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Class 12 Business Study Chapter 4 Planning
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PART – A
VERY SHORT TYPE QUESTIONS ANSWERS (1 MARK EACH)
1. What are the different types of plan ?
Ans: The different types of plans are:
2. What is planning process ?
Ans: Planning process involves the setting up of business objectives and allocation of resources for achieving them. Planning determines the future course of action for utilising various resources in a best possible way.
3. Planning is time consuming process. Comment.
Ans: Planning is a lengthy process which might lead to delay in action. It consumes a lot of time in defining objectives, collection of data, analysis of data and choice of alternatives. It may not be feasible to undergo this process when the situation demands quick decision.
4. Planning does not give guarantee of success. (Correct/incorrect)
Ans: Correct, because planning in itself does not guarantee success, it needs effective implementation. Effectiveness of planning depends upon the attitude and behaviour of the planners. Planning may sometimes create false sense of security among the planners.
5. Is there any limitations in planning ? Comment.
Ans: Yes, despite of many advantages of planning, there may be some obstacles and limitations in this process. Planning is not a panacea for all the ills of the business, it will only help in minimising uncertainties to a certain extent. Some of the limitations in planning are:
(a) Lack of reliable data.
(b) Time consuming process
(c) Very costly/expensive
(d) External factors may reduce utility.
6. Which type of planning determines what to do ?
Ans: Rules determine what to do or what not to do.
7. Why the planning does not involve in controlling activities ?
Ans: Planning is the first function of management and which is done on the basis of forecasting. It does not depend on control.
8. What do you know about the meaning of planning ?
Ans: Planning is a basic managerial function. It helps in determining the course of action to be followed for achieving business goals. Planning is a decision in advance. What to do, when to do, how to do and who will do a particular task. It is a process which involves thinking before doing.
9. Planning reduces the risk of uncertainty. [correct/incorrect]
Ans: It is correct that planning reduces the risk of uncertainties because planning involves forecasting and anticipation of future events.
10. How does planning provide directions ?
Ans: Planning provide direction towards enterprise objectives. It the objectives are clearly laid down all the business plans will be specifically directed towards the objectives. Thus, planning provides clear cut direction for all the departments and individuals working in the enterprise.
11. What is programming in planning ?
Ans: Programming is a sequence of activities designed to implement policies and accomplish objectives. It is a devised to meet a particular situation. Programme may be taken as a combination of policies, procedures, rules, budgets etc. developed for the specific purpose of carrying out a particular course of action.
12. Why is planning known as “Futuristic” ?
Ans: Planning is futuristic because it is carried out to achieve some objectives in future. It involves forecasting of future events such as customers demand, competition etc.
13. At which level of management is planning function of management conducted ?
Ans: Top level of management.
14. How can the happening of ‘overlapping and wasteful activities’ be reduced ?
Ans: Effective planning lays down various courses of action which are useful in the accomplishment of objectives. The chances of wasteful overlapping and activities would be reduced to a great extent.
15. “No Smoking in the Factory”. To which type of plans this statement is related ?
16. Which function of management is considered as the base of all other functions ?
17. Give an example of goal.
Ans: Increasing of sales by 10% during the next month.
18. What is a budget ?
Ans: Same as Q.No 35.
19. Give any one external limitation of planning.
Ans: Natural calamities are beyond the control of management.
B. SHORT TYPE QUESTIONS ANSWERS TYPE-I (3 MARKS EACH)
20. Give three differences between policy and procedure with the help of an example.
|(i) Policies are guides to the decision- making.||(i) Procedures are guides to action.|
|(ii) Policies are guiding principles which guide action usually of routine and repetitive nature.||(ii) Procedures are definite and fixed steps to perform some kinds of work.|
|(iii) Policies are flexible in their interpretation||(iii) Procedures are less flexible.|
21. Explain ‘method’, ‘rule’ and ‘strategy’ as types of plan.
Ans: Method: Every procedure consists of certain method to accomplish each phase of work. A methods is a manual or mechanical way by which each operation is performed.
Rule ― Same as Q.No 26.
Strategy ― Same as Q.No 28.
22. Planning is a continuous process. Illustrate the statement.
Ans: Planning is a continuous process because every manager is engaged in planning continuously. The old plans have to be revised and new ones to be introduced depending upon the needs of the situation. Thus, planning is a continuous process of making new plans and modifying existing plans to ensure that goals are achieved.
23. Write three major benefits of planning.
Ans :The three major benefits/advantages of planning are given below:
(i) Attention on objectives: Planning helps in clearly laying down objectives of the organisation. Planning is directed towards enterprise objectives. If the objectives are clearly laid down, all the business plans will be specifically directed towards the objectives.
(ii) Better utilisation of resources: Another advantage of planning is the better utilisation of resources of the business. All the resources are first identified and then operations are planned. All resources are put to best possible uses.
(iii) Better coordination: The objectives of the organisation being common, all efforts are made to achieve these objectives by a concerned effort of all. The duplication in efforts is avoided. Planning will lead to better coordination in the organisation which will ultimately lead to better results.
24. Are there any limitations of planning ? Explain in brief.
Ans: Yes, in spite of having many advantages, there are some limitations in the planning process.
(i) Depends on forecasting: It is based one the anticipated fiscal and industrial policies. Any changes in the policies make planning ineffective.
(ii) Expensive process: Planning involves a lot of expenses. The expenses on planning should never exceed the estimated benefits from planning.
(iii) Time consuming device: Planning process consumes a lot of time from the collection of data to the suggestion of the best alternatives.
(iv) Lack of reliable data: Planning will lose its value if reliable facts and figures are not supplied.
(v) Incompetent planners: If the planners who are entrusted with the task of planning are incompetent, the entire plan will prove to be defective.
25. Do you think planning can work in a changing environment ?
Ans: I think planning cannot work in a changing environment because, planning is made in advance for future course of activity, where future is unseen and unknown. So, if any change will take place in future then the planning cannot work as partneris and condition of its earlier. On the other hand, it becomes difficult to accurately assess future trends in the environment if economic policies are modified or political conditions in the country are not stable or there is a natural clarity. Moreover, there may be change from competitors market prices, technology, government budget and decisions. Therefore, planning cannot foresee everything and thus there may be obstacles to effective planning.
26. Why are rules considered to be planned ?
Ans: A rule is a plan that lays down a required course of action with regard to a situation. Rules are specific regulations which must be followed by the employees an organisation. Rules serve as a boundaries of behaviour. They are specific statements telling the employees what must or must not be done. Rules generally refer to the administrative area of the procedures. They are to be enforced rigidly and there is generally a fine or penalty if they are not adhered to. Sometimes, rules are not related to any procedure, as for instance, “No smoking. So, it is very important that rules should be planned.
27. What are the objectives of a plan ?
Ans: Objectives are the ends towards which the activities of an enterprise are directed. They provide direction to various activities of the enterprise. They depict a future state of affairs which an organisation strives to realise. They lay down guidelines for various activities and constitute a source of legitimacy which justifies the various activities of the organisation and also its very existence. Objectives serve as bench marks for measuring the performance of various people working in the organisation and the overall effectiveness of the organisation.
28. What is strategy in planning ?
Ans: Strategy refers to firm’s overall plan for dealing with and existing in its environment. Strategies are plans made in the light of the plans of the competitors because the modern business enterprise operates in a competitive environment. For instance, a company may follow a number of strategies like charging a lower price for its products, using more sales force than competitors, advertising more heavily than competitors. Thus, strategies are a useful framework for guiding an enterprise’s thinking and action.
29. What policy would you take into consideration while preparing planning ?
Ans: Policies are the guiding principles which govern action usually of routine and repetitive nature. They are general statements which guide thinking and action of the organisational members. A policy gives a guidelines and leaves scope for interpretation for the person implementing them. This means that a policy has the flexibility for interpretation. A rigid policy becomes a rule. For instance, different business firms may follow different sale policies as stated below:
“We don’t sell on credit.”
“It is our policy to deal with wholesalers only.” “We extend credit only to those customers who furnish us with requisite bank guarantee.”
30. What is procedure in planning ?
Ans: Procedure is a systematic way of handling regular events. It lan down a series of steps to be taken to do a particular work. Accordi to G R. Terry, “A procedure is a series of related task that mat up the chronological sequence and established way of performit the work to be accomplished.’ It gives detail of steps to undertaken for handling recurring business events. Procedure involve planned sequence of operations for handling recurring business operations uniformly and consistently.
31. What is planning premises ?
Ans: Planning premises are the assumptions about the likely shape events in the future. They serve as the basis of planning. In ord to make effective plans, it is essential that the planning premis are based on systematic forecasting. Assessment of future demand taste of consumers, competition in the market etc. can be mal with the help of forecasting. Planning premises may be intern and external. Internal premises include the sales forecast, the policy and programmes of the organisation, capital investment policy etc. The external premises, on the other hand, are derived from th external environment of the business.
32. What are the important ingredients of planning ?
Ans: The important ingredients of planning are given below:
(i) Objectives: Objectives are statement of results to be achieved in particular areas of business during a specified period of time. The provide a sense of direction to the business activities.
(ii) Strategy: A strategy is a plan of action to achieve specified business goals in the competitive environment. Strategies are plat made in the light of the plans of the competitors.
(iii) Policies: Policies are the guiding principles which govern actio usually or routine and repetitive nature. They are general statements which guide thinking and action of the organisational members.
(iv) Procedures: A procedure is a series of related tasks organised in a sequence to perform an activity such as admission procedure in a school, bus pass procedure etc.
(v) Rules: Rules are specific regulations which must be followed by the employees in an organisation. Rules serve as boundaries of behaviour. Eg. ― no smoking within the factory premises.
3. How would you implement a plan ?
Ans: After choosing a particular plan, it is put into practice by the formulation of derivative plans such as policies, procedures, schedules etc. The last step in planning process is the implementation part. The planning should be put into action so that business objectives may be achieved. The implementation will require establishment of policies, procedures, budgets etc. These tools will enable a better implementation of plans,
34. Why alternatives are chosen in selecting a plan ?
Ans: There are number of ways of doing a thing. The planner should study all the alternatives and then a final selection should be made. Best result will be achieved only when best way of doing a work is selected. Various techniques of decision-making are applied to choose a particular course of action. This may lead to the conclusion that no single alternative course of action is optimum. So the management may decide to select two or more alternative and combine them to have the most feasible plan for the enterprise.
35. What is budget in planning ?
Ans: Budget is a single use plan since it is prepared for a particular period of time. A budget is a statement of expected results expressed in quantitative terms. It provides a standard by which actual operations can be measured and by which variations can be checked. But it should not be forgotten that making a budget is clearly planning. It makes in advance a numerical compilation of expected cash flow, expenses and revenues, capital outlays etc.
36. Explain ‘objective’ and ‘policy’ as types of plans using suitable examples.
Ans: Same as Q.No 38.
C. LONG TYPE QUESTIONS ANSWERS TYPE-1 (5 MARKS EACH)
37. What are the process of planning ?
Ans: Following steps are involved in the process of planning:
(i) Setting objectives: The first step in the planning process is the establishment of objectives. It is essential that objectives should be properly formulated and communicated to all members of the organisation.
(ii) Determining planning premises: Planning premises are the assumption on the basis of which the planning is made. In order to make planning effective it is essential that the planning premises are based on systematic forecasting. action: There are many way
(iii) Identifying alternative courses of action: there are many way for performing an activity, but all alternatives are not equally benefited, so considering type, size, nature etc. factors of the organisation, a suitable alternative to be selected.
(iv) Evaluating alternative: It implies the process of identifying advantages as well as disadvantages of each and every alternative separately and independently.
(v) Selecting best alternatives: After evaluating all alternative, it will be easy to select best alternative as per desire of the organisational climate.
(vi) Implement the plan: In this step, the plan can be executed in practical field. It implies the process of putting the plan into action.
(vii) Follow up action: In this stage, they examine whether the activities of the organisation are progressing as per expectation of planning or not. If it is not happened so then they identify the errors and mistakes.
38. What are methods of planning ?
Ans: After setting the objectives, a manager prepares plan for achieving them. The goals are translated into plans. There are a variety of plans in every enterprise.
The methods of planning are given below:
(i) Objectives: Objectives are statement of results to be achieved in particular areas of business during a specified period of time. They provide a sense of direction to the business activities.
(ii) Strategy: A strategy is a plan of action to achieve specified business goals in the competitive environment. Strategies are plans made in the light of the plans of the competitors.
(iii) Policies: Policies are the guiding principles which govern action usually or routine and repetitive nature. They are general statements which guide thinking and action of the organisational members.
(iv) Procedures: A procedure is a series of related tasks organised in a sequence to perform an activity such as admission procedure in a school, bus pass procedure etc.
(v) Rules: Ruples are specific regulations which must be followed by the employees in an organisation. Rules serve as boundaries of behaviour. Eg.-no smoking within the factory premises.
(vi) Budget: Budget is a single use plan since it is prepared for a particular period of time. A budget is a statement of expected results expressed in quantitative terms. It provides a standard by which actual operations can be measured and by which variations can be checked. But it should not be forgotten that making a budget is clearly planning. It makes in advance a numerical compilation of expected cash flow, expenses and revenues, capital outlays etc.
(vi) Programmes: Programming is a sequence of activities designed to implement policies and accomplish objectives. It is a devised to meet a particular situation. Programme may be taken as a combination of policies, procedures, rules, budgets etc. developed for the specific purpose of carrying out a particular course of action.
39. What assumptions do you take into consideration while drafting a plan ?
Ans: Planning is always for uncertain future. Though nothing may be certain in the coming period but still certain assumptions will have to be made for formulating plans. A forecast means the assumption of future events.
The assumption that we should take into consideration while drafting a plan are listed below –
(i) The expectation of demand for the products.
(ii) The likely volume of production.
(iii) The anticipation of costs and the likely process at which products will be marketed.
(iv) The supply of labour, raw materials etc.
(v) The economic policies of the government.
(vi) The changing preferences of consumer preferences.
(vii) The impact of technological changes on production processes.
40. What kind of strategic decisions are taken by Business Organisation ?
Ans: Business organisations taken different strategic decisions.
(i) Strike while the iron is hot: This strategy suggest that the full advantage should be taken when the situation is favourable. Action. should be prompt to take advantage. A delayed action may not yield desired results.
(ii) Camel’s head in the tent: It may so happen that the plan is acceptable only to some persons and not to others. A favourable situation may be created by indirectly helping those who have favoured the plan. Once a sufficient number of persons start accepting the plan then it can be favourably implemented.
(ii) Strength in unity: In order to achieve desired results a departmental head may request others to unit so that combined efforts are made.
(iv) Divide and rule: This strategy suggests that division should be created among workers so that they are not able to put a collective pressure.
(v) One step ahead: A strategy may be to keep one step ahead of others. Those things may be done which the competitors have not yet thought of.
41. If planning involves working out of details for the future, why does it not ensure success ?
Ans: Planning involves working out details for the future. In Spite of this, planning does not ensure success, Because future is unseen and unknown, future itself is uncertain thing. Generally planning is prepare for future on the basis of past experience and present situation. But there is no guarantee at all the future will be continues as per the trend of past and present or as per expectation in the planning what is why, planning does not resume success at all time. Moreover, due to wrong implementation the planning may be unsuccessful.
D. LONG TYPE QUESTIONS ANSWERS TYPE II (6/8 MARKS EACH)
42. “Though planning is an important tool of management, yet it is not a remedy for all types of problem”. Do you agree with this statement ? Give any five reasons in support of your answer.
Ans: In practicé, planning may be ineffective because of the limitations discussed below:
(i) Rigidity or Limited Flexibility: Planning involves laying down plans of action in advance. It might lead to inflexibility or rigidity. Inflexibility in planning may prove to be costly for the organisation.
(ii) Discouragement of Creativity and Initiative: At times, planning leads to rigidity in the functioning of the organisation. This may prevent the managers from taking initiative and doing creative things to deal with the changes in the environment.
(iii) Dynamic Environment: In some cases, planning may not have any practical utility because of uncertainty in the environment. The managers can’t fully depend upon plans meant for stable environment. They have to adopt suitable measures or strategies to get the desired results in case of turbulent environment.
(iv) Time Consuming Process : Planning is a lengthy process which might lead to delay in action. It consumes a lot of time in defining objectives, collection of data, analysis of data and choice of alternatives. It may not be feasible to undergo this process when the situation demands quick decision.
(v) Costly Process: Planning is not only time consuming but expensive also. The cost of planning is directly proportionate to the time of the executives spent on planning. If sufficient time is not given to planning, the decisions taken by the management may prove to be unpracticable or wrong.
(vi) Inaccurate Forecasts: Planning is based on available information and forecasts of economic trends made by the managers. If forecasts are made on the basis of inaccurate information or the forecasting mechanism is defective, all the plans based on such forecasts will prove to be ineffective.
43. “Planning is not guarantee of business success.” Explain.
Ans: Same as Q.No 37
44. Why is that organization are not always able to accomplish all their objectives ?
Ans: Generally planning is responsible for setting the objectives the organisation and according planning tries to accomplish all their objectives. But practically, it is not possible always to accomplish all of the goal because of the following reasons –
(i) Planning leads to rigidity: Planning is a process of deciding in advance. So, ili predure, policy, rules are rigidly fixed in time of planning. Therether it is very difficult to change even to accomplish the goal.
(ii) Planning may not work in a dynamic environment: There is no surely, whether the planning will work in a dynamic environment. Changing is a common phenomena, so at any movement of time the business situation may change. But planning may not work in changing environment.
(iii) Huge Costs: Planning increase a huge amount of cost. So, from financial and monetary point of view organisation may fail to accomplish its financial goals a target such as profit, sales, production cost, product volume etc.
(iv) Time consuming: Preparation of planning tasks sufficient time, which is another barriers to accomplish the goal of the organisation, because every organisation is to perform its activities within a stimulate time and as per the opportunity available in the market.
(v) Planning reduces creativity: Under planning all terms and conditions, rules and procedures, policy and programmes have been fixed at the time of formulation. So, there is a little chance of applying various creativity by the employees.
45. What are the main features to be considered by the management while planning ?
Ans: Every planning function has its some own texture, which must be considered by management.
These features are discussed below:
(i) Planning an intellectual process: Planning deals with “thinking en before doing. It is a thinking process. It is an outcome of mental to exercise which involves imagination, foresightedness and sound judgement of manager. While planning, the following questions must be taken into consideration.
(a) What is to be done ?
(b) How is to be done ?
(c) When is to be done ?
(d) By whom should it be done ?
(ii) Primary function of management: Planning starts with objectives which are the basis of all the managerial functions. Management has to formulate plans at first and afterwards other functions.
(iii) Flexibility: The planning process should be flexible to meet the new challenges. The manager should able to change the plans,whenever necessary.
(iv) A continuous process: Planning begins when the organisation is established and ends with the winding up of the organisation. It continuous as long as the organisation continues to exist.
(v) Aims to efficiency: Plans are prepared to achieve the objectives in the best possible ways. Sound planning leads to accomplishment of desired objectives at the minimum possible cost.
(vi) Pervades all managerial activities: Every business activities require planning. Every department, viz. purchase, sales, accounts, marketing etc. needs systematic planning. All managers plan in the organisation.
46. What are the important steps taken by management in the planning process ?
Ans: See Answer to Question No. 37.
47. Does planning involve cost ? Explain in details.
Ans: The planning process is expensive. Collection of necessary information and testing of various concerns of action involves large amount of money. Sometimes expenses are so large that small concern cannot afford to use planning. The cost of planning should not be more than the utility derived from planning. But, in spite of occurring a huge amount of cost, planning is not costly or expensive in the sense that if it can be implemented properly for the highest profitability of the organisation. Because under planning all activities can be done in a systematic ways to increase productivity and efficiently to make it effective. On the other hand without plan, no organisation can give guarantee to run the organisation under careful control.
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