GSEB Class 12 Organization of Commerce and Management Solutions Chapter 3 Planning

Exercise

 

1. Select the correct alternative and write answer to the following questions

 

Question 1. Mention first function of management.
(a) Organizing
(b) Planning
(c) Directing
(d) Controlling
Answer: (b) Planning
In simple words: Planning is the very first step a management team takes. It sets the stage for all other tasks.

Exam Tip: Remember the sequence of management functions. Planning always comes first as it lays the groundwork for everything else.

 

Question 2. Planning is related to
(a) Production
(b) Future
(c) Present
(d) Past
Answer: (b) Future
In simple words: Planning always looks ahead and deals with what will happen in the future.

Exam Tip: Planning is a forward-looking activity; it involves setting goals and determining actions for future events, not past or present ones.

 

Question 3. What is the first step of planning process?
(a) Defining objectives
(b) Clarifying planning premises
(c) Preparing alternative
(d) Formation of subsidiary
Answer: (a) Defining objectives
In simple words: The first thing to do when planning is to clearly state what you want to achieve.

Exam Tip: Always start by clearly stating your objectives. Without clear goals, effective planning is impossible.

 

Question 4. Planning function means
(a) Routine function
(b) Fixed function
(c) Function of choice
(d) Formation of subsidiary
Answer: (c) Function of choice
In simple words: Planning means picking the best way from different options to reach your goals.

Exam Tip: Emphasize that planning involves making choices among various alternatives, as this is a core aspect of its definition.

 

Question 5. Decisions and strategies are decided by management for accomplishment of objectives are known as
(a) Programme
(b) Policy
(c) Rules
(d) Budget
Answer: (b) Policy
In simple words: The choices and plans management makes to achieve goals are called policies.

Exam Tip: Policies act as guiding principles for decisions and actions, helping an organization achieve its objectives consistently.

 

Question 6. What is pre-condition for successful planning?
(a) Long term
(b) Short term
(c) Strictness
(d) Flexibility
Answer: (d) Flexibility
In simple words: For planning to work well, it needs to be able to change easily if things change.

Exam Tip: Highlight flexibility as crucial for planning success because business environments are dynamic and unexpected changes often occur.

 

Question 7. State the last step of planning process.
(a) Evaluation of plan
(b) Selection of best plan
(c) Verification of plan
(d) Determination of alternative
Answer: (a) Evaluation of plan
In simple words: The final part of planning is checking how well the plan worked.

Exam Tip: The planning process concludes with evaluating the plan's effectiveness to identify areas for improvement in future planning cycles.

 

2. Answer the following questions in one sentence each:

 

Question 1. In which fields is planning found?
Answer: Planning is found in business, politics, education, religion, and social events.
In simple words: Planning happens in many areas like business, government, school, religion, and social gatherings.

Exam Tip: Mentioning a variety of fields demonstrates a broad understanding of where planning is applied.

 

Question 2. Give full form of O.R.
Answer: Operation Research.
In simple words: O.R. stands for Operation Research.

Exam Tip: Ensure you know the full forms of common acronyms related to business management.

 

Question 3. What are the first and last functions of planning?
Answer: The first function of planning is to determine the objectives and the last function is to evaluate the plan.
In simple words: Planning starts by setting goals and ends by checking how well the plan worked.

Exam Tip: Clearly stating both the start (objectives) and end (evaluation) points of planning shows a complete understanding of the process.

 

Question 4. When is the principle of 'Look and Leap' adopted?
Answer: The principle of 'Look and Leap' is adopted when the entire plan needs to be evaluated. Step by step proceedings are done after which appropriate decisions are taken.
In simple words: 'Look and Leap' is used when evaluating a whole plan, taking decisions after each step.

Exam Tip: Connect 'Look and Leap' directly to the evaluation phase and the iterative decision-making it implies.

 

Question 5. State types of budget.
Answer: Types of budgets include capital expenditure budget, sales budget, production budget, production cost budget, and cash budget.
In simple words: There are many kinds of budgets like ones for big spending, sales, making things, production cost, and cash.

Exam Tip: Listing specific examples of budgets demonstrates practical knowledge of financial planning tools.

 

Question 6. Mention reasons for the uncertainties in planning.
Answer: There are uncertainties in planning because planning is based on assumptions and forecasting, which are made for the future. The future is uncertain, and therefore, assumptions cannot be fully correct. Uncertainties prevail in planning as it is related to the future.
In simple words: Planning involves guesses about the future, which is unpredictable. This means plans can have many unknowns because future events are not certain.

Exam Tip: Focus on the inherent unpredictability of the future and its impact on planning assumptions as the primary reason for uncertainties.

 

Question 7. What is planning premises?
Answer: Planning premises is the second step of planning. After determining objectives, planning assumptions or forecasting must be made. These assumptions and forecasting are known as premises, which must be clear and precise for the success of planning in a business unit.
In simple words: Planning premises are the guesses about the future made after setting goals. These guesses must be clear for planning to succeed.

Exam Tip: Emphasize that planning premises are foundational assumptions about the future environment, crucial for realistic plan development.

 

Question 8. What is method / procedure?
Answer: Method is an arrangement for carrying out business programs. Strategy depicts the arrangement for facing competition, policy gives information to fulfill the objectives, while method refers to the best way of accomplishment of pre-determined objectives.
In simple words: A method is how you do a business task. Strategy is about beating rivals, policy tells you what to do, and method shows the best way to achieve goals.

Exam Tip: Clearly differentiate between strategy, policy, and method by explaining their distinct roles in achieving organizational objectives.

 

3. Answer the following questions in short:

 

Question 1. What do you mean by determination of objectives?
Answer: Determination of objectives means setting the goals that a business aims to achieve. It is said that, if objectives are determined properly, then it becomes extremely useful for the management. Planners should set realistic, intellectual, and achievable objectives.
In simple words: Determining objectives means clearly setting what a business wants to accomplish. Managers should set goals that are real and can be achieved.

Exam Tip: When defining "determination of objectives," highlight the importance of setting SMART (Specific, Measurable, Achievable, Relevant, Time-bound) goals for management effectiveness.

 

Question 2. What is planning.
Answer: The task of collecting information for the activities to be undertaken in business, considering them in advance, and planning out how to do these activities is called planning. Planning is an intellectual process to achieve business goals. Two important definitions of planning are:

• Definition of Bill Goetz: "Task of planning is choosing."
• Definition of George R. Terry: "Function of planning means assumption for results, policy to follow function, stages and to decide the method to be followed."

In simple words: Planning is figuring out what to do, how to do it, and when to do it to reach business goals. It's about making choices based on information.

Exam Tip: Always include at least one widely accepted definition of planning to enhance the credibility of your answer.

 

Question 3. What is the need of strategy?
Answer: Strategy:

• A plan of action designed to achieve a pre-decided long-term or overall aim is called a strategy.
• Strategy formation helps the business unit to be capable enough to face the competition or to survive against other factors.
• Strategy should be kept confidential from the competitors.
• A well-defined strategy can surely lead to success.

In simple words: Strategy is needed to set a long-term goal and create a way to reach it, especially to deal with competition and ensure success.

Exam Tip: Emphasize that strategy is crucial for long-term survival and competitive advantage, not just short-term operations.

 

Question 4. State the elements or components of planning.
Answer: Elements/components of planning:
The subsidiary plans and programs on which planning is based are called elements of planning. The elements of planning are discussed below:
1. Objectives
2. Strategy
3. Policy
4. Method/Procedure
5. Rules
6. Budget
7. Programme
In simple words: Planning has several key parts, like setting goals, creating a strategy, making policies, deciding on methods, setting rules, managing the budget, and creating a program. These are all smaller plans that make up the main plan.

Exam Tip: When asked to list elements, provide a clear, numbered list and offer a brief explanation for each if space and time allow.

 

Question 5. What is subsidiary plan?
Answer: Formulation and evaluation of subsidiary plan:

• Over and above the main plan, different projects or alternatives must be considered as per the basic plan or in support of the basic plan. These plans are known as subsidiary/derivative plans.
• For example, a car manufacturing company is trying to make a decision to make tires for its cars. On the other hand, it is also thinking to buy them rather than manufacturing. Such an alternative is considered a subsidiary plan.
• Even the subsidiary plan is evaluated to assess that it does not obstruct the basic plan in the future.

In simple words: A subsidiary plan is a smaller, supporting plan that helps the main plan. It involves looking at different options to help the main goal without getting in its way later. For example, a car company deciding whether to make its own tires or buy them is a subsidiary plan.

Exam Tip: Use a real-world example to illustrate complex concepts like subsidiary plans, making your explanation more concrete and understandable.

 

Question 6. What is final budget?
Answer: A budget is a tool to control the accomplishment of business objectives.
In simple words: A budget helps a business manage its money to achieve its goals.

Exam Tip: Emphasize that a budget is not just a financial statement but a control mechanism for achieving organizational goals.

 

Question 7. "Planning should be flexible.” Why?
Answer: Flexibility:

• Although planning is done so that tasks take place as per the planned method, planning still holds a good amount of flexibility.
• During the execution of planned steps, the business may experience certain factors that may disturb the planned process. Hence, the unit may have to make necessary changes as per time, circumstances, and situations.
• Thus, planning is dynamic, and flexibility is the precondition for planning.

In simple words: Planning needs to be flexible because things can change unexpectedly. A flexible plan can adapt to new situations, ensuring the business can still reach its goals even if challenges arise.

Exam Tip: Highlight that flexibility is key because business environments are rarely static; plans must adapt to external changes to remain effective.

 

Question 8. "Planning is primary function of management.” Explain.
Answer: Primary function:
Planning is the primary function of management. Management starts with planning. Other functions of management like organization, staffing, directing, and controlling are implemented on the basis of planning.
In simple words: Planning is the first and most important job of management. All other management tasks, like organizing or controlling, depend on and follow the plan that is created.

Exam Tip: Explain that planning sets the foundation for all other management functions, making it indispensable for organizational success.

 

Question 9. What do you mean by policy?
Answer: Policy:

• The decisions and strategies that the management decides for the accomplishments of objectives are known as policies.
• The type of policy framed by the business unit reflects the idea of efficiency and the working style of the business unit.
• Just like an objective, the policy should also be pragmatic and real.

In simple words: A policy is a set of rules or decisions made by management to help achieve goals. It shows how the business works and should be practical and achievable.

Exam Tip: Define policy as a guiding framework for decision-making that reflects the organization's philosophy and aims.

 

Question 10. "Planning is an expensive process.” Why?
Answer: Expensive process:

• In a large unit, experts are engaged in the planning function.
• Since these experts are highly experienced and knowledgeable, they charge high consultation fees for assisting in framing the plans.
• While planning, several resources are also to be gathered, like holding meetings, conducting surveys, gathering data, and performing analysis, etc. All these activities require time, effort, and money. Hence, planning incurs huge expenses to the unit.

In simple words: Planning is costly because it often involves hiring expensive experts, holding many meetings, doing surveys, collecting data, and analyzing information. All these steps take a lot of time, effort, and money.

Exam Tip: Focus on the human and material resources required for comprehensive planning, which contribute to its high cost.

 

4. Answer the following questions in brief:

 

Question 1. "Planning brings smoothness in managerial function.” Explain.
Answer:

• The task of collecting information for the activities to be undertaken in business, considering them in advance, and planning out how to do these activities is called planning.
• Planning is done using mental abilities while remaining conscious about the outcomes.
• Managers develop plans precisely and minutely by undergoing rigorous brainstorming, collecting and analyzing statistical data, collecting relevant information, etc.
• During the planning, the role, responsibilities, and authorities of each person and department are also carefully drawn.
• As a result, when business operations start following the plans, all departments and employees very well know what has to be done, how it has to be done, and in which timeframe.
• There arises no confusion related to who is responsible for what and who should report to whom.
• Hence, planning makes the daily operations very smooth, easy, and achievable.

In simple words: Planning makes management smooth because it gathers information, sets clear roles, and ensures everyone knows what to do, how to do it, and when. This prevents confusion and helps daily tasks run easily and achieve their goals.

Exam Tip: Emphasize how planning clarifies roles, processes, and timelines, thereby reducing ambiguity and enhancing operational efficiency.

 

Question 2. Explain any four elements or components of planning.
Answer: Elements/components of planning:
The subsidiary plans and programs on which planning is based are called elements of planning. The elements of planning are discussed below:
1. Objectives:

• All the plans of a business unit are based on the objectives they wish to achieve.
• So, it is important that the managers consider all the factors affecting business while drafting the plans.
• Such objectives should be set which are realistic and achievable.

2. Strategy:

• A plan of action designed to achieve a pre-decided long-term or overall aim is called a strategy.
• Strategy formation helps the business unit to be capable enough to face the competition or to survive against other factors.
• Strategy should be kept confidential from the competitors.
• A well-defined strategy can surely lead to success.

3. Policy:

• The decisions and strategies that the management decides for the accomplishments of objectives are known as policies.
• The type of policy framed by the business unit reflects the idea of efficiency and the working style of the business unit.
• Just like an objective, the policy should also be pragmatic and real.

4. Method/Procedure:

• The business units develop various methods or procedures to conduct business activities.
• Method guides the best way for accomplishing pre-determined objectives as well as doing tasks.

In simple words: Planning includes key elements like objectives (what to achieve), strategy (how to achieve long-term goals), policy (rules for decision-making), and method/procedure (the steps to follow for tasks). These parts work together to guide the business.

Exam Tip: When explaining elements, provide a brief, clear definition and one or two key characteristics or examples for each to show depth of understanding.

 

Question 3. Explain any four limitations of planning.
Answer: Limitations of planning:
1. Uncertain future:

• Planning is based on assumptions and forecasting, meaning it talks about the future. But, no one knows the future, and so it is uncertain.
• Therefore, one may make assumptions and frame plans based on these assumptions. But it should be well noted that assumptions can be wrong. Hence, uncertainties prevail in planning.

2. Expensive process:

• In a large unit, experts are engaged in the planning function.
• Since these experts are highly experienced and knowledgeable, they charge high consultation fees for assisting in framing the plans.
• While planning, several resources are also to be gathered, like holding meetings, conducting surveys, gathering data, and performing analysis, etc. All these activities require time, effort, and money. Hence, planning incurs huge expenses to the unit.

3. Time consuming:
Planning involves the collection of necessary information, its classification, analysis, and interpretation to decide alternatives for the business. Thus it is a lengthy and time-consuming process.
4. Planning is irrelevant:

• Although planning is extremely important, the future is uncertain. There are chances of changes in government policies, tax slabs, price, demand, supply, etc.
• Any major change can fail even a solid plan and hence planning becomes irrelevant in such a situation.

In simple words: Planning has limits like an uncertain future because predictions can be wrong. It's also expensive, needing experts and resources. It takes a lot of time to gather and analyze information. Finally, plans can become useless if big changes happen that were not expected.

Exam Tip: List limitations clearly and provide a concise explanation for each, demonstrating a critical understanding of planning's drawbacks.

 

Question 4. Discuss the importance of planning.
Answer: Importance of planning:

• Planning is the foundation of any business and an outline for its future. It is necessary in each and every field.
• Hence, government, the private sector, and all other sectors make plans for their activities.
• Considering the importance of planning, the Central Government of India has formed the planning commission to plan the various activities for India.

Following are some of the important aspects of planning:
1. Planning helps to perform all activities systematically.
2. Wastage of resources can be avoided.
3. Planning reduces future uncertainties.
4. Planning leads to precision.
5. It is useful for accomplishing objectives.
6. Planning also brings smoothness in other managerial functions.
7. Planning increases cooperation among employees.
8. It enables effective control over the activities and unit.
9. Planning coordinates various activities.
In simple words: Planning is very important because it sets the basis for any business, ensures activities are systematic, avoids waste, lowers future risks, makes work accurate, helps achieve goals, makes management smoother, boosts teamwork, helps control operations, and coordinates different tasks.

Exam Tip: When discussing importance, provide a mix of strategic benefits (foundation, reducing uncertainty) and operational benefits (systematic activities, efficiency) to offer a comprehensive answer.

 

Question 5. Explain operational and contingency plans.
Answer: Operational plan:
An operational plan is a detailed plan which provides a clear picture of how a team, department, or an individual will contribute to achieving strategic goals of the organization.

• Operational plans are almost similar to tactical plans.
• Generally, operational plans are formed for a short duration, say about one year.
• Under this, plans related to monthly or quarterly production, sales, etc., are made for achieving objectives of annual production.
• These plans are made by departmental heads for the implementation of the strategic plan.
• These plans are mainly formed for performing routine work and achieving daily targets. Hence, the implementation of operational plans becomes easy if they are made by involving concerned employees in the decisions, as these plans are related to routine work.

Contingency plan:

• A plan designed to take account of a possible future event or circumstance is called a contingency plan.
• Business units face changing market situations. These changes could be political, economical, social, or natural factors.
• If the business has to make changes in the original plan or make a new plan due to such reasons, then the plan is called a contingency plan.

In simple words: An operational plan is a short-term, detailed plan for daily tasks to meet strategic goals, usually made by department heads. A contingency plan is a backup plan made for unexpected future events, allowing a business to adapt to changes like political shifts or natural disasters.

Exam Tip: Clearly distinguish between operational (short-term, routine, implementation-focused) and contingency (backup, for unforeseen events) plans, providing key characteristics for each.

 

Question 6. Discuss single use plan and contingency plan.
Answer: Single Use plan:

• As the name suggests, single-use plans are made for handling one-time, non-recurring problems. Single-use plans are also referred to as 'specific plans' since these are meant to solve a particular problem.
• These plans are formulated to handle non-repetitive and unique problems. These plans cannot be used again and again. These plans become obsolete after achieving their purpose.
• The examples of these plans could be constructing a dam, making a budget, organizing an event, etc.

Contingency plan:
A plan designed to take account of a possible future event or circumstance is called a contingency plan.

• Business units face changes like changes in political, economical, social, or natural factors.
• If the business has to make changes in the original plan or make a new plan due to such reasons, then the plan made is called a contingency plan.

In simple words: Single-use plans are for problems that happen only once, like building a dam, and cannot be reused. Contingency plans are backup plans for unexpected future situations, such as political changes, to ensure the business can adapt.

Exam Tip: Emphasize that single-use plans are for unique, non-recurring events, while contingency plans are for adapting to uncertain future changes affecting ongoing operations.

 

Question 7. Explain the following statements:
(i) "Planning is a conscious and mental process.”
(ii) "Planning is irrelevant.”
(iii) "Planning is concerned with future.”
Answer:
(i) Conscious and mental process:
Planning is done using mental abilities while remaining conscious about the outcomes. This is so because during planning, decisions are taken consciously and on the basis of calculative assumptions.
(ii) Planning is irrelevant:
Although planning is extremely important, the future is uncertain. There are chances of changes in government policies, tax slabs, price, demand, supply, etc. Any major change can fail even a solid plan and hence planning becomes irrelevant in such a situation.
(iii) Concerned with future:

• Planning presumes that there are uncertainties involved in the future.
• While remaining in the present, planning evaluates the future and hence we can say that planning is concerned with the happenings of the future and is focused on – taking the best steps for the same.

In simple words: (i) Planning is a careful thinking process where decisions are made knowingly with a goal in mind. (ii) Planning can become useless if big, unexpected changes happen that make the original plan no longer work. (iii) Planning looks ahead, thinking about what might happen in the future and how to best prepare for it.

Exam Tip: For each statement, provide a clear explanation that directly addresses the core concept, using examples or elaborations where appropriate.

 

5. Answer the following questions in detail:

 

Question 1. Explain planning and its characteristics.
Answer:
(a) Planning:
The task of collecting information for the activities to be undertaken in business, considering them in advance, and planning out how to do these activities is called planning. Planning is an intellectual process to achieve business goals.
(b) Characteristics of planning:
1. Universal process:
Planning is a universal process. Planning is required in each and every field, be it business, politics, education, religion, or a social event.
2. Primary function:
Planning is the primary function of management. Management starts with planning. Other functions of management like organization, staffing, directing, and controlling are implemented on the basis of planning.
3. Conscious and mental process:
Planning is done using mental abilities while remaining conscious about the outcomes. This is so because during planning, decisions are taken consciously and on the basis of calculative assumptions.
4. Flexibility:

• Although planning is done so that tasks take place as per the planned method, planning still holds a good amount of flexibility.
• During the execution of planned steps, the business may experience certain external factors. These factors may disturb the planned process. Hence, the unit may have to make necessary changes as per time, circumstances, and situations.
• Thus, planning is dynamic, and flexibility is the precondition for planning.

5. Precise:
Planning is a process done for the future. Since the future is uncertain, planning must be done precisely and minutely by rigorous brainstorming, collecting and analyzing statistical data, collecting relevant information, etc.
6. Forecasting is essential:
Forecasting and planning are considered the first function of management. Forecasting is done by considering the uncertainties of the future that will take place while making a plan for the business unit.
In simple words: Planning involves gathering information and deciding future actions to reach business goals, making it an intellectual task. Its characteristics include being universal (used everywhere), primary (first management function), conscious (thought-out), flexible (adaptable to change), precise (detailed), and essential for forecasting future events.

Exam Tip: When explaining characteristics, use clear, concise language for each point and show how they collectively define the nature of planning.

 

Question 2. and explain its process.
Answer: (a) Planning: The task of gathering details for the activities to be done in a business involves thinking about them beforehand and figuring out how to do these activities. This is called planning. Planning is an intellectual process used to achieve business goals.
(b) Characteristics of planning:
1. Universal process: Planning is a universal process. It is needed in every field, whether it is business, politics, education, religion, or a social event.
2. Primary function: Planning is the main function of management. Management begins with planning. Other management functions like organizing, staffing, directing, and controlling are carried out based on planning.
3. Conscious and mental process: Planning uses mental abilities while staying aware of the results. This happens because during planning, decisions are made consciously and based on calculated assumptions.
4. Flexibility:
• Planning is done so that tasks happen as per the planned method, and planning always keeps a good amount of flexibility.
• During the execution of planned steps, the business might face certain external factors. These factors could disrupt the planned process. Hence, the unit may need to make necessary changes as per the time, situations, and circumstances.
• Thus, planning is dynamic, and flexibility is a key condition for planning.
5. Precise: Planning is a process done for the future. Since the future is uncertain, planning must be done precisely and carefully through thorough brainstorming, collecting and analyzing statistical data, and gathering relevant information, etc.
6. Forecasting is essential: Forecasting and planning are considered the first function of management. Forecasting is done by considering the uncertainties of the future that will occur while making a plan for the business unit.
7. List of alternatives: When planning for any objective, there are various alternatives available. For example, there could be several ways to increase future sales. These alternatives might include increasing advertising, lowering prices, training sales staff, or announcing attractive offers. Planners need to choose the most suitable alternative from these.
8. Concerned with future:
• Planning assumes that there will be uncertainties in the future.
• While staying in the present, planning evaluates the future. Therefore, we can say that planning looks ahead to future events and focuses on taking the best steps for them.
9. Continuous process:
• Planning is a continuous process.
• It is a process that begins with the establishment of the organization and continues until the organization ends. However, plans and the planning process constantly change based on time and situation.
10. Objective oriented activity:
• Planning is done to achieve a specific, pre-determined business goal.
• Once a goal is achieved, management decides the next goal for the business.
• It is good that realistic objectives are set so they can be planned and achieved well. Thus, planning is an activity focused on objectives.
11. Planning considers various available options and then selects the best one. Since planners need to make such decisions regularly, planning is considered a decision-oriented process.
In simple words: Planning involves gathering information to decide activities in advance to achieve business goals. Its characteristics include being a universal process, a primary management function, a conscious mental process, flexible, precise, and requiring forecasting. Planning also involves considering alternatives, focusing on the future, being a continuous process, and being objective-oriented.

Exam Tip: Always remember that planning is a forward-looking process, anticipating future events and setting a course of action to achieve specific objectives effectively.

 

Question 3. Explain elements or components of planning.
Answer: Elements/components of planning: The subsidiary plans and programs on which planning is based are called elements of planning.
The elements of planning are discussed below:
1. Objectives:
• All the plans of a business unit are based on the objectives they want to achieve.
• So, it is important that managers consider all factors affecting the business when creating the plans.
• Such objectives should be set realistically and be achievable.
2. Strategy:
• A plan of action designed to achieve a pre-decided long-term or overall goal is called a strategy.
• Strategy creation helps the business unit become capable enough to face competition or to survive against other factors.
• Strategy should be kept secret from competitors.
• A well-defined strategy can certainly lead to success.
3. Policy:
• The decisions and strategies that management makes to accomplish objectives are known as policies.
• The type of policy created by the business unit shows its idea of efficiency and working style.
• Just like an objective, the policy should also be practical and real.
4. Method/Procedure:
• Business units create various methods or procedures to conduct business activities.
• The method guides the best way for accomplishing pre-determined objectives and performing tasks.
5. Rules:
• Framing rules is very important to complete the functions of planning.
• Rules determine the procedure and give a clear understanding.
• They also ensure that discipline will be followed within the unit among employees.
• Through proper observation of rules, it becomes simple for the unit to achieve its objectives. For example, the rule of stopping mobile use during work hours helps to increase employee efficiency.
6. Budget:
• A budget is a tool that helps control outcomes and achieve business objectives.
• A unit prepares different types of budgets, such as a capital expenditure budget, sales budget, production budget, production cost budget, cash budget, etc.
• A budget helps to control business activities and also to increase management efficiency.
7. Programme:
• The sequence of activities undertaken by a business unit to accomplish a task is called a programme.
• If work is done according to the programme, objectives can be met without any confusion or problems.
• Management ensures that work is done as per the programme and set standards. Corrective actions are taken if there are any deviations.
In simple words: The elements of planning are objectives, strategies, policies, methods/procedures, rules, budgets, and programs. Each element helps guide and structure the planning process to achieve business goals effectively.

Exam Tip: When explaining elements, provide a brief definition and at least one key characteristic or purpose for each to show comprehensive understanding.

 

Question 4. Explain limitations of planning.
Answer: Limitations of planning:
1. Uncertain future:
• Planning is based on assumptions and forecasts; it discusses the future. However, no one truly knows the future, so it is uncertain.
• Therefore, one may make assumptions and create plans based on these. But it should be well noted that assumptions can be wrong. Hence, uncertainties exist in planning.
2. Expensive process:
• In a large unit, experts are involved in the planning function.
• Since these experts are highly experienced and knowledgeable, they charge high consultation fees for helping to create plans.
• While planning, several resources must also be gathered, such as holding meetings, conducting surveys, collecting data, and performing analysis. All these activities require time, effort, and money. Hence, planning involves huge expenses for the unit.
3. Time-consuming: Planning involves gathering necessary information, classifying it, analyzing it, and interpreting it to decide on alternatives for the business. Thus, it is a lengthy and time-consuming process.
4. Planning is irrelevant:
• Although planning is extremely important, the future is uncertain. There are possibilities of changes in government policies, tax rates, prices, demand, supply, etc.
• Any major change can make even a strong plan fail, rendering planning irrelevant in such a situation.
5. Tends to be rigid:
• Planning is done with the future in mind. Now, if a difficult situation arises in the future, managers or employees avoid taking risks, deviating from the plan, and making changes as per the new market situation.
• They stick to the plan; that is, they remain inflexible when making changes.
6. Uncertainty of external factors: Business units are affected by external factors that constantly change. This prevents the success of planning.
7. Incomplete information:
• Gathering necessary information is a requirement for the planning process.
• If a plan is created and implemented based on incomplete and unclear information, it may not give the desired result.
8. Restricts creativity or employees:
• A plan is formed by the manager but implemented by employees (or workers) of the business unit.
• Although employees have creativity and experience regarding business unit processes, they do not have the authority to make changes in the plan. Thus, planning limits employee creativity.
9. Use of faulty methods: When deciding assumptions and estimates for a plan, planners use different mathematical and statistical methods. If these methods or information are faulty or inappropriate, there is a chance the unit may make a wrong decision. This could cause the plan to fail.
10. Other limitations: Besides these limitations, many other factors affect planning, such as changes in technology, planner's prejudice, ignorance of facts, leadership problems, etc.
In simple words: Planning faces limitations like an uncertain future, being an expensive and time-consuming process, potential irrelevance due to changes, rigidity, external factor uncertainty, incomplete information, restricted creativity for employees, and the risk of faulty methods.

Exam Tip: When listing limitations, categorize them (e.g., related to future, cost, human factors) and provide a short explanation for each point.

 

Question 5. Discuss types of plan.
Answer: 1. Standing plan:
When some specific activities in an organization repeat, the organization creates a plan to handle that activity. Such a plan is called a standing plan.
• Standing plans provide guidelines for making decisions in repetitive situations, so they can be used repeatedly.
• Standing plans help subordinates make quick decisions.
2. Strategic plan:
• Strategic planning is an organization's process of defining its strategy or direction and making decisions on how to allocate its resources to follow this strategy.
• Based on their philosophies, business units decide on several business objectives.
• The unit then develops short-term as well as long-term strategies for achieving these, which is called strategic planning.
The effects of strategic plans can be seen over the long term. These plans shape the future of the business.
3. Tactical plan:
• A tactical plan is a short-term plan prepared for a maximum of one year, and it emphasizes the current operations of various parts of the organization.
• Since these are short-term plans, they clarify the short-term objectives that the business aims to achieve. Hence, business activities remain goal-oriented and happen systematically.
• Tactical plans, or short-term plans, are prepared by middle-level management.
• These plans guide departmental heads and employees about the roles they must play to achieve tactical plans.
4. Operational plan:
• An operational plan is a detailed plan that provides a clear picture of how a team, department, or individual will contribute to achieving the organization's strategic goals. An operational plan is almost like a tactical plan.
• Generally, operational plans are formed for a short duration, say about one year.
• Under this, plans related to monthly or quarterly production, sales, etc., are made for achieving annual production objectives.
• These plans are mainly formed for performing routine work and achieving daily targets.
5. Single Use plan:
• As the name suggests, single-use plans are made for handling one-time, non-recurring problems. Single-use plans are also called 'specific plans' because they are meant to solve a particular problem.
• These plans are created to handle non-repetitive and unique problems. These plans cannot be used again and again. They become outdated after achieving their purpose.
• Examples of these plans could be building a dam, creating a budget, or organizing an event.
• A plan designed to consider a possible future event or circumstance is called a contingency plan.
• Business units face changing market situations. These changes could include political, economic, social, or natural factors.
• If the business has to make changes to its original plan or create a new plan due to such reasons, then the plan made is called a contingency plan.
In simple words: Plans can be of different types like standing plans (for repetitive tasks), strategic plans (long-term goals), tactical plans (short-term, departmental goals), operational plans (daily tasks), single-use plans (for unique, one-time problems), and contingency plans (for unforeseen future events).

Exam Tip: Differentiate between the various types of plans by clearly stating their purpose, duration, and the level of management typically involved in their formulation.