NCERT Class 12 Business Studies Chapter 4 Planning

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NCERT Class 12 Business Studies Chapter 4 Planning

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Planning

Chapter: 4

PART – Ⅰ  PRINCIPLES AND FUNCTIONS OF MANAGEMENT

EXERCISE

VERY SHORT ANSWER TYPE

1. How does planning provide direction?

Ans: By stating in advance how work is to be done planning provides direction for action. Planning ensures that the goals or objectives are clearly stated so that they act as a guide for deciding what action should be taken and in which direction. If goals are well defined, employees are aware of what the organisation has to do and what they must do to achieve those goals. 

2. A company wants to increase its market share from the present 10% to 25% to have a dominant position in the  market by the end of the next financial year. Ms Rajni, the sales manager has been asked to prepare a proposal that will outline the options available for achieving this objective. Her report included the following options: entering new markets, expanding the product range offered to customers, using sales promotion techniques such as giving rebates, discounts or increasing the budget for advertising activities. Which step of the planning process has been performed by Ms Rajni? 

Ans: Ms. Rajni has performed the “Identifying Alternative Courses of Action” step of the planning process.

3. Why are rules considered to be plans?

Ans: Rules are specific statements that inform what is to be done. They do not allow for any flexibility or discretion. It reflects a managerial decision that a certain action must or must not be taken. They are usually the simplest type of plans because there is no compromise or change unless a policy decision is taken.

4. Rama Stationery Mart has made a decision to make all the payments by e‑transfers only. Identify the type of plan adopted by Rama Stationery Mart. 

Ans: Rama Stationery Mart has adopted a “Policy” as the type of plan.

5. Can planning work in a changing environment? Give a reason to justify your answer.

Ans: Planning may not work in a changing environment. 

The business environment is dynamic and constantly evolving due to factors like technological advancements, market trends, government policies, and competition. Planning cannot foresee everything and thus, there may be obstacles to effective planning.

SHORT ANSWER TYPE

1. What are the main aspects in the definition of planning? 

Ans: 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. 

Planning, thus, involves setting objectives and developing appropriate courses of action to achieve these objectives. Objectives provide direction for all managerial decisions and actions. Planning provides a rational approach for achieving predetermined objectives.

2. If planning involves working out details for the future, why does it not ensure success? 

Ans: Planning does not ensure success because the future is uncertain and external factors can change unexpectedly. Managers have a tendency to rely on previously tried and tested successful plans. It is not always true that just because a plan has worked before it will work again.

3. What kind of strategic decisions are taken by business organisations? 

Ans: Strategies usually take the course of forming the organisation’s identity in the business environment. Major strategic decisions will include decisions like whether the organisation will continue to be in the same line of business, or combine new lines of activity with the existing business or seek to acquire a dominant position in the same market.

4. Planning reduces creativity. Critically comment. (Hint: both the points ‑ Planning promotes innovative ideas and planning reduces creativity – will be given). 

Ans: Planning is an activity which is done by the top management. Usually the rest of the members just implements these plans. 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. Thus, much of the initiative or creativity inherent in them also gets lost or reduced. Most of the time, employees do not even attempt to formulate plans. They only carry out orders. Thus, planning in a way reduces creativity since people tend to think along the same lines as others. There is nothing new or innovative.

5. In an attempt to cope with Reliance Jio’s onslaught in 2018, market leader Bharti Airtel has refreshed its Rs. 149 prepaid plan to offer 2 GB of 3G/4G data per day, twice the amount it offered earlier. Name the type of plan is highlighted in the given example.? State its three dimensions also. 

Ans: The type of plan highlighted in the given example is a “Strategy” plan.

This comprehensive plan will include three dimensions:

(i) Determining long term objectives.

(ii) Adopting a particular course of action. and

(iii) Allocating resources necessary to achieve the objective.

6. State the type of plan and state whether they are Single use or Standing plan: 

(a) A type of plan which serves as a controlling device as well. (budget)

Ans: Budget is a single-use plan as it is prepared for a specific period and outlines expected financial results in numerical terms. It serves as a key tool for financial planning and control.

(b) A plan based on research and analysis and is concerned with physical and technical tasks. (Method) 

Ans: Method is a standing plan that provides a standardized way of performing a task. It is based on research and analysis, ensuring efficiency and consistency in operations. Since different tasks may require different methods, they can vary accordingly.

LONG ANSWER TYPE

1. Why is it that organisations are not always able to accomplish all their objectives?

Ans: This is because of the various limitations of planning due to which the organizations would not be able to accomplish all of their objectives. It is important for an organisation to move towards achieving goals. But we have often seen in our daily lives also, that things won’t always go according to plan. Unforeseen events and changes, rise in costs and prices, environmental changes, government interventions, legal regulations, all affect our business plans. An organisation, a well‑defined plan is drawn up with specific goals to be achieved within a specific time frame. These plans then decide the future course of action and managers may not be in a position to change it. This kind of rigidity in plans may create difficulty. The organisation has to constantly adapt itself to changes. 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 calamity. 

2. What are the steps taken by management in the planning process? 

Ans: Since planning is an activity there are certain logical steps for every manager to follow.

(i) Setting Objectives: The first and foremost step is setting objectives. Every organisation must have certain objectives. Objectives may be set for the entire organisation and each department or unit within the organisation. Objectives or goals specify what the organisation wants to achieve. It could mean an increase in sales by 20% which could be objective of the entire organisation. 

(ii) Developing Premises: Planning is concerned with the future which is uncertain and every planner is using conjecture about what might happen in future. Therefore, the manager is required to make certain assumptions about the future. These assumptions are called premises. Assumptions are the base material upon which plans are to be drawn. The base material may be in the form of forecasts, existing plans or any past information about policies. 

(iii) Identifying alternative courses of action: Once objectives are set, assumptions are made. Then the next step would be to act upon them. There may be many ways to act and achieve objectives. All the alternative courses of action should be identified. The course of action which may be taken could be either routine or innovative. An innovative course may be adopted by involving more people and sharing their ideas.

(iv) Evaluating alternative courses: The next step is to weigh the pros and cons of each alternative. Each course will have many variables which have to be weighed against each other. The positive and negative aspects of each proposal need to be evaluated in the light of the objective to be achieved. In financial plans, for example, the risk‑return trade‑off is very common. 

(v) Selecting an alternative: This is the real point of decision making. The best plan has to be adopted and implemented. The ideal plan, of course, would be the most feasible, profitable and with least negative consequences. Most plans may not always be subjected to a mathematical analysis.

(vi) Implementing the plan: This is the step where other managerial functions also come into the picture. The step is concerned with putting the plan into action, i.e., doing what is required.

(vii) Follow-up action: To see whether plans are being implemented and activities are performed according to schedule is also part of the planning process. Monitoring the plans is equally important to ensure that objectives are achieved.

3. An auto company C Ltd. is facing a problem of declining market share due to increased competition from other new and existing players in the market. Its competitors are introducing lower priced models for mass consumers who are price sensitive. C Ltd. realized that it needs to take steps immediately to improve its market standing in the future. For quality conscious consumers, C Limited plans to introduce new models with added features and new technological advancements. The company has formed a team with representatives from all the levels of management. This team will brainstorm and will determine the steps that will be adopted by the organisation for implementing the above strategy. Explain the features of Planning highlighted in the situation given below.(Hint: Planning is pervasive, Planning is futuristic and Planning is a mental exercise).

Ans: Here are more features of planning highlighted in the given situation:

(i) Planning is Pervasive: Planning is pervasive” means that planning is required at all levels of an organization, in every department, and is an integral part of every activity within a business, making it a necessary function across the entire organization, not just limited to top management. 

(ii) Planning is Futuristic – C Ltd. is focusing on future challenges and market trends by introducing new models with advanced technology. The purpose of planning is to meet future events effectively to the best advantage of an organisation.

(iii) Planning is a Mental Exercise: The process of brainstorming, analyzing competition, and deciding on new features requires logical thinking, creativity, and problem-solving skills. Planning is called a mental exercise in management because it involves application of high order thinking skills and intellectual faculties involving vision and foresightedness to decide the things to be done in the future. Planning is an intellectual activity that helps in making informed decisions.

(iv) Planning Involves Decision Making: planning essentially involves choice from among various alternatives and activities. The company is considering various options, such as improving quality and adding technological advancements, before selecting the most suitable course of action. 

(v) Planning Reduces Risks: The statement “Planning reduces the risk of uncertainty” means that having a plan in place can help minimize the uncertainty and unpredictability of future events. Planning helps in foreseeing potential threats and preparing strategies to tackle them effectively.

(vi) Planning Focuses on Achieving Objectives: The primary purpose of planning is to set specific goals and then develop strategies and actions to successfully reach those goals. Planning provides a roadmap to achieve this objective by introducing new models that cater to quality-conscious consumers.