Planning Class 12 Notes

Please refer to the  Planning Class 12 Notes for Business Studies given below. These revision notes and important question answers have been prepared based on the latest NCERT book for Class 12 Business Studies. Our teachers have developed these short notes and Important Questions Class 12 Business Studies as per the latest syllabus for Grade 12 Business Studies issued by CBSE. Read these notes and important questions to get better marks in examinations

Class 12 Business Studies Planning

Planning

Planning can be defined as “thinking in advance what is to be done, when it is to be done, how it is to be done and by whom it should be done.”

According to Fayol, “Planning is chalking out plan of action, i.e., the result envisaged in the line of action to be followed, the stages to go through the methods to use.

Features of Planning

1. Planning Focuses on Achieving Objective Planning is purposeful. It has no meaning unless it contributes to the achievement of predetermined organisational goals.

2. Planning is a Primary Function of Management Planning is the primary or first function to be performed by every manager. No other function can be executed by the manager without performing planning function.

3. Planning is Pervasive Planning is essential for every sort of business activities. Every department whether, purchase, sales accounts, auditing, marketing etc. needs systematic planning.

4. 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 environment and in the selection of one best way.

5. Planning is Futuristic Planning always means looking ahead; it is never for the past. All the managers try to make predictions and assumptions for future. ,

6. Planning Involves Decision Making Planning choice making of the best possible alternative out of various alternative.

Importance of Planning

1. Planning Provides Directions Planning provides the directions to the efforts of employees. Planning makes clear what employees have to do, how to do etc.

2. Planning Reduces the Risk Uncertainty Planning helps the manager to face the uncertainty because planners try to force the future by making some assumptions. The plans are made to overcome uncertainties.

3. Planning Reduces Over Lapping and Wasteful Activities Planning evaluates the alternatives uses of the available and prospective resources of the business and makes their must appropriate use.

4. Planning Promotes Innovative Ideas Planning requires high thinking and it is an intellectual process. So it makes the managers innovative and creative.

5. Planning Facilitates Decision Making Planning helps the managers to look in to the future and make a choice from amongst various alternative courses of action.

6. Planning Establishes Standards for Controlling It has predetermined goal with which the actual performances are compared to find out deviation and suggest remedial measures.

Limitations of Planning

✔ 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.
✔ Planning May Not Work in a Dynamic Environment Business environment is very dynamic as there are continuously changes. It becomes very difficult to forecast these future changes. Plans may fail if the changes are very frequent.
✔ Planning Reduces Creativity With the planning the managers of the organisation start working rigidly and they become the blind followers of the plan only.
✔ Planning Involves Huge Costs Planning process involves lot of cost because it is an intellectual process and companies need to hire the professional experts to carry onthis process.
✔ Planning is a Time Consuming Success Lot of time is needed in developing planning premises
✔ Planning does not Guarantee Success Planning only provides a base for analysing future. It is not a solution for future course of action.

Planning Process

1. Setting Objectives In planning function manager begin with setting up of objectives because all the policies, procedures and methods are framed for achieving objectives only.

2. Developing Premises Premises refers to making assumptions regarding future. The assumptions are made on the basis of forecasting. Forecast is the technique of gathering information.

3. Identifying Alternative Courses of Action After setting up of objectives the managers make a list of alternatives through which the organisation can achieve its objectives.

4. Evaluating Alternative Courses After making the list of various alternatives along with the assumptions supporting them the manager starts evaluating each and every alternative.

5. 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 combination of different alternatives can also be selected.

6. Implementing the Plan This is the step where other managerial functions also come in to the picture. The step is concerned with putting the plan into action i.e., doing what is required.

7. Follow-up Action Planning is a continuous process so the manager’s job does not get over simply by putting the plan into action. The manager monitors the plan carefully while it is implemented.

Types of Plans

On the basis of use and duration
• Single use plans are the ones that are formulated to deal with new or non-repetitive situations that may arise in an organisation from time-to-time. For example- programmes, budgets and projects.
• Standing plans refer to the another type of plans which once formulated may be used for a long period of time in similar or repetitive situations that may prevail in an organisation. For example—objectives, strategies, policies, methods, procedures and rules.

On the basis of what a plan seeks to achieve
• Objectives are the end results of the activities that an organisation seeks to achieve through its existence.
• Strategy is a comprehensive plan for achieving the objectives of the organisation.
• Policy is a set of general guidelines that help in managerial decision making and action.
• Method refers to the prescribed ways or manner in which a task has to be performed considering the objective.
• Procedure refers to a series of specific steps to be performed in a chronological order to carry out the routine activities.
• Budget refers to a financial plan that is expressed in numerical terms.
• Rule is a specific statement relating to the general norms in terms of Do’s and Don’ts that guide the behaviour of people. It commands strict obedience and a penalty is likely to be imposed on its violation.
• Programme is a comprehensive plan that contains detailed statements about a project which outlines the objectives, policies, procedures, rules and method and the budget to implement any course of action.

Case Study Planning Class 12 Business Studies

Question. State any three points of importance of planning function of management.
Ans. The three points indicating the importance of planning is described below:
1. Reduces the risk of uncertainty: Planning relates to deciding in advance about the tasks to be performed in future. This enables a manager to anticipate changes and devise the way to deal with changes and uncertain events effectively.
2. Planning promotes innovative ideas: Planning is one of the basic managerial functions. Before doing something, the manager must formulate an idea of how to work on a particular task. Thus, planning is closely connected with creativity and innovation. It is the most challenging activity for the management as it guides all future actions leading to growth and prosperity of the business.
3. Avoiding overlapping and wasteful activities: Planning ensures clarity in thought and action and serves as the basis of coordinating the activities and efforts of different individuals and departments. Therefore, by curtailing useless and redundant activities it helps in smooth working of the organisations work is without interruptions. Moreover, it makes detection of inefficiencies easier so that timely corrective measures may be taken to avoid them in future.

Question. Give the meaning of ‘objectives’ and ‘budget’ as types of plans.
Ans. • Objectives: Objectives are the end results of the activities that an organisation seeks to achieve through its existence. All other activities within the organisation are directed towards achieving these objectives. Objectives are based on the mission or philosophy of the organisation. Objectives are determined by top level management. For example, the objectives of a newly started business is to earn 30% profit go the amount invested in the first year.
• Budget: A budget refers to a financial plan that is expressed in numerical terms. For example, the marketing manager prepared an area wise sales target for different products for the forthcoming quarter. It is a type of single use plan.

Question. State any three limitation of planning.
Ans. The three limitations of planning are described below:
1. Planning may not work in a dynamic environment: The business environment is dynamic in nature. Every organisation has to constantly adapt itself to changes in its environment in order to survive and grow. However, it difficult to anticipate all the likely future changes in the environment with utmost accuracy. Hence, even with planning everything cannot be foreseen.
2. Planning reduces creativity: The top management undertakes planning of various activities whereas the other members are expected to merely implements these plans. This restricts the creativity of the middle managers as they are neither allowed to deviate from plans nor are they permitted to act on their own.
3. Planning involves huge costs: The process of planning involves huge cost in terms of time and money as detailed planning is based on a series of scientific calculations. Moreover it may include a number of related costs as well, like expenses on boardroom meetings, discussions with professional experts and preliminary investigations to find out the viability of the plan. As a result the expenses on planning may turn out to be much more than benefits derived from it.

Question. Laxmi Chemicals Ltd., a soap manufacturing company, wanted to increase its market share from 30% to 55% in the long-run. A recent report submitted by the Research & Development Department of the company had predicted a growing trend of herbal and organic products. On the basis of this report, the company decided to diversify into new variety of soaps with natural ingredients having benefits and fragrances of Jasmine, Rose, Lavender, Mogra, Lemon Grass, Green Apple, Strawberry etc. The Unique Selling Proposition (USP) was to promote eco-friendly living in the contemporary life style. The company decided to allocate t 30 crores to achieve the objective.
• Identify the type of one of the functions of management mentioned above which will help the company to acquire dominant position in the market.
Ans. Strategy is the type of plan which will help the company to acquire dominant position in the market.

Question. Suhasini, a home science graduate from a reputed college, has recently done a cookery course. She wished to start her own venture with a goal to provide ‘health food’ at reasonable prices. She discussed her idea with her teacher (mentor) who encouraged her. After analysing various options for starting her business venture, they short listed the option to sell ready made and ‘ready to make’ vegetable shakes and sattu milk shakes. Then, they weighed the pros and cons of both the short listed options.
• Name the function of management being discussed above and give any one of its characteristics. Also briefly discuss any three limitations of the function discussed in the case.
Ans. Planning is the function of management which is being discussed above.
• Planning involves decision-making: Planning essentially involves application of rational thinking to choose the best alternative among the various available alternatives in order to achieve the desired goals efficiently and effectively.
The limitations of planning are described below:
• Planning may not work in a dynamic environment: The business environment is dy¬namic in nature. Every organisation has to constantly adapt itself to changes in its environment in order to survive and grow. However, it is difficult to anticipate all the likely future changes in the environment with utmost accuracy. Hence, even with planning, everything cannot be foreseen
• Planning reduces creativity: The top management undertakes planning of various activities whereas the other members are expected to merely implement these plans. This restricts the creativity of the middle level managers as they are neither allowed to deviate from plans nor are they permitted to act on their own.
• Planning involves huge costs: The process of planning involves huge cost in terms of time and money as detailed planning is based on a series of scientific calculations. Moreover, it may include a number of related costs as well, like expenses on boardroom meetings, discussions with professional experts and preliminary investigations to find out the viability of the plan. As a result, the expenses on planning may turn out to be much more than benefits derived from it.

Question. Two years ago, Madhu completed her degree in food technology. She worked for sometime in a company that manufactured 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 an action plan to achieve the same. One of her objectives 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 from farmers cultivating only organic crops. She also decided to follow the steps required for marketing of the products through her own outlets. She appointed Mohan as the Production Manager who decided the exact manner in which the production activities were 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 area wise sales target for different products for the forthcoming quarter. While working on the production table, a penalty of ? 100 per day for not wearing caps, gloves and apron was announced.
• Quoting lines from the above paragraph, identify and explain the different types of plans discussed.
Ans. The different types of plans discussed above are listed below:
✔ Objectives: Objectives are the end results of the activities that-an organisation seeks to achieve through its existence. All other activities within the organisation are directed towards achieving these objectives. “One of her objectives was to earn 10% profit on the amount invested in the first year.”
✔ Policy: A policy is a set of general guidelines that helps in managerial decision making and action.
“It was decided that the raw materials like fruits, vegetables, spices, etc. will be purchased on three months credit from farmers cultivating only organic crops.”
✔ Procedure: A procedure contains a series of specific steps to be performed in a chronological order to carry out the routine activities. “She also decided to follow the steps required for marketing of the products through her own outlets.” “The exact manner in which the production activities are to be carried out.”
✔ Rule: A rule is a specific statement relating to the general norms in terms of Do’s and Don’ts that guide the behaviour of people. It commands strict obedience and a penalty is likely to be imposed on its violation. “While working on the production table, a penalty of? 100 per day for not wearing caps, gloves and aprons were announced.”
✔ Budget: A budget refers to a financial plan that is expressed in numerical terms.
“Mohan also prepared a statement showing the number of workers different products for the forthcoming quarter.”

Question. Two years ago, Mayank obtained a degree in food technology. For some time, he worked in a company that manufactured 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 an action plan to achieve the same. One of his objectives was to earn 50% profits 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 the Production Manager who decided the exact manner in which the production activities were 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 are a wise sales target for different products, for the forthcoming 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 lines from the above paragraph, identify and explain the different types of plans discussed.
Ans. The different types of plans discussed above are listed below:
✔ Objectives: Objectives are the end results of the activities that an organisation seeks to achieve through its existence. All other activities within the organisation are directed towards achieving these objectives. “One of her objectives was to earn 50% profit on the amount invested in the first year.”
✔ Policy: A policy is a set of general guidelines that help in managerial decision making and action.
“It was decided that the raw materials like flour, wheat, sugar, etc. will be purchased on two months credit.”
✔ Method: A method refers to the prescribed ways or manner in which a task has to be performed considering the objective. “..decided the exact manner in which production activities were to be carried out.”
✔ Procedure: A procedure contains a series of specific steps to be performed in a chronological order to carry out the routine activities. “He also decided to follow the steps required for marketing of the products through his own outlets.”
✔ Rule: A rule is a specific statement relating to the general norms in terms of Do’s and Dont’s that guide the behaviour of people. It commands strict obedience and a penalty is likely to be imposed on its violation. “While working on the production table, a penalty of Rs. 150 per day was announced for not wearing helmets, gloves and aprons by the workers.”

Question. 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. Instead of appreciating him, Rahul’s supervisor ordered him to complete the work as per the methods and techniques decided earlier as nothing could be changed at that stage. The above paragraph describes one of the limitations of the planning function of management. Name and explain that limitation. 
Ans. The limitation of the planning function of management described in the above paragraph is that ‘planning reduces creativity.’ The top management undertakes planning of various policies and procedures whereas the other members are expected to merely implement these plans. This restricts the creativity of the middle level managers as they are neither allowed to deviate from plans, nor permitted to act on their own.