Friday, December 26, 2014

AHSEC - 12: Planning Important Notes for Feb' 2017 Exam

Unit – 4: Planning
Objective Questions (1 Mark)
1. Define planning.
Ans: Planning can be define as “thinking in advance what is to be done, when it is to be done, how it is to be done and by whom it should be done.” In simple words we can say, planning bridges the gap between where we are standing today and where we want to reach.
In the words of Alfred and Beatty,” Planning is the thinking process, the organised foresight, the vision based on facts and experience that is required for intelligent action.”
2. Point out whether Planning is a physical or mental activity.
Ans: Planning is a mental activity. It requires application of the mind involving creative thinking and imagination, foresight & judgment.
3. Does planning eliminate risk?
Ans: No, Planning does not eliminate risk. It only reduces the risks.
4. Name the other name of directional plan.
Ans. Strategy.
5. Why is planning regarded as pervasive function of management?
Ans: Planning is regarded as a pervasive function as it is required at all levels of mgt. as well as in all departments of the organisation. However the scope of planning differs at different levels and among different departments.
6. How does planning restrict creativity?

Ans: Planning in an activity which is done by top mgt. usually the rest of the organisation just implements these plan. The result is that middle management and other decision makers are neither allowed to deviate from plans nor are they permitted to act on their own. This planning restricts creativity.
7. What is meant by “policies” as a type of plans?                                           2009, 2011
Ans: Policy can be defined as organisation’s general response to a particular problem. In simple words, it is the organisation’s own way of handling the problems. Example: Different business firms may follow different sales policies as stated below: “We don’t sell on credit”; “It is our policy to deal with wholesalers only.”
8. State the meaning of “Rules” as a type of plan.                                                            2008
Ans. Rules spell out special actions or non-actions of the employees. Rules are spelt out to create the environment of discipline in the organisation. Rules are to be enforced rigidly and there is generally a fine or penalty for violation of rules. They do not allow for any flexibility or discretion.
9. ‘Planning strangulates the initiativeness of the employees and compels them to work in an inflexible manner’
Ans. Planning Hampers creativity
10. ‘No Smoking in the factory’ is which type of plan.
Ans. Rules
11. Define derivative plans.
Ans. Plans that are prepared to support the main plan is called derivative plan.
12. Define Planning Premises.                   2013
Ans: Planning is concerned with the future, which is uncertain. Therefore, the manager is required to make certain assumptions about the future. These assumptions are called premises.

Short Answer Type Questions (2/3 marks)
1. How does planning help co-ordination?
Ans: Planning makes co-ordination of various activities, departments and groups relatively easy, planned programmes of activity serve as the basis of harmonizing the efforts of different division, departments and people. Thus, for example, manufacturing and sales activities can be co-ordinate only if plan of the production department are drawn on the basis of sales plane. In the absence of proper planning of interrelated activities the production department may turn out goods which the sales department may not be able to sale and conflict may occur between then heads of two departments. Confusion and misunderstanding may also occur in the absence of integrated planning of different activities coordination of departmental operations is facilitated by planning through the establishment of common goals as guide posts
2. Explain the characteristics (Essentials) of a sound plan.                                            2008
Ans. Characteristics of sound plan are:
A) Plan should be simple: for a good plan to be effective, it should be simple, to understand and worked upon different individuals and groups.
B) Plan should be specific: objectives and goals should be clearly defined and explained. Thus planning is purposeful.
C) Plan must be flexible: conditions under which a business operates keep on changing. Therefore, planning must be flexible and not rigid. It should enable the management to take care of the changes in the environment.
3. Why does planning fail sometimes in spite of the best efforts of management? Planning does not guarantee success.” Comment
Ans: The success of enterprise is possible only when plans are properly drawn up and implemented. The business environment is dynamic, nothing is constant. The organisation has to constantly adapt itself, to the changes of in business environment. I agree with the statement &” Though Planning is an important tool of management, yet it is not a remedy in business environment. Planning can’t prevent problem. It can only product them to prepare contingency plans to deal with them if and when they occur. Planning fail inspire of efforts of management because of its imitation.
4. ‘Planning involves choice’ Comment
Ans: Planning essentially involves choice from among various alternatives and objectives of there are one possible goal or only one possible course of action, there is no need of planning because there is no choice. The needs for planning arises only when alternative are available. In actual practice, planning presuppose the existence of alternatives, planning, thus, involves through examination and evaluation for each alternative and choosing the most appropriate one.
5. What are various types of plans?
Ans: Different types of plans are framed by the managers at different levels which are given below:
a) Objectives: Objectives are the ends towards which the activities are directed. They are end result of every activity.
b) Strategy: A strategy is a comprehensive plan to achieve the organisational objectives.
c) Policies: Policy can be defined as organisation’s general response to a particular problem. In simple words, it is the organisation’s own way of handling the problems.
d) Procedures: Procedure can be defined as the exact manner in which an activity has to be accomplished.
e) Rules: Rules spell out special actions or non-actions of the employees. Rules are spelt out to create the environment of discipline in the organisation.
f) Programmes: Programmes are the combination of goals, policies, procedures and rules. All these plans together form a program.
g) Methods: Methods can be defined as formalized or systematic way of doing routine or repetitive jobs. The managers decide in advance the common way of doing a job.
h) Budget: Budget is the statement of expected result expressed in numerical terms. A company prepares both financial and operational budget.
6. Distinguish between – Objectives and policies
Basis
Objectives
Policies
a)      Aim
Objectives determine the final goal of the enterprise.
Policies are framed to achieve objectives efficiently.
b)     Level of Management
Objectives are determined by the owners or the top level management.
Policies are determined by top, middle and Lower level of management.
c)      What
Objectives determine what is to be done.
Policies decide how the work is to be done.
d)     How
Objectives decide the way in which a specific job to be done.
Policies decide the procedures to be adopted for completion of the job.
7. Distinguish between Rules and methods.
Basis
Rules
Methods
1. Meaning
Rules are norms regarding behaviour of employees.
Methods are formalisesd way of doing routine and repetitive jobs.
2. Purpose
Rules ensures discipline.
It increases efficiency of operation.
3. Effect of violation
Penalty attached to violation of rules.
No penalty for violation of methods.
4. Flexibility
Generally rules are rigid.
Methods are flexible.
5. Association
Associated with control.
Not associated with control.
8. Distinguish between policy and Strategy.
Basis
Policies
Strategies
1. Meaning
Policies are guidelines which facilitate the achievement of predetermined objectives.

A strategy is a plan prepared for meeting the challenge posed by the activities of competitors or some other external environmental forces.
2. Purpose/Aim
Formulated to deal with repetitive problems.
Formulated to counter environmental threats and capitalize on opportunities.
3.Concern/ Coverage
Concerned with the company as a whole or particular departments.
Concerned with the company as a whole.
4. Nature of Plan
It is a type of standing plan to be used repetitively again and again.
It is a single use plan for meeting challenges. After its implementation, it is not used again.
5. Situation
The situations to be faced by a policy are comparatively known.
A strategy is formulated to deal with unknown environment in future.
9. Distinguish between procedures and Policies. 2008, 2010, 2013
POLICIES
PROCEDURES
Policies are guidelines which facilitate the achievement of predetermined objectives.
Procedures are sequences of steps to be followed for performing some important jobs.
They are general statements .
They are specific statements.
Policies are flexible.
Procedures are more rigid.
Scope for discretion.
No scope for discretion.
Decided by top level management
Decided by middle & low level management
There may be different policies for different departments .
There are same procedures for all departments
They are not dependent on procedures
They are dependent on policies
10. Distinguish between procedures and methods.
Procedures
Methods
Procedures are sequences of steps to be followed for performing some important jobs.
Methods are formalisesd way of doing routine and repetitive jobs.
Procedures are more rigid.
Methods are less rigid or flexible.
Procedures help in implementation of policy.
Methods help in standardisation of activity.
11. Distinguish between policies and rules.                                        2016
Policies
Rules
Policies are guidelines which facilitate the achievement of predetermined objectives.
Rules are norms regarding behaviour of employees.
They are general statements.
Rules are specific statements.
Policies describes what is to be done under different situations.
Rules describe what is to be done and what is not to be done by the employees.
Policies are less rigid.
Rules are very rigid.
12. State five features of Planning.                                         2011, 2015
Ans. Following are the features of Planning:
A)     Planning contributes to objectives: Planning starts with the process of setting up the objectives. We cannot think of planning without objectives. After setting up the objectives various activities are decided which would help in the achievement of the same.
B)      Pervasive: Planning is required at all levels of management. It is not a function restricted to top level managers only but planning is done by managers at every level.
C)      Primary Function: Planning is the first function of the management (primacy).On the basis of planning; the other functions of organizing, staffing, directing and controlling are performed.
D)     Forward looking: planning is looking ahead. It is done for the future and not for the past. All the managers try to make assumptions for the future and act accordingly.
E)      Continuous: Planning goes on continuously. It does not stop after a particular period. If plans are made for a month, after one month new plans are made. So Planning goes on without halt.
Long Answer Type (5/8 Marks)
1. Discuss the importance of Planning.                  2007, 2011, 2012, 2014, 2016
Ans. Planning is of vital importance in the managerial process. No enterprise can achieve its objectives without systematic planning. “Planning is the heart of management”. It is also considered to be the basic function of management. The following points highlight the importance of planning function of management:
1.       Planning provides directions: By stating in advance how work is to be done, planning provide direction for action. If goals are well defined, employees are aware of what the organization has to do and what they must do to achieve those goals. Departments and individuals in the organization are able to work in coordination.
2.       Planning keeps the organization on the right path: If there was no planning, employees would be working in different directions and the organization would not be able to achieve its goals efficiently.
3.       Planning reduces the risks of uncertainty: Business enterprises operate in an uncertain environment and face several types of risks. Planning enables these enterprises to predict future events and prepare to face the unexpected events. With the help of planning, managers can identify potential dangers and take steps to overcome them. Thus, planning helps risk and uncertainty.
4.       Planning reduces overlapping and wasteful activities: Since planning ensures clarity in thought and action, work is carried on smoothly without interruptions. There is no confusion and misunderstanding. Useless and redundant activities are minimized or eliminated.
5.       Planning promotes innovative ideas: Planning is thinking in advance and, therefore, there is scope of finding better ideas and better methods and procedures to reach the objectives/goals of the enterprise.
6.       Planning establishes standards for controlling: Planning provides the goals or standards against which the actual performance can be measured and evaluated. A comparison of actual performance with the standards helps to identify the deviations and to take corrective action.
2. Discuss the process or steps in the process of Planning.                           2007, 2009, 2012, 2013, 2016
Ans: Steps in the Process of Planning
1.       Setting organizational objectives: The first and foremost step in the planning process is setting organizational objectives or goals, which specify what the organisation wants to achieve.
2.       Developing planning premises: Planning is concerned with the future, which is uncertain. Therefore, the manager is required to make certain assumptions about the future. These assumptions are called premises.
3.       Identifying alternative courses of action: Once objectives are set and assumptions are made, then the next step is to identify all possible alternative courses of action.
4.       Evaluating alternative courses: The positive and negative aspects of each proposal need to be evaluated in the light of the objective to be achieved, its feasibility and consequences.
5.       Selecting the best possible alternative: This is the real point of decision making. The best/ideal plan has to be adopted, which must be the most feasible, profitable and with least negative consequences. Sometimes, a combination of plans may be selected instead of one best plan.
6.       Implementing the plan: Once the plans are developed, they are put into action. For this, the managers communicate the plans to all employees very clearly and allocate them resources (money, machinery, etc.).
7.       Follow-up action: The managers monitor the plan carefully to ensure that the premises are holding true in the present condition or not. If not, adjustments are made in the plan.
3. Discuss the Limitations of Planning.  2010, 2015
Ans: Limitations of Planning:
1. Planning does not work in dynamic environment: The business environment is dynamic, nothing is constant. The environment consists of a number of dimensions— economic, political, technological, legal and social dimensions. The organisation has to constantly adapt itself to the changes in business environment. However, it is not always possible to accurately assess future trends in the environment.
2. Planning is a time consuming process: Planning is a time consuming process. It requires collection of information, its analysis and interpretation. These activities may take considerable time.
3. Planning involves huge costs: Planning is an expensive process in terms of money. When plans are drawn up, huge costs are involved in the formulation of plans. If the costs are not justified by the benefits derived from the plan, it may have adverse effect on the enterprise.
4. Planning creates rigidity: Planning leads to rigid mode of functioning for managers. This has adverse effect on the initiative to be taken by them.
5. Planning does not guarantee success: The success of an enterprise is possible only when plans are properly drawn up implemental. Managers have a tendency to rely on previously tried and tested successful plans. But it is not always true that a plan which has worked before, will work effectively again.
6. Planning reduces creativity: Planning is an activity which is done by top management. 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.

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