Chapter 4 Planning

Planning is deciding in advance the objectives to be achieved during a given period, formulating alternative courses of action to achieve them and selecting the best course of action. It is connected with what is to be done and how it is to be done. We also get to know about the other topics in this chapter and that are concept of planning, Importance of planning, Features of planning, Limitations of planning, Planning process, Types of plans, Objectives, Strategy, Policy, Procedure, Method, Rule, Programme and Budget.

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Exercise 1 ( Page No. : 108 )

Exercise 2 ( Page No. : 109 )

Exercise 3 ( Page No. : 109 )

  • Q1 Why is it that organisations are not always able to accomplish all their objectives?

    Planning is the most important activity as it tells where to go. And it provides direction and reduces the risk of uncertainty by preparing forecasts. And it is extremely important to invest enough time and money to formulate plans for the success of the organization. But due to the dynamic nature of the business environment the plans of the organization do not work accordingly. This is because it has various limitations and due to which the organizations would not be able to achieve its objectives. Followings are the limitations of planning:

    1. Planning leads to rigidity: A specific plan made in an organization indicates the objective to be achieved and the ways of doing work. And a manager may not be able to change these plans, it leads to rigidity.

    2. Planning may not work in a dynamic environment: Business environment consists of social, economical, legal, political, and technological factors which keep on changing. And the organization has to adapt these changes by itself. But planning cannot exactly assess the future trends and thus fails in a dynamic environment.

    3. Planning reduces creativity: Planning is the activity which is performed by the top level of management and the members of middle and lower level of management are there just to implement these plans. They are neither allowed to participate in the planning process nor permitted to act on their own. And this leads to reduction in creativity and innovation.

    4. Planning involves huge costs: Planning involves a lot of time, cost and efforts of the managers. It requires collection of data, boardroom meetings, investigation and discussion with experts and it involves a lot of expenditures of the organization. And sometimes the cost incurred may not justify the benefits derived from the plans.

    5. Planning is a time consuming process: Sometimes the planning process takes a lot of time and due to which there is not much time left for their implementation. And this leads to failure of planning.

    6. Planning does not guarantee success: The success of planning totally depends upon its implementation. And lack of proper implementation leads to failure of planning. Though the plan has worked earlier, it may not work again due to change in the external environment.

    Q2 What are the steps taken by management in the planning process?

    Planning means to decide in advance what to do and how to do. It is an activity which follows certain logical steps.

    1. Setting objectives: Every organization works to achieve some objectives. So the first step of the planning is to define and describe the objectives of the organization. And once the objective is decided then these objectives should be communicated to all the units and employees.

    2. Developing premises: Planning is concerned with the future, which is uncertain and every manager assumes about what might happen in future. Therefore the manager is required to make certain assumptions about the future. And these assumptions are known as premises. Premises are the base, upon which plans are drawn. They may be forecasts, existing plans or past information.

    3. Identifying alternative courses of action: Once the objectives and planning premises are established, it becomes necessary to discover the various courses of action, which will be used to achieve the established objectives and the must know all the alternatives to achieve the objectives.

    4. Evaluating alternative courses: After that the next step is to analyze the pro and cons of each alternative. It is important to evaluate the negative and positive aspect of each alternative to achieve the objectives. It involves a number of calculations to measure the cost and benefits related to an alternative.

    5. Selecting an alternative: After evaluating the alternative course the next step is to selecting an alternative. And this is the real point of decision-making. The best plan has to be adopted and implemented. An ideal plan should be the one which is most profitable, most feasible and has least negative consequences.

    6. Implementing the plan: The main role of this step is to put the plan into action and do what is required. And then the managers start to communicate the plans to the employees and initiate them to carry out the activities according to the specifications of plans.

    7. Follow-up action: Since, planning is the continuous process so the managers keep on following up the plans to ensure that all the activities should be performed as per the schedule. Monitoring the plan is important to ensure achievement of objectives.

    Q3 An auto company C Ltd. is facing a problem of declining market share due to increased competition from other new and existing players in the market. Its competitors are introducing lower priced models for mass consumers who are price sensitive. C Ltd. realized that it needs to take steps immediately to improve its market standing in the future. For quality conscious consumers, C Limited plans to introduce new models with added features and new technological advancements. The company has formed a team with representatives from all the levels of management. This team will brainstorm and will determine the steps that will be adopted by the organisation for implementing the above strategy. Explain the features of Planning highlighted in the situation given below. (Hint: Planning is pervasive, Planning is futuristic and Planning is a mental exercise).

    The features of planning highlighted in the above case are:

    1. Planning is pervasive: Planning is required at all levels of management as well as in all departments of the organization. It is not a function restricted to top level but it is performed by managers at every level. Where the top level management forms organizational plans, the middle level does departmental planning, and the lower level makes plans for the day-to-day working or the organization.

    2) Planning is futuristic: Planning is based on forecasting and it is prepared for the future. The main purpose of planning is to meet future events effectively to the best advantage of an organization. It implies looking into the future, analyzing it and predicating it. Thus planning is a futuristic process.

    3. Planning is a mental exercise: Planning is a mental exercise as it requires creativity, imagination and higher thinking skills with sound judgement. It is an intellectual activity of thinking. It requires logical and systematic thinking rather than guesswork or wishful thinking.

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