[AHSEC Class 12, Business Studies Notes, Revised Syllabus, 2022 Exam, Planning]
Class 12 Business Studies Notes
Unit – 4:
Planning
Objective Questions (1 Mark)
1. 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.
2. Does planning eliminate risk?
Ans: No, Planning does not eliminate risk. It only reduces the
risks.
3. What are different types of plan?
Ans: Policy, Procedures, Method, Rule, Strategy, programme,
Budget.
4. Planning is a time consuming
process. Comment.
Ans: Planning is a time consuming process. It requires collection
of information, its analysis and interpretation. These activities may take
considerable time. This is also a limitation of planning.
5. ‘Planning strangulates the
initiativeness of the employees and compels them to work in an inflexible
manner’
Ans. Planning Hampers creativity
6. ‘No Smoking in the factory’ is
which type of plan.
Ans. Rules
7. Define derivative plans.
Ans. Plans that are prepared to support the main plan is called
derivative plan.
8. Define Planning Premises. 2013, 2018
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.
9. Why is planning regarded as
pervasive function of management? 2017
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.
10. Why is planning known as
“Futuristic’?
Ans: Planning is futuristic. It is done for the future and not for
the past. All the managers try to make assumptions for the future and act
accordingly.
10. At which level of management is
planning function of management conducted?
Ans: Top Level
11. How can the happening of
‘overlapping and wasteful activities’ be reduced?
Ans: Through Planning
12. Which type of plan determines what
to do and how to do?
Ans: Objectives and Strategy
13. Name the techniques of control by
which all operations are planned in advance in the form of budget.
Ans: Budgetary Control
14. Define derivative plans.
Ans. Plans that are prepared to support the main plan is called
derivative plan.
15. Does planning eliminate risk?
Ans: No, Planning does not eliminate risk. It only reduces the
risks.
16. Planning provides directions. Comment.
Ans: 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.
17. Name the other name of directional
plan.
Ans. Strategy.
18. 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.
19. Give an example of goal.
Ans: To use new technology to
increase brand recognition in the local markets
20. Planning is a continuous process.
Comment.
Ans: 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.
21. Which function of management is
considered as the base of all other functions?
Ans: Planning
22.
Define Planning Process.
Ans: The
development of goals, strategies, task lists and schedules required to achieve
the objectives of a business is called planning process. This process is a
fundamental function.
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ALSO READ (AHSEC ASSAM BOARD CLASS 12)
1. AHSEC CLASS 12 BUSINESS STUDIES CHAPTERWISE NOTES
2. AHSEC CLASS 12 BUSINESS STUDIES QUESTION PAPERS (FROM 2012 TILL DATE)
3. AHSEC CLASS 12 BUSINESS STUDIES SOLVED QUESTION PAPERS (FROM 2012 TILL DATE)
4. AHSEC CLASS 12 BUSINESS STUDIES IMPORTANT QUESTIONS
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Short and
long Answer Type Questions (2/3 marks)
Q.1. Define planning. What are various
types/methods/kinds of plans?
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.”
Different types of plans are framed by the
managers at different levels which are given below:
a) Objectives: Objectives are the goals
established to guide the efforts of the management. Objectives are the ends
towards which all the managerial activities are directed. Objective should be
measurable and must be achievable within a given time limit. Example of
increase in sales revenue by 10% by reducing prices.
b) 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. 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.” 2009, 11, 18
c) Procedures: Procedure can be defined as the
exact manner in which an activity has to be accomplished. Procedures give
details of how things are to be done. Example of procedure: Procedure of filing
forms to get admission in a particular school.
d) 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. For example: Method of
charging depreciation, methods for valuation of stock FIFO or LIFO.
e) Rules: Rules
are specific statements that tell what is to be done. Rules are to be enforced
rigidly. They do not allow for any flexibility or discretion. For example: No
smoking in the business premise. 2008
f) Strategy: A strategy is a comprehensive
plan to achieve the organisational objectives. It is a general programme of
action and a deployment of resources towards the attainment of comprehensive
objectives. 2018
g) Programmes: Programmes are the combination
of goals, policies, procedures and rules. All these plans together form a
program.
h) Budget: Budget is the monetary and
quantitative expressions of business plans and policies to be pursued in the
future period of time. The term budgeting is used for preparing budgets and other
procedures for planning, co-ordination and control of business enterprises.
Q.2. 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. |
Q.3. 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 ensure 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. |
Q.4. 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. |
Q.5. 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 |
Q.6. 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. |
Q.7. 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 describe
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. |
Q.8. State five features of Planning. 2011,
2015, 2017
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.
Q.9. 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.
D) Integrated process: Planning is an
integrated process. That is it facilitates and integrates all other functions
of management.
E) Selective Process: Planning is a selective
process. That is, it involves the selection of the best course of action after
a careful analysis of the various alternative courses of action.
Q.10. ‘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.
Q.11.”Planning
involves huge cost.” Comment.
Ans: Planning involves huge cost, when plans are drawn up huge
costs are involved in their formulation. These are in terms of time, money,
effort etc. Detailed plans require scientific calculations to ascertain facts
and figures. The costs incurred sometimes may not justify the benefits derived
from the plans. There are a number of incidental costs as well (which are
indirect) like expenditures on organizing a meeting, consultation fees given to
professional experts, market survey etc. But despite the high cost no firm can
work without proper planning if used properly.
Q.12. 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.
Long
Answer Type (5/8 Marks)
Q.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.
Q.2. What
is Planning Process? Discuss the process or steps in the process of Planning. 2007,
2009, 2012, 2013, 2016, 2019
Ans:
Planning Process: The development of goals, strategies, task lists and
schedules required to achieve the objectives of a business is called planning
process. This process is a fundamental function.
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.
Q.3.
Discuss the Limitations of Planning. 2010,
2015, 2018
Or
Why does
planning fail sometimes in spite of the best efforts of management? Planning
does not guarantee success.”
Comment
Ans: Limitations of Planning: 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 fails in spite of efforts of management because of its
limitations which are stated below:
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.
Q.4. What
is planning premises? Explain its various types.
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. Planning Premises are divided into various
parts which are stated below:
(a) Internal and external premises: Internal premises are those which exist within the business
enterprise. Important internal premises include:
a) Policies
and programmes of organisation
b) Capital
investment in plant and equipment
c) Competence
of management
d) Skill
of the labour force;
e) Other
resources and abilities of the organisation in the form of machines, money and
methods, and beliefs, behaviour and values of the owners and employees of the
organisation.
External
premises centre round the markets and derived from the external environment
surrounding the business. External premises may be classified into three
groups: (a) business environment, (b) factors which influence the demand for
the products of the enterprise and (c) factors which affect the resources
available to the enterprise. These external premises may include the following:
(i) General business and economic environment. (ii) Technological changes.
(iii) Government policies and regulations. (iv) Population growth.
(v) Political stability. (vi) Sociological factors. (vii) Demand for industry's product.
(b) Controllable. Semi- controllable
and non-controllable premises:
Controllable premises are
those within the control of a business enterprise such as, men, Monet,
materials, policies, procedure, programmers etc. They can be controlled
but a business enterprise to ensure better sales of its products.
Semi- controllable premises
are those which can be partially controlled by a business enterprise like,
labour position on the market.
Non-controllable premises are
those that lie beyond the control of a business enterprise. Ware, natural
calamities and external environment factors are non- controllable premises.
(c) Tangible
and Intangible Premises
Tangible Premises can be measured in quantitative terms.
They include units of production and sale, money, time, hours of work, etc.
Intangible Premises cannot be measured in quantitative
terms. They include goodwill of the business, employee's morale, employee's
attitude and public relations.
(d) Constant and Variable Premises
Constant Premises do not change. They remain the same,
even if there is a change in the course of action. They include men, money and
machines.
Variable Premises are subject to change. They change
according to the course of action. They include union-management relations.
Q.5. Explain the advantages of Laying down
objectives and procedures.
Ans:
Advantages of Laying Down Objectives: Objectives are the targets to be
achieved by the management. They do not help one or two functions but all the functions
are facilitated by the formulation of objectives.
1.
The objectives are helpful in
creating unity in planning. Different departments make their own departmental
plans. In the absence of common objectives there is a possibility of
inconsistency or confusion.
2.
The formulation of objectives
helps in decentralisation of authority. The goals of various levels of
management are fixed and requisite authority is needed to be delegated for
achieving those targets. The decentralisation of authority will involve more
persons in decision-making process.
3.
Objectives are helpful in
exercising control over various activities. Every department, section or
individual is responsible for its performance. The comparison of standard and
actual performance will enable the management in pin –pointing weak spots. The
control is facilitated through the setting of objectives.
4.
The setting up of objectives
stimulates motivation in individuals. When a person knows his goal then he will
try to achieve it as early as possible. The performance of various individuals
improves through this process.
5.
Objectives are the essence of
planning. Planning process is not possible without objectives. The planning
starts with the setting up of objectives. It is the objectives for. Which
planning is undertaken.
Advantages
of Procedures
1.
Basis of Control. Procedures give
a detail of sequences to be followed for completing a task. It can be seen
whether the work is proceeding according to the plan or not. Procedures are
used as a control mechanism because any discrepancy in completing the work can
be determined at once.
2.
Consistency. Procedures help to
ensure consistency and uniformity of performance. Once the procedures are
established, they can be similarly used again and again.
3.
Standardization. The standardization
of procedures reduce the need for decision-making in similar situation.
Whenever a task is to be performed, the same procedure will be followed for
doing it. This increases efficiency in doing a work.
4. Co-ordination. Procedures establish a sequence to be followed for each work. This helps in co-ordinating the activities of different departments or sections because same procedures will be followed by all them.