AHSEC - 12: Planning Important Notes for March 2022 - 23 Exam | Business Studies Class 12 Notes

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

5. BUSINESS STUDIES MCQs

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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

Q.3. Distinguish between Rules and methods.

Q.4. Distinguish between policy and Strategy.

Q.5. Distinguish between procedures and Policies. 2008, 2010, 2013

Q.6. Distinguish between procedures and methods.

Q.7. Distinguish between policies and rules.                                      2016

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.