CLASS 12 BUSINESS STUDIES

CHAPTER-4 PLANNING
Planning: Definition
Planning is deciding in advance what to do, how to do, when to do and who has to do it.
Thus, it involves setting objectives and developing an appropriate course of action to
achieve those objectives.

Features of Planning

 Planning focuses on achieving objectives by deciding upon the activities to be

undertaken.
 Planning is a primary function as it precedes all functions of management i.e.
organising, staffing, directing& controlling.
 Planning is pervasive as it is required at all the levels of management but its
scope may vary.
 Planning is continuous as plans need to be made on a continuous basis till an
organisation exists.
 Planning is futuristic as it seeks to meet future events effectively to the best
advantage of an organisation. Planning is, therefore, called a forward looking
function.
 Planning involves decision-making as it involves rational thinking to choose the
best alternative among the various available alternatives in order to achieve the
desired goals efficiently and effectively.
 Planning is a mental exercise as it is based on intellectual thinking involving
foresight, visualisation and judgement rather than guess work.

Importance of Planning

 Planning provides direction as it acts as a guide for deciding what course of

action should be taken to attain the organisational goals.
 Planning reduces the risk of uncertainty arising due to the dynamic nature of
business environment as it enables a manager to anticipate and meet changes
effectively.
 Planning reduces overlapping & wasteful activities as it serves as the basis
for coordinating the activities and efforts of different divisions and individuals.
 Planning promotes innovation as it encourages new ideas that can take shape
of concrete plans.
 Planning facilitates decision making as it enables a manager to choose the
best alternative course ‘of action among the various available alternatives in light
of present and future conditions.
 Planning establishes standards for controlling. Planning provides standards
against which the actual performance is measured and timely corrective actions
the taken.

1
TYPES OF PLANNING
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 th 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.
 A 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.

Steps Involved in the Planning Process

 Setting clear, specific and measurable objectives for the entire organisation and
each department or unit within the organisation.
 Developing Premises which reflect the assumptions about the future that the
manager is
required to make since the future is uncertain.
 Identifying alternative courses of action through which the desired goals can be
achieved.
 Evaluating alternative courses to analyse the relative pros and cons of each
alternative in light of their feasibility and consequences.
 Selecting an alternative or a combination of plans which appears to be most
feasible.
 Implement the plan with the help of a strategy.

2
  Follow up action in order to monitor the plans to ensure that the desired
objectives are achieved efficiently and effectively.

Limitations of Planning

 Planning leads to rigidity as plans are drawn in advance and managers may not
be in a position to change them in the light of changed conditions.
 Planning may not work ina dynamic environment as through planning,
everything cannot be foreseen.
 Planning reduces creativity as the top management undertakes planning of
various activities whereas the middle managers are neither allowed to deviate
from plans nor are they permitted to act on their own.
 Planning involves huge costs in terms of time and money required to undertake
scientific calculations and sometimes it may not justify the benefits derived from it.
 Planning is a time consuming process and sometimes there is not much time
left for implementation of the plans.
 Planning does not guarantee success because it is not always essential that if
a plan has worked before, it will work again, as things may change. This kind of
complacency and false sense of security may actually lead to failure instead of
success of a business.

MIND MAP

3
 LATEST CBSE QUESTIONS

Question 1.
State any three points of importance of planning function of management. (CBSE, Delhi
2017)
Answer:
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 2.
Give the meaning of ‘objectives’ and ‘budget’ as types of plans. (CBSE, Delhi 2017)
Answer:

1. 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 gn the amount invested in the first year.
2. 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 3.
State any three limitation of planning. (CBSE, Delhi 2017)
Answer:
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

4
 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 4.
Give the meaning of ‘procedure’ and ‘rule’ as types of plans. (CBSE, Delhi 2017)
Answer:

1. Procedure: A procedure contains a series of specific steps to be performed in a

chronological order to carry out the routine activities. It is determined by lower and
middle level management. It is a specific statement. There is no scope for
managerial discretion. Procedure is framed to implement a policy. It is a type of
standing plan.
2. 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. Rules help to maintain discipline.
Rules are both specific and rigid. For example, No smoking, No Parking. It is a
type of standing plan.

Question 5.
State any three features of planning. (CBSE, Delhi 2017)
Answer:
The three features of planning are described below:

1. Planning is pervasive: Planning is not an special function, is equally essential at

all levels of management. But the scope of planning varies at different levels and
among different departments.
2. 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.
3. Planning is a primary function: Planning precedes all the functions of
management i.e. organizing, staffing, directing and controlling. This refers to
primacy of planning. Planning provides basis of all other functions.

Question 6.
Give the meaning of ‘policy’ and ‘strategy’ as type of plans. (CBSE, Delhi 2017)
Answer:
5
 1. Policy: Policy are general statements that guide managerial decision making. If is
determined by top level management. It is a general statement. It provides scope
for managerial discretion. Policies are framed to achieve the objectives of an
organisation. They all guides in implementing the strategy. It is a type of standing
plan.
2. Strategy: A strategy is a comprehensive plan prepared for winning over the given
challenge or problem. A strategy is based on the objectives of the organisation. A
strategy may be determined by top level or middle level management.

Question 7.
Give the meaning of ‘Objective’ and ‘Procedure’ as types of plans. (CBSE, OD 2017)
Answer:

1. 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 on the amount invested in the first year.
2. Procedure: A procedure contains a series of specific steps to be performed in a
chronological order to carry out the routine activities. It is determined by lower and
middle level management. It is a specific statement. There is no scope for
managerial discretion. Procedure is framed to implement a policy. It is a type of
standing plan.

Question 8.
Give the meaning of ‘Strategy’ and ‘Rule’ as types of plans. (CBSE, OD 2017)
Answer:

1. Strategy: A strategy is a comprehensive plan prepared for winning over the given
challenge or problem. It is based on the objectives of the organisation. It may be
determined by top level or middle level management.
2. Rule: Rules are specific statements that tell people what should or should not be
done. Violation of Rules may lead to imposition of penalties. Rules help to
maintain discipline. Rules are both specific and rigid. For example, No smoking,
No Parking. It is a type of standing plan.

Question 9.
Super Fine Rice Ltd. has the largest share of 55% in the market. The company’s policy
is to sell only for cash. In 2015, for the first time company’s number one position in the
industry has been threatened because other companies started selling rice on credit*
also. But the managers of Super Fine Rice Ltd. continued to rely on it’s previously tried
and tested successful plans which didn”t work because the environment is not static.
This led to decline in sales of Super Fine Rice Ltd. The above situation is indicating two
limitations of planning which led to decline in it sales.
Identify these limitations. (CBSE, Sample Paper, 2017)
6
Answer:
The two limitations of planning which led to decline in it sales are:

 Planning does not guarantee success.

 Planning may not work in dynamic environment.

Question 10.
State the main aspects in the concept of planning. (CBSE, Sample Paper, 2017)
Answer:
The concept of planning primarily involves three aspects namely;

 Setting objectives in clear specific and measurable terms for a given period of
time.
 Identifying the various alternative courses of action which may be adopted to
achieve the objectives.
 Selecting the best possible alternative course of action from among the various
courses of action available.

Question 11.
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. (CBSE, Sample Paper
2016)
Answer:
Strategy is the type of plan which will help the company to acquire dominant position in
the market.

Question 12.
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.

1. Name the function of management being discussed above and give any one of its
characteristics.

7
 2. Also briefly discuss any three limitations of the function discussed in the
case. (CBSE, Sample Paper 2016)

Answer:

1. 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.
2. 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 13.
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.

8
Quoting lines from the above paragraph, identify and explain the different types of plans
discussed. (CBSE, Delhi 2016)
Answer:
The different types of plans discussed above are listed below:

1. 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.”
2. 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.”
3. 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.”
4. 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 ? 100 per day for not wearing
caps, gloves and aprons was announced.”
5. Budget: A budget refes 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 quater.”

Question 14.
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. (CBSE, OD 2016)

9
Answer:
The different types of plans discussed above are listed below:

1. 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.”
2. 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.”
3. 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.”
4. 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.”
5. 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 15.
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. (CBSE, Delhi Comptt.
2011)
Answer:
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.

ADDITIONAL QUESTIONS

Question 1.
Josh Ltd. is a one of the largest two-wheeler manufacturer in India. It has a market

10
share of about 42% in the two-wheeler category. The company had witnessed almost a
35% drop in the booking as the currency crunch was prompting people to withhold new
purchases due to demonetisation. Therefore, the production manager of the company
had decided to align production to factor in slower sales in the market.
In context of the above case:

1. Identify and explain the function of management being discussed in the above
lines.
2. Which limitations of the function of management as identified in part (a) of the
question was the production manager trying to overcome due to demonetisation?

Answer:

1. Planning is the function of management which is being discussed in the above

lines.
Planning is deciding in advance what to do, how to do, when to do and who has to
do it. Thus, it involves setting objectives and developing an appropriate course of
action to achieve these objectives.
2. The production manager is trying to overcome the following limitations of planning:

 Rigidity
 Planning may not work in dynamic environment

Question 2.
The term demonetisation has become a household name since the government pulled
the old Rs. 500 and Rs. 1,000 notes out of circulation in November 2016. Prior to the
year 2016, the Indian government had demonetised bank notes on two prior occasions
—once in the year 1946 and then again in the year 1978. In both cases, the purpose
was to combat tax evasion by ‘black money’. Identify the types of one of the functions of
management being discussed in the above lines.
Answer:
Objective and Strategy

Question 3.
The arrangement to demonetise the ? 500 and ?1000 bank notes began six to ten
months prior to the public announcement and was kept highly confidential. The cabinet
was informed about the demonetisation on 8th November 2016 in a meeting called by
the Prime Minister of India, Narendra Modi. This was followed by Modi’s public
announcement about the demonetisation in a televised address where he announced
that currency notes with the denomination of ? 500 and ? 1000 would cease to be the
legal tender from 9th of November 2016. The most interesting thing regarding the
demonetisation is that people were devising various unique ways for transforming their
black money in to white one by depositing money in the accounts of their poor relatives
and friends, converting black money in to gold, paying a few months salaries in advance
and so on.

11
In context of the above case:
Identify and explain the types of plans being discussed in the above lines with regard to
demonetisation.
Answer:
The various types of plans being discussed in the above lines with regard to
demonetisation are detailed below:

 Procedure: It is a series of chronological steps which are performed to do a

particular activity.
 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.

Question 4.
Flipkart is an e-commerce company founded in the year 2007 by Sachin Bansal and
Binny Bansal. The company is registered in Singapore, but has its headquarters in
Bangaluru, India. The company seeks to increase traffic (more clicks on their products)
and boost sales and revenue through integration of Mobile Apps, Display, Pay Per Click
and Search Engine Optimization. In order to dispel the fear of people related to
shopping online, Flipkart was the first company to implement the popular ‘Cash on
Delivery’ facility. All the products sold by the company under a particular category may
have different return/replacement period. Flipkart allows multiple payment options such
as cash on delivery, credit or debit card transactions, net banking, e-gift voucher and
card swipe on delivery. The company operates both ways when an order is received.
The products for which it holds inventory are dispatched by it directly. For the products
they do not store in inventory, they just send the order received by them to the supplier
who ships it. The company plans to spend about ? 75 crores on e-Commerce
advertising in the year 2016. Flipkart reserves the right to terminate your membership
and/or refuse to provide you with access to the website if it is brought to Flipkart’s notice
or if it is discovered that you are under the age of 18 years. This is because as per the
Indian Contract Act, 1872, the minors, un-discharged insolvents, etc. are not eligible to
use the website.
In context of the above case, identify and explain the different types of plans being used
by Flipkart by quoting lines from the paragraph.
Answer:
The different types of plans being used by Flipkart are listed below:

1. 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.
“The company seeks to increase traffic (more clicks on their products) and boost
sales and revenue through integration of Mobile Apps, Display, Pay Per Click and
Search Engine Optimization.”
2. Strategy: A strategy is a comprehensive plan for achieving the objectives of the
organisation. This comprehensive plan involves:

 determining long term objectives

12
  adopting a particular course of action
 allocating resources necessary to achieve the objective.
“In order to dispel the fear of people related to shopping online, Flipkart was
the first company to implement the popular ‘Cash On Delivery’ facility.”
3. Policy: A policy is a siet of general guidelines that help in managerial decision
making and action.
“All the products sold by the company under a particular category may have
different return/replacement period.”
4. Method: A method refers to the prescribed ways or manner in which a task has to
be performed considering the objective.
“Flipkart allows multiple payment options such as cash on delivery, credit or debit
card transactions, net banking, e-gift voucher and card swipe on delivery.”
5. Procedure: A procedure contains a series of specific steps to be performed in a
chronological order to carry out the routine activities.
“The company operates both ways when an order is received. The products for
which it holds inventory are dispatched by it directly. For the products they do not
store in inventory, they just send the order received by them to the supplier who
ships it.”
6. Budget: A budget refers to a financial plan that is expressed in -numerical terms.
“The company plans to spend about ? 75 crores on e-commerce advertising in the
year 2016.”
7. 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.
“Flipkart reserves the right to terminate your membership and/or refuse to provide
you with access to the Website if it is brought to Flipkart’s notice or if it is
discovered that you are under the age of 18 years. This is because as per the
Indian Contract Act, 1872, the minors, un-discharged insolvents etc. are not
eligible to use the Website.”

Question 5.
Rajender has been running a successful business of manufacturing traditional wedding
wear for women including sarees and lehengas. His friend Surinder who is engaged in
the business of providing web designing solutions to his clients, suggests him to explore
the option of selling his products online. Rajender agrees to his suggestion and decides
to venture into online business, keeping in view the various e-commerce regulations in
order to avoid imposition of any penalty. In order to facilitate the sale of his products,
Rajender decides to offer multiple payment options such as cash on delivery, credit or
debit card transactions, net banking to the buyers etc.
In context of the above case:

1. Identify the two different types of plans mentioned in the above paragraph that
relate to the online portal that Rajinder intends to startby quoting lines from the
paragraph.
2. Distinguish between the two types of plans as identified in part (a).

13
Answer:

1. Rule and Method are the two different types of plans that relate to the online portal
that Rajender intends to start.

 Rule: “Rajender agrees to his suggestion and decides to venture into online
business keeping in view the various e-commerce regulations in order to
avoid imposition of any penalty.”
 Method: “However, he decides to offer multiple payment options such as
cash on delivery, credit or debit card transactions, net banking to the buyers
etc.”
2. The difference between rule and method is as follows:

Basis Rule Method

Rules are specific statements that tell people Methods define the way of doing
Meaning
what should or should not be done. routine or respective job.

Violation of rules may lead to imposition of Method does not involve any
Violation
penalties. penalties on violation.

Methods help in carrying out the

Purpose Rules help to maintain discipline.
job efficiently.

Methods are specific (well defined)

Nature Rules are both specific and rigid.
but flexible.

14
 Method of payment of fee-cheque,
Example No smoking, No Parking etc.
cash, online etc.

Question 6.
Wazir Ahmed joins ‘Ashiyana Ltd.’ a company dealing in real estate, as a human
resource manager. Through a series of interactions with his team during lunch breaks,
he comes to know that quite a few managers at middle and senior levels have recently
left the organisation as their promotions were overdue. Therefore, in order to reinstate
the confidence of the staff, he lays out a clear cut plan consisting of a set of general
guidelines for both time bound and performance related appraisals of the mangers at all
levels. Moreover, he develops standardized processes containing a series of steps
specified in a chronological order for its implementation.
In context of the above case:

1. Identify the two different types of plans that Wazir Ahmed proposes to implement
in order to reinstate the confidence of the staff by quoting lines from the
paragraph.
2. Distinguish between the two types of plans as identified in part (a).

Answer:

1. Policy and Procedure are the two different types of plans that Wazir Ahmed
proposes to implement in order to reinstate the confidence of the staff.
Policy: “… he lays out a clear cut plan consisting of a set of general guidelines for
both time bound and performance related appraisals of the mangers at all levels.”
Procedure: “Moreover, he develops standardized processes containing a series of
steps specified in a chronological order for its implementation.”
2. The difference between Policy and Procedure is outlined below:

Basis Policy Procedure

Meaning Policies are general statements that guide It is a series of chronological

managerial decision making. steps which are performed to

15
 do a particular activity.

It is determined by lower and

Level of management It is determined by top level management.
middle level management.

Expression It is a general statement. It is a specific statement.

Manager’s
It provides scope for managerial There is no scope for
Discretion
discretion. managerial discretion.

Policies are framed to achieve the

A procedure is framed to
Purpose objectives of an organisation. They all
implement a policy.
guide in implementing the strategy.

Question 7.
‘Apna Ghar/ a company dealing in consumer durables, plans to increase the sale of its
products by 25% around Diwali this year. Moreover, in order to cash on the
implementation of the seventh pay commission by that time, which is likely to raise the
income of 47 lakh serving employees of the Central government and 52 lakh
pensioners, the company has created 30 advertisement films which will be aired across
85 national and regional channels until Diwali.
In context of the above case:

1. Identify the two different types of plans that ‘Apna Ghar’ proposes to implement by
quoting lines from the paragraph.
2. Distinguish between the two types of plans as identified in part(i).

Answer:

16
 1. Objective and Strategy are the two different types of plans that ‘Apna Ghar’
proposes to implement.
Objective: “Apna Ghar’, a company dealing in consumer durables, plans to
increase the sale of its products by 25% around Diwali this year.”
Strategy: “Moreover, in order to cash on the implementation of the seventh pay
commission by that time which is likely to raise the income of 47 lakh serving
employees of the Central government and 52 lakh pensioners, the company has
created 30 advertisement films which will be aired across 85 national and regional
channels until Diwali.”
2. The difference between objectives and strategy is outlined below:

S. No. Basis Objectives Strategy

Objectives are the end results of

A strategy is a comprehensive
the activities that an organisation
1. Meaning plan prepared for winning over
seeks to achieve through its
the given challenge or problem.
existence.

Objectives are based on the

A strategy is based on the
2. Source mission or philosophy of the
objectives of the organisation.
organisation.

A strategy may be determined

Level of persons Objectives are determined by
3. by top level or middle level
involved top level management.
management.

Question 8.
After completing a diploma in Bakery and Patisserie, Payai sets up a small outlet at Goa

17
Airport to provide a healthy food option to the travellers. To begin with, she has decided
to sell five types of patties, three types of pizzas and low sugar muffins in four flavours.
Thus, by deciding in advance what to do and how to do, she is able to reduce the risk of
uncertainty and avoid overlapping and wasteful activities. But sometimes her planning
does not work due to some unavoidable circumstances like cancellation of flights due to
bad weather conditions, government alert etc. which adversely affects her clientele.
In context of the above case:

1. Identify and explain the points highlighting the importance of planning mentioned
in the above paragraph.
2. Describe briefly the limitation of planning which adversely affects Payal’s business

Answer:

1. The points highlighting the importance of planning mentioned in the above

paragraph are described below:

 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 ways to deal with changes and uncertain
events effectively.
 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 the smooth working of the
organisation’s work without interruptions. Moreover, it makes detection of
inefficiencies easier so that timely corrective measures may be taken to
avoid them in future.
2. The limitation of planning which adversely affects Payal’s business is:
 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.

Question 9.
‘Agile Ltd.’ is a well-known automobile manufacturing company in India. The company
plans to increase the sale of its sedan cars by 20% in the next quarter. In order to
achieve the desired target, the marketing team of the company considers the impact of
policy of the government towards diesel vehicles and the level of competition in this
segment of cars. They explore the various available options like offering more discount
to dealers and customers, providing more customer friendly finance options, lucky
draws on test drives, increasing advertising, offering more of free accessories on the
purchase of the car, etc. A thorough analysis of the various available options is done
keeping in view the relative viability of each option. The company decides to pursue the
18
option of offering more discount to dealers and customers in order to boost the sale of
sedan cars. In order to implement the plan, they determine the various discount
packages and communicate the same to their product dealers. To make the prospective
consumers aware about the new available benefits, advertisements are made through
various sources of print and electronic media. The market analysts of the company keep
a close watch on the revenue from the sedan cars to study the effect of new initiatives
by the company to promote its sales.
In context of the above case:

1. Name the function of management described in the above paragraph.

2. Identify and explain the various steps involved in process the function of
management as identified in part (a) by quoting lines from the paragraph.

Answer:

1. Planning is the function of management which is being described in the above

paragraph.
2. The various steps involved in the planning process are explained below:

 Setting objectives: The planning process is initiated by setting the

objectives in clear, specific and measurable terms. The objectives may be
set for the organization as a whole and for each department or unit within the
organization.
“The company plans to increase the sale of its sedan cars by 20% in next
quarter.”
 Developing Premises: Planning process is carried out keeping in view the
assumptions related to the future, which is uncertain. These assumptions
are called premises and may relate to government policy, interest rate,
inflation, etc. Accurate forecasts are therefore essential for successful
planning.
“In order to achieve the desired target the marketing team of the company
considers the impact of policy of the government towards diesel vehicles and
level of competition in this segment of cars.” .
 Identifying alternative courses of action: The next step in the planning
process involves identification of the various ways in which the goals can be
achieved.
“They explore the various available options like offering more discount to
dealers and customers, providing more customer friendly finance options,
lucky draws on test drives, increasing advertising, offering more of free
accessories on the purchase of the car, etc.”
 Evaluating alternative courses: In order to select the best option, the
relative positive and negative aspects of each alternative should be
evaluated in the light of their feasibility and consequences.
“A thorough analysis of the various available options is done keeping in view
the relative viability of each option.”

19
  Selecting an alternative: The best plan is adopted to achieve the desired
goals. Sometimes, a combination of plans may be selected instead of one
best course of action.
“The company decides to pursue the option of offering more discount to
dealers and customers in order to boost the sale of sedan cars.”
 Implement the plan: This step is concerned with putting plans into action.
“In order to implement the plan, they determine the various discount
packages and communicate the same to their product dealers. To make the
prospective consumers aware about the new available benefits,
advertisements are made through various sources of print and electronic
media.”
 Follow up action: Monitoring of plans is equally important to ensure that
objectives are achieved efficiently and effectively.
“The market analysts of the company keep a close watch on the revenue
from the sedan cars to study the effect of new initiatives by the company to
promote its sales.”

Question 10.
Arush joins as a sales manager of a company dealing in naturotherapy products. Being
proficient in his work, he knew that without good planning he will not be able to
organise, direct, control or perform any of the other managerial functions efficiently and
effectively. Only on the basis of sales forecasting, he would assist in the preparation of
the annual plans for its production and sales. Besides, he will have to prepare sales
plans regularly on weekly, monthly, quarterly and half yearly basis. While preparing the
sales forecasts, he undertakes intellectual thinking involving foresight, visualization and
issued judgement rather than wishful thinking or guess work. Most importantly, all these
planning activities will be meaningful only if they will coincide with the purpose fob which
the business is being carried out.
In context of the above case, identify the various features of planning highlighted in the
above paragraph by quoting lines from it.
Answer:
The features of planning highlighted in the above paragraph are explained below:

1. Planning is a primary function: Planning precedes all the functions of

management i.e. organizing, staffing, directing and controlling. This refers to
primacy of planning. Planning provides the basis of all other functions.
“… without good planning he will not be able to organise, direct, control or perform
any of the other managerial functions efficiently and effectively. “
2. Planning is futuristic: Planning is called a forward looking function as it enables
an organization to meet future events effectively.
“Only on the basis of sales forecasting, he would assist in the preparation of the
annual plans for its production and sales.”
3. Planning is continuous: Plans need to be continuously made, implemented and
followed by another plan and so on till an organization exists
“Besides, he will have to prepare sales plans regularly on weekly, monthly,
quarterly and half yearly basis.”

20
 4. Planning is a mental exercise: Planning is done on the basis of rational thinking
involving foresight, visualization and issued judgement rather than wishful thinking
or guess work.
“While preparing the sales forecasts, he undertakes intellectual thinking involving
foresight, visualisation and issued judgement rather than wishful thinking or guess
work.”
5. Planning focuses on achieving objectives: Planning is a purposeful activity as
it contributes to the achievement of predetermined goals of the organisation both
efficiently and effectively.
“Most importantly, all these planning activities will be meaningful only if they will
coincide with the purpose for which the business is being carried out.”

Question 11.
Holistic Education Public School in Bahadurgarh decides to implement the literacy
programme of the government in the school. It is decided that within the year, the forty
five support staff employees of the school will be made literate by the school
counsellors and social workers. In order to enhance the learning process, the school
decides to use audio-visual aids. To start the programme, the school has to first procure
the literacy books from State Resource Centre at Jamia. Besides the curriculum, each
literacy book contains a series of nine tests which the volunteers have to get completed
by the learners during the programme. Moreover, by implementing the plan of ‘each one
teach one’, each student of the school from classes fifth to tenth will be encouraged to
make one person literate. The student volunteers may select a learner by adopting any
one of the two ways; either from the slum areas adopted by the school or on their own
within the vicinity of their residence. As per the norms of the Delhi Government, it is
mandatory for the volunteers to send back the filled copy of only the ninth test paper in
the series to the authorities as a conclusive proof of the completion of the course, else
the certificate of commendation will not be awarded to them. Considering the
implementation of the programme to be a part of its corporate social responsibility
initiative, the school has decided to spend around Rs. 50,000 on the distribution of free
stationery items, refreshments of the learners, etc.
In context of the above case:

1. Identify the various types of plans being used by Holistic Education Public School
in order to implement the literacy programme in their school by quoting the lines
from the paragraph.
2. Categorise the various types of plans as identified in part (a) into single use plans
and standing plans.

Answer:

1. The various types of plans being used by the school to implement the literacy
programme in the school are:

21
  Objectives: “It is decided that within the year, all the forty five support staff
employees of the school will be made literate by the school counsellors and
social workers.”
 Strategy: “In order to enhance the learning process, the school decides to
use audio visual aids.”
 Policy: “Moreover, by implementing the plan of ‘each one teach one,’ each
student of the school from classes fifth to tenth will be encouraged to make
one person literate.”
 Procedure: “To start the programme the school has to first procure the
literacy books from State Resource Centre at Jamia. Besides the curriculum,
each literacy book contains a series of nine tests which the volunteers have
to get completed by the learners during the programme.”
 Method: “The student volunteers may select a learner by adopting any one
of the two ways; either from the slum areas adopted by the school or on their
own within the vicinity of their residence.”
 Rule: “As per the norms of the Delhi Government, it is mandatory for the
volunteers to send back the filled copy of only the ninth test paper in the
series to the authorities as a conclusive proof of the completion of the
course, else the certificate of commendation will not be awarded to them.”
 Budget: “Considering the implementation of the programme to be a part of
its corporate social responsibility initiative, the school has decided to spend
around ? 50,000 on the distribution of free stationery items, refreshments of
the learners, etc.”
2. 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. This
includes programmes, budgets and projects.
Standing plans refer to the types 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. These include objectives, strategies, policies, procedures methods
and rules.

22