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Chapter ---Planning, Class XII commerce, Subject

Business Studies
NAME ! "#E "EAC#E$ %S#I&#A'P(" CMME$CE)
Meaning of Planning Deciding about all the aspect is called planning. A
problem about taking decision on these matters rises when there are more than one
possible answers.. therefore it can be said to be a process of choosing .
Defnition of planning :
According ot koontz and Odonnell!" Planning is deciding in ad#ance $hat to do !
how to do it! when to do it! and who is to do it."
%haracteristics of planning
& Planning focuses on achie#ing the ob'ecti#es: Management begins with planning
and planning begins with the determining of ob'ecti#es. (n the absence of ob'ecti#es
no organization can e#er be thought about.
) Planning is the primar* function of Management: Planning is the frst important
function of management. +he other functions organising! sta,ng! directing and
controlling come later. (n the absence of planning no other function of management
can be performed.
- planning is continuous: Planning is the process which begins with the beginning of
business itself and ends with the ending of the business. (t means that as long a
business e.ists! the planning process is continuous.
/or e.ample ! a compan* plans to sell one lakh units in the coming *ear.
0uddenl*! man* competing companies enter the market. +his will naturall*
a1ect the pre#ious position of the compan* and ! therefore !it shall ha#e to
re#ise its planning.
2. Planning is /uturistic: Planning decides the plan of action3$hat is to be
done! how is to be done! when is to be done! b* who is to be done! all the
4uestions are related to future. 5nder the planning! answer to these
4uestiona is found out. $hile an e1ort is made to fnd out these answer.
6. Planning is mental e.ercise: planning is known as a mental e.ercise as it is
related to thinking before doing something. A planner has mainl* to think
about the following 4uestions:
7&8 $hat to do9 ! 7)8 how to do it9 ! 7-8$hen to do it9 ! 728 $ho
is to do it9

Importance o* planning
Planning is the frst and most important function of the management. (t is
needed at e#er* le#el of the management. (n the absence of planning all the
business acti#ities of the organization will become meaningless. +he
importance of planning has increased all the more in #iew of the increasing
size of organizations (n the absence of planning! it ma* not be impossible but
certainl* di,cult to guess the uncertain e#ents of future.
& Planning facilitates Decision making: Decision making means the process
of taking decision. 5nder it! a #ariet* of alternati#es are disco#ered and the
best alternati#e is chosen. :ut it is important to determine the ob'ecti#es
before the disco#er* of alternati#es. Ob'ecti#es are determined under the
process of planning. 0o. it can be said that planning facilitates decision
) Planning reduce risk of 5ncertaint*: planning is alwa*s done for future and
future is uncertain. $ith the help of planning possible changes in future are
anticipated and #arious acti#ities are planned in the best possible wa*.
-. Planning reduces o#erlapping and wasteful acti#ities: 5nder planning!
future acti#ities are planned in order to achie#e ob'ecti#es. the problems of
when! where !what and almost decided. +his puts an end to disorder. (n such
situation coordination is established among di1erent acti#ities and
departments. (t puts an end ot o#erlapping and wasteful acti#ities.
2. Planning pro#ides Direction: 5nder the process of planning the ob'ecti#es
of the organization are defned in simple and clear words. +he outcome of
this is that all the emplo*ees important role in the attainment of the
ob'ecti#es of the organization.
6 Planning establishes 0tandards for controlling: :* determining the
ob'ecti#es the ob'ecti#es of the organisation through planning all the people
working in the organization and all the departments are informed about
when! what and how to do things. 0tandards are laid down about their work!
time and cost. 5nder controlling !at the time of completing the work!the
actual work done is compared with the standard work and de#iations are
found out and if the work has been done as desired the person concerned is
held responsible.

+imitations o* planning
Planning is needed both in the business and non business organizations.
0ome people think that planning is based on the future and nothing can be
said certaint* about future. +herefore! it is
for all the situations before and which now re4uires immediate decision. (n
such situation if the useless process. (f planning has to be successful and
purposeful! the managers should be aware of these di,culties and
limitations of planning./ollowing are the limitations of planning.
& Planning does not work in D*namic ;n#ironment: Planning is based in the
future happenings. 0ince future is uncertain and d*namic. <enerall*! a
longer period of planning makes it less e1ecti#es. +herefore! it can be said
that planning does not work in d*namic en#ironment.
) Planning reduce creati#it*: 5nder the planning
All the acti#ities connected with the attainment of ob'ecti#es of the
organization are pre3determined. ;#er*bod* works as the* ha#e been
directed to do and it has been made clear in the plans. it means that the* do
not think about appropriate wa*s of disco#ering new alternati#es.
- Planning in#ol#es huge costs: Planning is small work but its process is
reall* big. Planning becomes meaningful after a long path. (t takes a lot of
time to co#er this path. During this entire period the managers remain bus*
in collecting a lot of information and anal*zing it. (n this wa* the organization
is bound to face huge costs.
2 Planning is time consuming process: Planning is blessing in facing a
defnite situation but because of long process it can not f ace sudden
emergencies. 0udden emergencies can be in the form of unforeseen
problems or some opportunit* of proft is and there has been no planning
manager thinks of completing the planning process before taking some
decision. +hus! planning is time consuming process.
6Planning does not guarantee of success: 0ome times the manager think
that planning sol#es all their problems. 0uch a think makes them neglect
their real work and ad#erse e1ect of such an attitude has to be faced b* the
organization. (n this wa*! planning planning o1ers the managers a false
sense of securit* and makes them careless. 0o! we can that mere planning
does not ensure successs!rather e1orts ha#e to be made for it.
Planning process
$hen we look at planning in the conte.t of management process! it is called
acti#it* ! it is being a part of management. :ut on the other hand! when it is
studied separatel* it is called a process because to complete one has to
clear man* steps one after the other. 0o far as the number of steps included
in the planning process is concerned it depends on the size of the
organization. Di1erent organization can ha#e di1erent planning process.+he
following steps are generall* taken in the business organization during the
planning process.
& 0etting the ob'ecti#es= Ob'ecti#es are those end points for whose
attainment all the acti#ities are taken. (n the planning process ob'ecti#es are
determined and defned frst of all so that all the emplo*ees concerned can
be informed about them to get their complete cooperation. Ob'ecti#es ha#e
a hierarch* of their own organizational ob'ecti#es! departmental ob'ecti#es!
and indi#idual ob'ecti#es.
) De#eloping the premises: the basis of planning is those factors which
in>uence the possible results of di1erent alternati#es. :efore taking a fnal
decision about an* alternati#e a forecast of this assumption is made. +he
rate of success of planning will be in direct proportion to the rate of the
success of forecasting. +he assumption of planning is two t*pes:
7&8(nternal premises: capital! labour! raw material! machiner* ect.
7)8 ;.ternal premises= <o#ernment polices! business competition! taste of
customer rate of ect.
- (dentif*ing alternati#e course of action: <enerall*! there is no work which
has no alternati#e method of doing it. On the basis of the ob'ecti#es of the
organization and limitations of planning! alternati#e course of doing a
particular work can be disco#ered.
2 ;#aluating alternati#e courses: All those alternati#e courses which are up
to the e.pectations of the minimum preminar* criteria are selected for
intensi#e stud*. it will be seen as to what e.tent a particular alternati#e
course can help in the attainment of the ob'ecti#es of the organizations.
+here is howe#er! one problem which confronts us while anal*sing these
alternati#e courses. ;#er* alternati#es course has its merits and demerits.
6 0electing an alternati#e: alternati#e a careful anal*sis of di1erent
alternati#es the best one is selected. 0ometimes the anal*sis *ields more
than one alternati#e course with similar merits.
?eeping in #iew the uncertainties of future it is 'ustifable to select more than
one good alternati#e course One of such alternati#e is adapted and other is
kept in reser#e.
@ (mplementing the plan: After ha#ing decided the chef plan and the
subsidiar* plans! the* are to be implemented. After implementing the plans
the se4uence of di1erent acti#ities has to be decided. (n other words! it is
decided as to who will do a particular 'ob and at what time.
A. /ollow up Action: the process of planning does not end with the
implementation of plans. plans are formulated for future which is uncertain.
(t is of great importance that there is a constant re#iew of plans so as to
ensure success in the uncertain future. +he moment there appears to be
changes in the plans also. (n this wa* we can sa* planning is %ontinuousl*
mo#ing process.
",pes o* plans
Planning is a process and plan is its outcome. Plan is a sort of commitment to
accomplish all the acti#ities needed for the attainment of special results!
from this point of #iew there are man* plans. +he following stud* will help in
understanding di1erent kinds of plans.
&Ob'ecti#es: ob'ecti#es are those end points for the attainment of which all
the acti#ities are
/ollowing are the e.amples of ob'ecti#es:
7( 8+o impro#e the communication s*stem to hold regular sta1 meeting and
publish a newsletter.
7)8+o cross the )B!B BB crore mark in turno#er of soaps.
7-8+o make a#ailable the emplo*ment to &BB people e#er* *ear.
728+o reduce 4ualit* re'ects to -C
) 0trategies: 0trategies refer to those plans which are prepared in #iew of
the mo#e of the competitors and whose ob'ecti#e is to make possible the
optimum utilization of resources.
-. Policies= Polcies are those general statements which are decided for the
guidance of the emplo*ees while taking decision. +heir purpose is la*ing
down a limit within which a particular work can be done or decision taken.
Ob'ecti#es decide what is to be achie#ed and the policies tell us how it can
be achie#ed.
2Procedures : Procedures are those plans which determine the se4uence of
an* work performance. /or e.ample! the reco#er* of mone* from the debtors
can be done in the following order:
7a8$riting letters! 7b8 connecting on telephone! 7c8 Meeting personall*!7dB
taking legal action.
+his is the procedure of collecting mone* from all the debtors. +here is a
di1erence between policies and procedures.. +here can be two policies of
the organization regarding the reco#er* of mone* from the debtors. 7A8
+ight collection polic*! and 7:8 Denient collection polic*. 5nder the frst
polic* an e1ort is made to reco#er mone* from debtors is b* treating him
harshl*. 5nder the second polic* the debtors will be gi#en enough time for
the pa*ment of mone* while treating him lenientl*.
6 methods. Methods is that plan which determines how di1erent acti#ities
of the procedure are completed. Methods is not related to all steps but
onl* to one step of the procedure . it is more detailed than procedure .
there ma* be man* methods to do a particular work. After e.tensi#e
stud*! a method has to be selected from which a worker feels minimum
fati4ue! increase in producti#it* and there is reduction in costs.
@ Eules: Eules till us what is to be done and what is not to be done in
particular situation. (n the absence of rules there is no need to take an*
decision. $hate#er is said in the rules has to be followed without an*
thinking. /or e.ample! the rule F Go smoking in the factor* Fis applicable
to e#er*bod* and it must be obser#ed. Pro#ision for punishment in case of
non3obser#ing of the rule can also be made.
A:udget: :udgets describe the desired results in numerical terms. A
budget is that planning which pro#ides detailers about estimated mone*!
material time and other resources for the achie#ement of pre determined
ob'ecti#es of #arious departments. /or e.ample! the sales
departmensbudget gi#es estimated fgures about the t*pe of material
that will be purchased! its 4uantit*! the time of purchase and the amount
to be spent on it. 0imilarl*! budget of other departments are also
H Programmers: a programme means a single3use comprehensi#e plan
la*ing down the what! how who and when of accomplishing a specifc 'ob.
through program me the managers are informed in ad#ance about #arious
needs so that there is no problem in future. +he programmers can be
di1erent t*pes3production programme! +raining programme 0ales
promotion programme management de#eloping programme.etc.

M.+ - Iours M.M &BB
<eneral (nstruction=
A answer to 4uestions carr*ing & mark ma* be from one word to one
B ans0er to 1uestions carr,ing 2 mar3s ma, be *rom 45-64 0ords 7
C Ans0er to 1uestions carr,ing 8-4 mar3s ma, be about 945 0ords7
/ Ans0er to 1uestions carr,ing : mar3s ma, be about ;55 0ords7
E Attempt all parts o* a 1uestion together7
9 <7 =h, planning is 3no0n as >*uturistic?@
; <7 State an, t0o points o* the importance o* the planning7
2 <7 ho0 the happening o* >oAerlapping and 0aste*ul actiAities? can
be reduced@ 9
8 <7 At 0hich leAel management is considered a base *or all other
*unctions7 Name that
*unction7 9
4 <7 =hat is method@
: <7 #o0 does planning restrict creatiAit,@
6 <7 #o0 does planning proAides direction
B <7 ECplain brieD, an, three limitations o* planning7
E <7 ECplains the programme 0ith the eCample7
95 <7 Fplanning is continuous process7G Comment7
99 <7 =hat is budget@ (iAe an eCample o* a sales budget7
9; < FNo smo3ing in the *actor, F is rule7 Comment on it7
92 <7 Clari*, the meaning o* objectiAes 0ith the help o* an eCample7
98 <do ,ou thin3 planning can 0or3 in a changing enAironment@
947<7 =hat is meant b, polic, as a t,pe o* plan@
9:7 <7/iHerentiate bet0een the rule and polic, through an eCample7
96 <7 =hat is the meaning o* planning@ ECplain an, IAe
Characteristics o* planning7 4
9B <7 =hat is the diHerence bet0een polic, and procedure@
9E <7 =hat is procedure@ ECplain it 0ith the eCample@
;5 <7=hat are the 1ualities or re1uirements o* objectiAes @
;9 <7 =hat steps are ta3en b, management in the planning@
;; <7 ECplain, in brie* an, siC t,pes o* plans7
;2 <7 FPlanning is not a guarantee o* success i* business7G
Comment7 :
;8 <7 =hat is the relationship bet0een planning and controlling@
;4=hat are the techni1ues o* good planning@
M.+ - Iours M.M &BB
<eneral (nstruction=
A answer to 4uestions carr*ing & mark ma* be from one word to one
B ans0er to 1uestions carr,ing 2 mar3s ma, be *rom 45-64 0ords 7
C Ans0er to 1uestions carr,ing 8-4 mar3s ma, be about 945 0ords7
/ Ans0er to 1uestions carr,ing : mar3s ma, be about ;55 0ords7
9 =hat is meant b, singal use plan7@
; is planning a mental eCercise@
2ho0 does planning helps in controlling@
8/eIne polic,7@ 9
4=hat is an ideal plan@
:#o0 does planning promote innoAatiAe ideas@
6 #o0 does planning *ocus on achieAing objectiAes@ ECplain7
B=h, planning regarded as a continuous process7
E Enumerate the *eatures o* planning7
95 > planning is *or0ard loo3ingG ECplain7
99 giAe an, siC limitations o* planning7
9; =hat are the 1ualities o* objectiAes@
92 =hat is budget@ ECplain 0ith eCample7
98 #o0 does planning establish standards *or controlling@ ECplain7
94 (iAe the diHerence bet0een rules and methods7
9: =hat is the meaning o* planning@ giAe the importance o*
planning7 4
96 planning reduces oAerlapping and 0aste*ul actiAities7 ECplain7
9B /istinguish bet0een objectiAes and polic,7
9E=hat are the characteristics o* sound polic,7
;5 Planning is not the guarantee o* success7 ECplain7
;9 (iAe the process o* planning7
;; ECplain7 an, siC importance o* planning7
;2/iscuss the essential elements o* planning7
;87/eIne polic,7 #o0 do policies diHer *rom rules7
;4 planning is the basic *unction o* management7 ECplain7
M.+ - Iours M.M &BB
<eneral (nstruction=
A answer to 4uestions carr*ing & mark ma* be from one word to one
B ans0er to 1uestions carr,ing 2 mar3s ma, be *rom 45-64 0ords 7
C Ans0er to 1uestions carr,ing 8-4 mar3s ma, be about 945 0ords7
/ Ans0er to 1uestions carr,ing : mar3s ma, be about ;55 0ords7
& J (s planning is mental e.ercise9
) J. Defne Polic*9
- J.0tate an, t0o points o* the importance o* the planning7
8 <7 =hat is meant b, signal use plan@
4 <7=h, planning is 3no0n as >*uturistic?@
: <7#oe does planning helps in controlling @
6 < (iAe one eCample o* budget7
B <7 =h, is planning preAasiAe@
E <7 At 0hat leAel o* management the *unction o* planning is
considered@ 9
957< Name the Irst or primar, *unction o* management7
99< FPlanning is *or0ard loo3ing 7G eCplain
9;< =h, planning regarded as a continuous process@
92< 0hat is meant b, programme as a t,pe o* plan@
98< ho0 does planning *ocus on achieAing objectiAes7 ECplain7
94 < 0hat 3ind o* strategic decisions are ta3en b, business
organiJations@ 2
9:< #o0 does planning establish standards *or controlling@7ECplain7
96< Planning proAides direction7 ECplain7
9B7< Planning inAolAes decision ma3ing7 ECplain7
9E7< Enumerate the *eatures o* planning7
;5 < =hat is budget@ (iAe the t,pes o* budget7
;9=hat is the meaning o* planning@ ECplain an, IAe limitations o*
planning7 4
;; <7 =hat is the diHerence bet0een polic, and objectiAes
;2 <7 =hat is procedure@ ECplain it 0ith the eCample@
;8 < /eIne polic,7 #oe does polic, diHer *rom rules7
;4 < =hat is the relationship bet0een planning and controlling
;: < /iscuss in brie* the components o* planning7
;6< /iscuss in brie* the steps in a planning process7
;B < =hat are the techni1ues o* a good planning7
;E 1ECplain 0h, planning is necessar, *or eHectiAe management7
25< ECplain the Aarious t,pes o* planning7
A "echni1ues o* good planning
9 &eep aims reasonable and attainable7
;3eep aims in balance b, correct assessment o* priorities o* both
basic planning and supporting action7
23eep aims DeCible and related to oAerall changes, 0hich are either
li3el, or certain to ta3e place7
8 3eep a care*ull, dail, chec3 on progress against time and cost
4(et and 3eep problems inAolAed in planning in clear perspectiAe
both in its indiAidual importance and in its relation to the 0hole
conduct o* an operation or o* the business7
B Aarious t,pes o* planning
9 !inancial and non Inancial planning
; SpeciIc or routine planning7
2 !ormal or in*ormal planning7
8 Short term and long term planning7
4 ProIt planning7
C7!unctions o* a sound polic,
sund policies are considerable Aalue in the smooth running o* a
business7 Its principal contribution as, suggested b, $alph7
/aAis7 Are as *ollo0sK
9Its tends to preAent deAotions *rom planned course o* action7
;it promotes intelligent co-operation7
2It *acilitates co- ordination o* action7
8It proAides a guide *or determining e1uitable personnel relations7
4It proAides a guide *or thin3ing in *uture planning7
AProcess o* planningL
9Setting the objectiAes
;/eAeloping the premises
2Identi*,ing AlternatiAe course o* action7
8 eAaluating alternatiAe course o* action
: Selecting an alternatiAe7
6 Implementing the plan
B !ollo0 up action7
B +imitations o* planning
9 Planning reduce creatiAit,L
; planning inAolAes huge costs7
2Planning is a time consuming process7
8Planning does not guarantee o* success7
4Planning does not 0or3 in a d,namic enAironment7
C 7Importance o* planning
9Planning proAides direction7
;Planning reduce ris3 o* uncertainit,7
2 planning reduce oAerlapping and 0aste*ul actiAities7
8 planning *acilitates decision ma3ing7
4planning establishes standards *or controlling7
/ ",pes o* plan
9 objectiAes
/I!!IC-+" CNCEP"
A "echni1ues o* good planning
B Aarious t,pes o* planning
C Conceot o* polic,7
/ concept o* strateg,7
E concept o* strategies7
!ollo0ing are the some teaching strategiesL
9 ProAiding *or *ace to *ace interaction
; proAiding as man, simple eCamples as possible
to eCplain the concept
2 promoting actiAe inAolAement o* the student
8 obserAing students? response to probing
1uestions as 0ell as his behaAior to ensure
continuous learning7
4(iAing assignment on the corrected learning
diMcult, to strengthen

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