Planning Class 12 Important Questions and Answers Business Studies Chapter 4

We have given these Business Studies Class 12 Important Questions Chapter 4 Planning to solve different types of questions in the exam. Go through these Planning Class 12 Important Questions and Answers & Previous Year Questions to score good marks in the board examination.

Important Questions of Planning Class 12 Business Studies Chapter 4

Question 1.
What is meant by ‘Rule’? (All India 2019)
Answer:
Rule is a specific statement that informs what is to be done and what not. They must be strictly followed and one cannot alter them.

Question 2.
Varsha Jain after completing her fashion designing course from Indian Institute of Fashion Technology planned to enter into designer clothing venture. She had to address issues like her target customers, channel of distribution to be used, pricing policy etc. Identify the type of plan that Varsha Jain needs to develop to provide direction and scope to her organisation in the long run. (Delhi 2019)
Answer:
Varsha should develop ‘Strategy’ for her business.

Question 3.
Saurabh decided to start a chocolates manufacturing business. He set the target of earning 10% profit on sales in the first year. As a good businessman, he was concerned about the future of the business, which was uncertain. He gathered information that the demand for chocolates
is increasing day-by-day. He used this information as the base for future planning and shared it with his team. On the basis of the gathered information, he scheduled a meeting in the following week to find innovative ways to achieve the objectives.
List the first two steps, which have been followed by Saurabh that are related to the process of one of the functions of management. (CBSE 2018)
Answer:
The function of management referred here is Planning. The first two steps of planning followed by Saurabh are:

Setting Objectives
Developing Premises

Question 4.
Give the meaning of “Method’ as a type of plan. (CBSE 2018)
Answer:
‘Method’ as a type of plan provides the prescribed ways or manner, in which a task has to be performed considering the objectives.
They are formalised and standardised ways of accomplishing repetitive and routine jobs, thus, are considered under the standing plan.
It deals with a task which may be a step of a procedure and specifies how a step is to be performed, e.g. methods of training, methods of recruitment, etc.

Question 5.
Give the meaning of ‘programme’ as a type of plan. (All India 2015; Compartment 2013)
Answer:
These are the combination of goals, policies, procedures and rules. The programmes are made to achieve specific objectives. For example, there might be a project of constructing a shopping mall.

Question 6.
Give the meaning of ‘objective’ as a type of plan. (All India 2015)
Answer:
These are defined as ends which the management seeks to achieve by its operations. The objectives are usually set by top management of the organisation and focus on broad and general issues. They define the future state of affairs which the organisation strives to realise.

Question 7.
Give the meaning of method as a type of plan. (Compartment 2015; All Indio 2014; Delhi 2014)
Answer:
Method provides the precribed ways in which work is to be performed considering the objective.

Question 8.
Define planning premises. (Delhi 2015)
Answer;
Premises refers to making assumptions regarding future. Premises are the base on which plans are made. It is a kind of forecast made, keeping in view existing plans and any past information about various policies.

Question 9.
Define planning. (Delhi 2015, Comportment 2015)
Answer:
According to Koontz and O’ Donnell “Planning is deciding in advance what to do, how to do it, when to do it and who is to do it”.

Question 10.
Give the meaning of policy as type of plan. (All India 2015; Delhi 2014)
Or
What is meant by policy as a type of plan? (Delhi 2014)
Answer:
A policy is a general statement which guides the action and decision of the subordinates in various departments. It provides the basis for interpreting strategy, which is usually stated in general terms.

Question 11.
‘Dreams can he turned into reality only when managers think in advance what to do and how to do it’. Name the function of management indicated by the statement. (Comportment 2014)
Or
‘Deciding in advance what to do and how to do is one of the basic management functions’. Give the meaning of this function. (Comportment 2014)
Answer:
Planning seeks to bridge the gap between where we are and where we want to go. It involves setting objectives and targets and formulating an action plan to achieve them.

Question 12.
Which type of plan has the least flexibility and why? Compartment 2014
Or
State the type of plan that does not allow any flexibility. (All India (C) 2014)
Answer:
Rules are enforced rigidly. No exception or deviations are allowed in rules. With regard to rule, the managers have no scope for discretion.

Question 13.
Name the type of plan which is in the form of general statements and channelise energies towards a particular direction. (Delhi (C) 2014, 2010)
Answer:
Policies are general statements that guide thinking or channelise energies towards a particular direction.

Question 14.
‘To see whether plans are being implemented and activities are being performed according to schedule’, is a step of planning process. Identify the step. (All India 2013)
Answer:
Follow-up action This step is concerned with carefully monitoring whether the plans are being implemented and activities are performed according to schedule or not. The managers need to carefully check that the premises are holding time in the existing conditions.

Question 15.
Name the type of plan which tells what is to be done and what is not to be done. (Compartment 2012)
Answer:
Rules are the type of plan which tells what is to be done and what is not to be done.

Question 16.
Name the type of plan which defines the parameters in which a manager may function. (Comportment 2012)
Answer:
Strategy

Question 17.
Name the type of plan which is time bound and linked with measurable outcome. (Delhi 2012)
Answer:
Objective/Budget

Question 18.
Name the type of plan which provides the broad contours of an organisation’s business. (All India 2012)
Answer:
Strategy

Question 19.
‘Planning is done for achieving the organisational goals’. Do you agree? Give one reason in support of your answer. (Delhi 2012)
Answer:
Yes, planning ensures that goals or objectives are clearly stated so that they act as a guide for deciding what action should be taken and in which direction.

Question 20.
State why planning is called primary function of management. (Comportment 2012)
Answer:
Planning is called the primary function of management because it serves as a basis for all the other functions of management and precedes them.

Question 21.
State why planning is called a pervasive function of management. (Comportment 2012; Foreign 2012)
Answer:
Planning is called a pervasive function of management because it is required at all levels and departments of all business as well as non-business organisations.

Question 22.
State how planning “leads to rigidity’? (All India 2010)
Answer:
The existence of plan puts managerial activities in a rigid framework. Programmes are carried out according to plans. Managers become more concerned with observing the rules and procedures as laid down in the plan rather than achieving the goals.

Question 23.
State how planning reduces creativity? (Delhi (C) 2010)
Answer:
Planning makes managers and workers a puppet. They are expected to follow the guidelines laid down in plAnswer: Everything is pre determined. This discourages the creative thinking and initiative on the part of people working at various levels in the organisation.

Question 24.
Name the type of plan which specifies the steps to carry out different activities in a chronological order. (All India 2010)
Answer:
Procedure lays down the routine steps on how to carry out activities. They are specified in a chronological order.

Question 25.
State any three points of importance of planning function of management. (All India 2019, Delhi 2017)
Or
State any three points of importance of planning. (All India 2017,2016; Delhi 2016,2012)
Answer:
The three points of importance of planning as follows: (any three)
(i) Planning provides direction By stating in advance how work is to be done, planning provides direction for action. It reduces aimless activity and makes action more meaningful.
(ii) Planning reduces the risk of uncertainty Planning is always done for future and future is uncertain. With the help of planning, possible changes in future are anticipated and various activities are planned in the best possible way.

(iii) Planning facilitates decision-making Planning is an intellectual activity. It helps the manager to look into the future and make a choice from amongst various alternative courses of action. The manager has to evaluate each alternative and select the most viable option. Thus, decision-making is inherent in planning.

(iv) Planning promotes innovative ideas Planning is the first function of management, where new ideas can take the shape of concrete plAnswer: It is the most challenging job or an activity of the management as it guides all future actions, leading to growth and prosperity of the business.

(v) Planning reduces overlapping and wasteful activities Planning serves as the basis of coordinating the activities and efforts of different divisions, departments and individuals. It helps in avoiding confusion and misunderstanding. Since, planning ensures clarity in thought and action, hence, the work is carried on smoothly without any intermptions.

Question 26.
Explain any three limitations of planning function of management. (All India 2019)
Or
State any three limitations of planning. (All India 2017,2016; Delhi 2017; Foreign 2016)
Or
How does planning lead to rigidity and reduce creativity? Explain. (Compartment 2014)
Answer:
The limitations of planning are as follows: (any three)
(i) Planning leads to rigidity In an organisation, a well-defined plan is drawn up with specific goals to be achieved within a specific time frame. These plans then decide the future course of action and managers may not be in a position to change it with change in the external environment. This kind of rigidity in plans may create difficulty.

(ii) Planning may not work in dynamic environment The environment is not static, it keeps on changing. The organisation has to constantly adapt itself to such changes. It becomes difficult to access future trends in the environment. Hence, planning cannot foresee everything and fails to work in a dynamic environment.

(iii) Planning reduces creativity Plans are usually formulated at the top level. Middle and lower level managers are expected to follow them. Therefore, much of initiative and creativity inherent in them gets lost.

(iv) Planning involves huge costs When plans are drawn up, huge costs are involved in their formulation. These may be in terms of time and money. According to Koontz and 0′ Donnell, “Expenses on planning should never exceed the estimated benefits from planning”.

(v) Planning is a time consuming process Planning is a lengthy process. It consumes a lot of time in defining objectives, collection of data, analysis of data and choice of alternatives. Sometimes plans to be drawn up take so much of time that there is not much time left for their implementation.

Question 27.
Explain how
(i) Planning reduces the risks of uncertainty; and (Compartment 2018)
(ii) Planning involves huge costs. (Comportment 2013)
Answer:
(i) Planning reduces the risks uncertainity Planning is always done for future and future is uncertain. With the help of planning, possible changes in future are anticipated and various activities are planned in the best possible way.

(ii) Planning involves huge costs Refer to ans no. 2 (iv) on page 62 and 63.

Question 28.
State any three features of planning. (All India 2017; Delhi 2017,2016)
Answer:
The three features of planning are as follows: (any three)
(i) Planning is goal-oriented Planning seeks to achieve certain objectives and all plans are linked with the goals of the organisation. Planning identifies the action that would lead to the desired results quickly and economically.

(ii) Planning is a primary function Planning serves as the basis for all other functions of management. It precedes organising, staffing, directing and controlling. All these functions are, performed within the framework of plans.

(iii) Planning is pervasive Planning is required at all levels of management as well as in all departments of the organisation. It is not only for top management, but it differs at different levels and among different departments.

(iv) Planning involves decision-making The need of planning arises because of the availability of various alternatives to achieve specified objectives. It considers or evaluates the various alternates to find out the best choice which serves the purpose. Thus, planning involves decision-making.

(v) Planning is a mental exercise Planning requires application of mind involving foresight, intelligent imagination and sound judgement. It is basically an intellectual activity of thinking rather than doing.

Question 29.
Define ‘planning’. Explain the first two steps in the process of planning. (All India 2016)
Or
Explain the first three steps in the process of ‘planning’. (Foreign 2016)
Answer:
Planning is the process of thinking before doing. It is the process of determination of a course of action to achieve the desired results.
According to Koontz and O’ Donnell, “Planning is deciding in advance what to do, how to do it, when to do it and who is to do it”.
The first three steps in the process of planning are:
(i) Setting objectives The first and foremost step is setting objective. Every organisation must have certain objectives. Objectives may be set for the entire organisation or for each department or unit within the organisation. Objectives or goals specify what the organisation wants to achieve. It could mean an increase in sales by 20% which could be an objective of the entire organisation.

(ii) Developing premises Premises refers to making assumptions regarding future. Premises are the base on which plans are made. It is a kind of forecast made, keeping in view existing plans and any past information about various policies. There should be total agreement on all these assumptions.

(iii) Identifying alternative courses of action After the 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 objectives and managers must know all those ways to reach these objectives.

Question 30.
How does planning not work in a dynamic environment and does not guarantee success? Explain. (Compartment 2014)
Answer:
(i) Planning does not work in a dynamic environment The environment is not static. It keeps on changing. The organisation has to constantly adapt itself to such changes. It becomes difficult to access future trends in the environment. Hence, planning cannot foresee everything and fail to work in dynamic environment.

(ii) Planning does not guarantee success When plans are drawn, they need to be properly implemented. Mere drawing plans does not lead to success. Also, a plan which had been successful earlier may not work out next time, since there are many factors which may change for the next planning period and make the plans ineffective.

Question 31.
Explain the following features of planning (Delhi 2013)
(i) Planning focusses on achieving objectives, and
(ii) Planning is a mental-exercise.
Answer:
(i) Planning focusses on achieving objectives Planning seeks to achieve certain objectives and all plans are linked with the goals of the organisation. Planning identifies the action that would lead to the desired results quickly and economically.

(ii) Planning is a mental exercise Refer to ans no. 4(v) on page 63.

Question 32.
Explain the following as features of planning
(i) Planning is continuous.
(ii) Planning is futuristic. (Delhi 2013)
Answer:
(i) Planning is continuous Plans are prepared for a specific period of time, may be for a month, a quarter or a year. At the end of that period, there is need for a new plan to be drawn on the basis of new requirements and future conditions.
Management can’t afford to follow rigid plans in the era of fast changes in technology, market, etc. Thus, a manager must develop or modify the plans from time to time as per the noted. Hence, planning is a continuous process.

(ii) Planning is futuristic Planning is essentially looking ahead and preparing for the future. It is based on the proverb, “look before you leap”. In other words, it is carried out to achieve some objectives in future. It is therefore, essential to anticipate or predict the future.
For example, A manufacturer prepares next year’s production plan after forecasting the demand. Therefore, it is said that planning is futuristic and involves thinking before doing.

Question 33.
Explain the following features of planning
(i) Planning involves decision-making; and
(ii) Planning is pervasive. (Delhi 2013)
Answer:
(i) Planning involves decision-making The need of planning arises because of the availability of various alternatives to achieve specified objectives. It considers or evaluates the best alternative. Decision-making is an integral part of planning. A manager is surrounded by number of alternatives. He has to pick the best depending upon requirements and resources of the enterprises.

(ii) Planning is pervasive Planning is required at all levels of management as well as in all departments of the organisation. It is not only for top management, but it differs at different levels and among different departments. The top level may be more concerned about planning for the organisation as a whole, whereas, the middle level may be more specific in departmental plans and the lower level is concerned for the implementation of the same.

Question 34.
Explain how (Compartment 2013)
(i) Planning facilitates decision-making; and
(ii) Planning may not work in a dynamic environment.
Answer:
(i) Planning facilitates decision-making Refer to ans no. 1 (iii) on page 62.

Question 35.
Explain how
(i) Planning provides direction for action; and
(ii) Planning leads to rigidity. (Comportment 2013)
Answer:
(i) Planning provides direction for action By stating in advance how work is to be done, planning provides direction for action. It reduces aimless activity and makes action more meaningful. It makes the employees aware of how they will have to work, by giving them necessary directions for achieving the objectives.

(ii) Planning leads to rigidity Refer to ans no.2(i) on page 62.

Question 35.
Explain ‘objectives’ as one of the types of plan. (Compartment 2013: Delhi 2013)
Answer:
It is the most important type of plan. These are defined as ends which the management seeks to achieve by its operations. The objectives are usually set by top management of the organisation and focus on broad and general issues. They define the future state of affairs which the organisation strives to I realise.

For example, An organisation may have an objective of increasing sales by 10% or earning a reasonable rate of return.

Question 36.
Explain ‘method’ as one of the types of plans. (Delhi 2013)
Answer:
These provide the prescribed ways or manner in which a task has to be performed considering the objective. It deals with a task comprising one step of a procedure and specifies how this step is to be performed.

Question 37.
Explain ‘strategy’ as one of the types of plans. (Comportment 2013: Delhi 2013)
Answer:
It refers to future decisions defining the organisation’s direction and scope in the long-run. It is a comprehensive plan for accomplishing the organisation’s objectives. The comprehensive plan includes three dimensions. Determining the long-term objectives. Adopting a particular course of action, and Allocating resources necessary to achieve the objectives.

Question 38.
Explain‘policy’as a type of plan. (Comportment 2013)
Answer:
These are the general guidelines which facilitate uniformity in decision-making for the attainment of objectives of the organisation. It can be defined as organisation’s general response to a particular problem or situation. Policies are made at every level because the managers at every level need to decide or predetermine the way of handling a situation and policy acts as a guide to take decisions in an unexpected situation.

For example, a school may have a policy of giving admission to the students who have secured more than 60% marks.

Question 38.
Differentiate between objective and strategy as types of plan. (All India 2011)
Answer:
The differences between objective and strategy are

Objective	Strategy
These are defined as ends towards which the activities and efforts are to be directed.	These are defined as comprehensive plan for accomplishing organisational objectives.
Objectives focus on broad and general issues.	They are generally focussed on achieving specific objectives, specifically in light of competitors strategies.
Objectives need to be in measurable terms, e.g. increasing sales by 10%.	They convert the objectives into results by adopting a particular course of action and allocating resources to achieve them.

Question 39.
Differentiate between policy and rule as types of plan. (All India 2011; Delhi 2011)
Answer:
The differences between policy and rule are

Policy	Rule
Policy is a guide to decision-making.	A rule is a guide to human behaviour.
It is a general statement which brings uniformity in decision-making.	It is the most specific statement.
A policy is subject to interpretation. In other words, it allows discretion during decision-making.	Rules are rigid in nature and there is no scope for any kind of discretion.

Question 40.
Differentiate between method and budget as types of plan. (Delhi 2011)
Answer:
The differences between method and budget as types of plan are

Method	Budget
These are standardised ways or manner in which a task is performed.	These are the statement of expected results expressed in numerical terms.
It is an instrument of planning only.	It is an instrument for both planning and controlling.
It is a type of standing plans.	It is a type of single use plans.

Question 41.
Rahul, a worker, is given a target of assembling two computers per day. Due to his habit of doing things differently, an idea struck him which would not only reduce the assembling time of computers but would also reduce the cost of production of the computers. Rahul’s supervisor instead of appreciating him, ordered him to complete the work as per the methods and techniques decided earlier, as nothing could be changed at that stage.
The above para describes one of the limitation of planning function of management. Name and explain that limitation. (All India 2011; Delhi (C) 2011)
Answer:
The para given in the question expresses the limitation of planning ‘planning reduces creativity’ which is explained as under.

Planning reduces creativity Refer to ans no. 2 (iii) on page 62 and 63.

Question 42.
What is meant by planning? List any two features of planning. (Delhi 2010)
Answer:
Planning is the process of thinking before doing. It is the process of determining a course of action to achieve the desired results. Planning bridges the gap between ‘where we are’ and ‘where we want to go’.
Two features of planning are as follows:

Planning is a goal-oriented function of management.
Planning is a continuous process.

Question 43.
Mega Ltd. holds an Annual Management Programme every year in the month of March in which the top managerial personnel formulate plans for the next year hy analysing and predicting the future to meet future events effectively.
As they are responsible for providing direction to the organisation, facts are thoroughly checked using scientific calculations. Detailed plans are prepared after discussion with professional experts. Preliminary investigations are also undertaken to find out the viability of the plan. Since, it is an intellectual activity requiring intelligent imagination and sound judgement, so it is mainly done by the top management. Usually rest of the members just implement the plAnswer: Middle level managers are neither allowed to deviate from the plans nor are they permitted to act on their own. The top management ensures that the expenses incurred in formulating the plans justify the benefits derived from them.
State any two limitations and any two features of planning discussed above. (Delhi 2019)
Answer:
Features of planning highlighted are: (any two)

Planning is a mental exercise.
Planning is futuristic.
Planning is continuous.

Limitations of planning highlighted are (any two)

Planning leads to rigidity.
Planning reduces creativity.
Planning involves huge cost.

Question 44.
In 2015, Naveen left his luxurious life in Mumbai, where he worked as a manager for Blue Birds Ltd. He shifted to Begampur, Chhattisgarh to fulfil his grandmother’s dream of converting their 25-apre ancestral land into a fertile farm. For this, he set out specific goals along with the activities to be performed to achieve the goals.
Every activity was a challenge since he was clueless about farming. He learnt every activity from filling the land to sowing the seeds.To aid farmers, he launched his own company ‘Innovative Agriculture Solutions Pvt. Ltd’.

It was difficult initially as no one trusted an urban youth telling farmers about farming. But when everything was discussed in detail the farmers started taking interest. He wanted to ensure that the future events meet effectively the best interests of the company. Through sales forecasting, he prepared an annual plan for production and sales.

He also found that the farmers grew only paddy, which was an activity of 3-4 months and the land remained idle for the rest 8-9 months of the year. He not only identified but evaluated various alternatives through which the farms could be utilised for the remaining months of the year. Through correct foresight and logical and systematic thinking based on analysis of all facts, all alternatives were examined and evaluated. He presented a plan to the farmers, where after harvesting paddy, vegetables could be grown.
The above case highlights the features of one of the functions of management. By quoting lines from the above identify and explain these features. (CBSE 2018)
Answer:
Planning is the function of management referred in this case.
(i) ‘For this, he set …………. this goals’.
This line indicates the following feature of planning
Planning focuses on achieving objectives: Every organisation has a set of goals to be achieved. Planning involves setting goals and determining the most economical and viable course of action to achieve the predetermined goals. Thus, planning is purposeful.

(ii) ‘He not only ………….. the year’.
This line indicates the following feature of planning
Planning involves decision-making: Planning is essentially the process of choosing among various alternatives. So, in order to make an effective choice, examination and evaluation of each alternative is necessary. Thus, it is concerned with decision-making.

(iii) ‘Through correct ………….. evaluated’.
This line indicates the following feature of planning
Planning is a mental exercise: It is a mental exercise as it requires creativity, imagination and higher thinking skills with sound judgement. It is an intellectual activity of thinking rather than doing. It requires logical and systematic thinking rather than guess work or wishful thinking.

Question 45.
Vardan Patel started the business of preparation and supplying sweets through home delivery at a production cum show-room ‘Express Sweets’ at Ahmedabad.
He made a plan forecasting the sales of different types of sweets in various localities of Ahmedabad for each month of the year to earn a profit of 20% on capital employed.
He set a sales target of 20,00,000 in the current year with a 10% increase every year.
He then set the criteria for selecting suppliers from whom he would make purchases of raw material. The planning paid off and the business was able to achieve its targets. (Comportment 2018)
(a) Identify any two types of plans by quoting the lines from the above.
(b) Also give the meaning of the types of plans identified in part (a) above.
Answer:
(a) Types of plans are:

Objective He made a ………….. capital employed.
Budget He set …………… every year.
Method He then set …………… raw material.

(b) Objective Refer to ans no. 6 on page 60.
Budget Refer to text on page 60.
Method Refer to ans no. 7 on page 61.

Question 46.
Give the meaning of ‘strategy’ and ‘rule’ as types of plans. (All India 2017)
Answer:
The meaning of ‘strategy’ and ‘rule’ as types of plans are given below:
(i) Strategy A strategy is a comprehensive plan to achieve the organisational objectives.
The dimensions of strategy are:

Determining long-term objective.
Adopting a particular course of action.
Allocating resources for achieving the objectives.
Strategy is formulated after scanning the business environment.

(ii) Rules These are specific statements that inform what is to be done. They do not allow any flexibility or discretion. It reflects a managerial decision that a certain action must or must not be taken. Rules generally refer to the administrative area of the procedure. They serve as guides and do not leave any scope for discretion.

Question 47.
Give the meaning of ‘objectives’ and ‘procedure’ as types of plans. (All India 2017)
Answer:
Objectives: These are defined as end results which the management seeks to achieve by its operations. They are set by the top management of the organisation and are measurable. Different departments and units may have their own objectives. There must be a time limit for achievement of objectives.

Procedure: It is a stipulated sequence of a course of action for handling activities. They are specified in chronological order, e.g. there may be a procedure for requesting supplies for production. Procedures are designed to execute policies and achieve objectives.
For example, procedure may be for purchase of raw material, selection of employees, redressal of grievances, etc.

Question 48.
Give the meaning of ‘objectives’ and ‘budget’ as types of plans. (Delhi 2017)
Answer:
Objectives It is the most important type of plan. These are defined as ends which the management seeks to achieve by its operations. The objectives are usually set by top management of the organisation and focus on broad and general issues. They define the future state of affairs which the organisation strives to realise.
For example, an organisation may have an objective of increasing sales by 10% or earning a reasonable rate of return.

Budget: It is a statement of expected results expressed in numerical terms. It is a projection designed to define the anticipated costs and results in numerical terms of a single project. Thus, it comes under the single use plan. Since, budgets are prepared in numerical terms,’it becomes easier to compare them with the actual performance. Thus, it is considered as a control device, prepared during the planning process.

Question 49.
Give the meaning of ‘procedure’ and ‘rule’ as types of plans. (Delhi 2017)
Answer:
Procedure: It is a stipulated sequence of a course of action for handling activities. They are specified in chronological order, e.g. there may be a procedure for requesting supplies for production. Procedures are designed to execute policies and achieve objectives.
For example, procedure may be for purchase of raw material, selection of employees, redressal of grievances, etc.

Rules: These are specific statements that inform what is to be done. They do not allow any flexibility or discretion. It reflects a managerial decision that a certain action must or must not be taken. Rifles generally refer to the administrative area of the procedure. They serve as guides and do not leave any scope for discretion.

Question 50.
Give the meaning of ‘policy’ and ‘strategy’ as types of plans. (Delhi 2017)
Answer:
Policy: These are the general guidelines which facilitate uniformity in decision-making for the attainment of objectives of the organisation. It can be defined as organisation’s general response to a particular problem or situation. Policies are made at every level because the managers at every level need to decide or predetermine the way of handling a situation and policy acts as a guide to take decisions in an unexpected situation.

Strategy A strategy is a comprehensive plan to achieve the organisational objectives.
The dimensions of strategy are

Determining long-term objective.
Adopting a particular course of action.
Allocating resources for achieving the objectives.
Strategy is formulated after scanning the business environment.

Question 51.
Two years ago Mayank obtained degree in food technology. For some time he worked in a company manufacturing bread and biscuits. He was not happy in the company and decided to have his own bread and biscuits manufacturing unit. For this he decided the objectives and the targets and formulated action plan to achieve the same. One of his objective was to earn 50% profit on the amount invested in the first year. It was decided that raw materials like flour, sugar, salt, etc will be purchased on two months’ credit. He also decided to follow the steps required for marketing the products through his own outlets. He appointed Harsh as a Production Manager who decided the exact manner in which the production activities are to be carried out. Harsh also prepared a statement showing the requirement of workers in the factory throughout the year. Mayank informed Harsh about his sales target for different products, areawise for the forth coming quarter.
While working on the production table a penalty of 150 per day was announced for not wearing the helmet, gloves and apron by the workers.
Quoting fines from the above para identify and explain the different types of plans discussed. (All India 2016)
Or
Two years ago Madhu completed her degree in food technology. She worked for sometime in a company manufacturing chutneys, pickles and murabbas. She was not happy in the company and decided to have her own organic food processing unit for the same. She set the objectives and the targets and formulated action plan to achieve the same.
One of her objective was to earn 10% profit on the amount invested in the first year. It was decided that raw materials like fruits, vegetables, spices, etc. will be purchased on three months’ credit form farmers cultivating organic crops only. She also decided to follow the steps required for marketing of the products through her own outlets. She appointed Mohan as a production Manager who decides the exact manner in which the production activities are to be carried out. Mohan also prepared a statement showing the number of workers that will be required in the factory throughout the year. Madhu informed Mohan about her sales target for different products, areawise for the forthcoming quarter.
While working on the production table a penalty of 100 per day for not wearing the caps, gloves and apron was announced.
Quoting lines from the above para identify and explain the different types of plans discussed. Delhi 2016
Answer:
The different types of plans discussed in the above para as follows:
(i) Strategy It is a comprehensive plan and helps to define the organisations scope and direction in the long ran.
Lines from the above para, indicative of this type of plan are:
“For this he decided ………….. to achieve the same.”

(ii) Objective It refers to the desired future positions that an organisation seeks to reach.
Lines from the above para, indicative of this type of plan are:
“One of his objective ……………. in the first year.”

(iii) Policy It is a general statement that defines the boundaries within which decisions are made.
Lines from the above para, indicative of this type of plan are:
“It was decided ……………. on two months credit.”

(iv) Procedure It describes the exact manner in which certain activity is to be performed.
Lines from the above para, indicative of this type of plan are:
“He also decided to follow ……………. his own outlets.”

(v) Method It provides the prescribed manner in which a task has to be performed, considering the objectives.
Lines from the para indicative of this plan are:
“He appointed Harsh …………… carried out.”

(vi) Programme It is a concrete action plan indicating how, when and by whom work is to be done.
Lines from the above para indicative of this plan are:
“Harsh also prepared a ……………… the year.”

(vii) Budget It is a statement of expected results expressed in numerical terms.
Lines from the above para indicative of this plan are:
“Mayank informed Harsh …………… forth coming quarter.”

(viii) Rules These are specific statements that inform what is to be done, lines which are indicative of this type of plan are:
“While working on the production ………….. by the workers.”

Question 52.
It is deciding in advance what to do and how to do? It is one of the basic managerial functions. It requires that before doing something, the manager must formulate an idea of how to work on a particular task. This function is closely connected with creativity and innovation. It seeks to bridge the gap between where we are and where we want to go and is performed at all levels of management.
In spite of this, the function of management referred above has a number of limitations. Explain any two such limitations. (Comportment 2015)
Answer:
The function mentioned above is ‘planning’. Planning is deciding in advance what is to be done. When a manager plans, he projects a course of action for the future, attempting to achieve a consistent and coordinated structure of operations aimed at the desired results.

Question 53.
Define ‘planning’. State any four points of importance of planning. (All India 2014; Delhi 2014)
Or
‘Planning is an important function of management’. State any four reasons in favour of the statement. (All India 2011; Delhi 2011)
Or
Describe any two points of importance of planning. (All India 2011)
Or
In addition to providing directions and reducing the risk of uncertainty, planning helps managers in the many other ways. Explain any four such ways. (Delhi (C) 2014)
Or
Explain any five points of importance of planning for a large business enterprise. (Delhi 2014. All India 2013: Comportment 2012)
Answer:
Planning: It is deciding in advance what is to be done. When a manager plans, he projects a course of action for the future, attempting to achieve a consistent and coordinated structure of operations aimed at the desired results.

Question 54.
After the following logical steps in the process of planning, explain the steps required to complete the process:
(i) Setting objectives
(ii) Developing premises, and
(iii) Identifying alternative courses of action. (Comportment 2014)
Answer:
The first step in the process of planning is setting objectives. After that, development of premises is done. Then various alternatives are identified. After this, the following steps are followed to complete the process of planning:
(i) Evaluating alternative courses After making the list of various alternatives alongwith the assumptions supporting them, the manager starts evaluating each and every alternative and note down the positive and negative aspects of each alternative. After this the manager starts eliminating the negative aspects and the one with maximum positive aspects is selected as the best alternative.

(ii) Selecting an alternative This is the real point of decision-making. The best plan has to be adopted and implemented. The ideal plan, of course, would be the most feasible, profitable and with least negative consequences. After preparing the main plan, the organisation has to make a number of small plans to support the main plan.

(iii) Implementing the plan This is the step where other managerial functions also come into the picture. This step is concerned with putting the plan into action, i.e. doing what is required, e.g. if there is a plan to increase production then more labour and more machinery will be required. This step would involve organising labour and purchase of machinery.

(iv) Follow-up action To see whether plans are being implemented and activities are performed according to schedule, is also a part of the planning process. Monitoring the plans is equally important to ensure that objectives are achieved properly.

Question 55.
‘Process of planning involves certain logical steps.’ Explain the first four steps of this process. (Compartment 2014)
Answer:
Steps involved in the process of planning are as follows:
(i) Setting objectives: The first and foremost step is setting objective. Every organisation must have certain objectives. Objectives may be set for the entire organisation or for each department or unit with in the organisation. Objectives or goals specify what the organisation wants to achieve. It could mean an increase in sales by 20% which could be an objective of the entire organisation.

(ii) Developing premises Premises refers to making assumptions regarding future. Premises are the base on which plans are made. It is a kind of forecast, made keeping in view existing plans and any past information about various policies. There should be total agreement on all these assumptions.

(iv) Evaluating alternative courses After making the list of various alternatives alongwith the assumptions supporting them, the manager starts evaluating each and every alternative and note down the positive and negative aspects of each alternative. After this ,the manager starts eliminating the negative aspects and the one with maximum positive aspects is selected as best alternative.

(v) Selecting an alternative This is the real point of decision-making. The best plan has to be adopted and implemented. The ideal plan, of course, would be the most feasible, profitable and with least negative consequences. After preparing the main plan, the organisation has to make number of small plans to support the main plan.

(vi) Implementing the plan This is the step where other managerial functions also come into the picture. This step is concerned with putting the plan into action, i.e. doing what is required, e.g. if there is a plan to increase production then more labour and more machinery will be required. This step would also involve organising labour and purchase of machinery.

(vii) Follow-up action To see whether plans are being implemented and activities are performed according to schedule, is also part of the planning process. Monitoring the plans is equally important to ensure that objectives are achieved properly.

Question 56.
Explain ‘policy’ and ‘procedure’ as types of plan. (All India 2011,2010; Delhi 2010)
Answer:
Policy: These are the general guidelines which facilitate uniformity in decision-making for the attainment of objectives of the organisation. It can be defined as organisation’s general response to a particular problem or situation. Policies are made at every level because the managers at every level need to decide or predetermine the way of handling a situation and policy acts as a guide to take decisions in an unexpected situation.
For example, a school may have a policy of giving admission to the students who have secured more than 60% marks.

Question 57.
Explain ‘methods’ and ‘rules’ as types of plan. (All India 2010: Delhi 2010)
Answer:
Methods: These provide the prescribed ways or manner in which a task has to be performed considering the objective. It deals with a task comprising one step of a procedure and specifies how this step is to be performed. The method may vary from task to task. Selection of proper method saves time, money and effort and therefore, increases efficiency.
For example, for the valuation of stock, the organisation must decide in advance which method has to be adopted (LIFO or FIFO), so that everyone must follow the same.

Rules: These are specific statements that inform what is to be done. They do not allow any flexibility or discretion. It reflects a managerial decision that a certain action must or must not be taken. Rules generally refer to the administrative area of the procedure. They serve as guides and do not leave any scope for discretion.
For example, no smoking in the organisation.

Question 58.
Explain ‘objectives’ and ‘strategy’ as types of plan. (All India 2010; Delhi (C) 2010)
Answer:
(i) Objectives These are defined as end results which the management seeks to achieve by its operations.
The main features of objectives are

They are set by the top management of the organisation.
Different departments and units may have their own objectives.
They are measurable.
There must be a time limit for achievement of objectives.
They must be achievable or feasible.
For example, increase in sales by 10% or decrease in rejections by 2%.

(ii) Strategy Refer to ans no. 8 on page 69.

Multiple Choice Questions

Question 1.
Which function of management is considered as the base for all other functions?
(a) Planning
(b) Organising
(c) Staffing
(d) Controlling
Answer:
(a) Planning

Hint:
Planning is concerned with both ends and means, i.e. what is to be done and how it is to be done. Thus, it is considered as the base for all other functions of management.

Question 2.
McDonald’s company does not give its franchise to other company. Which type of plan is it?
(a) Method
(b) Policy
(c) Programme
(d) Strategy
Answer:
(b) Policy

Hint:
It is the policy of McDonald’s that it does not offer franchise to other company. Policy is a general statement that defines the boundaries within which decisions are made, as it answers to recurring problems of similar nature.

Question 3.
Planning enables a manager to look ahead and anticipate changes. Identify, which benefit of planning is highlighted here?
(a) Planning reduces the risk of uncertainty
(b) Planning provides direction
(c) Planning promotes innovative ideas
(d) None of the above
Answer:
(a) Planning reduces the risk of uncertainty

Hint:
It is an activity, which enables a manager to look ahead and anticipate changes. By deciding in advance, planning shows the way to deal with the changes and uncertain events.

Question 4.
In spite of many advantages, state how planning can be detrimental?
(a) Planning is detrimental as it increases creativity
(b) Planning is detrimental as it involves zero cost
(c) Planning is detrimental as it leads to rigidity
(d) None of the above
Answer:
(c) Planning is detrimental as it leads to rigidity

Hint:
A specific plan made in an organisation clearly indicates the objective to be achieved and the ways of doing work. Since, a manager may not be able to change these plans, it leads to rigidity.

Question 5.
An ideal plan would be one which is most profitable, most feasible and has the least
(a) positive consequences
(b) negative consequences
(c) alternatives
(d) None of these
Answer:
(b) negative consequences

Question 6.
“As per the manager of comprehensive group, changes in business environment restrict freedom of planning for the management.” In a fast changing environment, management has a little control over external events.
Which limitation of planning has been highlighted in the quoted line?
(a) Planning reduces creativity
(b) Planning involves huge cost
(c) Planning may not work in a dynamic environment
(d) Planning is a time consuming process
Answer:
(c) Planning may not work in a dynamic environment

Hint:
Changes in business environment restrict freedom of planning for the management, as business environment consists of social, economical, legal and other factors that keep on changing. The organisation has to adapt itself to such changes. But, planning cannot assess future trends exactly and thus, fails in a dynamic environment.

Question 7.
Mention the step, in which each course of alternatives is to be weighed against each other.
(a) Setting objectives
(b) Evaluating alternative courses
(c) Follow up action
(d) Implementing the plan
Answer:
(b) Evaluating alternative courses

Question 8.
What are derivative plans and why they are formulated?
(a) Derivative plans are the supporting plans, which are formulated for executing the primary plan
(b) Derivative plans are the developing plans, which are formulated for executing the developed plan
(c) Derivative plans are the controllable plans, which are formulated for executing the controlled plan
(d) None of the above
Answer:
(a) Derivative plans are the supporting plans, which are formulated for executing the primary plan

Question 9.
Identify the concept of management involved at the initial stage.
(a) Planning
(b) Staffing
(c) Co-ordination
(d) Controlling
Answer:
(a) Planning

Hint:
The concept of management involved in the given situation is planning as the manager is planning to increase the profits.

Question 10.
Mention the steps involved in the above process by quoting the lines from the question.
(a) Setting objectives
(b) Evaluating alternative courses
(c) Developing premises
(d) All of the above
Answer:
(d) All of the above

Question 11.
To complete the process of the concept identified, what further steps does the manager have to take?
(a) Implementing the plan
(b) Selecting an alternative
(c) Follow up action
(d) Both (a) and (c)
Answer:
(d) Both (a) and (c)