NCERT Solutions for Class 12 Business Studies Chapter 4 - Planning

Very Short Answer Type Questions

1. How does planning provide direction?

Ans. Planning provides direction for action by deciding in advance what to do, how to do, when to do and who will do. In planning, goals are will defined, employees are aware of what the organisation has to do and what they must do to achieve those goals.

2. A company wants to increase its market share from the present 10% to 25% to have a dominant
position in the market by the end of the next financial year. Ms Rajni, the sales manager has been asked to prepare a proposal that will outline the options available for achieving this objective.
Her report included the following options entering new markets, expanding the product range offered to customers, using sales promotion techniques such as giving rebates, discounts or increasing the budget for
advertising activities. Which step of the planning process has been performed by Ms Rajni?

Ans. The step of the planning process which has been performed by Ms Rajni is 'Identifying alternative courses of action'.
There are many ways to act and achieve objectives laid by the management. Ms Raini has indexed all the possible alternative courses of action which can be used to increase the market share.

3. Why are rules considered to be plans?

Ans. Rules are specific statements that specifies what is to be done or not to be done. There is no flexibility or discretion decision. It reflects a managerial decision that a certain action must or must not be taken. They are usually the simplest types of plans because there is no compromise when a policy decision is being taken.

4. Rama Stationery Mart has made a decision to make all the payments by e-transfers only. Identify the type of plan adopted by Rama Stationery Mart.

Ans. Rama Stationery has adopted a payment 'policy' of making all payments by e-transfers. A policy is a general guidelines that aims at channeling the efforts of the organisation in a particular direction.

5. Can planning work in a changing environment? Give a reason to justify your answer.

Ans. No, planning may not work right in a changing environment. Business environment is dynamic in nature and changes continuously. For example, political conditions, social conditions, consumer tastes and preferences, government
rules and regulations change continuously. The organisation has to constantly change itself according to the need of the environment.

Short Answer Type Questions

1. What are the main points in the definition of planning?

Ans. The main points in the definition of planning are as follows:
(i) Planning is what to do and how to do.
(ii) It is one of primary function.
(iii) Planning involves objectives and action to execute them.
(iv) It seeks to bridge the gap between where we are and where we want to reach.

2. If planning involves working out details for the future, why does it not ensure success?

Ans. Planning does not guarantee success. The success of an enterprise is possible only when plans are properly drawn up and formulated. Any plan has to be turned into action or it would be meaningless. Managers have a tendency to rely on previously tried and tested successful plans in a current scenario . It is not always true that just because a plan has worked before it will work again. This kind of false sense of security may actually lead to failure instead of success.

3. What kind of strategic decisions are taken by business organisations?

Ans. Major strategic decisions include whether the organisation will continue to be in the same line of business or combine new lines of activity with the existing business or the position company is aiming in the existing market and the pricing
policy which should be used.

4. Planning reduces creativity. Critically comment. (Hint: both the pointsโ€” Planning promotes innovative ideas and planning reduces creativity โ€“ will be given).

Ans. Planning promotes innovation. The formulation of plans and policies is an intellectual process that requires creativity and innovation on the part of the managers. However, once a plan is formulated, the manager may not be able to change it. This rigidity creates obstacles when unforeseen changes come about and thereby reduces creativity.

5. In an attempt to cope with Reliance Jioโ€™s onslaught in 2018, market leader Bharti Airtel has refreshed its โ‚น149 prepaid plan to offer 2 GB of 3G/4G data per day, twice the amount it offered earlier. Name the type of plan is highlighted in the given example. ? State its three dimensions also.

Ans. Bharti Airtel has adopted a Strategy. A strategy is created by keeping the business environment in mind.
Strategy includes three dimensions:

  1. Determining long term objectives
  2. Adopting a particular course of action
  3. Allocating resources necessary to achieve the objective.

6. State the type of plan and state whether they are Single use or Standing plan:
(a) A type of plan which serves as a controlling device as well.(budget).
(b) A plan based on research and analysis and is concerned with physical and technical tasks. (Method).

Ans. (a) Budget: It is a statement which forecasts the expected results of a specific task to be performed in the future period. A budget is a Single-used plan which is developed for a one time project or event.

(b) Method: A plan based on research and analysis and is concerned with physical and technical tasks. Method is a Standing plan as it is used for activities which occur regularly over a period of time and usually developed once but is modified from time to time business needs as required.

Long Answer Type Questions

1. Why is it that organisations are not always able to accomplish all their objectives?

Ans. For the attainment of the desired objectives, organisations make plans. Planning is an essential activity for any organisation and sets the basis for its functioning. However sometimes the things do not go as per the plan. Unforeseen changes in the business environment often dampen the plans of the organisation. Moreover, the process of planning has its own limitations that hinder the accomplishment of all the objectives of an organisation.

Following are some of the limitations of planning which may result in the abandoning of the organisational objectives:

(i) Rigidness: Planning is rigid in nature. Once a plan regarding the objectives to be achieved and the course of action to be followed is formulated, the manager may not be able to change it. Such rigidity creates hurdles at times of unforeseen changes. At times of unexpected changes, the managers may require certain degree of flexibility so as to cope with the changes in an appropriate manner. Thus, rigidity in plans sometimes creates obstacles in the completion of the objectives.

(ii) Cannot Deal With Dynamic Environment: Business environment is dynamic and thereby, very uncertain. However, planning cannot foresee such changes and fails at times of changes and uncertainties. This may lead to failure in the accomplishment of objectives. An organisation must adapt its functioning to the changing environment.

(iii) Gigantic Costs: Formulation of plans involves huge costs in terms of time and money. As planning is based on future predictions, it requires a lot of thinking and analysing. It involves scientific calculations along with the figures and the facts, which are to be used in formulating the course of action. This involves high costs. Moreover, sometimes it might also happen that the benefits derived from planning fall short of the costs incurred.

(iv) False Security: Good planning does not mean a guarantee to success. Often the mangers tend to rely on pretested plans that have worked well in the past. However, it is not always true that if a plan had worked well in the past, it will also be successful in the future. Many unforeseen changes may crop up that may fail the plan. Sometimes managers think that planning can prevent the problems from occurring, however, they neglect the fact that planning just provides a base for predicting the future. It does not give straight away solutions to the problems.

(v) Time Consuming: Formulating plans is a very time consuming task, as it involves looking forward in the unforeseen situations. It involves a lot of research and evaluation. This increases the time consumed by the managers and the actual actions may get delayed.

2. What are the steps taken by management in the planning process?

Ans. The planning process involves the following steps:

(i) Establishing objectives: The first step in planning is to determine objectives which must be realistic, specific and clear to specify what is to be accomplished by the network of policies, procedures, strategies etc. After setting up the objectives, the clearly defined goals are communicated to all the employees.

(ii) Developing premises: Premises refer to making the assumptions regarding future. These assumptions or forecasts of the future and unknown conditions will eventually affect the operations of the plans. They provide an idea about the future which facilitates the work of planning.

(iii) Identifying the alternative courses of action: The next step in planning is to identify the various alternatives available to achieve the objectives.

(iv) Evaluating alternative courses: The merits and demerits of different courses of actions are evaluated in the light of objectives to be achieved; how far they will be successful in helping to achieve the objective.

(v) Selecting an alternative: The next step is to find out the most suitable course to be followed. The efforts are directed towards selecting that course of action, which increases efficiency in the organisation by maximising output and profits at the minimum costs.

(vi) Implement the plan: At this step the best alternative chosen is put to use.

(vii) Follow up: Only putting the best alternative to action is not enough. The future is uncertain and dynamic. Therefore, it becomes important to check back whether the plan is giving results or not.

3. 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).

Ans. The features of planning that are highlighted in the above case are:

(i) Planning is pervasive: Planning is required at all levels of management as well as in all departments of the organization. The scope of planning differs at different management levels. It is performed at all level as it is not just a function restricted to top level .As the organizational plans form by top level management, then the middle level does departmental planning, and the lower level makes plans for the day-to-day operations for the organization.

(ii) Planning is futuristic: Planning is based on forecasting and it is prepared for the future. This is done to scan the general environment so that the organisation set their objectives accordingly. Hence, its main purpose is to meet future events effectively to the best advantage of an organization. It implies looking into the future, analyzing it. Thus, planning is a futuristic process.

(iii) 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 rather then doing which requires application of mind involving foresight, intelligent imagination and sound judgement. . It requires logical and systematic thinking rather than guesswork or wishful thinking.

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