NIOS Class 12 Business Studies Chapter 7 Planning and Organising

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NIOS Class 12 Business Studies Chapter 7 Planning and Organising

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Also, you can read the NIOS book online in these sections Solutions by Expert Teachers as per National Institute of Open Schooling (NIOS) Book guidelines. These solutions are part of NIOS All Subject Solutions. Here we have given NIOS Class 12 Business Studies Chapter 7 Planning and Organising, NIOS Senior Secondary Course Business Studies for All Chapter, You can practice these here.

Planning and Organising

Chapter: 7

Module – 2 Business Management and its Functions

Intext Questions 7.1

1. 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.

Ans: Features. 

(b) Planning brings about efficiency and effectiveness.

Ans: Importance. 

(c) Planning is always futuristic.

Ans: Features. 

(d) Planning reduces uncertainty, risk and confusion. 

Ans: Importance.

(e) Planning helps in achieving coordination and control.

Ans: Importance.

2. Identify the limitations of planning from the following: 

(a) Rigidity. 

(b) Facilitates Control. 

(c) Time Consuming. 

(d) Reduces uncertainty. 

(e) Delay in Action. 

(f) Leads to economy.

Ans: (a) Rigidity.

(c) Time Consuming. 

(e) Delay in Action.

Intext Questions 7.2

1. Rearrange the following elements of external and internal planning premises. 

Ans: External Planning Premises:

(b) Availability of skilled labour.

(c) Change in govt. Policy.

(i) Market demand.

(ii) Change in technology.

Internal Planning Premises:

(a) Methods of production.

(iii) Use of modern machinery.

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. 

(a) Appointed three managers. 

(b) Visited two management institutes to interview the management graduates. 

(c) Compared the short-listed candidates in terms of qualifications and salary expected. 

(d) Set assumptions that the technology is going to change; and that enough money is available for payment of salaries to the new managers. 

(e) Set a deadline of appointment of three managers.

Ans: (e) Set a deadline of appointment of three managers.

(d) Set assumptions that the technology is going to change; and that enough money is available for payment of salaries to the new managers. 

(b) Visited two management institutes to interview the management graduates.

(c) Compared the short-listed candidates in terms of qualifications and salary expected. 

(a) Appointed three managers.

INTEXT QUESTIONS 7.3 

1. Identify the types of plans in the following cases and write it in the brackets: 

(a) It is in the form of general statements that channelize energies towards a particular direction. ( ) 

(b) It determines the end which the management seeks to achieve by its operations. ( ) 

(c) It defines the broad parameters within which a manager may function. ( ) 

(d) It specifies the steps to carry out different activities in chronological order. ( ) 

(e) It states standardised ways of accomplishing routine jobs. ( ) 

(f) In this plan the minutest details are worked out, i.e. procedures , rule and budget within the broad framework of policy. ( )

Ans: (c) It defines the broad parameters within which a manager may function.  

2. Identify the plan which is numerical and can be expressed in monetary terms. 

(a) Objective. 

(b) Strategy. 

(c) Budget. 

(d) Policy.

Ans: (b) Strategy.   

3. 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. 

4. 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 7.4

1. What is meant by the functional structure of organisation?

Ans: A functional organisational structure is a team structure that groups employees into different departments based on areas of expertise.A functional organisational structure is a common type of business structure that organises a company into different departments based on areas of expertise, grouping employees by specialty, skill or related roles. 

2. Arrange the following steps of organising in proper sequence. 

(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: (b) Identification of activities to be done.

(e) Grouping and sub-dividing activities within each function on the basis of similarity or relatedness.

(a) Assigning responsibility.

(c) Granting authority. 

(d) Establishing relationships among individuals and groups. 

3. XYZ Limited is manufacturing chemicals and textiles. What type of organisational structure would suit the requirements of such an organisation?

Ans: Divisional Structure.

INTEXT QUESTIONS 7.5

1. Identify the following as formal or informal organisation. 

(a) Students enjoying a picnic in a park.

Ans: Informal. 

(b) Workers of the Health department are engaged in cleaning the roads.

Ans: Formal. 

(c) People gathered for a marriage party.

Ans: Informal. 

(d) Workers of Production department working at the machines.

Ans: Formal. 

(e) Tutors of NIOS tutoring during PCP classes.

Ans: Formal. 

2. Fill in the blanks: 

(a) Authority flows from _____ level to ______level. 

Ans: Top, lower.

(b) Accountability is being fully answerable to the _____ for the performance of the task assigned.

Ans: Superior.

Very Short Answer Questions:

1. List any two limitations of planning. 

Ans: (i) Rigidity: The existence of a plan puts managerial activities in a rigid framework.

(ii) Probabilistic: Plans are based on forecast so they do not reflect reality.

2. Name any two types of plan.

Ans: (i) Objectives: Objectives are the end results towards which all the activities are directed. 

(ii) Strategy: To exist in the changing business environment and to face the competitions in the market, plans that are formulated are called strategies.

3. Define the term Organising. 

Ans: Organising can be defined as identifying and grouping of activities in the organisation and bringing together the physical, financial and human resources for developing productive relationships among them for achieving the laid down objectives.

4. What is meant by planning premises? 

Ans: The assumptions about the future environment of the business are known as planning premises. These premises may be external or internal.

5. Explain the meaning of authority. 

Ans: Authority is the right to control and command and responsibility is the obligation to carry out the work successfully. Organising establishes the relationships among job positions and employees so as to carry out the tasks successfully.

6. Define the term delegation. 

Ans: This active process of entrustment of a part of work or responsibility and authority to another and the creation of accountability for performance is known as delegation.

7. Give the meaning of decentralisation. 

Ans: Decentralisation refers to a systematic effort to delegate authority at all levels of management, and in all departments.This shifts the power of decision making to lower levels under a well-considered plan.

1. State the different steps of planning process. 

Ans: It 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:

(i) Establishment of Objectives: All of us know that 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.

(ii) Making Assumptions (establishing Planning premises) about the External and Internal Conditions: Making assumptions about the future environment of business is the second step in planning.

(a) External Planning Premises relate to conditions outside the business. External planning premises include assumptions about the market demand and nature of competition, laws affecting the business, availability of resources, and changes in technology.

(b) Internal planning premises relate to conditions prevailing within the organisation. These conditions include cost, methods and techniques of production, employees, type of machinery and equipment, etc.

(iii) Development of Alternative Courses of Action: The next step in planning is to identify the alternative courses of action to achieve the agreed objectives.

(iv) 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 making the best choice.

(v) Selecting the Appropriate Course of Action: After evaluating the alternatives, the manager will select that alternative which gives maximum benefit at minimum cost.

(vi) 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. 

(vii) Review and Follow up: To ensure that the plans are implemented and results achieved in the desired manner, constant monitoring and follow up is necessary. Thus necessary adjustments and corrections can be made in a timely and relevant manner.     

2. Differentiate between external and internal planning premises. 

Ans:

3. What is functional authority? How is it different from line authority?

Ans: Functional authority gives individuals the ability to make decisions regarding the way a department will be run. Functional authority is provided to specific personnel with expertise in a certain subject.Functional authority is a special type of authority for staff personnel, which must be designated by top management.

Functional Authority is different from Line Authority because line authority is given only for one particular department. Line authority is the formal right to oversee and control the work of others, typically given to management positions or lower-level employees. Staff authority involves providing advice and assistance to managers, while functional authority affects employees in other departments or units. 

4. State the different elements of delegation. 

Ans: Thus, there are three elements of delegation as follows: 

(i) 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. 

(ii) 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 on them. 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 use the company vehicle, booking the company guest house for accommodation etc. 

(iii) 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.

5. Mention the different steps of organising.

Ans: (i) Organising is an Important Function of Management: Organising is an important function in the process of management. It follows the function of planning and is concerned with bringing the resources together, formulating organisational structure and defining authority and responsibility relationships among job positions. 

(ii) Organising is a Continuous Process: It is an ongoing process concerned with identification of activities, grouping of activities, assignment of jobs and establishing the relationships among them. 

(iii) Organising is Pervasive: The management function of organising is practised by all managers at all levels. Though, its nature and scope may vary at different levels. Top level management is involved with the entire organisation, middle level management is significantly involved with departmental activities and lower level management is concerned with units and divisions. 

(iv) Organising is Goal-oriented: Organising is directed towards achieving the overall goals of the organisation. It harmonises the individual goals with the organisational goals. 

(v) Organising Involves Coordination: Organising essentially involves coordination as it ensures to strike a balance between the various resources and the efforts of the employees. 

6. Why should a rule be considered as a plan? 

Ans: 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 applications from candidates.

(b) Verify the scores / mark of each candidate.

(c) Verify the area of training needed by each individual (for example, 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. 

(g) Issue of certificate to each participant on completion of training.

7. Write a short note on ‘Procedure’. 

Ans: 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 applications from candidates.

(b) Verify the scores / mark of each candidate.

(c) Verify the area of training needed by each individual (for example, 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.

(g) Issue of certificate to each participant on completion of training.

1. Explain the features of planning. 

Ans: The basic features of planning can be summarised as follows: 

(a) Planning is the Primary Function of Management: Planning is the first and the foremost function performed by every manager. It forms the basis of all the other managerial functions. In other words, planning precedes all other managerial functions and provides the very basis for organising, staffing, directing and controlling. 

(b) Planning is Goal Directed: Planning is always directed at achieving certain goals. 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: Planning is relevant to all levels of management and also for all functional areas. It is not restricted to only top-level but is done by managers at all levels. Managers at the top-level plan for the entire organisation. They make plans for long periods 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 (lower-level managers) plan for a workshop for a section of the office. 

(d) Planning is Futuristic: Planning is future-oriented. It is deciding in advance what to do, how to do, when to do etc. It requires collection of information about various matters relating to business and then choosing a course of action for the future. The purpose of planning is to meet the future events effectively and in the best possible manner. For example: the annual production plans are prepared on the basis of sales forecasting. 

(e) Planning is an Intellectual Activity: Planning requires certain conceptual skills to look ahead into the future. It needs good foresight and sound judgement to anticipate future events, develop alternative courses of action and make the right choices. 

(f) Planning is a Continuous process: In organisations, plans are made for a specific period followed by new plans for a further period. Sometimes the conditions or circumstances change demanding the plans to be revised. For example, a sugar factory situated in upper regions of Uttar Pradesh had planned for production of 1,000 tons of sugar during the last quarter of the year. Accordingly, the management planned for procurement of sugarcane from the nearby areas. Unfortunately, there was snowfall leading to loss of crop. 

(g) Planning involves making Choices: Planning involves choices from various alternatives. Need for planning arises when there are several alternatives to meet the objectives /goals. For example, if the organisation plans to increase its profits there may be several alternatives like- increase in sales revenue, cutting cost of production, increasing the price of the product, increase in advertising and sales promotion etc. The alternatives are evaluated and a choice is made regarding which course of action is to be followed. 

(h) Planning is Flexible: Planning is a future-oriented activity and thus forecasts are made on the basis of certain assumptions which may not materialise. Hence, plans need to be revised in accordance with the changed conditions. Activities are planned with certain assumptions, which may not come true. Managers must make provision for alternate strategies and plans as indicated in the earlier example of a sugar factory. 

2. What is meant by planning? Describe any four-points of importance of planning. 

Ans: Planning is a systematic way of deciding about and doing things in a purposeful manner. It is one of the basic managerial functions. Before starting with something, the manager must first decide on the objectives and then how these have to be achieved. In the context of management, Planning may be defined as “the process of setting future objectives and deciding on the ways and means of achieving them”. The entire process seeks to bridge the gap between where we are and where we want to go. 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 alternatives.”

The importance of planning are as follows:

(a) Planning Provides Direction to Action: Planning is concerned with predetermining the course of action and stating in advance how the work is to be done. It provides direction to the efforts of the employees. It ensures that the goals and objectives are clearly stated and acts as a guide for decision making. This also leads to unity of direction. The various departments, employees, and resources work in the same direction for achieving the organisational goals. 

(b) Planning Reduces Risk and Uncertainty: Planning is a future-oriented activity and enables the managers to look ahead and anticipate changes. Thus, it prepares the organisation to deal with uncertainties and unexpected events. Though changes and uncertainties cannot be eliminated but with planning these can be certainly reduced. 

(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 corrective action. 

(d) Planning Facilitates Decision-Making: Planning provides for several alternatives from among which the choice can be made, thus, facilitating decision making for managers. In planning, goals are set in advance and predictions are made for future. These predictions and goals help the managers to take fast decisions.

(e) Planning Leads to Economy and Efficiency in Operations: Best methods are selected out of available choices, thus, reducing overlapping and wasteful activities. 

(f) Planning is Necessary to Facilitate Control: Planning provides the basis for control. While controlling, the actual results are compared with the pre-determined objectives given by planning. Thus, the periodic reviews of operations can show whether the plans implemented are in the right direction or not. 

(g) Planning begins with the Determination of Objectives and Directed Towards their Achievement: It keeps the executive vigilant and alert. Managers have to review the progress periodically and recast their strategies to meet the agreed objectives. It should be noted that planning also has certain limitations, as the plans are based on certain assumptions and possibly incomplete information. Hence, the management has to be vigilant and provide for necessary flexibility to take care of changed situations.

3. What is organising? Describe the steps in the organising process. 

Ans: The next important function of management after planning is organising. Once the plans are laid down and objectives have been specified, the next step is to arrange for the resources- men, material, money, methods and machinery and also to decide on the ways and means through which it will be easier to achieve what has been planned. All this is undertaken by the organising function. Organising can be defined as identifying and grouping of activities in the organisation and bringing together the physical, financial and human resources for developing productive relationships among them for achieving the laid down objectives.

The process of organising is explained below: 

(i) 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.

(ii) 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.

(iii) Assignment of Duties: After the organiszation is divided into specialized departments/ divisions, the next step is to assign and allot duties to various job positions/employees matching their qualification and skills. The work assigned must match their abilities so as to enable them to perform well and successfully. 

(iv) Delegation of Authority: Mere assignment of tasks will not ensure their completion until the employees are given the right amount of authority to carry out the task. On the basis of responsibilities given to employees, they are also to be given the necessary authority to ensure effective performance.

4. 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. Informal organisations on the other hand, refer to relationships between individuals in the organisation based on personal attitudes, likes and dislikes. They originate to meet their social and emotional needs and develop spontaneously. They represent natural grouping of people in work situations and are supplementary to formal organisations as they serve the needs not satisfied by formal organisations. 

5. If a person is responsible for supervising employees, why must that person have authority?

Ans: The supervisor’s overall role is to communicate organisational needs, oversee employees’ performance, provide guidance, support, identify development needs, and manage the reciprocal relationship between staff and the organisation so that each is successful. If a person is responsible for supervising employees, they must have a higher authority like the higher officials because they generally have the supreme power.Authority is the right to control and command and responsibility is the obligation to carry out the work successfully. Division of work and delegation of authority clearly defines the relationships and lines of communication in the organisational structure. Authority provides sufficient freedom to the employees for independent thinking, new and innovative ideas and initiatives.

6. Write short notes on Rules, Procedures, Budget and Programme. 

Ans: (i) Rule: 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. 

(ii) 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 example, Cash budget estimates the expected cash inflow and cash outflow over a period of time.

(iii) 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 systematic working in the organisation. A 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 example, developing a new product, training programme, advertising programme etc. 

(iv) 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 applications from candidates.

(b) Verify the scores / mark of each candidate.  

7. Explain ‘Rules’ and ‘Methods’ as types of plan. Differentiate between the two. 

Ans: Rule: 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. 

Methods: A Method is that plan which determines how different activities of the procedure are completed. A method is not related to all steps but only to one step of the procedure. One best method is selected in which a worker feels minimum fatigue and there is increase in productivity. Methods are standardised ways of doing work. For example, cloth can be manufactured by labour intensive method or capital intensive method. But the most efficient method is one which will use least amount of resources. The method of car driving training can be by using a car or by using a computer software in the initial period of training.

8. Explain the limitations of planning.

Ans: Following are the important limitations of planning:

(i) Rigidity: The existence of a plan puts managerial activities in a rigid framework. Changes are not always acceptable to the employees. This attitude makes employees and managers inflexible in their operations. 

(ii) Probabilistic: Plans are based on forecast so they do not reflect reality. Predictions may not be correct and plans based on these predictions may go wrong. For example, even developed countries like America, UK, and France etc. did not forecast sub-prime crisis, which resulted in a major economic crisis in those countries. 

(iii) Expensive and Time Consuming: Planning requires a lot of time to collect information, its analysis and interpretation. So it is a time consuming process. It is not practical during an emergency. If the benefits derived are not more than the cost of a plan, then it has adverse effects on the financial performance of an organisation. 

(iv) Delay in Actions: Planning is a time consuming process. In case of urgent decisions, planning will delay the action. 

(v) Misdirection: Sometimes planning may be used to serve individual and group interests and interest of the organisation may get ignored. 

(vi) False Sense of Security: Planning may create a false sense of security among the employees of an organisation in the sense that activities will take place as per plan, therefore, there is no need to worry.