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BUSINESS STUDIES BY – DEEPANSHU SIR

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CLASS 12- CHAPTER 4

“PLANNING”
Meaning: - Planning is a process of thinking before doing. It involves determinations of goals and
the activities required to be performed to achieve the goals. It consists of:
 What is to be done?
 How it is to be done?
 Where it is to be done?
 When it is to be done?
 By whom it is to be done?

Therefore, it can be said it as thinking beforehand. It bridges the gap between where we are and
where we want to be in the future.

Features of Planning
(1) Planning Focuses on Achieving Objective - Planning is purposeful, because it is always
done for setting some objective and what are the processes, methods and procedure which
are required to be followed for the achievement of organizational goal. It has no meaning
unless it contributes to the achievement of predetermined organizational 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 and the other functions of management are
performed after the planning function.

(3) Planning is Pervasive - Planning is essential for every sort of business activity because
planning is done at every level of management, every department, whether purchase, sales
accounts auditing marketing etc. all these needs systematic planning. It is not restricted to
top level management only. It is required to perform at every level of management.

(4) Planning is Continuous - Planning is a never ending or continuous process because after
making plans one also has to be in touch with the changes in the changing environment and
in the selection of the best way to do the activity for the achievement of goal.

(5) Planning is Futuristic - Planning means looking ahead, it is never for the past. As all the
questions related to planning are future oriented such as what to do, how to do, when to do,
etc., therefore it is a futuristic process. All the managers try to make predictions and
assertions for the future.

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(6) Planning Involves Decision Making- as the planning defines what is to be done, when it is
to be done, how it is to be done, therefore planning is a selective process which involves
selecting the best alternative to do a particular task, so Planning choice making of the best
possible alternative out of various alternatives. Therefore, we can say that planning involves
decision making.

(7) Planning is a mental exercise: since planning involves finding the answers to what is to be
done, when it is to be done, how it is to be done, therefore it is a mental exercise, because it
involves thinking about how all of these can be achieved.

Importance (Benefits) of planning

(1) Planning Provides Directions: Planning is involved in deciding the future course of action.
Fixing goals and objectives is the priority of any organization. By stating the objective in advance,
planning provides unity of direction to the managers to work in the same direction for the
achievement of organizational goal, rather than working aimlessly. Proper planning makes goals
clear and specific. It helps the manager to focus on the purpose for which various activities are to
be undertaken.

(2) Planning Reduces the Risk Uncertainty - Planning helps the manager to face the uncertainty
because the manager makes the predictions regarding the future based on the assumptions
regarding the future on the basis of past experience, so that he can remove the uncertainty which
can happen in the future. The plans are made to overcome uncertainties.

(3) Planning Reduces Over Lapping and Wasteful Activities – planning is done as the process
of coordination between the managers for the activities and efforts form by the different
departments, divisions. So, it helps in avoiding confusion and misunderstanding.

(4) Planning Promotes Innovative Ideas - Planning encourages creativity and helps the
organization in various ways. Managers develop new ideas and apply the same to create new
products and services leading to overall growth and expansion of the business. Therefore, it
encourages managers to think differently.

(5) Planning Facilitate Decision Making- to achieve the objective predetermined under planning,
business has to take various decisions by considering the available resources. If the job may be
completed by using various alternatives (e.g., manually or by machine) the best alternative is
decided by the management, which is most helpful in achieving the objective.

(6) Planning Establishes Standards for Controlling – controlling refers to the comparison of
actual result with the planned result, and then find out the reason behind it. And the planned
results are always formulated on the basis of planning so if there is no planning the actual result
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BUSINESS STUDIES BY – DEEPANSHU SIR
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cannot be compared with the planned result. So, if there is no planning there will be no standards
for controlling.

Limitation of planning
1. Planning leads to rigidity: Planning discourages an individual’s initiative &creativity. The
managers do not make changes according to the changing business environment they just stay
with the plan made by them. They stop taking or giving suggestions and new ideas. Thus, detailed
planning may create a rigid framework in the organization.

2. Planning may not work in a dynamic environment: The business environment keeps on
changing on a daily basis. It is difficult for an organization to predict future trends, the taste of
customers, natural calamity, competitors’ policies, and the effects of changing components of the
environment. The organization should constantly adapt to changes, and it is very difficult to
forecast the future accurately. The dynamic environment in a specific situation may lead to the
failure of plans.

3. Planning involves huge costs: When plans are drawn up, huge costs are involved in their
formulation, because at the time of making the planning experts are hired, to give their
suggestions, verifying the facts and data, that involved the cost of their salary.

4. Planning is time-consuming: planning is a time-consuming process, because it involves

5. Planning does not guarantee success: The success of an enterprise is possible only when plans
are properly drawn up and implemented. Sometimes managers depend on previously tried
successful plans, but it is not always true that a plan which has worked before will work
effectively again.

6. Planning reduces creativity: in planning, work is to be done as per pre-determined plans. It is

decided in advance what is to be done, how it is to be done and who is going to do it. Moreover,
planning is done by top management which leads to a reduction in creativity at other levels of
management.

Planning process
1. Setting Objectives:
- This is the primary step in the process of planning which specifies the objective of an
organisation, i.e., what an organisation wants to achieve.
- Objectives are set for the organisation for all departments, and then departments set their own
objectives within the framework of organisational objectives.

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- the managers carefully considered the company's ambitions, as well as its physical and financial
resources. Managers tend to set goals that can be completed quickly and within a specific time
frame. After the goals have been established, they are communicated to all employees.

2. Developing Premises:
-Plans are made on the basis of some assumptions
-These assumptions, which provide the basis for planning, are called premises
-These are the base material for the planning. These assumptions may in terms of forecasts,
existing plan or any past information about policies.
-All managers involved in planning should be familiar with them because plans are expected to
operate & reach their destination subject to these. They can be:
°Internal premises - Cost of products capital, machinery, profitability, labour, raw material, etc.
•External premises - Changes in technology, population growth, competition, govt policies etc

3. Identifying Alternative Courses of Action:

-After setting the objectives managers make a list of alternatives through which the organisation
can achieve its objectives as there can be many ways to achieve the objectives & managers must
know all of them
- in this stage, management have to apply their creative thinking and innovation skills to generate
alternative plans.
- Eg Sales could be increased through any of the following ways
°By enhancing advertising expenditure
°Appointing salesmen for door-to-door sales
°By offering discounts

4. Evaluating Alternative Courses of Action

- after identifying the alternative courses of action, the manager has to evaluate the Positive &
negative (pros and cons) aspects of every proposal to determine their feasibility and consequences
in the light of each objective to be achieved.
- E.g., in financial plans risk-return trade-offs are important. The more the investment higher the
returns it is likely to give to evaluate such proposals, taxes earnings per share etc. should be done.

5. Selecting an Alternative (selecting the best alternative)

-the best alternative is to be selected which have more positive aspect and less negative aspects
manager try to eliminate those alternative which have more negative aspects.
-Real point of decision-making- best plan has to be adopted and implemented. -The ideal plan
most feasible, profitable and with least negative consequences
- Most plans may not be subjected to mathematical analysis. In such cases, subjectivity. &
manager's experience, judgment and intuition are important to select the most viable alternative.
- Sometimes a combination of plans may be selected instead of one best course.
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6 Implementing the Plan

-Concerned with putting the plan into action.
-For implementing the plans, managers start organizing & assembling resources, and allocating
the resources according to the plan.
-successful implementation of plans requires whole-hearted co-operation and understanding by
personnel.
- Eg. If there is a plan for production, then more labour, more machinery will be reqd.
This step would also involve organizing more labour and the purchase of machinery.

7. Follow Up Action
-This involves monitoring the plans and ensuring that activities are performed according to the
schedule.
-Whenever there are deviations from plans, immediate action has to be taken to bring
implementation according to the plan or make changes in the plan.

Plan
A Plan is a specific action proposed to help the organization achieve its objectives, therefore we
can say that planning is a process however plan is an outcome. Plan specifies outlines how goals
are going to be met. The importance of developing plans is evident from the fact that there may be
more than one means of reaching a particular goal. So, with the help of logical plans, objectives of
an organization could be achieved easily.

TYPES OF PLANS
SINGLE USE PLAN
A Single use plan in a business refers to plan developed for a one-time project or event that has
one specific objective. It applies to activities that do not reoccur or repeat. It is specifically
designed to achieve a particular goal. Such plan is developed to meet the needs of a unique
situation. And after having used once the plan, there is no importance of these plan in future.

* Types of Single Use Plan

1. Programme: A programme is a single use plan containing detailed statements about project
outlining the objectives, policies, procedures, rules, tasks, physical and human resources required
to implement all course of action. The programmes can be of different types, e.g., production
programme, training programme, sale promotions programme, etc.

2. Budget: A budget is a statement of expected result expressed in numerical terms for entire
period in the future. A budget species, the money, material, time and other resources which are
required for achievement of objectives.

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BUSINESS STUDIES BY – DEEPANSHU SIR
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* STANDING PLANS
Standing plans are used over and over again because they focus on organizational situations that
occur repeatedly. They are usually made once and retain their value over a period of years while
undergoing revisions and updates. That is why they are also called repeated use plans.
Standing plan includes policies, procedures, methods, and rules.

* Types of Standing Plans

1. Policy: Policies refers to the general guidelines which brings uniformity in decision making for
achievement of organizational objectives. They provide directions to the managers of an
organization; therefore they are made by all level, top, middle, and lower level of management.
They are flexible as they may be changed as per requirement. Therefore, we can say that objective
defined what is to be achieved and the policies tell us how it can be achieved. Example, selling
goods on cash basis only, reserving some post for women in the organization.

2. Procedure: Procedures are those plans which determine the sequential steps to carry out some
work/activity. They indicate which work is to be done in which sequence/way. They help in the
performance of work. Procedures are guides to action. Example Process adopted in the Selection
of Employees

3. Rule: Rules are specific statement that tell what is to be done and what not to be done in a
specified situation. They help in indicating which points are to be kept in mind while performing
task/work. Rules are rigid which ensure discipline in the organization.
There is difference between rule, policy, and procedure: rule specifies what is to be done, and
what is not to be done, however policy guides to take decision and procedure tells us the manner
to complete particular work. Example: 'No smoking in the office premises. Violation of rules may
invite penalty.

4. Method: Methods are standardized ways or manners in which a particular task has to be
performed. There may be many ways/methods of completing a task, but that method/way must be
selected by which work can be done early at the minimum possible cost. Methods are flexible. It is
more detailed than procedure. The efforts are continuously made to improve the method, so that
unnecessary and unproductive activities can be removed.

However, the objective and strategy cannot be considered as a single used plan or standing
plan:
Because objective serve as a base for planning and strategy determines the how the organization
has to react over the business environment.

1. Objectives: Objective is the first step of planning process which defined the purpose for

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BUSINESS STUDIES BY – DEEPANSHU SIR
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which the organization is working. Objectives of the organization is formed by the top-level
management. Objective defined where the company see itself in the future period, they are the end
results of activities. Examples increasing sales by 10%.
The objective should have the following features:
Objective should be:- SMART
S – specific, M- measurable, A – achievable, R – relevant, T- time- bound

2. Strategy: Strategies refer to those plans which an organization prepares to face various
situations, threats, and opportunities When the managers of an organization prepare a new strategy
for the business it is called internal strategy and when some strategies are prepared to respond to
the strategies of the competitors, then such strategies are called external strategies. Examples,
selection of the medium of advertisement, selection of the channel of distribution etc.

difference between single use plan and standing plan:

Basis of Single use plan Standing plan
difference
1. Meaning A Single use plan in a business Standing plans are used over and over
refers to plan developed for a one- again because they focus on
time project or event that has one organizational situations that occur
specific objective repeatedly.
2. objective To manage certain special activities To effect similarity in decision making.
3. Scope Narrow Wider
4. Stability As soon as goal achieved For a longer period, because these are
used over and over again.
5. Example Budget, programme Policies, procedures, methods, rules.

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