the purchase of raw material, selection of employees, redressal of grievances, etc.
50. Objectives: Objectives are those endpoints which every organization strives to achieve. These are the basic reason for a firm's existence. These are usually stated in measurable terms. These are time-
bound i.e these are to be achieved within a given period of time. All the activities of the organisation are directed towards the attainment of the objectives. These provide broad direction to employees
about what they should do. For e.g. it is a firm's objective to increase its sales targets by 20%.
Policy: A Policy is a general statement that guides decision making. It acts as a guide to managerial actions and decisions in implementing strategy. A policy defines the boundaries within which
decisions can be made by the subordinates. The main purpose of policies is to provide a practical shape to objectives by elaborating the manner in which goals are to be achieved. Policies play
important role in setting the parameters within which a manager may function. There are different policies at different levels ranging from major company policies to minor policies. Major policies are
concerned with the market, competitors, customers and clients etc. whereas minor policies are concerned with the insiders.
51. The various features of planning are described below:
1. Planning is Goal Oriented: All plans arise from objectives.
2. Planning is a Primary Function: Planning is the foundation of manage­ment.
3. Planning is All Pervasive: Planning is a function of all managers.
4. Planning is a Mental Exercise: Planning is a mental process involving imagination, foresight and sound judgment.
5. Planning is a Continuous Process: Planning is continuous. It is a never-end­ing activity.
6. Planning Involves Choice: Planning essentially involves choice among various alternative courses of action.
7. Planning is Forward Looking: Planning means looking ahead and pre­paring for the future.
8. Planning is Flexible: Planning is based on a forecast of future events.
9. Planning is an Integrated Process: Plans are structured in a logical way wherein every lower-level plan serves as a means to accomplish higher level plans.
10. Planning Includes Efficiency and Effectiveness Dimensions: Plans aim at deploying resources economically and efficiently.
52. Failing to plan is planning to fail is a statement which highlights that planning is indispensable. Every business organisation has to operate in an environment which is continuously changing.
Management has to foresee the changes in the environment and prepare itself to face them to its advantage. Hence, planning becomes indispensable for management. Following are some areas which
require planning:
i. Government policy towards business
ii. Consumers taste and preferences

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iii. Entry of competitors in the market
iv. State of economic conditions
v. Technological improvements ch
Hence, if a business organisation fails to plan, it will fail.
53. 1. Strategy and Procedure are the two different types of plans that relate to the online portal that Rajender intends to start.
Strategy: "Rajender agrees to his suggestion and decides to venture into online business keeping in view the various e-commerce regulations in order to avoid the imposition of any penalty."
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Procedure:: "However, he decides to offer multiple payment options such as cash on delivery, credit or debit card transactions, net banking to the buyers etc."
2. The difference between Strategy and Procedure is as follows:
1. A strategy is a comprehensive plan for achieving the objectives of the organisation.
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2. Procedure refers to a series of specific steps to be performed in a chronological order to carry out the routine activities.
54. Planning is the most challenging function. It encourages the managers to think creatively and out of the box to generate innovative ideas. With the planning, the managers of the organisation start
working rigidly and they become the blind followers of the plan only. The managers do not take any initiative to make changes in the plan according to the changes prevailing in the business
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environment. They stop giving suggestions and new ideas to bring improvement in working because the guidelines for working are given in planning only.
i. Planning is an activity which is done by the top management. Usually the rest of the members just implement these plans.
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ii. As a consequence, middle management and other decision-makers are neither allowed to deviate from plans nor are they permitted to act on their own.
iii. Thus, much of the initiative or creativity inherent in them also get lost or reduced. Most of the time, employees do not even attempt to formulate plans they only carry out orders.
iv. Thus, planning in a way reduces creativity since people tend to think along the same lines as others. There is nothing new or innovative.
55. The first step in the process of planning is setting objectives, then the development of premises is done. After that various alternatives are identified. After this, the following steps are followed to
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complete the process of planning

i. Evaluating alternative courses: At this stage, it is seen as to what extent a particular alternative course can help in the attainment of the objectives. Every alternative has its own pros and cons.
Each plan is evaluated with all its merits and demerits in the light of the objectives to be achieved and their feasibility is judges accordingly.
ii. Selecting an alternative: This is the real point of decision-making. The best plan has to be adopted and implemented. The ideal plan, of course, would be the most feasible, profitable and with the
least negative consequences. After preparing the main plan, the organization has to make a number of small plans to support the main plan.
iii. Implementing the plan: At this step, a plan is transformed from thought (a dream) to an action (reality) by activating other managerial functions. After having decided the chief plan and the
subsidiary plans, they are to be implemented. It is decided as to who will do a particular job and at what time.
iv. Follow-up action: The process of planning does not end with the implementation of plans. Plans are formulated for future which is uncertain. It is of great importance that there is a constant review
of plans to ensure success in an uncertain future. The moment there appear to be changed in the assumptions on which the plans are based, there should be corresponding changes in the plans as
well. Thus, planning is a continuous process.
56. In the words of Koontz N O'donell, Planning is the process of deciding in advance what to do, how to do, when to do and who is going to do it.It bridges the gap between where we are and where we
want to go. It is a trap to capture the future.
There are 3 key elements in the concept of planning. These are:
Establishing clear, precise and realistic objectives for a given time period.
Identifying alternative courses of action
Selecting the most suitable alternative.
By providing direction, planning promotes efficiency and reduces the risk of uncertainty.
57. Objectives are the ends which a business firm wants to achieve by its operations.
These are set for the entire organization and for each department or unit within the organization.
These are expressed in quantifiable terms.
For example, the objective of a business firm is to increase in sales by 25%.
Managers must ensure that the objective should be clearly defined for all departments, units and workers.
There must be a time limit to achieve objective.
58. The steps involved in the "planning process" are as follows:
1. Establishing objectives: Objectives are those endpoints for whose attainment all the activities are undertaken. These should be realistic, specific and clear so as to specify what is to be
accomplished by the network of policies, procedures, strategies, rules, and programmes. Thus, the first step in the planning process is defining objectives.
2. Developing premises: Planning premises are the anticipated environments in which plans are expected to operate. They include assumptions or forecasts of the future and known conditions that
will affect the operation of the plans. They provide useful facts and information and facilitate the work of planning.
3. Identifying the alternative courses of action: The next step in the planning process is to identify the various alternatives available to achieve the objectives. Most of the times identifying the
various alternatives is a difficult task and it depends upon the creativity and logical thinking of the planner which opens up different avenues for the firm.

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 4. Evaluating the alternatives courses of action: At this stage, it is seen as to what extent a particular course can help in the attainment of the objectives. Each and every alternative has its own pros
and cons. Every alternative is evaluated with its merits and demerits in the light of the objectives to be achieved and their feasibility is judged accordingly.
59. When a business firm formulates its strategy, the business environment i.e. social, political, economic and legal factors should be kept in mind.
Strategic decisions include decisions like whether a business firm will continue to be in the same line of business or aim for a fixed position in a particular market or combine new lines of
activity with the existing business.
A strategy is a comprehensive plan which includes:
i. Determining long-term objectives of the firm.
ii. Adopting an appropriate course of action.
iii. Allocating various resources i.e. financial, technical and human resources which are necessary to achieve the organizational objective.
A strategy takes into account the environmental opportunities and threats and fixes a match between them and the organization's resources.
It is a type of standing plans.
Strategy provides a broad contour of an organization.
60. Planning is a mental exercise because :
(i) Planning requires thinking in advance for future events involving foresight, intelligent imagination and sound judgement.
(ii) It is an activity of thinking rather than doing, because planning determines the action to be taken.
(iii) However here we require logical and systematic thinking rather than guess work. In other words, planning should be based on past experiences and forecasts.
61. i. Planning is pervasive
Planning is required at all levels of management as well as in all departments of the organisation.
Planning is not an exclusive function of top management nor of any particular department. But the scope of planning differs at different levels and among different departments. Though at different
levels and for different departments, the extent of planning varies.
The top management undertakes planning for the organisation as a whole.
Middle management does the departmental planning.
At the lowest level, day-to-day operational planning is done by supervisors.
ii. Planning is futuristic
Planning essentially involves looking ahead and preparing for the future.
The purpose of planning is to meet future events effectively to the best advantage of an organisation. It implies peeping into the future, analysing it and predicting it. Planning is, therefore, regarded
as a forward looking function based on forecasting. Planning entails predicting future events and situations and making plans based on those predictions.
​Through forecasting, future events and conditions are anticipated and plans are drawn accordingly. For example, sales forecasting is the basis on which a business firm prepares its annual plan for
production and sales.
iii. Planning is a mental exercise

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Planning requires application of mind involving foresight, intelligent imagination and sound judgement. It is basically an intellectual activity of thinking rather than doing, because planning
determines the action to be taken. Planning necessitates the use of the mind and foresight. Rather than guesswork, planning is an intellectual activity that necessitates logical and organized thought.
62. Definition of Planning: Planning may be defined as the process of determining in advance what is to be done and defining a procedure, method and time table to do it to achieve the set objectives.
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Importance of Planning:
i. Planning reduces overlapping and wasteful activities: Planning serves as the basis of coordinating the activities and efforts of different divisions, departments and individuals. It helps in avoiding
confusion and misunderstanding. Since planning ensures clarity in thought and action, work is carried on smoothly without interruptions.
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ii. Planning promotes innovative ideas: Since planning is the first function of management, new ideas can take the shape of concrete plans. It is the most challenging activity for the management as
it guides all future actions leading to growth and prosperity of the business.
iii. Planning facilitates decision making: Planning helps the manager to look into the future and make a choice from amongst various alternative courses of action. The manager has to evaluate each
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alternative and select the most viable proposition. Planning involves setting targets and predicting future conditions, thus helping in taking rational decisions.
iv. Planning establishes standards for controlling: Planning involves setting of goals. The entire managerial process is concerned with accomplishing predetermined goals through planning,
organising, staffing, directing and controlling. Planning provides the goals or standards against which actual performance is measured. By comparing actual performance with some standard,
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managers can know whether they have actually been able to attain the goals.
63. a. The concept of management involved is “Planning”.
b. The steps involved in the above process are:
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i. Establishing objectives: Main objective of the company is to increase the profit. Lines quoted are "The manager............increase profits."
ii. Identifying alternative courses of action: Various alternatives available to manager:
Purchasing new high speed machines
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Increasing the sale price

Using waste material in manufacturing stuffed toys. Lines quoted are " By purchasing new..................stuffed toys."
iii. Evaluating and selecting Alternative courses: Use of waste material to increase profits is the best solution. Lines quoted are "He deiced..............solution for him."
c. To complete the process manager should take the following steps:
i. Implementing the Plan.
ii. Follow up action.
64. Plans and programs indicate precisely how various tasks are to be accomplished and how resources are to be utilised for the purpose. The availability of advance information on such matters leads to the
economy. This is because planning helps employees to avoid needless efforts and reduce wastage. Planning serves as the basis of coordinating the activities es and efforts of different divisions,
departments and individuals. It helps in avoiding confusion and misunderstanding. Since planning ensures clarity in thought and action, work is carried on smoothly without interruptions. Useless and
redundant activities are minimised or eliminated. It is easier to detect inefficiencies and take corrective action to deal with them.
For example, planning minimises cost by suggesting the exact requirements of manpower, raw materials, machines, etc., what is to be done, how and when are specified in the plans. Hence, there is no
scope for using trial and error methods. This also leads to the efficiency of operations.
65. Standing plans are used for activities that occur regularly over a period of time. It is designed to ensure that internal operations of an organisation run smoothly. Again, as the name suggests these are
the plans which stand for a rather long time, that is to say, the Plans which are used by an organisation, again and again, are called standing Plans.
A single use plan is developed for a one-time event or project. Such a course of action is not likely to be repeated in the future. ingle-use plan as the name suggests is the plan that is used only once in
order to achieve a particular goal, and that is why it is also known as the specific purpose plan because the plan gets discarded after the purpose is achieved.
The following type of plans discussed above are classified as standing plans:
i. "changing the vendors ..."
Policy is a general statement that guides thinking or channelizes energies towards a particular direction.
ii. "Seminar for higher levels ... supervisory management"
Method provides the prescribed ways or manner in which a task has to be performed considering the objective.
iii. "Attending the meeting not discretion ....penalty"
Rules are specific statements that inform what is to be done.
66. The first step in the planning process is to establish objectives. Objectives determined must be clear, realistic and specific as to what is to be accomplished. The further steps in the planning process are:
Establishing Planning Premises
Identifying the Alternative Courses of Actions
Evaluating the Alternative Courses
Selecting the Best Alternative
Implementing the Plan
Follow-up Action

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 1. Establishing Planning Premises: Planning premises are the anticipated environments in which plans are expected to operate. They include assumptions or forecasts of the future. Premises provide
useful facts and information to the managers to facilitate the work of planning. Various assumptions regarding government policies, prices, taste, and preference etc are made.
2. Identifying the Alternative Courses of Actions: On the basis of objectives to be achieved, alternative courses of doing a particular work are discovered. It is a difficult task and it depends upon the
creativity and logical thinking of the planner which opens up different avenues for the firm.
3. Evaluating the Alternative Courses: In this stage, it is seen as to what extent an alternative course can help in the attainment of the objective. Every alternative has its own pros and cons. Each
alternative is carefully evaluated with all its merits and demerits and their feasibility is judged accordingly.
4. Selecting the Best Alternative: The next step is to find out the most suitable course to be followed. Efforts are directed towards selecting that course which increases efficiency in the organization
by maximizing output and profits at minimum costs. The best-suited for the purpose is selected.
5. Implementing the Plan: After having decided the Chief Plan and the subsidiary plans, they are to be implemented. At this step, a plan is transformed from a thought (a dream) to an action (reality)
by activating the other managerial functions.After implementing the plans the sequence of different activities are also decided.
6. Follow-up Action: The process of planning does not end with the implementation of plans. There should be a constant review of the plans to ensure success in an uncertain future. Due to
uncertainties of future, it is necessary that the plan should be evaluated from time to time to measure its effectiveness and to see that the objectives are achieved or not.
67. a. The points highlighting the importance of planning mentioned in the above paragraph are described below:
i. Reduces the risk of uncertainty: Planning relates to deciding in advance about the tasks to be performed in the future. This enables a manager to anticipate changes and devise the ways to deal
with changes and uncertain events effectively.
ii. Avoiding overlapping and wasteful activities: Planning ensures clarity in thought and action and serves as the basis of coordinating the activities and efforts of different individuals and
departments. Therefore, by curtailing useless and redundant activities, it helps in the smooth working of the organization's work without interruptions. Moreover, it makes detection of
inefficiencies easier so that timely corrective measures may be taken to avoid them in the future.
b. The limitation of planning which adversely affects Payal's business is 'Planning may not work in a dynamic environment'. The business environment is dynamic in nature. Every organization has to
constantly adapt itself to changes in its environment in order to survive and grow. However, it difficult to anticipate all the likely future changes in the environment with the utmost accuracy. Hence,
even with planning, everything cannot be foreseen.
68. i. Planning provides directions: Planning assures that the objectives are certainly asserted so that they serve as a model for determining what action should be taken and in which direction. If objects
are well established, employees are informed of what the company has to do and what they need do to accomplish those purposes. Planning means coming up with a predetermined action plan for
the organization. It actually states in advance what and how the work is to be done.
ii. Planning decreases the chances of risk: Planning is an activity which permits a manager to look forward and predict changes. By determining in prior the tasks to be completed, planning notes the
way to deal with changes and unpredictable effects.
iii. Planning decreases overlapping and wasteful activities: Planning works as the foundation of organising the activities and purposes of distinct branches, departments, and people. It assists in
avoiding chaos and confusion. Since planning guarantees precision in understanding and action, work is conducted on easily without delays.
iv. Planning encourages innovative ideas: Since it is the primary function of management, new approaches can take the form of actual plans. It is the most challenging project for the management as
it leads all planned actions pointing to growth and of the business. It encourages the manager to broaden their horizons and forces them to think differently.

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69. Some limitations of planning are as follows:
1. Planning Reduces Creativity: Under planning, all the activities connected with the attainment of the objectives of the organization are preconceived and predetermined. Consequently, everybody
works as they have been directed to do and as it has been made clear in the plans. Managers can't think of any new ways for doing the tasks. Thus, it reduces creativity.
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2. Planning Does not work in Dynamic Environment: Planning is based on the anticipation of future happenings. Since the future is uncertain and dynamic, therefore the future anticipations are not
always true. Planning does not work in the dynamic environment as plans are rigid with least scope of any changes.
3. Planning Involves Huge costs: In planning a lot of work is to be done, a lot of information is to be collected. When so many people remain busy in the same activity, the organization faces huge
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costs. Also, it involves applying of forecasting techniques, determining alternatives, analyzing data etc. All these make planning a costly process.
70. Importance of Planning:
It is the fundamental function that gives an outline about where to go, how to go, and reduces the risk of an uncertain future with the help of forecasting. The importance of planning is as follows:
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i. Helps to set clear objectives: Planning is concerned with setting objectives, targets, and formulating plans to achieve them.
It helps managers to analyze the present condition of the organization and on that basis to identify the ways of attaining the desired position in the future.
ii. Provides path of action: Planning ensures that the goals or objectives are clearly stated. They act as a guide and they provide direction for doing the right things at the right time with the right way.
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It helps employees to know what the organization has to do and what they must do for achieving the goals. Planning means coming up with a predetermined action plan for the organization. It
actually states in advance what and how the work is to be done.
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iii. Planning improves performance: It helps managers to improve future performances of employees by establishing objectives and selecting a course of action. It is beneficial for the organization.
Planning leads to the efficient working of the employees. Due to proper planning, the employees can work according to time guidelines. This improvement in performances results in higher
profitability of the organization.
iv. Minimizes the risk: Planning is based on forecasting techniques. It is the process of looking into the future and anticipating future changes. By deciding in advance the tasks to be performed,
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planning shows the way to deal with changes and uncertain events. Changes or risks cannot be eliminated totally but they can be anticipated and can be tackled with preventive measures. It
minimizes the risk of future or uncertainties of the future. Planning not only sets objectives but also anticipates any future changes in the industry or the organization. So it allows the managers to
prepare for these changes, and allow them to deal with the uncertainties.
v. Planning leads to optimum utilization of resources: Organizational plans are prepared by taking into consideration the availability of resources and the proper allocation of resources for various
activities. It also facilitates optimum utilization of resources which brings higher efficiency and better results. One can avoid wastage of resources by proper planning.
71. Types of plans Sara is discussing in the above lines are:
a. Policy: Policy is a general statement that guides thinking or channelises energies towards a particular direction. It defines the broad parameters within which a manager may function. It brings
uniformity in decision making and action. Policies are generic statements, which are basically a guide to channelize energies towards a particular strategy.
Example: Recruitment Policy, Purchase Policy, etc.
b. Procedure: It consists of sequence of routine steps performed in a chronological order to carry out activities within a broad policy framework. It details the exact manner in which any work is to be
performed. They are a stepwise guide for the routine to carry out the activities.
Example: Procedure for reporting progress in production.
72. Following are the types of plans:
i. Objectives: Objectives are those end-points for the attainment of which all the activities are undertaken. It is a special target to be achieved by an organization, e.g., it can be the objective of a
school to impart education in the subject of commerce to 100 students during a year.
ii. Strategy: It refers to a plan which takes into account the environmental opportunities and threats and the organizational strengths and weaknesses and provides an optimal match between the
organization and the environment.
iii. Policies: Policies are those general statements that are decided for the guidance of the employees while taking a decision like Personnel Policy. Under this policy, it can be decided that the basis for
the promotion of employees will be their age. Once this is decided, no departmental manager will need the permission of the General Manager regarding the promotion of the employees.
iv. Procedures: Procedures are those plans which determine the sequence of any work performed. For example, the recovery of money from the debtors can be done in the following order:
a. Writing letters
b. Contacting on telephone
c. Meeting personally
d. Taking legal action.
v. Methods: Method is that plan which determines how different activities of the procedure are completed. A method is not related to all steps but only to one step of the procedure. It is more detailed
than the procedure. There may be many methods to do a particular work. After extensive study, a method has to be selected from which a worker feels minimum fatigue, an increase in productivity
and there is a reduction in costs.
73. Advantages of Planning:
i. Planning provides Direction: Under the Process of planning the objectives of the organization are defined in simple and clear words. The obvious outcome of this is that all the employees get a
direction and all their efforts are focused towards a particular end. In this way, planning has an important role in the attainment of the objectives of the organization.

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 ii. Planning reduces Risks of Uncertainty: Planning is always done for the future and the future is uncertain. With the help of planning, possible changes in the future are anticipated and various
activities are planned in the best possible way. In this way, the risk of future uncertainties can be minimized.
iii. Planning reduces Overlapping and Wasteful Activities: Under planning, future activities are planned in order to achieve objectives. Consequently, the problems of when, where, what and why
are almost decided. This puts an end to disorder and suspicion. In such a situation, coordination is established among different activities and departments. It puts an end to overlapping and wasteful
activities.
Limitation of planning:
i. Planning Creates Rigidity: Although the quality of flexibility is inherent in planning, it must be admitted that only small changes are possible. Big changes are neither possible nor in the interest of
the organization. Since it is not possible to introduce desired changes according to the changed situation, the organization loses many chances of earning profits.
ii. Planning does not work in a Dynamic Environment: Planning is based on the anticipation of future happenings. Since the future is uncertain and dynamic, therefore, the future anticipations are
not always true. Therefore, it can be said that planning does not work in a dynamic environment.
74. Planning is important for better management of the business. It is the heart of the management. It is of vital importance because of the following reasons:
1. Planning promotes efficiency: Proper planning ensures better utilisation of organisational resources. It involves the selection of the best course and helps in coordinating the activities in all
departments. This reduces idle time of workers, machines. There is no ambiguity in the organization. It minimises the cost and promotes efficiency in the organization.
2. Planning provides direction: Planning is directed towards achieving the objectives of an enterprise. It ensures that goals are clearly defined so that they act as a guide for what actions are to be
taken and in what direction. Planning contributes to the achievement of predetermined goals by stating in advance what is to be done and by whom.
3. Planning reduces the risk of uncertainties: All business enterprise operate in an uncertain environment and have to face risks of various types. Since the future can't be changed but can be
anticipated at present. So, planning takes care of all future uncertainties and minimises the risks. Thus, it ensures an organization's survival and growth.
75.
i. Objective and Strategy are the two different types of plans that 'Apna Ghar' proposes to implement.
Objective: "Apna Ghar', a company dealing in consumer durables, plans to increase the sale of its products by 25% around Diwali this year."
Strategy: "Moreover, in order to cash on the implementation of the seventh pay commission by that time which is likely to raise the income of 47 lakh serving employees of the Central government and
52 lakh pensioners, the company has created 30 advertisement films which will be aired across 85 national and regional channels until Diwali."
ii. The difference between objectives and strategy is outlined below:
S.No. Basis Objectives Strategy

Objectives are the end results of the activities that an organization seeks to achieve A strategy is a comprehensive plan prepared for winning over the given
1. Meaning
through its existence. challenge or problem.

2. Source Objectives are based on the mission or philosophy of the organization. A strategy is based on the objectives of the organization.

Level of persons
3. Objectives are determined by top-level management. A strategy may be determined by top-level or middle-level management.
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