CBSE Class 12 Business Studies HOTs Planning Set B

CBSE Class 12 Business Studies HOTs Planning Set B

Chapter-3 Planning

Hots Questions

1. One of the functions of management is closely connected with creativity and innovation. Identify the management functions
2. Which functions of management is considered as the base of all other function ?
3. State any two consequences if there was no planning.
4. What is meant by ‘Pervasiveness of planning’ ?
5. Planning requires logical and systematic thinking rather than guen work. Which feature of planning is highlighted here ?
6. What is the focus of planning ?
7. How does planning reduce the risks of uncertainty ?
8. ‘Planning provides directions’. State two benefits derived from it.
9. Explain how controlling is not possible without planning.
10. Name any two factors which affect business plans.
11. While formulating a plan, the manager is required to make certain assumptions about the future. What are these assumptions called ?
12. How are alternative courses of action evaluated wile formulating a plan ?
13. How should a manager select the best possible course of action ?
14. Strategy is a comprehensive plan which includes three dimensions. Enumerate them.
15. Name the type of plan which serves as a guide for overall business planning and define the future state of affairs which the organization strives to realise.
16. Name the type of plan which provides a basis for interpreting the strategy.
17. State the relationship between policies and objectives.
18. Name the type of plan in which the minutest details are worked out, that is procedures, rule and budget within the broad frame work of policy.
19. Name the type of plan which is also a control device from which deviation can be taken care of.
20. Though a budget is a control device from which deviations can be taken care of, yet it comes under planning. Why ?
21. ‘Offering 30% jobs to women.’ What type of plan is it ?
22. Puneet electronics decides to sell television sets though exchange of old television sets. What type of plan is it ?
23. A company needs a detailed plan for its new project-Construction of shopping mall. What type of plan is it ?
24. Which function of management is considered as the base of all other functions ?
25. Which limitation of planning suggest that the employees step thinking and become the blind follows of plan ?
26. In which type of plan the sequences to perform a job are determined ?
27. Which plan suggests acts and non-action of employees ?
28. ‘No Smoking’-this statement is related to which type of plan ?
29. Mc Donald co. does not give its franchise to any other co. Which is running food business. This is related to which type of plan ?
30. In which step of planning process the planners make predictions and assumptions regarding future ?
31. ‘No enterprise can achieve its objectives’. Do you agree with this statement ?
 
Give any five reasons in support of your answer.

32. Planning is not a guarantee of success of a business. Comment.
33. ‘Sometimes planning fails in spite of the best efforts of management’. Do you agree ? Give any five reasons in support of your answer.
34. Give two examples of goal, objectives, policy.
 
QUESTION BANK
Very Short Answer type :—

1. Define planning.
2. Point out whether Planning is a physical or mental activity.
3. Does planning eliminate risk ?
4. How does planning affect initiative ?
5. Name the managerial function, which is the beginning and end of all managerial activities.
6. Name three types of plan.
7. ‘Planning in mental preposition to do things!’ Who thinks so ?
8. Why is planning regarded as pervasive function of management ?
9. How does planning restrict creativity ?
10. What is meant by policies as a type of plans ?
11. Explain rule as a type of plan ?
12. Name the other name of directional plan.
 
Short Answer Type Questions :—

1. Enumerate the differences between policies and strategies.
2. Distinguish between rules and methods.
3. State the limitations of planning.
4. How does planning help co-ordination ?
5. Explain the characteristics of a sound plan.
6. Write features of planning.
7. Why does planning fail sometimes in spite of the best efforts of management?
8. Planning involves choice. Explain.
 
Long Answer Type Questions :—

1. Explain briefly any six points which highlighted the importance of planning.
2. State steps involved in planning process.
3. Planning is looking ahead and controlling is looking back. Explain.
4. What is planning ? How can Government policies and technological changes create problems in Planning ?
5. How does planning help co-ordination, facilitate decision making and promote creativity ?
6. How does planning reduce the risk of uncertainty, provide the bases of control and lead to economy ?
7. In spite of best efforts of managers sometimes planning fails to achieve desired results due to its limitations. Explain any six limitations .
 
Suggested answers to Hots Questions(11)

Ans. 1 Planning
Ans. 2 Planning
Ans. 3 If there was no planning employees would be working in different directions & the management would not be able to achieve the desired results/goals.
Ans. 4 Planning is all pervasive. It implies that planning is required at all levels of management as well as in all departments of the organisation..
Ans. 5 Planning is a mental exercise.
Ans. 6 Forecasting of the events.
Ans. 7 By deciding in advanced the tasks to be performed planning shows the way to deal with change and uncertain events. Thus, the manager can identify potential dangers and take steps to overcome them.
Ans. 8 (i) When goals are clearly defined, employees are aware of what the objectives are and what they must do to achieve them.
(ii) Departments and individuals are able to work in co-ordination.
 
Ans. 9 Planning is a pre-requisite for controlling. It provides the goals or standards against which the actual performance is measured, deviations are found out and corrective action is taken. If there were, no goals and standards, finding deviations and taking corrective action would not be possible which are a part of controlling.
Ans. 10 (i) Unforeseen events and changes.
(ii) Rise in costs prices.
 
(iii) Environmental changes.
(iv) Govt. intervention.
(v) Legal regulations.
 
Ans. 11 Planning premises.
Ans. 12 The positive and negative aspects of each alternative course of action are evaluated in the light of the objective to be achieved, their feasibility & consequences.
Ans. 13 The manager should apply permutations & combinations.
Ans. 14 (a) Determining long term objectives
(b) Adopting a particular course of action.
(c ) Allocating to achieve the objectives.
 
Ans.15 Objectives
Ans. 16 Policies
Ans. 17 Policies provide broad guidelines as to how the objectives of the enterprise are to be achieved.
Ans. 18 Programme.
Ans. 19. Budget.
Ans. 20 Because making a budget involves forecasting.
Ans. 21 Policy.
Ans. 22 Strategy
Ans. 23 Programme
Ans. 24 Planning.
Ans. 25 “Reduces creaturity or adverse effect on initiative”. Briefly explain.
Ans. 26 Procedure.
Ans. 27 Rules
Ans. 28 Rule
Ans. 29 Related to policy of company.
Ans. 30 “Setting up of planning permi sex all the alternatives”. predictions are made.
Ans. 31. Yes, I agree with the statement. Planning is the primary function of every organisation objectives are laid down- Give 5 reasons for importance of planning.
Ans. 32 It is right to say that planning is not a guarantee of success of business. Since it based on assumptions regarding future and assumptions can not be hundred percent accurate- Give 5 limitations of planning.
Ans. 33 yes I agree-state 5 limitations of planning.
 
Ans. 34. Goal
1. Increase in Sale.
2. Attain No. 1 position in market.
 
Objective
1. Increase in production by 10% in 6 months.
2. Increase in Sale by 5%.
 
Policy :
1. Give admissions to students securing more than 60% marks.
2. Policy of MC. Donald, not to give franchise to a business man, who is already having a restaurant.
 
Suggested answers to the Question Bank

Very Short answer type
Ans. 1 Planning in deciding in advance what to do and how to do. Before doing something, the manager always formulates an idea of how to work on a particular task.
Ans. 2 Planning is a mental activity. It requires application of the mind involving creative thinking and imagination, foresight & judgment. A manager can make sound. Plans only when he has sound judgment, foresignt & vision. Plg; in not mere guess work but involves logical & systematic thinking.
 
Ans. 3 No, Planning does not eliminate risk. It only reduces the risks. Business enterprises operate in an uncertain environment and face several types of risk. Planning enable these enterprices to predict future events & prepare to face the unexpected events. With the help of planning mangers can identify potential dangers and take steps to overcome them. Thus plg. helps to reduce risk.
Ans. 4 Planning affects initiative as it facilitates the decision making and reducesthee overlapping and wasteful activities.
Ans. 5 Planning.
Ans. 6 (a) Policies (b) Objectives (c) Strategies.
Ans. 7 Koontz and O’ Donnell.
Ans. 8 Planning is regarded as a pervasive function as it is required at all levels of mgt. as well as in all departments of the organisation. However the scope of plg. differs at differs at different levels and among different departments.
Ans. 9 Plg in an activity which is done by top mgt. usually the rest of the organisation just implements these plans. The result is that middle management and other decision makers are neither allowed to deviate from plans nor are they permitted to act on their own. This planning restricts creativity.
 
Ans. 10 Policies are general statements or understandings which guide thinking indecision-making. Example : Different business firms may follow different sales policies as stated below :
 
“We don’t sell on credit.”
“It is our policy to deal with wholesalers only.”
A policy is based on the objectives of the enterprise. While objectives provides the ends which a manager should try to achieve, the policies provided broad guidelines as to how the objectives of the enterprise are to be achieved.
Ans. 11 Rules are specific statements that tell what is to be done.
 
o A ‘rule’ reflects a managerial decision that a certain action must or must not be taken.
o They are usually the simplest type of plans because there is no compromise or change unless a policy decision is taken.
o Rules are rigid and definite plans that specify what is to be done or not to be done is given situations.
o Rules are to be enforced rigidly and there is generally a fine or penalty for violation of rules. They do no allow for any flexibility or discretion.
 
Ans. 12 Strategy.
CBSE_Class_12_Bussiness_Studies_Planning _Set_B_1
CBSE_Class_12_Bussiness_Studies_Planning _Set_B_2
Ans. 3 I) Planning does not work in dynamic environment.
2) It is a time consuming process.
3) It involves huge costs.
4) It creates rigidity.
 
Ans. 4 Planning makes co-ordination of various activities, departments and groups relatively easy, planned programmes of activity serve as the basis of harmonizing the efforts of different division, departments and people. Thus, for example, manufacturing and sales activities can be co-ordinate only if plans of the production department are drawn on the basis of sales plane. In the absence of proper planning of interrelated activities the production department may turn out goods which the sales department may not be able to sale and conflict may occur between then heads of two departments. Confusion and misunderstanding may also occur in the absence of integrated planning of different activities co-ordination of departmental operations is facilitated by planning through the establishment of common goals as guide posts.
 
Ans. 5 Characteristics of sound plan are :

• Plan should be simple : for a good plan to be effective, it should be simple, to understand and worked upon different individuals and groups.
• Plan should be specific : objectives and goals should be clearly defined and explained. Thus planning is purposeful.
• Plan must be flexible : conditions under which a business operate keep on changing. Therefore, planning must be flexible and not rigid. It should enable the management to take care of the changes in the environment.
 
Ans. 6 Planning is essential for a business organisation. It is difficult to manage operations without formal planning. it is important for the organisation to move towards achieving goals. But often things to not always go according to plan. Unforeseen events and changes, rise in costs and prices, environmental changes, government interventions, legal regulations, all affect our business plans. Plans then need to be modified. Therefore, planning might fail due to the following limitations :
 
1. Planning does not work in dynamic environment : The business environment is dynamic, nothing is constant. The environment consists of a number of dimensions—economic, political, technological, legal and social dimensions. The organisation has to constantly adapt itself to the changes in business environment. However, it is not always possible to accurately assess future trends in the environment.
• Competition in the market can upset financial plans.
• Sales targets have to be revised and according is cash budgets also need to be modified since then are based on sales figures.
Thus, planning cannot foresee everything and thus these are obstacles to effective planning.
 
2. Planning is a time consuming process : Planning is a time consuming process. It requires collection of information, its analysis and interpretation. These activities may take considerable time. Sometimes plans to be drawn up take so much of time that there is not much time left for implementation of plans.
 
3. Planning involves huge costs : Planning is an expensive process in terms of money. When plans are drawn up, huge costs are involved in the formulation of plans. If the costs are not justified by the benefits derived from the plan, it may have adverse effect on the enterprise. There are a number of incidental costs as well, like expenses on Board’s meetings, discussions with professional experts and preliminary investigations to find out the viability of the plan.
 
4. Planning creates rigidity : Planning leads to rigid mode of functioning for managers. This has adverse effect on the initiative to be taken by them.
 
5. Planning does not guarantee success : The success of an enterprise is possible only when plans are properly drawn up implemental. Managers have a tendency to rely on previously tried and tested successful plans. But it is not always true that a plan which has worked before, will work effectively again.
 
6. Planning reduces creativity : Planning is an activity which is done by top management. Usually the rest of the organisation just implements these plans. As a consequence, middle management and other decision makers are neither allowed to deviate from plans nor are they permitted to act on their own. They only carry out orders. Thus, planning in a way reduces creativity. There is nothing new or innovative.
 
Ans. 7Planning does not guarantee success. The success of enterprise is possible only when plans are properly drawn up and implemented. The business environment is dynamic, nothing is constant. the organisation has to constantly adapt itself, to the changes of in business environment. I agree with the statement & ”Thought business is an important tool of management, yet it is not a remedy in business environment. Planning can’t prevent problem. It can only product them to prepare contingency plans to deal with them if and when they occur. Planning fail inspire of efforts of management because of its imitation.
 
Ans. 8 Planning essentially involves choice from among various alternatives and objectives of there is one possible goal or only one possible course of action, there is no need of planning because thee is no choice. The need for planning arises only when alternative are available. In actual practice, planning presuppose the existence of alternatives, planning, thus, involves through examination and evaluation for each afternative and choosing the most appropriate one.
 
Long Answer Type

Ans. 1 Planning is of vital importance in the managerial process. No enterprise can achieve its objectives without systematic planning. “Planning is the heart of management” The following points highlight the importance of planning function of management :
 
1. Planning provides directions : By stating in advance how work is to be done, planning provide direction for action. If goals are well defined, employees are aware of what the organisation has to do and what they must do to achieve those goals. Departments and individuals in the organisation are able to work in coordination Planning keeps the organisation on the right path. If there was no planning, employees would be working in different directions and the organisation would not be able to achieve its goals efficiently.
 
2. Planning reduces the risks of uncertainty : Business enterprises operate in an uncertain environment and face several types of risks. Planning enables these enterprises to predict future events and prepare to face the unexpected events. With the help of planning, managers can identify potential dangers and take steps to overcome them. Thus, planning helps risk and uncertainty.
 
3. Planning facilitates decision-making : Decision-making involves searching for various alternative courses of action, evaluating them and selecting the best course of action. Under planning, targets are laid down. With the help of these targets, managers can better evaluate alternative courses of action and select the best alternative. Plans lay down in advance what is to be done and how it is to be done. Therefore, decisions can be taken with greater confidence.
 
4. Planning reduces overlapping and wasteful activities : Since planning ensures clarity in thought and action, work is carried on smoothly without interruptions. There is no confusion and misunderstanding. Useless and redundant activities are minimized or eliminated. It is easier to detect inefficiencies and take corrective measures to deal with them.
 
5. Planning promotes innovative ideas : Planning is thinking in advance and, therefore, there is scope of finding better ideas and better methods and procedures to reach the objectives/goals of the enterprise.
This forces managers to think differently about the future of the organizations from the present. Thus, planning makes the managers innovative and creative.
 
6. Planning establishes standards for controlling : Planning provides the goals or standards against which the actual performance can be measured and evaluated. A comparison of actual performance with the standards helps to identify the deviations and to take corrective action. Planning makes control meaningful and effective. ‘Control is blind without planning.” Thus, planning provides the basis of control.
 
Ans. 2 1. Setting organizational objectives : The first and foremost step in the planning process is setting organizational objectives or goals, which specify what the organisation wants to achieve. For example, an increase in sales by 20% could be the objective of the organisation. Objectives may also be set for each individual department. They give direction to all departments.
 
2. Developing planning premises : Planning is concerned with the future, which is uncertain. Therefore, the manager is required to make certain assumptions about the future. These assumptions are called premises. Assumptions are made in the form of forecasts about the demand for a particular product, government policy, inerest rates, tax rates, etc. Therefore, accurate forecasts become essential for successful plans.
 
3. Identifying alternative courses of action : Once objectives are set and assumptions are made, then the next step is to identify all possible alternative courses of action. For example, in order to achieve the organizational objectives of increasing profit, the alternatives may be
a. increase the sales of an existing product, or
b. produce and sell a completely new product.
 
4. Evaluating alternative courses : The positive and negative aspects of each proposal need to be evaluated in the light of the objective to be achieved, its feasibility and consequences. For example, the risk-return trade-off is very common. The more risky the investment, the higher is the possibility of returns. To evaluate such proposals, detailed calculations of earnings, earnings per share, interest, taxes, dividends are made.
 
5. Selecting the best possible alternative : This is the real point of decision making. The best/ideal plan has to be adopted, which must be the most feasible, profitable and with least negative consequences. The manager must apply permutations and combinations and select the best possible course of action. Sometimes, a combination of plans may be selected instead of one best plan.
 
6. Implementing the plan : Once the plans are developed, they are put into action. For this, the managers communicate the plans to all employees very clearly and allocate them resources (money, machinery, etc.).
 
7. Follow-up action : The managers monitor the plan carefully to ensure that the premises are holding true in the present condition or not. If not, adjustments are made in the plan.
 
Ans. 3 Planning is looking ahead and controlling is looking back. Plans proceed the standards/targets against which actual performance is compared. bevlation of actual result from the standards indicate the nature of corrective action needed therefore planning may be said to provide basis of control for example a firm has planned to seel 100 units of its product performance of sales department shall be compared with the planned safe and corrective actions would be taken. Thus planning provides the basis of control.
Ans. 4 Refer Ans. 1 (VSA) Planning is not a guarautee of success in dynamic environment.
Ans. 5 Refer Ans. 4 (SA) and features of planning (Ans. 6-SA)
Ans. 6 Refer Ans. 6 (SA)
Ans. 7 At the back of Ans. 5/5 short Answer.

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