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NIOS Class 12 Business Studies Chapter 11 Planning and Organising
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Planning and Organising
Chapter: 11
Module – 5 : FUNCTION OF MANAGEMENT
INTEXT QUESTIONS 11.1
Q. 1. Define the term Planning.
Ans: Planning is deciding in advance what is to be done and how it is to be done.
Q. 2. Read the statements given below. Write against each if it represents a feature, or importance of planning or neither.
(a) Planning is the primary function of management.
(b) Planning brings about efficiency and effectiveness.
(c) Planning is always futuristic.
(d) Planning reduces uncertainty, risk and confusion.
(e) Planning helps in achieving coordination and control.
Ans: Features —
(a) Planning is the primary function of management.
(c) Planning is always futuristic.
Importance —
(b) Planning brings about efficiency and effectiveness.
(d) Planning reduces uncertainty, risk and confusion.
(e) Planning helps in achieving coordination and control.
Q.3. From the following identify the limitations of planning:
(a) Rigidity.
(b) Facilitates Control.
(c) Time Consuming.
(d) Reduces Uncertainity.
(e) Delay in Action.
(f) Leads to economy.
Ans: (a) Rigidity.
(c) Time Consuming.
(e) Delay in Action.
INTEXT QUESTIONS 11.2
Q. 1. Rearrange the following elements of external and internal planning premises:
| External Planning Premises | Internal Planning Premises |
| (a) Methods of production | (i) Market demand |
| (b) Availability of skilled labour | (ii) Change in technology |
| (c) Change in govt. policy | (iii) Use of modem machinery |
Ans: External Planning Premises – (b); (c); (i); (ii),
Internal Planning Premises – (a); (iii).
Q. 2. Ramesh wants to appoint mangers in different departments of his factory. He follows the following steps, which are not given in proper order. Arrange them carefully in correct sequence in the table given below.
(a) Appointed three managers.
(b) Visited two management institutes to interview the management graduates.
(c) Compared the short listed candidates in terms of qualification and salary expected.
(d) Set assumption that the technology is going to change; and that enough money is available for payment of salaries to the new managers.
(e) Set a target of appointment of three managers.
Ans:
| 1 | 2 | 3 | 4 | 5 |
| (e) | (d) | (b) | (c) | (a) |
INTEXT QUESTIONS 11.3
Q. 1. Identify the plan which is numerical and can be expressed is monetary terms:
(a) objective.
(b) strategy.
(c) budget.
(d) policy.
Ans: (c) budget.
Q. 2. A company formulated a plan to conduct training for 6 months. What type of plan is it?
(a) objective.
(b) programme.
(c) budget.
(d) none of the above.
Ans: (b) programme.
Q. 3. A company frames a plan which mentions that workers should punch their entry card before 10:15 a.m. What type of plan is it?
(a) objective.
(b) rules.
(c) budget.
(d) none of the above.
Ans: (b) rules.
INTEXT QUESTIONS 11.4
Q. 1. What is meant by the functional structure of organisation?
Ans: An organisation structure formed by grouping together all activities into functional departments and putting each department under one coordinating head is called functional structure. Thus, in any industrial enterprise the functions like manufacturing, marketing, finance, personnel may constitute the major separate units (departments) of the enterprise; and in case of a large retail store purchasing, sales and warehousing may be the major units. It may be noted that the major units use are further divided into sub-units. For example, the manufacturing department may be sub-divided into stores, repairs, maintenance, production, etc.
Q. 2. Arrange the following steps of organising in proper sequence in the table given below:
(a) Assigning responsibility.
(b) Identification of activities to be done.
(c) Granting authority.
(d) Establishing relationships among individuals and groups.
(e) Grouping and sub-dividing activities within each function on the basis of similarity or relatedness.
Ans:
| 1 | 2 | 3 | 4 | 5 |
| (b) | (e) | (a) | (c) | (d) |
INTEXT QUESTIONS 11.5
Q. I. Identify the following as formal or informal organisation:
(a) Students enjoying a picnic in a park.
(b) Workers of the Health department are engaged in cleaning the roads.
(c) People gathered for marriage party.
(d) Workers of Production department working at the machines.
(e) Tutors of NIOS PCP classes tutoring.
Ans: Formal–
(b) Workers of the Health department are engaged in cleaning the roads.
(d) Workers of Production department working at the machines.
(e) Tutors of NIOS PCP classes tutoring. and,
Informal–
(a) Students enjoying a picnic in a park.
(c) People gathered for marriage party.
Q. 2. Following is a list of decisions to be taken by a manager of an organisation. Write against each what kind of authority is needed for the decision-making.
(a) Production manager giving instructions to Foreman for target output.
(b) Head of Engineering department giving instructions regarding security norms to be kept in mind.
(c) Head of the marketing research unit asking for some value addition to the product.
(d) Personnel manager recommending names for recruitment in the sales department.
(e) The Chief Executive Officer asking General Manager to ensure 25% reservation in recruitment.
Ans: Line–
(a) Production manager giving instructions to Foreman for target output.
(e) The Chief Executive Officer asking General Manager to ensure 25% reservation in recruitment.
Staff –
(b) Head of Engineering department giving instructions regarding security norms to be kept in mind.
(c) Head of the marketing research unit asking for some value addition to the product.
Functional –
(d) Personnel manager recommending names for recruitment in the sales department.
TERMINAL EXERCISE
Short Answer Type Questions:
Q. 1. List any two limitations of planning.
Ans: Planning suffers from several limitations: rigidity, probabilistic, expensive and time consuming, delay in actions, misdirection, false sense of security.
Q. 2. Name any two types of plan.
Ans: 1. Objectives.
2. Strategy.
Q. 3. Define the term Organising.
Ans: Organising is the next important function of management after planning. It refers to identifying and grouping the activities to be performed, defining the responsibility and authority for each job position. establishing relationships between various job positions and determining detailed rules and regulations of working.
Q. 4. What is meant by planning premises?
Ans: Planning is a primary function of management. It is all pervasive, intellectual, futuristic and continuous activity. It is a flexible activity dealing with making choice when many alternatives are available.
Q. 5. Explain the meaning of authority.
Ans: Authority means the right to take decision, right to issue orders and right to take action if orders are not carried out. On the basis of the nature, it can be of three types viz, Line authority, Staff authority and Functional authority.
Q. 6. Define the term delegation.
Ans: Delegation is the process of entrustment of part of work or responsibility and requisite authority to another person and creating accountability for performance.
Q. 7. Give the meaning of decentralisation.
Ans: Decentralisation is the effort to delegate authority at all levels of management.
Short Answer Type Questions:
Q. 8. State the different steps of planning process.
Ans: Planning in organisation follows a step-by-step process without which it may be difficult to build up proper plans and ensure their implementation. Such steps are as follows.
1. Establishment of Objectives: Every organisation has some goals that it wants to achieve. Planning actually starts with defining these goals in more concrete, clear and unambiguous terms. This enables the management in gaining clarity on what they have to achieve and then plan all activities accordingly. Hence, establishing organisational objectives is a pre-requisite for good and meaningful planning.
2. Making Assumptions (establishing premises) about the External and Internal Conditions: Making assumptions about the future environment of business is the second step in planning. For example, it may be assumed that there will not be any change in tax laws and that there will be sufficient funds available to meet its financial requirements. These assumptions about the future environment of the business are known as planning premises. These premises may be external or internal External planning premises relate to conditions outside the business.Internal planning premises relate to conditions prevailing within the organisation.
3. Development of Alternative Courses of Action: The next step in planning is to identify the alternative courses of action to achieve the objectives set. For example, to achieve the objective of increasing the profits of a business unit, anyone or more of the following alternatives can be used:
(i) Increase the sale of its existing products.
(ii) Improve product quality.
(iii) Add new products/product lines.
(iv) Increase the prices of products.
(v) Reduce costs.
4. Evaluation of Alternatives: Evaluation of alternatives is the fourth step in planning. When alternative courses of action are there before a manager, he has to examine the feasibility and the possible results of each course of action before selecting the best course. Certain alternatives may not be practicable. Management should ignore such alternatives. For example, to maximise profits the management may not think of reducing the wages of workers as it may not be workable. Similarly, if prices are increased, the business unit may not be able to face competition in the market. So, the management should evaluate each of the remaining alternatives and work out how far they help in meeting the objectives and whether these are workable in the light of available resources.
5. Selecting the Appropriate Course of Action: After evaluating the alternatives the manager will select that alternative which gives maximum benefit at minimum cost.
In selecting the best course from among the alternatives, managers should also keep in mind their own limitations of resources. So in making the final selection from among the alternative courses of action, the management will ultimately be guided by:
(a) the opportunities provided by the external environment. and
(b) the ability of the business unit to take advantage of these opportunities.
6. Arranging for Implementation: After the management has finalised their choice, it should build up the necessary strategies and action plan for its implementation in due consultation with all key personnel who are to implement it.
Q. 9. Differentiate between external and internal planning premises.
Ans: External planning premises include assumptions about the market demand and nature of competition, laws affecting the business, availability of resources, and changes in technology. If the management can visualise the likely changes in the external conditions, they can take steps to solve problems arising there form and plan to take advantage of the emerging business opportunities. Government policies and laws, for example, affect the decisions of managers to a great extent. Advance knowledge of the likely changes in government policy enables managers to plan their activities more appropriately.
Internal planning premises relate to conditions within an organisation. These conditions include cost, methods and techniques of production, employees, type of machinery and equipment, etc. All these constitute the internal resources which determine as to what the organisation is capable of achieving. The study of external conditions enables a business unit to know the opportunities available in the market. Hundreds of opportunities are available to a business unit, but it cannot take advantage of every opportunity. It has to decide what it will produce and distribute in the light of what it can do i.e., on the basis of the study of internal factors and then plan accordingly.
Q. 10. What is functional authority? How is it different from line authority?
Ans: Functional authority is the authority of a manager over a person who is not the immediate subordinate of a manager. For example, the purchasing manager has functional authority related to procedures to be followed by various departments for purchasing goods.
The distinction between functional authority and line authority is that line authority is exercised over an immediate subordinate while functional authority is exercised over a person who is not the immediate subordinate of a manager.
Q. 11. State the different elements of delegation.
Ans: Three elements of delegation as follows:
1. Assignment of Responsibility: This is also known as entrustment of duties. Duties can be divided into two parts: one part, that the individual can perform himself and the other part, that he can assign to his subordinates to perform.
2. Granting Authority: Authority refers to the official powers and position required to carry on any task. When duties are assigned to subordinates then the required authority must also be conferred to him. For example, when a manager asks his subordinate to receive a guest of the company on his behalf then he must also grant him some authority like carry the company vehicle, booking the company guest house for accommodation etc.
3. Creating Accountability: This refers to the obligation on the part of the subordinates, to whom responsibility and authority are granted to see to it that the work is done. In other words, the delegatee is fully answerable to his superior for performance of the task assigned to him. Thus, the superior ensures performance through accountability by his subordinate.
Q. 12. Mention the different steps of organising.
Ans: The process of organising consists of the following steps–
1. Identification of activities: Every enterprise is created with a specific purpose. Based on this, the activities involved can be identified. For example, in a manufacturing firm, producing goods and selling them are the major activities in addition to routine activities like, paying salary to employees, raising loans from outside, paying taxes to the government etc. and these activities vary when the organisation is a service concern or a trading firm.
Therefore, it is essential to identify various activities of an enterprise.
2. Grouping of activities: Once activities are identified, then they need to be grouped. They are grouped in different ways. The activities which are similar in nature can be grouped as one and a separate department can be created. For example – activities undertaken before sale of a product, during the sale of the product and after the sale of the product can be grouped under the functions of a marketing department. Normally, all activities of a manufacturing unit can be grouped into major functions like purchasing, production, marketing, accounting and finance, etc. and each function can be subdivided into various specific jobs.
3. Assignment of Responsibilities: Having completed the exercise of identifying, grouping and classifying all activities into specific jobs, they can be assigned to individuals to take care of.
4. Granting authority: On the basis of responsibilities given to specific individuals, they are also to be given the necessary authority to ensure effective performance.
5. Establishing relationship: This is a very important job of management as everybody in the organisation should know as to whom he/she is to report, there by establishing a structure of relationships. By doing so, relationships become clear and delegation is facilitated.
Q. 13. Why rule should be considered as a plan?
Ans: Rules clearly indicate what is to be done and what is not to be done in a particular situation. Strict actions can be taken against persons who violate the rules. Rules are guideline designed to guide behaviour. For example, there can be rule of ‘Keep Silence’ in a library or ‘No smoking’ in a factory.
Q. 14. Write short notes on ‘Procedure’.
Ans: Procedure: Procedures are plans which determine the sequence of any work performance. If procedures are decided in advance, everyone can follow the same. For example, the procedure for giving training to candidates in an organisation.
(a) Collect the application from candidates.
(b) Verify the scores / mark of each candidate.
(c) Verify the area of training needed by each individual (cutting & measuring a piece of cloth for stitching).
(d) Collect fees / decide the stipend to be given to each candidate.
(e) Send letters intimating the date and period of training.
(f) Conduct training programme on completion of training.
(g) Issue of certificate to each participant.
Long Answer Type Questions:
Q. 15. Explain the features of planning.
Ans: The basic features of planning can be summarised as follows:
(a) Planning is the primary function of management as every activity needs to be planned before it is actually performed. In other words, planning precedes all other managerial functions and provides the very basis for organising, staffing. directing and controlling.
(b) Planning is always goal directed. A manager cannot plan anything unless he knows what he wants to achieve. For example, you cannot plan for a journey unless you know where you want to go. Thus, planning is taking such steps so as to achieve the desired goal.
(c) Planning is pervasive at all levels of management and so also for all functional area. Managers at the top level plan for the entire organisation. They make plans for a long period and lay down the objectives for the organisation as a whole Middle-level managers make quarterly. half-yearly and yearly plans for the departments under them. Foremen and office supervisors plan for a workshop or a section of the office. They make plans for a short period, i.c., for the next day, next week of next month.
(d) Planning is always futuristic. It is deciding in advance what to do, how to do, etc. It requires collection of information about various matters er relating to business and then choosing action for the future. However, while planning for the future, it does take past experience and current situation into consideration.
(e) Planning is an intellectual activity and requires certain conceptual skills to look ahead into the future. It needs good foresight and sound judgment to anticipate future events, develop alternative courses of action and make the right choice.
(f) Planning is a continuous process. In organisations plans are made for a specific period followed by new plans for further period. Sometimes the conditions or circumstance change requiring the plans to be revised. For example, a sugar factory situated in upper regions of Uttar Pradesh had planned for 1,000 tonnes of sugar Planning during the last quarter of the year. Accordingly, the management planned for procurement of sugar cane from the nearby areas. Unfortunately, there was snowfall leading to loss of crop. This made the management to change their plan and procure sugarcane from far off areas like Haryana and Rajasthan and also revise their planned production of 1000 to 800 tonnes. Thus, planning is a continuous activity in organisations.
(g) Planning basically involves making choices. Need for planning arises when goals/objectives are many and alternatives to achieve them are also plenty. While planning, alternatives are evaluated and a choice is made regarding which course of action is to be followed.
(h) Planning is flexible. Planning is done on the basis of some forecasts which may not materalise. Hence, plans have to be changed in accordance with the changedconditions. Activities are planned with certain assumptions, which may not cometrue. Managers must make provision for alternate strategies and plans as indicated in the earlier example of a sugar factory.
Q. 16. What is meant by planning? Describe any four points of importance of planning.
Ans: Planning may be defined as the process of setting future objectives and deciding on the ways and means of achieving them. In the words of M.E. Hurley “planning is deciding in advance what is to be done in future. It involves the selection of objectives, policies, procedures and programmes from among the altern atives”.
Planning is the most important of all the management functions.
Some of the points of importance are as follows:
(a) Planning reduces uncertainty, risk and confusion in operation. Through planning, the future course of action is known to all and so, everybody knows exactly what needs to be done. This gives a sense of direction resulting in efficiency in operations.
(b) Planning guides the decision making by the managers. Planning of goals to be achieved and the course of action to be followed to achieve the goal act as a guide in their own decision making and action plans.
(c) Planning helps in achieving coordination and facilitates control. Proper planning integrates the tasks at the operational level, thereby making coordination more effective. It also helps in identifying deviations and taking the corrective action.
(d) Planning with an element of flexibility makes the organisation adaptable. In other words, planning makes the organisation capable of coping with the changing environment and facing challenges.
(e) Planning leads to economy and efficiency in operations. Best methods are selected out of available choices, thus, reducing over lapping and wasteful activities.
(f) Planning begins with the determination of objectives and directed towards their achievement. It keeps the executive alive and alert. Managers have to review the progress periodically and recast their strategies to meet the objectives.
Q. 17. What is organising? Describe the steps in the organising process.
Ans: Organising refers to the process of:
(i) Identifying and grouping the work to be performed.
(ii) Defining and determining responsibility and authority for each job position.
(ii) Establishing relationship among various job positions.
(iv) Determining detailed rules and regulations of working for individuals and groups in organisation.
The process of organising consists of the following steps-
1. Identification of activities: Every enterprise is created with a specific purpose. Based on this, the activities involved can be identified. For example, in a manufacturing firm, producing goods and selling them are the major activities in addition to routine activities like, paying salary to employees, raising loans from outside, paying taxes to the government etc. and these activities vary when the organisation is a service concern or a trading firm. Therefore, it is essential to identify various activities of an enterprise.
2. Grouping of activities: Once activities arebidentified, then they need to be grouped. They are grouped in different ways. The activities which are similar in nature can be grouped as one and a separate department can be created. For example – activities undertaken before sale of a product, during the sale of the product and after the sale of the product can be grouped under the functions of a marketing department. Normally, all activities of a manufacturing unit can be grouped into major functions like purchasing, production, marketing. accounting and finance, etc. and each function can be subdivided into various specific jobs.
3. Assignment of Responsibilities: Having completed the exercise of identifying, grouping and classifying all activities into specific jobs, they can be assigned to individuals to take care of.
4. Granting authority: On the basis of responsibilities given to specific individuals, they are also to be given the necessary authority to ensure effective performance.
5. Establishing relationship: This is a very important job of management as every body in the organisation should know as to whom he/she is to report, thereby establishing structure of a relationships. By doing so, relationships become clear and delegation is facilitated.
Q. 18. Explain the meaning of formal and informal organisations. What are the differences between these two?
Ans: Formal organisation refers to the officially established pattern of relationships among departments, divisions and individuals to achieve well-defined goals and is a consciously designed structure of roles. In other words, formal organisation clearly spells what a person has to do, from who he has to take orders and what rules, policies and work procedures are to be followed. Thus, it is a system of well defined jobs, each bearing a definitive measure of authority, responsibility and accountability. This promotes order and facilitates planning and controlling functions.
Informal organisations on the other hand, refers to relationship between in dividuals in the organisation based on personal attitudes, likes and dislikes and originates to meet their social and emotional needs and develops spontaneously. It represents natural grouping of people in work situation and is supplementary to formal organisation as it serves the needs not satisfied by formal organisation. The format organisation does not provide opportunity to members to exchange personal views and experiences and so they interact informally to fulfill such interest and needs.
Difference between Formal and Informal Organisations
| Formal Organisations | Informal Organisations |
| 1. It is created by the top management. | It is not created by top management. It arises out of the natural desire of the people to associate. |
| 2. It is created to get the jobs of an organisation performed in a planned and systematic manner. | It is formed to satisfy those needs of members which can not be satisfied through formal organisation. |
| 3. It is managed by officially appointed managers. | Members of the informal group select some one as their leader to take care of the interests of the group members. |
| 4. Managers of formal organisation have formal authority. | The authority of the leader of the informal group depends upon the combined support of group members. |
| 5. Formal organisation is permanent and stable. | Informal organisation is of temporary nature. It changes its size and membership from time to time. |
Q. 19. If a person is responsible for supervising employees, why must that person have authority?
Ans: Delegation is considered as one of the most important elements in the process of organisation because, it reduces the load on managers as work is successfully shared by the subordinates. This improves the managerial effectiveness because by delegating a good part of work to the subordinate the managers are able to concentrate on important matters which requires personal attention. Not only that, the organisations now-a-days are usually large in size and complex in character, and no manager can claim to have all the skills and expertise to handle all kinds of jobs himself. Moreover, the business activities are spread over a larger area with several branches and units, which makes it Planning difficult for him to supervise all the activities personally at all places. The delegation of responsibility with commensurate authority offers a good workable solution. This also provides an opportunity for subordinates to develop. and motivates and prepares them for taking up higher responsibilities in future. It leads to creating a healthy work environment and harmony among the employees. Thus, delegation facilitates organisational growth and prosperity.
Q. 20. Write short notes on Rules, Procedures, Budget and Programme.
Ans: Rules: Rules clearly indicate what is to be done and what is not to be done in a particular situation. Strict actions can be taken against persons who violate the rules. Rules are guideline designed to guide behaviour. For e.g., there can be rule of ‘Keep Silence’ in a library or ‘No smoking’ in a factory.
Procedure: Procedures are plans which determine the sequence of any work performance. If procedures are decided in advance, everyone can follow the same. For e.g., the procedure for giving training to candidates in an organisation.
(a) Collect the application from candidates.
(b) Verify the scores / mark of each candidate.
(c) Verify the area of training needed by each individual (cutting & measuring a piece of cloth for stitching).
(d) Collect fees/decide the stipend to be given to each candidate.
(e) Send letters intimating the date and period of training.
(f) Conduct training programme on completion of training.
(g) Issue of certificate to each participant.
Budget: It is a statement of expected results expressed in numerical terms. A budget is a type of plan expressed in financial terms or in terms of labour hours, units of product, machine hours etc. Budgets are quantitative statements indicating expected results and expenditure required for achieving the goal. For e.g., Cash budget estimates the expected cash inflow and cash outflow over a period of time.
Programme: A programme is a plan laying down the what, how, who and when of accomplishing a specific job. The programmes are mode to get a systematic working in the organisation. Programme is a scheme designed to accomplish a specific objective. It spells out clearly the steps to be taken, resources to be used, and time period within which the task is to be completed. A programme usually includes a set of objectives, policies, procedures, methods, budgets etc. for e.g., developing a new product, training programme, advertising programme etc.
