CBSE Class 12 Business Studies Planning Worksheet Set A

KEY CONCEPTS IN NUTSHELL

Meaning - It is the process of setting objectives and targets for a given time period and formulating an action plan to achieve them effectively and efficiently. It concerns itself with both ends and means that is what is to be done and how it is to be done. 

Definition -
“Planning seeks to bridge the gap between where we are and where we want to go.
Planning is a trap to capture the future.

Features -
i) It is the primary function of management - Every manager has to plan prior to performing any managerial function.
ii) It focuses on achievement of objectives - It is goal oriented and the primary objective being accomplishment of organizational goal.
iii) It is futuristic i.e. forward looking.- Planning aims at looking into the future analyzing and predicting it, so as to use it to the best advantage of the firm.
iv) It is all pervasive- existing at all levels of management and in all departments of the organization.
v) It involves decision making- choice of the best alternative through proper and careful analysis of the various alternatives and arriving at the best option.
vi) Planning is a continuous process- where one ends at the end of a specified time there is a need for yet another plan.
vii) It is a mental exercise- requiring creative thinking, imagination, foresight and sound judgment.

Importance of planning.
i) Provides direction- By stating in advance the future course of action of what is to be done and how it is to be done. By stating in advance it facilitates unity of direction.
ii) Reduces the risk of uncertainty- By predicting future events and preparing the organization to anticipate the future and face unexpected events.
iii) Facilitates decision making-planning helps the manager to look into the future and make a sound judgment or choice from among the various alternatives.
Present Position
Here we are
Planning
Bridges this gap
Future position
Where we want
to go
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iv) Reduces overlapping and wasteful activities-Through elimination and minimization of useless and redundant activities facilitating clarity.
v) Promotes innovative ideas- Through better new methods, ideas and procedures to reach the objectives and goals of the enterprise. It induces the management to predict the changes in the environment and accordingly plan the strategies for the same .
vi. Establishes standard for controlling- “control is blind without planning”. It helps provide standard against which the actual performance are compared and evaluated to estimate the deviations.

Limitations of planning:
i. Planning does not work in a dynamic environment - Planning also has to work amidst the influence of external environment which can render even the most effective plan inoperative.
ii. Planning is a time consuming process as it requires collection of information, its analysis and interpretation. It becomes a difficult exercise in times of unexpected emergencies.
iii. It involves huge cost in its formulation. As a lot of money needs to be expended in the collection, analysis and interpretation of data
iv. It creates rigidity in the mode of functioning. As the employees are required to function as per the dictates of the predetermined policy.
v. It does not guarantee success, as a wrong or a misconceived plan or a well drawn lan when not implemented can lead to failure.
vi. It reduces creativity as the middle level managers and the other decision makers ave to only follow and are not allowed to deviate from the plans.
vii. The human element can give way to errors or mistakes through wrong assumptions.
viii. It is prone to external influences which can reduce its impact like natural calamity, echnology changes, policy changes, competition. 

Steps in planning process
i. etting up objectives: The process begins with identifying and setting up of objectives. It determines where to reach. The organizational objectives arrived at should be measurable, understandable, clear and attainable.
ii. eveloping planning premises - Premises involve making assumptions relating to uture conditions. It provides relevant facts and information relating to future conditions. Hence sound estimates or forecast need to be made.
iii. dentifying alternative course of action : The planner now arrives at the various lternatives for performance of a task and evaluate the probable consequence of ach option.
iv. valuating the alternative course - The positive and negative impact of each option light of cost, risk and benefits is worked out.
v. electing the best alternative - This is actually the stage of decision making where the most suitable course of action is selected .The selected alternative is obviously the one which is most feasible, profitable and has least negative impact.
vi. mplementing the plan : The plan is transformed into action by activating the other anagerial function involving organizing various resources and securing cooperation and participation of other members of the organization.
vii. ollow up plan : This final culminating step involves reviewing the existing plan for its relevance and effectiveness. 

Types of planning

1) Objectives - Are the ends which the management seeks to achieve by its operation.
• Represent the end point of management.
• Set by top management.
• Defines the future state of affairs.
• Guides the overall business planning.
• Can be expressed in specific terms.

2) Strategy - Provides broad shape of organization‟s business. Refers to the future decisions defining the organization‟s directions and scope in the long run.
• It involves a comprehensive plan which covers the determination of long term objectives, adoption of a particular course of action and allocation of resources.

3) Policies - are general statements which guide thinking in decision making.
• They are based on objectives.
• They guide managerial action and decisions.
• They exist at all levels and departments of the organization.

4) Procedures - Are a chronological sequence of routine steps on how to carry an activity.
They detail the exact manner in which the work is to be performed.
• It is meant for the insiders to follow.
• Policies and procedures are interlinked.

5) Rules - Are specific statements that inform what is to be done.
• Reflects managerial decision.
• Simplest plan.
• They are to be enforced rigidly.

6) Methods - Are standardized ways or manners in which a task has to be performed considering the objectives.
• Selection of a proper method saves time, money and effort.

7) Programmes - Detailed statements which are combination of goals, policies, procedures, rules tasks, human and physical resources required and the budget to implement any course of action.. All these plans together form a programme.

8) Budget - Is a statement of expected results expressed in numerical terms for a definite period of time in the future.
• It quantifies future facts and figures.
• Serves as a standard for measuring actual performance.
• It is prepared for various groups of activities. 

Question. What is meant by 'Planning? 
Answer:  It refers to thinking before hand.

Question. State any two points of the importance of planning. 
Answer: (a) It provides direction.
(b) It reduces risks of uncertainty.

Question. State first two steps in the process of planning. 
Answer: (a) Setting objectives
(b) Developing premises.

Question. Define ‘Planning premises'. 
Answer: It refers to make certain assumptions about the future.

Question. Give the meaning of 'Policy' as a type of plan.
Answer: Policy is a general guideline which brings uniformity in decision making for achievement of pre- determined objectives.

Question. What is Planning?
Answer: Planning is deciding in advance as to what needs to be done in future.

Question. Which function of management bridges the gap between where we are and where we want to go to ?
Answer: Planning.

Question. Name the primary function of management.
Answer: Planning.

Question. One of the functions of Management is considered as base' for all other functions.
Name that function.
Answer: Planning

Question. What all qualities are required for doing planning?
Answer: Intelligence, Imagination, Foresight, Sound Judgment.

Question. Name the feature of planning which says planning is a forward looking function?
Answer: Planning is futuristic.

SHORT ANSWER TYPE QUESTIONS

Question. 'Planning reduces creativity'. How?
Answer: Usually in an organisation, planning function is performed by the top management and the rest of the members are required to implement these plans. As a result, middle management and other members are neither allowed to deviate from plans nor are they granted authority to act on their own. Hence most of the initiative and creativity in them gets reduced.

Question. 'Planning does not guarantee success'. Comment.
Answer: An organisation is successful only when the plans are effectively drawn and implemented. A plan must be converted into action otherwise it becomes meaningless.
Generally, it is seen that managers are in the habit of depending on previously tried and tested successful plans. But this practice sometimes does not work and may actually lead to failure instead of success.

Question. Enumerate the steps involved in the planning process.
Answer: Steps of planning are as follows:
(i) Setting up of objectives
(ii) Developing premises.
(iii) Identifying alternative courses of action.
(iv) Evaluating alternative courses
(v) Selecting an alternative.
(vi) Implementation of plan.
(vii) Follow up

Question. What do you mean by objectives?
Answer: Objective can be defined as a position where the management wants to reach in the future. These are the ends which an organisation wants to achieve through its operations.
They are measurable in quantitative terms.
For example, one objective of an organisation may be to increase sales by 20% and return on investment by 10% in the forthcoming year.

Question. Explain the meaning of policies.
Answer: A policy can be defined as a general statement that provides guidelines for constructive thinking. They act as a guide to managerial actions and decisions in implementing the strategy. A well defined policy helps in solving the complex problems easily.
For example, an organisation may have a credit policy, pricing policy etc. on the basis of which objectives are decided and decisions are made.

Question. What is meant by procedures?
Answer: Procedures are routine steps framed to carry out activities. These are plans that determine the order of any work performance. Procedures are generally meant for insiders and define the chronological sequence of doing any work for attaining predetermined objectives.

Question. What do you mean by methods?
Answer: Methods are standard ways of doing planned jobs for attaining the objectives. They are more detailed than procedures. Methods are helpful in simplification, standardization and systematization of work. For doing different jobs, different methods can be adopted. For example, for imparting training to employees at different levels, different methods of training can be used viz for higher level lectures or seminars and for supervisory level on the job training can be used.

Question. What do you mean by rules?
Answer: Rules can be defined as statements that tell us what is to be done and what is not to be done. Deviations from rules are not permitted unless a policy decision is taken. They enforce rigidity and there is fine or penalty if they are not followed. For example, prohibition on sale of tobacco within certain radius of an educational institution is a rule to be followed by all.

Question. What do you mean by programmes?
Answer: Programmes are a solid combination of goals, policies, procedures, rules, tasks, assignments, steps to be taken, resources to be employed and other elements necessary to carry out a given course of action. Programmes interlink the objectives, policies and procedures. They work out even the minutest detail within broad policy framework of the organisation.

Question. What is meant by budget?
Answer: Budget is a plan in numerical terms which quantifies desired facts and figures. It is a statement of expected results expressed in quantitative terms. For example, a sales budget helps in forecasting the sales of a particular product in different areas during a particular month. Similarly, a budget may be prepared to show the number of workers required in factory at the time of packing the products.