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| AHSEC CLASS 12 BUSINESS STUDIES |
AHSEC HS 2nd Year Class 12 Business Studies
CHAPTER-4
PLANNING
Short Answer Type Questions: Type - I (Marks-3)
1. Planning is a continuous process. Illustrate the statement.
Ans. Planning is a never ending or continuous process because after making plans also one has to be in touch with the changes in changing environment and in the selection of one best way So, after making plans also planners keep making changes in the plans according to the requirement of the company. For example, if the plan is made during the boom period and during its execution there is depression period then planners have to make changes according to the conditions prevailing
2. Write three major benefits of planning. Ans. Three major benifits of planning are
Ans: (i) Better utilisation of Resources- Planning ensures better utilisation of resources as the resources are first identified and then operations are planned and are put to best possible use.
(ii) Facilitates decision-making - Planning helps the managers to take various deci sions. As in planning goals are set in advance and predictions are made for future.
(iii) Better co-ordination-Planning will lead to better co-ordination in the organisation which will ultimately lead to better results.
3.Are there any limitations of planning? Explain in brief.
Ans. Yes, there are certain limitations of planning which are as follows -
(i) Planning is costly - On account of heavy costs involved in planning, small and medium concerns find it difficult to make comprehensive plans. Since, these con cerns are already sort of capital, it is difficult for them to spare money for collection of information, forecasting etc.
(ii) Planning is a time consuming process - Planning requires too much time and the decision making process may get delayed especially where immediate decisions are to be taken.
(iii) Inaccuracy in planning-Planning is based on forecasts which cannot be accurate Forecasts relate to future which is very difficult to predict. There can only be a guess-work about what will happen in future
4.Give three differences between policy and procedure with the help amples.
Ans:-
5.Describe the meaning of policies, procedures and budget.
Ans. Policies - Policies can be defined as organisations general response to a particular problem or situation policies are made at every level because the manag ers at every level ned to decide or predetermine the way of handling a situation.
Procedures - Procedures are the required steps established in advance to handle future conditions. The procedure can be defined as the exact manner in which activity has to be accomplished. Budget-Budget is the statement of expected result expressed in numerical terms It is an estimation of the revenue and expenses over a specified future period of time. A budget can be made for a person, family, government, country or just about anything else that makes and spends money.
6.What are rules considered to be planned?
Ans. Rules are rigid instructions. They spell out specific required actions or non actions, allowing no discretion Rules lay down what is to be done and what is not to be done. They are generally formalize in writing and impersonal in nature. That is why rules are considered to be planned
7. Explain 'method', 'rule' and 'strategy' as types of plan.
Ans. The term method' refers to the manner of proceeding in the performance of work. They are work plans giving details of the manner and sequence of performing the individual task. They influence the behaviour of individuals. A 'rule' is a plan that lays down a required course of action with regard to a situa tion. A rule is in the nature of a decision made by management regarding what is to be done and what is not to be done in a particular situation. A strategy is a comprehensive plan to achieve the organisational objectives Startegy defines the future decisions regarding the organisation's direction and scope in the long run.
8. "Sometimes planning fails in spite of the best efforts of management." Do you agree? Give any three reasons to support your answer.
Ans. Yes, I agree with the statement that planning fails inspite of the best efforts of management. The planning may fail because of the following reasons
(i) Planning leads to rigidity - Once plans are made to decide the future course of action the manager may not be in a position to change them.
(ii) Planning involves huge cost- Planning process involves a lot of cost because it is an intellectuals process and companies need to hire the professional experts to carry on this process.
(iii) It is a time consuming process - Planning process is a time consuming process because it takes long time to evaluate the alternatives and select the best org.
Short Answer Type Questions: Type-11 (Marks-4)
1.What is strategy in planning?
Ans. In planning strategy is an activity that is used to set priorities, focus energy and resources, strengthen operations, ensure that employees and other stakeholders are working toward common goals, establish agreement around intended outcomes/ results, and assess and adjust the organizations direction in response to a changing environment. It is a disciplined effort that produces fundamental decisions and ac tions that shape and guide what an organization is, who it serves, what it does and why it does it, with a focus on the future Effective strategic planning articulates not only where an organization is going and the actions needed to make progrees, but also how it will know if it is successful.
Strategic planning is an organizations process of defining its strategy, or direction and making decisions on allocating its resources to pursue this strategy. It may also extend to control mechanisms for guiding the implementation of the strategy.
2. What is planning premises?
Ans. Planning premises refers to the anticipated environment in which plans are expected to operate. They inclu assumptions forecasts of the future and known conditions that will affect the operations of plans, Planning is made depending on some information. This information is included in planning premises. It is very es sential to make plans as sometimes the informations are available and sometimes they are not. These information are mainly known as planning premises Sometimes efficient information are got from forecasting, in such a situation planning premises become strong. For planning premises managers may not face any uncertainity for implementing plans. Premises are important because thay give important informa tions about future to managers. There are mainly three categories of planning pre mises
(a) Internal and external premises,
(b) Tangible and intangible premises.
(c) Controllable and non-controllable premises.
3. What is budget in planning?
Ans. In planning, "budget refers to a quantitative expression of a plan for a defined period of time. It may include planned sales volumes and revenues, resource quan tities, cost and expenses, assets, liabilities and cash flows. It expresses startegic plans of business units, organizations, activities or events in measurements terms. Budget planning entails identifying the sources of income and taking into account all current and future expenses, with an aim to meet an individual's financial goals. The primary aim of budget, planner is to ensure savings after the allocation for spending. By following good budgeting strategies, one can ensure the successful management of his or her expenditure and the recording of savings so that investments may be made for securing one's future.
4.Why alternatives are chosen in selecting a plan?
Ans. In selecting a plan, the planner should study all the alternatives and then a final selection should be made. Best results will be achieved only when best way of doing a work is selected. The best alternative is selected but as such there is no math ematical formula to select the best alternative. Sometimes, instead of selecting one alternative, a combination of different alternatives can also be selected.
After preparing the main plan, the organisation has to make number of small plans to support the main plan. These plans are related to performance of routine jobs in the organisation. These are derived from the major plans. So, they are also known as derivative plans.
5. What is procedure in planning?
Ans. In planning, procedures refers to the required steps established in advance to handle future conditions. The sequence of steps to be followed by employees in different situations must to be followed by employees in different situations must be pre determined. So, that everyone follows same steps. In planning, procedures are details of actions or the guidelines for the achievements of business objectives. The procedure can be defined as the exact manner in which an activity has to be accom plished.
For example- The procedure for admission in a particular school can be
(a) Set up a fill for applicants.
(b) Accept the filed forms and put them in a file.
(c) Ask for other certificates to verify score or marks .
(d) Put those documents also in the file
(e) Give the file to admission in charge.
6. Explain 'objective' and 'policy' as types of plans using suitable examples.
Ans. Objectives are the goals established to guide the efforts of the company and its various constituents. These are the standards of performance which are ex pected to be achieved. Objectives are a pre-requisite for planning. No planning is possible without setting up of objectives. Effective management is possible only through the setting up of objectives and all efforts should be directed to achieve these objectives.
Eg-Increase in sale by 10% or decrease in rejections by 2% Policy can be defined as organisations general response to a particular problem or situation. Policies are made at every level because the managers at every level need to decide or pre-determine the way of handling a situation and policy acts as a guide to take decisions in unexpected situations. Policy formation always encour ages initiatives of employees because employees have to deal with situations and the way of handling the situation is decided in consultation with the employees. Eg: "No credit sale policy", etc Introduction of new products in the market.
Long Answer Questions: Type - 1 (marks -5)
1. What are the process of planning?
Ans. The process of planning are as follows
(i) Setting up of the objectives:-In planning function manager begins with setting up of objectives because all the policies, procedures and methods are framed for achieving objectives only. Manag ers prefer to set up goals which can be achieved quickly and in specific limit of time
(ii) Developing premises:-Premises are the base on which plans are made. It is kind of forecast made keeping in view existing plans and any past information about various policies. The assump tions are made on the basis of forecasts.
(iii) Listing the various alternatives for achieving the objectives:- After setting up of objectives the managers make a list of alternatives through which the organisation can achieve its objectives as there can be many ways to achieve the objective and managers must know all the ways to reach the objectives.
(iv) Evaluation of different alternatives After making the list of various alternatives along with the assumptions supporting them, the manager starts evaluating each and every alternative and notes down the positive and negative aspects of every alternative. Alternatives are evaluated in the light of their feasibility.
(v) Selecting an alternative:-The best alternative is selected but as such there is no mathematical formula to select the best alternative. Sometimes instead of selecting one alternative a combi nation of different alternatives can also be selected.
2.what assumptions do you take into consideration while drafting a plan?
Ans. While drafting a plan, the following assumptions are taken into consideration
(i) Clear objectives-A good plan should be based on clearly defined objectives. If the goals are not clear then there will be a confusion and chaos
(ii) Proper Understanding-The implementation of a plan will depend its proper under. standing by those who are to execute it. If the concerned persons have not properly followed the plan and are not clear about the ways of understanding it then there will be no use of such a plan.
(iii) Comprehensive - The plan should cover each and every aspect of the business for proper fulfilment of objectives
(iv) Flexible-Aplan should be flexible to accomadate future uncertainities. The future cannot be accurately predicted and there is always a likelihood of new things com ing up. A flexible plan will be one which will smoothly adjust requirements of chang ing conditions.
(v) Economical-The cost involved in preparing and executing a plan should be consid ered. A plan should be as economical as possible, depending upon the resources available with the enterprise.
Class 12 Ahsec Business Studies Planning Important notes and Solutions
3.What are the methods of planning?
Ans. The different types/methods of planning are --
(i) Objectives - Objectives are the goals established to guide the efforts of the com pany and its various constituents. These are the standards of performance which are expected to be achieved. Objectives are a pre-requisite for planning. No plan ning is possible without setting up of objectives. Effective management is possible only through the setting up of objectives and all efforts should be directed to achieve these objectives
Eg-Increase in sale by 10% or decrease in rejections by 2%
(ii) Policies Policy can be defined as organisations general response to a particular problem or situation. Policies are made at every level because the managers at every level need to decide or pre-determine the way of handling a situation and policy acts as a guide to take decisions in unexpected situations Policy formation always encourages initiatives of employees because employees have to deal with situations and the way of handling the situation is decided in consultation with the employees.
Eg: "No credit sale policy", etc Introduction of new products in the market
(iii) Method - The term "method' refers to the manner of proceeding in the perfor mance of work. They are work plans giving details of the manner and sequence of performing the individual task. They influence the behaviour of individuals task.
(iv) Rules -A 'rule' is a plan that lays down a required course of action with regard to a situation. A rule is in the nature of a decision made by management regarding what is to be done and what is not to be done in a particular situation
(v) Strategy -A strategy' is a comprehensive plan to achieve the organisational objec tives. Startegy defines the future decisions regarding the organisation's direction and scope in the long run
Long Answer Questions: Type-II (Marks-6)
1.What are the main features to be considered by the management while planning?
Ans. While planning, the following features are to be considered by the manage ment
(i) Planning is primary function of management Planning is the primary or foremost function to be performed by every manager. No other function can be executed by the manager without performing planning func tion because objectives are set up in planning and other functions depend on the objectives only
(ii) Planning contributes to objectives - Planning starts with the determination of ob jectives. We cannot think of planning in absence of objective After setting up of the objectives, planning decides the methods, procedures and steps to be taken for achievement of set objectives:
(iii) Pervasive-Planning is required at all levels of the management. It is not a function restricted to top level managers only but planning is done by managers at every level.
(iv) Planning is forward looking-Planning always means looking ahead or planning is a futuristic function Planning is never done for the past.
(v) Planning is continuous-Planning is a never ending or continuous process because after making plans also one has to be in touch with the changes in changing environ ment and in the selection of one best way.
(vi) Planning is a mental exercise - It is mental exercise. Planning is a mental process which requires higher thinking, that is why it is kept separate from operational ac tivities.
2. What are the important steps taken by management in the planning process?
Ans. In planning process, the management takes the following steps__
(i) Recognising Need for Action - The first step in planning process is the awareness of business opportunity and the need for taking action. Present and future opportu nities must be found so that planning may be undertaken for them.
(ii) Gathering necessary information - Before actual planning is initiated relevant facts and figures are collected. All information relating to operations of the business should be collected in detail.
(iii) Laying down objectives - Objectives are the goals which the management tries to achieve. The objectives are the end products of and all energies are diverted to achieve these goals.
(iv) Determining planning premise-Planning is always for uncertain future. Though nothing may be certain in the coming period but still certain assumptions will have to be made for formulating plans.
(v) Examining Alternative course of Action - The next step in planning will be choosing the best course of action. there are a number of ways of doing a thing. The planner should study all the alternatives and then a final selection should be made.
(vi) Evaluation of action patterns-After choosing a course of action, the next step will be to make an evaluation of those courses of action. Evaluation will involve the study of performance of various actions.
3. "Planning is not a guarantee of success of a business." Comment.
Ans. It is right to say that planning is not a guarantee of success of a business because planning function is based on certain assumptions regarding future and no one can give guarantee that assumptions regarding future are 100% accurate. The planning function suffers from certain limitations which are__
(i) Planning leads to rigidity - Once plans are made to decide the future course of action the manager may not be in a position to change them.
(ii) Planning reduces creativity - With the planning the managers of the organisation start working rigidly and they become the blind followers of the plan only.
(iii) It involves huge cost - Planning process involves lot of costs because it is an intel lectual process and companies need to hire the professional experts to carry on this process,
(iv) It is a time consuming process - Planning process is a time consuming process because it takes long time to evaluate the alternatives and select the best one.
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