CBSE Class 12 Business Studies Planning Worksheet Set C

Meaning – Planning means deciding in advance what is to be done, when is to be done, how is to be done and by whom is to be done. So that it is a process of thinking before doing. It bridges the gap between where we are standing and where we want to go.

Features of Planning

1. Planning Focuses on objectives – Every organization has its own objectives and every plan must contribute towards the accomplishment of these objectives.

2. Planning is the primary function of management – Planning is the first function of management. All other functions are performed to implement the plan.

3. Planning is pervasive – Planning is required at all levels of management, top management undertakes long range plans, middle management is concerned with departmental plans and the lower level management is related to short term plans.

4. Planning is continuous – Planning is an on-going process. Usually a plan is prepared for a specific period of time. At the end of the period a new plan is prepared in accordance with the requirement of future condition. E.g. Shortage in raw material in a month may lead to revise the plan for the next month.

5. Planning is futuristic – Planning is looking ahead and preparing for the future. Hence forecasting is the essence of planning. E.g. Keeping an umbrella in our bag with us foreseeing the chance of rain.

6. Planning involves decision making – If there are various alternatives to achieve an objective, then we have to select the best one (decision making) only after proper analysis. E.g. If a company has three suppliers for the same raw materials, they have to select only the best one by analyzing all the facts such as price, promptness, quality etc.

7. Planning is a mental exercise – Planning is an intellectual process which involves foresight, imagination and judgment.

Importance of Planning

1. Planning provides direction - Planning provides direction for action. This ensures effective implementation of plans and direction of effort towards attainment of objectives. If you don't know where you are going, no road will take you there.

2. Planning reduces uncertainty - Planning enables an organization to cope up with uncertainty and change. With the help of planning, an enterprise can predict future events and make due provisions for them.

3. Planning reduces overlapping and wasteful activities - Planning co-ordinates the activities of individuals and departments in an orderly manner, which will help to avoid wasteful activities.

4. Planning promotes innovation and creativity - Planning is a process of thinking in advance; there is a scope for finding better methods for productivity. This makes the managers innovative and creative.

5. Planning facilitates decision making - Planning helps in decision making by selecting the best alternative among the various alternatives.

6. Planning establishes standards for control - Plans serve as standards for evaluation of performance. It will help to ensure proper control by comparing the actual performance with the standard performance.

Limitations of Planning

1. Rigidity (inflexibility) – Planning restricts the individual skill, initiative and creativity, because employees are required to work strictly in accordance with the plans.

2. Planning may not work in dynamic environment – The scope for planning is limited up to a certain extent especially in the organizations having rapid changing situations e.g. Fashionable products.

3. Planning reduces creativity – Managers at middle and lower levels are just implementing the plans formulated by the top management, thus it reduces the creativity among them.

4. Huge Cost – Planning is a very expensive and time consuming process which involves the collection of data, analysis, interpretation etc. Hence it is not suitable for quick decisions as well as for small concerns.

5. Time consuming – Sometimes plans to be drawn up take so much time, but there is no much time left for their implementation.

6. Does not guarantee success – Planning may create a false sense of security in the organization that everything is going smooth; it affects independent thinking and creativity of managers.

Planning Process (Steps in Planning)
1. S- Setting Objectives
2. P-Developing Premises
3. I-Identifying alternative courses of Action
4. C-Evaluating alternative Courses
5. S-Selecting an Alternative
6. I-Implementing the Plan
7. F-Follow-up Action

STEPS IN PLANNING

1. Setting the objectives – The first step in planning is the establishment of objectives. The objectives must be clear and specific. The objective of the entire organization is laid down first, and then it is broken down into departments and individuals. E.g. Rs.10000 profit is the objective for this month, then it is divided as how many units may be produced by production department, how many units may be sold by sales department etc.

2. Develop Planning Premises – Planning is done for the future which is uncertain, certain assumptions are made about the future environment. These assumptions are known as planning premises. E.g. A business is anticipating increase in the sales of computers assuming that sales tax on computers will be decreased by the government.

3. Identifying alternatives – There are alternative ways for achieving the same goal. For example, to increase sales, different ways are there, like advertisement, reducing prices, improve quality etc.

4. Evaluating alternatives – The positive and negative aspects of each alternative should be evaluated based on their feasibility and consequences.

5. Selecting the best alternative – After analyzing the merits and demerits of each alternative, the most appropriate one is to be selected by evaluating cost, risk, benefit to organization etc.

6. Implementation of plans – Implementation means putting plans into action to achieve the objective. For the successful implementation, the plans are to be communicated to the lower levels at every stage.

7. Follow Up – Plans are to be evaluated regularly to check whether they are proceeding in right way, shortfalls can be located and remedial actions can be taken well in advance.

Plans: - Plans is a document that outlines how goals are going to be met. It is a specific action proposed to help the organization to achieve its objectives.

(i) Single use plan:- These are one time use plan. These are designed to achieve a particular goal that once achieved will not reoccur in future.

(ii) Standing plan:- These plans are also known as Repeat Use Plans. These plans focus on situations which occur repeatedly.

Types of plan

a) Objectives: Objectives are the ends which the management seeks to achieve by its operations. They are the end result of every activity.

b) Strategy: It is a comprehensive plan to achieve the organizational objectives.

c) Policy: Policies are general statements that guide thinking or channelise energies towards a particular direction

d) Procedures: Procedures are required steps established in advance to handle future conditions.

e) Rules: Rules are specific statements that inform what is to be done. They do not allow for any flexibility or discretion .Rules are norms regarding actions and non-actions of employees.

f) Programme: Programmes are detailed statements about a project which outlines the objectives, policies, procedures, rules, tasks, human and physical resources required and the budget to implement any course of action.

g) Methods: Methods are formalized way of doing routine and repetitive jobs.

h) Budgets: It is the statement of expected result expressed in numerical terms.

MCQs for NCERT Class 12 Business Studies Planning 

Question. Planning is a process:
(a) Periodic
(b) Continuous
(c) Casual
(d) Annual

Answer :  B

Question. It is not the feature of budget:
(a) Budget creates illusion
(b) Budget is an element of planning
(c) Budget relates to planning and control
(d) Budgets are object oriented

Answer :  A

Question. Planning is helpful in increasing ________ .
(a) Cost
(b) Loss
(c) Efficiency
(d) None of these

Answer :  C

Question. Planning means
(a) arrange the resources
(b) think in advance
(c) appoint the right person
(d) monitor the activity

Answer : B

Question. Identify the type of plan which has least flexibility.
(a) strategy
(b) Rules
(c)  policy
(d) objective

Answer :  B

Question. Star Ltd..is a garment manufacturing co.Theco.regularly scan business environment and constantly adapts itself to change in environment.with all these efforts also it became difficult for company to foresee future trends, competition in the market effects the financial plan of theco.identify limitation of planning.
(a) leads to rigidity
(b) may not work in dynamic environment
(c) reduces creativity
(d) huge cost

Answer :  A

Question. Planning is the function of the
(a) Manager
(b) Accountant
(c) Organization
(d) Government

Answer A

Question. Which is a type of plan:
(a) Organizing
(b) Budget
(c) Directing
(d) Fiscal budget

Answer B

Question. A Planning is an activity which is done by which level of management?
(a)Top level
(b) lower level
(c) Middle level
(d) Operational 

Answer: A 

Question. Planning is a time-consuming process.
(a)Benefit
(b) Merit
(c)Importance
(d) limitation 

Answer: D

Question. Organisations own customised way of handling problems or taking decisions is called
(a) Strategy
(b) Policy
(c) Budget
(d) Rule

Answer :  B

Question. Planning is the
(a) Primary/First function of manager
(b) Last function of manager
(c) Both (a) and (b)
(d) None of the above

Answer :  B

Question. Making assumptions for future is called
(a) Making derivative plans
(b) Making policy
(c) Setting planning premises
(d) All of the above

Answer :  A

Question. Single use plan
(a) Used only once
(b) Used for one single department
(c) Used by single individual
(d) All of the above

Answer :  A

Question. Standardised way in which a task has to be performed is called
(a) Policy
(b) Procedure
(c) Strategy
(d) Method

Answer :  C

Question. Planning is performed at
(a) Top Level
(b) Middle Level
(c) Supervising Level
(d) All Level

Answer :  B

Question. The sequence of steps or actions to be taken to enforce a policy and attain predetermined objectives is called
(a) Objective
(b) Policy
(c) Procedure
(d) Strategy

Answer :  A

Question. End Results towards which all the activities are directed is called
(a) Policy
(b) Strategy
(c) Objective
(d) Programme

Answer :  C

Question. ________ is the base of Planning.
(a) Organising
(b) Controlling
(c) Forecasting
(d) Directing

Answer :  C

Question. Planning is the ________ function of management.
(a) First
(b) Second
(c) Third
(d) Fourth

Answer :  A

Question. Making assumptions for future is called
(a) Making derivative plans
(b) Making policy
(c) Setting planning premises
(d) All of the above

Answer :  C

Question. Planning is the
(a) Primary/First function of manager
(b) Last function of manager
(c) Both (a) and (b)
(d) None of the above

Answer :  A

Question. Planning is ________
(a) Flexible
(b) Stable
(c) Rigid
(d) None of these

Answer :  C

Question. Making assumptions for future is called
(a) Making derivative plans
(b) Making policy
(c) Setting planning premises
(d) All of the above

Answer :  C

Important for NCERT Class 12 Business Studies Planning 

Very Short Answer Type Questions :

Question. State any three features of planning.
Answer : The three features of planning are described below:
1. Planning is pervasive:
2. Planning involves decision-making:
3 Planning is a primary function:

Question. Define planning.
Answer : Planning refers to thinking in advance what to do, how to do, when to do. and whom to do it.

Question. Define strategy.
Answer : A strategy is a comprehensive plan to achieve the organizational objectives.

Question. State any three points of importance of planning function of management. 
Answer : The three points indicating the importance of planning is described below:
1. Reduces the risk of uncertainty:
2. Planning promotes innovative ideas:
3. Avoiding overlapping and wasteful activities:

Question. Planning function of management is conducted at which level of management.
Answer : At all the three levels

Question. State any three limitation of planning.
Answer : The three limitations of planning are described below:
1. Planning may not work in a dynamic environment:
2. Planning reduces creativity:
3. Planning involves huge costs:

Question. Write one difference between Policies & Procedure.
Answer : Policy are organization own way of tackling the problem whereas procedure are step by step way of doing a job.

Question. “No Smoking in the work shop” This statement is related to which types of plan.
Answer : Rules

Question. Planning function of management is conducted at which level of management. 
Answer: At all the three levels

Question. “Planning is mental exercise “how? 
Answer: Planning is a mental exercise:
i) it requires application of the mind involving foresight, intelligent imagination and sound judgement
ii) it is basically an intellectual activity of thinking rather than doing, because planning determines the action to be taken
iii) planning requires logical and systematic thinking rather than guess work.

Question. Explain briefly importance of planning.
Answer: 

Question. Explain the limitations of Planning. 
Answer: 

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. It is deciding in advance what to do and how to do. It is one of the basic managerial functions. It requires that before doing something, the manager must formulate an idea of how to work on a particular task. This function is closely connected with creativity and innovation. It seeks to bridge the gap between where we are and where we want to go and is performed at all levels of management. Inspite of this the function of management referred above has a number of limitations. Explain any two such limitations.
Answer: Limitations of planning:-
a) leads to rigidity
b) may not work in dynamic environment
c) reduces creativity
d) time consuming process

Short Answer Type Questions :

Question. Josh Ltd. is a one of the largest two-wheeler manufacturer in India. It has a market share of about 42% in the two-wheeler category. The company had witnessed almost a 35% drop in the booking as the currency crunch was prompting people to withhold new purchases due to demonetisation. Therefore, the production manager of the company had decided to align production to factor in slower sales in the market. In context of the above case: 1. Identify and explain the function of management being discussed in the above lines. 2. Which limitations of the function of management as identified in part (a) of the question was the production manager trying to overcome due to demonetisation?
Answer: 1. Planning is the function of management which is being discussed in the above lines. Planning is deciding in advance what to do, how to do, when to do and who has to do it. Thus, it involves setting objectives and developing an appropriate course of action to achieve these objectives.
2. The production manager is trying to overcome the following limitations of planning:
♦ Rigidity
♦ Planning may not work in dynamic environment

Question. Arush joins as a sales manager of a company dealing in naturotherapy products. Being proficient in his work, he knew that without good planning he will not be able to organise, direct, control or perform any of the other managerial functions efficiently and effectively. Only on the basis of sales forecasting, he would assist in the preparation of the annual plans for its production and sales. Besides, he will have to prepare sales plans regularly on weekly, monthly, quarterly and half yearly basis. While preparing the sales forecasts, he undertakes intellectual thinking involving foresight, visualization and issued judgement rather than wishful thinking or guess work. Most importantly, all these planning activities will be meaningful only if they will coincide with the purpose fob which the business is being carried out. In context of the above case, identify the various features of planning highlighted in the above paragraph by quoting lines from it.
Answer:  The features of planning highlighted in the above paragraph are explained below:
1. Planning is a primary function: “… without good planning he will not be able to organise, direct, control or perform any of the other managerial functions efficiently and effectively. “
2. Planning is futuristic: “Only on the basis of sales forecasting, he would assist in the preparation of the annual plans for its production and sales.”
3. Planning is continuous: “Besides, he will have to prepare sales plans regularly on weekly, monthly, quarterly and half yearly basis.”
4. Planning is a mental exercise: “While preparing the sales forecasts, he undertakes intellectual thinking involving foresight, visualisation and issued judgement rather than wishful thinking or guess work.”
5. Planning focuses on achieving objectives: “Most importantly, all these planning activities will be meaningful only if they will coincide with the purpose for which the business is being carried out.”

Question. What do you mean by Planning?
Answer:  Planning is setting objectives for a given time period, formulating or identifying various courses of action to achieve them, and then selecting the best possible alternative from among the various courses of action available.
Other important points to bear in mind:
♦ Planning is deciding in advance what to do and how to do.
♦ It is one of the basic managerial functions.
♦ Planning is closely connected with creativity and innovation.
♦ Planning seeks to bridge the gap between where we are and where we want to go.
♦ Planning is what managers at all levels do.
♦ It requires taking decisions since it involves making a choice from alternative courses of action.
♦ Objectives provide direction for all managerial decisions and actions.
♦ The plan that is developed has to have a given time frame but time is a limited resource. It needs to be utilised judiciously. If time factor is not taken into consideration, conditions in the environment may change and all business plans may go waste.

Question. “Planning is an important function of management”. State any six reasons in favour of the statement.
Answer: The major benefits of planning are given below:
(i) Planning provides directions:
(ii) Planning reduces the risks of uncertainty:
(iii) Planning reduces overlapping and wasteful activities:
(iv) Planning promotes innovative ideas:
(v) Planning facilitates decision making:
(vi) Planning establishes standards for controlling:

Question. After completing a diploma in Bakery and Patisserie, Julie sets up a small outlet at Goa Airport to provide a healthy food option to the travellers. To begin with, she has decided to sell five types of patties, three types of pizzas and low sugar muffins in four flavours. Thus, by deciding in advance what to do and how to do, she is able to reduce the risk of uncertainty and avoid overlapping and wasteful activities. But sometimes her planning does not work due to some unavoidable circumstances like cancellation of flights due to bad weather conditions, government alert etc. which adversely affects her business.
In context of the above case:
1. Identify and explain the points highlighting the importance of planning mentioned in the above paragraph.
2. Describe briefly the limitation of planning which adversely affects Julie’s business
Answer: 1. The points highlighting the importance of planning mentioned in the above paragraph are described below:
♦ Reduces the risk of uncertainty:
♦ Avoiding overlapping and wasteful activities:
2. 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 organisation 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 utmost accuracy. Hence, even with planning, everything cannot be foreseen.

Question. Suhasini, a home science graduate from a reputed college, has recently done a cookery course. She wished to start her own venture with a goal to provide ‘health food’ at reasonable prices. She discussed her idea with her teacher (mentor) who encouraged her. After analysing various options for starting her business venture, they short listed the option to sell ready made and ‘ready to make’ vegetable shakes and sattu milk shakes. Then, they weighed the pros and cons of both the short listed options.
1. Name the function of management being discussed above and give any one of its characteristics.
2. Also briefly discuss any three limitations of the function discussed in the case. 
Answer: 1. Planning is the function of management which is being discussed above. Planning involves decision-making: Planning essentially involves application of rational thinking to choose the best alternative among the various available alternatives in order to achieve the desired goals efficiently and effectively.
2. The limitations of planning are described below:
♦ Planning may not work in a dynamic environment:
♦ Planning reduces creativity:
♦ Planning involves huge costs:

Question. ‘Agile Ltd.’ is a well-known automobile manufacturing company in India. The company plans to increase the sale of its sedan cars by 20% in the next quarter. In order to achieve the desired target, the marketing team of the company considers the impact of policy of the government towards diesel vehicles and the level of competition in this segment of cars. They explore the various available options like offering more discount to dealers and customers, providing more customer friendly finance options, lucky draws on test drives, increasing advertising, offering more of free accessories on the purchase of the car, etc. A thorough analysis of the various available options is done keeping in view the relative viability of each option. The company decides to pursue the option of offering more discount to dealers and customers in order to boost the sale of sedan cars. In order to implement the plan, they determine the various discount packages and communicate the same to their product dealers. To make the prospective consumers aware about the new available
benefits, advertisements are made through various sources of print and electronic media. The market analysts of the company keep a close watch on the revenue from the sedan cars to study the effect of new initiatives by the company to promote its sales.
In context of the above case:
1. Name the function of management described in the above paragraph.
2. Identify and explain the various steps involved in process the function of management as identified in part (a) by quoting lines from the paragraph.
Answer: 1. Planning is the function of management which is being described in the above paragraph.
2. The various steps involved in the planning process are explained below:
♦ Setting objectives: “The company plans to increase the sale of its sedan cars by 20% in next quarter.”
♦ Developing Premises: “In order to achieve the desired target the marketing team of the company considers the impact of policy of the government towards diesel vehicles and level of competition in this segment of cars.” .
♦ Identifying alternative courses of action: “They explore the various available options like offering more discount to dealers and customers, providing more customer friendly finance options, lucky draws on test drives, increasing advertising, offering more of free accessories on the purchase of the car, etc.”
♦ Evaluating alternative courses: “A thorough analysis of the various available options is done keeping in view the relative viability of each option.”
♦ Selecting an alternative: “The company decides to pursue the option of offering more discount to dealers and customers in order to boost the sale of sedan cars.”
♦ Implement the plan: “In order to implement the plan, they determine the various discount packages and communicate the same to their product dealers. To make the prospective consumers aware about the new available benefits, advertisements are made through various sources of print and electronic media.”
♦ Follow up action: “The market analysts of the company keep a close watch on the revenue from the sedan cars to study the effect of new initiatives by the company to promote its sales.”

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