PLANNING

CHAPTER – 11

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.”

Importance of Planning establishing coordination between various

(i) Planning Provides Directions: Planning provides the
directions to the efforts of employees. Planning makes
clear what employees have to do, how to do etc.
Planning ensures that objectives are clearly defined so
that they act as a guide for deciding what action should
be taken and in which direction. If objectives are
clearly laid down, employees are aware of what the
organisation has to do and what they must do to
achieve those objectives. This also helps in
departments. In the absence of employees, employees
would be working in different directions and the
organisation would not be able to achieve its
objectives.
(ii) 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. Planning enables a manager to look
 forward and anticipate change and consider the
impact and take appropriate steps to deal with them.
Thus, Planning helps to reduce the risk of uncertainty.
(iii) Planning Reduces Over Lapping and Wasteful
Activities: Planning coordinate the efforts of different
divisions, departments and individuals. Since
planning ensures clarity of thoughts in action, work is
carried on smoothly without any confusion and
misunderstanding. Useless and redundant activities
are minimised or eliminated. It is easier to detect
inefficiencies and take remedial action to deal with
them.
(iv) Planning Promotes Innovative Ideas: Planning
requires high thinking and it is an intellectual process.
So it makes the managers innovative and creative. As
Planning is thinking in advance what to do and how to
do it. Therefore new ideas can take the shapes of
concrete plans.
(v) Planning Facilitates Decision Making: Planning
helps the managers to look into the future and make a
choice from amongst various alternative courses of
action. In Planning, targets are set in advance and
these targets are set in advance and these targets are
indicators on basis of which alternative courses of
action are considered. Evaluation as well as selection
of the best alternative is determined with reference to
the target set. Sound plans prevent hasty decisions
and random actions. In the absence of planning,
decisions may lead to undesirable results and shall
direct activities towards uncertain objectives.
(vi) Planning Establishes Standards for Controlling:
Controlling involves comparison of actual
performance with the planned performance. Planning
provides the objectives or standards against which the
actual performance is evaluated. A comparison of
actual performance with the planned results helps to
identify the deviations and to take corrective action to
match the actual performance with standard
performance. But in the absence of planned objectives
the manager will not be able to compare whether
actual performance is satisfied or not. The base for
comparison in controlling is provided by planning
function only. Controlling is blind without planning.
Thus, planning is the basis for controlling.

Features of Planning
(i) Planning Focusses on Achieving Objectives: Planning is purposeful. It has no meaning unless it contributes to the
achievement of predetermined organisational goals. We cannot do any planning in the absence of objectives. Once the
objectives are decided, then manager decides the methods, procedures and steps to be taken for achievement of goals.
For eg. If a firm decides to sell 2,400 refrigerators in six months. If sales are not taking place of 400 refrigerators each
month, the enterprise may think of better ways like sale discount, price cut etc. to achieve the final objective.
(ii) 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. Thus Planning
precedes other function. This is also referred to as the ’primacy of planning’.
(iii) Planning is Pervasive: Planning is required in all
types of organisations and at all levels of management.
However, the nature and scope of planning may differ
from one level to another. For eg. Top level
management plans for the organisation as a whole.
Middle level management prepares departmental
plans and lower-level management makes day-to-day
operational plans.
(iv) 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.
Plans are formulated for a specific time period e.g six
months, one year or two years. At the end of that
period, new plans have to be prepared on the basis of
new demands and conditions. Thus, planning is a
continuous process. For eg. If the plan has been made
during a recession period and during its execution
market punged into boom, then planner have to make
several changes for that period or to work on different
strategy to achieve the desired goals.
(v) 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.
The aim of planning is to meet future events effectively
Limitations of Planning
(i) Planning Leads to Rigidity/ Limited Flexibility: In
an organisation, a well defined plan is drawn to
achieve some specified objectives within a specified
time period. These plans decide the future course of
action and it is not possible for managers to change
them. They have to strictly adhere to the formulated
plans irrespective of the changes in the environment.
This kind of rigidity or inflexibility may prove to be
costly and may not bring positive results for the
organisation when the situation changes. For eg. As
part of sales strategy the marketing manager of
Hemant Ltd., instructed the sales employee to offer
maximum 10% discount. Competitors reduced their
price, therefore customers of Hemant Ltd. demanded
more discounts. The sales employee refused to offer
more than 10% and as a result they lost many
customers.
(ii) 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. For eg., it is very
to the best advantage of an organisation. Therefore,
planning is regarded as a forward looking function
based on forecasting. For eg., on the basis of sales
forecasting, a business enterprise prepares its annual
plan for production and sales.
(vi) Planning Involves Decision Making: Planning choice
making of the best possible alternative out of various
alternatives. If there is one way of doing something
then there is no need for planning as there is no choice.
Hence, the need for planning arises only when
alternatives are available. A manager after examining
and evaluating the various alternatives, select the best
plan. Thus planning is essentially decision making.
(vii) Planning is a Mental Exercise: Planning is amental
exercise. It is thinking rather than doing function of
management. Planning requires application of the
mind involving foresight and sight, intelligence
imagination and sound management. The quality of
planning will vary accordingly to the quality of
manager. Planning is not mere guess work but
involves logical and systematic thinking. Thus,
planning is closely connected with creativity and
innovation.
difficult to make accurate forecasts about economic
conditions, government policies, human behaviour
and so on.
(iii) Planning Reduces Creativity: Planning is a activity
which is performed by the top level management.
Usually rest of the members are required to
implement these plans. As a result middle level
management and other members are neither allowed
to deviate from plans nor they are granted to power to
act on their own. Hence, much of their creativity and
initiative in them gets reduced. They stop giving
suggestions and only execute orders and do not even
attempt to formulate plans. For eg. A Mahesh, a worker
is given a target of assembling two computer per day.
Due to is habit of doing things differently, an idea
struck him, which would not only reduce the
assembling time of computer but would also reduce
the cost of production of computers. Mahesh’s
supervisor, instead of appreciating him, ordered him
to complete the work as per methods and techniques
decided earlier as nothing could be changed at that
stage.
(iv) 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 on this process. Huge costs are involved in
formation of plans. Money and effort have to be spent
in forecasting, gathering and analysing the
information, preliminary investigations to find out the
feasibility of plan etc. Sometimes, costs incurred may
not justify the benefits derived from the plans.
(v) Planning is a Time Consuming Process: Planning is
a lengthy process which might lead to delay in action.
Lot of time is needed in developing planning premises.
Thus planning is not practicable in case of
emergencies or crisis or when quick or on the spot
decisions are required. In such situations, the existing
plans may have to be abandoned. Planning may cause
delay in decisions and actions. Sometimes so much
time is taken in formulating the plans, as a result of
which very less time if left for implementation.
Conclusion: Despite the limitations of the planning, it cannot
be said that planning is a useful exercise. Infact it is tool to be
used with caution. Mangers should perform planning
function keeping in mind its limitations which help them in
more careful and systematic planning.
Planning Process
(i) 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. For eg. Increasing profits by
30% ca be objective of a electronics company.
(ii) 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. These
assumptions are called ‘Planning Premises’
(iii) Identifying Alternative Courses of Action: Once
objectives are established and assumptions are made,
then the managers have to make a list of alternatives
through which the organisation can achieve its
objectives. There is hardly any plan for which
alternatives do not exist. Generally, there are many
alternatives to achieve the objectives and the
managers must know all the ways to reach the
objectives.
(vi) Planning does not Guarantee Success: The success
of an organisation is possible only when plans are
properly drawn up and implemented. Managers have
a tendency to rely on previously tried and tested
successful plans. But it is not always true that a plan
which has worked successfully in the past will bring
success in future also as there are number of unknown
factors which may lead to failure of plan in future. So
plans must be formulated and implemented in the
light of changing environment.
(iv) Evaluating Alternative Courses: After making the
list of various alternatives along with the assumptions
supporting them the manager starts evaluating each
and every alternative. The alternatives should be
compared in light of objectives, risk, cost, planning
premises, availability of capital etc. The feasibility and
consequences of each alternative must be scruitnised
before a choice is made.
(v) 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. The ideal plan
selected would be most feasible, profitable and with
least negative consequences.
(vi) Implementing the Plan: This is the step where other
managerial functions also come into the picture. The
step is concerned with putting the plan into action i.e.,
doing what is required.
(vii) 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 monitor the
plan carefully while it is implemented. Monitoring of
plan is very important because it helps to verify
whether the premises are holding true in present
condition. If not, immediate changes are made in the
plan.
Plan
Plan is a document that outlines how goals are going to be
met. It is a specific action proposed to help the organization
achieve its objectives. There may be more than one way and
means of reaching a particular goal but with the help of
logical plans, objectives of an organization could be easily
achieved.
Single Use Plans: Single use plans are one time use plan.
These are designed to achieve a particular goal the once
achieved will not reoccur in future. These are made to meet
the needs of unique situation. The duration or length of
single use plan depend upon the activity or goal for which it
is made. It may last one day or it may last for weeks or
months if the project for which it is made is long.
Features of Single Use Plan
1. Single use plans are used only once.
2. Prepared to meet the demand of specific situation.
3. These are discarded when the situation is over.
4. Every time a new plan is prepared for new situation, e.g.,
budget, programme, projects.
Single use plan
Single use plan is used only once.
It is discarded when the project is over.
Single use plan include – budget, programmes and projects.
Single use plan is developed for one time event such or
course action is not likely to repeat.
Types of Plans
(i) Objectives: Objectives are the ends towards which the
activities are directed. They are the end result of every
activity, e.g., increase in sale by 10%. All other
functions of management are directed towards the
achievement of objectives. Generally, objectives are
set by top management of the organisation. Objectives
serve as as a guide as well as end point for overall
business planning. They should be expressed in
specific terms, i.e, they should be measurable in
quantitative terms. They must have a time limit for
achievement and must be feasible.
(ii) Strategy: A strategy is a comprehensive prepared for
meeting the challenge posed by the activities of
competitors and other environmental forces.
It includes three dimensions:
(a) Determining long-term objectives.
Standing Plans
Standing plans are also known as Repeat Use Plans. These
plans focus on situations which occur repeatedly. Standing
plans are used over and over again. They are made once but
retain their value over a period of years. Although some
revisions and updates are made in these plans from time to
time.
Features of Standing Plans
1. These are recurring plans used for an indefinite period.
2. Standing plans are stable in nature.
3. These plans act as guidelines for smooth functioning of
the organisation, e.g., policy, procedure, rules, methods,
etc.
There are other types of plans which are usually not
classified as single use or standing plans. These are strategy,
objectives as these plans are prepared by top management
and serve as guide for overall planning whereas single use
and standing plans are part of the operational planning
process.
Standing Plan
Standing plan is used again and again.
It is usually developed once, but used over and over again
with necessary modifications from time to time.
Standing Plans include policies, procedures, methods, rules
etc.
Standing Plan is made for activities that occur regularly
over a period of time.
(b) Adopting a particular course of action.
(c) Allocating resources necessary to achieve the
objectives.
Strategy also refers to future decisions defining the
organisation’s direction and scope in long run.
Strategy is formulated at top level. It is very important
to scan and understand clearly the business
environment before formulating the strategy because
changes in business environment will affect an
organisation’s strategy. Major strategic will include
decisions like whether the organisation will continue
to be in same line of business or combine new lines of
activity with the existing business or seek to acquire a
dominant position in the same market.
(iii) Policies : Policies are general statements that guide
thinking or channelise energies towards a particular
direction. Policies define the parametres within which
 a manager may function. Policies provide a basis for discretion. Rules are to be enforced rigorously or
interpreting strategy. They are guides to managerial strictly and there is generally a fine or penalty for
action and decisions in the implementation of violation of rules. A rule is usually the simplest type of
strategy. Objectives indicate the destination of an plan because there is no compromise or change unless
organisation and policies provide the routes to reach a policy decision is taken.
that destination. In other words, objectives tell what is
to be achieved and the policies tell us how it can be Example
achieved. Policies exist at all levels of the organisation
ranging from organisation’s major policies to minor (a) No Smoking inside the office premises.
policies. Major policies are for the customers, (b) No entry for employee in the office after 10.00 a.m.
competitors, clients etc. whereas minor policies are (c) Running in the Plant is strictly prohibited.
for the insiders. For eg. Policy of a school is to give
admission to those students who secured more than
85% marks. (vii) Programme : Programme are detailed statements
about a project which outlines the objectives, policies,
(iv) Procedures: Procedures are required steps
procedures, rules, tasks, human and physical
established in advance to handle future conditions.
resources required and the budget to implement any
The procedure can be defined as the exact manner in
course of action. Programme will include the entire
which an activity has to be accomplished. Procedures
activities as well as the organisation’s policy and how
are generally meant for insiders to follow. Procedures
it will contribute to overall business plan. The
are used in all functional areas of business. In business
minutest details are worked out within the broad
procedures are laid down for requisitioning supplies
policy framework.
before production, purchase of raw material,
processing of orders, selection of employees, redressal (viii) Budget: A budget is a statement of expected results
of grievance, collection of payments and so on. expressed in numerical terms for a definite period of
time in the future. It may be expressed in time, money
For example, the procedure for getting admission in a
or physical units. Budgets can be prepared for various
particular school can be:
group of activities, e.g., production, sales, material,
(a) Set up a file for applicants.
cash etc.
(b) Accept the filed forms and put them in file.
(c) Ask for necessary documents A budget is useful tool for planning and controlling. It
(d) Put those necessary documents in the file provides a standard by which actual performance can
(e) Give the file to the admission incharge. be measure to find out deviation from planned
expenditures or results and take corrective actions so
(v) Method: Methods provide the prescribed ways or
that performance takes place according to plans. Thus,
manner in which a task has to be performed
a budget is also a control device. But making a budget
considering the objective. Selection of proper method
involves forecasting, therefore, it comes under
saves time, money, and effort and increases efficiency.
planning. The most common budget prepared by the
A method is more limited in scope than a procedure. It
managers at various levels is cash budget. It is a
is one step of a procedure. For example, for imparting
statement showing the estimated cash inflow and cash
training to employees at various levels, different
outflow over a period of time. Cash inflow comes from
methods can be adopted, in case of high level
cash sales and cash outflow is in form of costs and
orientation programmes, lectures and seminars can be
expenses. The net cash position is find out by minus
organised while apprenticeship training, induction
cash outflow from cash inflow.
etc. can be organised at lower level.
Cash inflow (–) Cash outflow = Surplus or Deficiency
(vi) Rule: Rules are specific statements that inform what
is to be done. They do not allow for any flexibility or
 QUESTIONS FOR PRACTICE
Q7. How planning reduces overlapping and wasteful
MCQ activities?
Q1. Madhuban Oils Ltd. policy is to sell only for cash. In (a) It helps the manager to look into the future and
2021, for the first time company’s number one choose amongst the various alternatives.
position in the industry has been threatened because (b) It serves as the base for coordination by avoiding
other companies started selling oil on credit also. But, confusion and misunderstanding.
the manager of Madhuban Oils Ltd. continued to rely (c) It enables a manager to look ahead and anticipate
on its previously tried and tested successful plans, changes.
which didn’t work because the environment is not (d) None of the above
static. This led to decline in sales of Madhuban Oils Ltd. Q8. Which is the fourth step in planning?
The above said case highlights the limitation(s) of (a) Identifying alternative courses of action
planning which led to decline in its sales. Identify such (b) Evaluating alternative courses
limitation(s). (c) Selecting an alternative
(a) Planning does not guarantee success (d) Implementing the plan
(b) Planning may not work in dynamic environment Q9. ‘Developing premises’ is a step in which function of
(c) Planning leads to rigidity management?
(d) Both (a) and (b) (a) Planning (b) Organising
Q2. Natural disaster like flood in Kerala lead to failure of (c) Staffing (d) Controlling
production sales strategies of many companies. Which Q10. Which of these leads to failure of planning?
limitation of planning is highlighted? (a) Change in government policy
(a) Planning leads to rigidity (b) Pandemic
(b) Planning is a time consuming process (c) Change in technology
(c) Planning reduces creativity (d) All of the above
(d) Planning does not guarantee success Q11. Manav Ltd. prepares budget in its Annual General
Q3. Having transformed 3,000 Kirana stores across eight Meeting for the year 2021-2022. What kind of plan is
cities into virtual super markets, the start-up quick it?
flee further decided in advance, to collaborate with (a) Single use plan (b) Standing plan
18,000-22,000 store owners in top 40 cities of the (c) Objective plan (d) None of these
country by the end of this year. The company has set Q12. Identify the key elements of planning from the
its eye on digitising over 2,00,000 Kirana stores over following.
next 24-30 months. Identify the step in the process of (a) Determining the objectives
planning discussed above. (b) Identifying alternative courses of action
(a) Setting objectives (c) Selecting the best course of action
(b) Developing premises (d) All of the above
(c) Evaluating alternative courses Q13. Managers at the operational or supervisory level make
(d) Selecting an alternative plans for
Q4. If there is no planning, employees would work in (a) strategic direction of organisation
different directions and would not be able to achieve (b) departmental working
its goals. In the light of this statement, identify the (c) day-to-day working
importance of planning. (d) None of the above
(a) Planning reduces the risk of uncertainties Q14. Plans are made for a specific time period. At the end of
(b) Planning facilitates decision-making such time period, new plans have to be drawn. Identify
(c) Planning provides direction the feature of planning.
(d) None of the above (a) Planning is pervasive
Q5. Which of these is not a feature of planning? (b) Planning is futuristic
(a) Futuristic (c) Planning involves decision-making
(b) Mental exercise (d) Planning is continuous
(c) Reduces overlapping Q15. Which plan is defined as the formalised or systematic
(d) Continuous process way of doing routine and repetitive jobs?
Q6. “Planning involves application of mind and foresight”. (a) Objective (b) Strategy
What importance of planning is highlighted here? (c) Method (d) None of these
(a) Promotes innovative ideas Q16. A company wants to introduce a new product. What
(b) Facilitates decision-making type of plan should it prepare?
(c) Establishes standard (a) Objective
(d) Provides direction
 (b) Strategy
(c) Policy
(d) None of these
Q17. What is meant by ‘follow-up action’ as the step
involved in the process of planning?
(a) Managing the plan
(b) Checking the plan
(c) Selecting the plan
(d) None of the above
Questions 18–19 contain two statements–– Assertion (A)
and Reason (R). Each question has FOUR choices (a), (b),
(c), (d), only one of which is correct.
In the light of these statements, choose the most
appropriate option:
(a) (A) is incorrect but (R) is correct.
(b) (A) is correct but (R) is incorrect.
(c) Both (A) and (R) are correct and (R) is the correct
explanation of (A)
(d) Both (A) and (R) are correct but (R) is not the correct
explanation of (A).
Q18. Assertion (A): Policies and procedure are inter-
linked.
Reason (R): Procedures are steps to be carried out
within a broad policy framework.
Q19. Assertion (A): Planning is the primary function of
management.
Reason (R): Planning has no meaning unless it
contributes to the achievement of organisational
goals.
Q20. ‘‘All other managerial functions are performed within
the framework of the plans drawn. Thus, it can be said
that planning precedes other functions.’’ This
statement describes which function of planning?
(a) Planning focuses on achieving objectives
(b) Planning is pervasive
(c) Primacy of planning
(d) Planning is futuristic
SUBJECTIVE QUESTIONS
Q1. On the introduction of Goods and Services Tax Act,
experts in the field of business started analysing and
forecasting its impact on various sectors and
industries. Vivek, an established businessman,
attended a few seminars and conferences organised by
such experts to familiarise himself with this
information. He wanted to use these forecasts to
reduce the uncertainty in making decisions for the
future in his business. Name the step in the planning
process that is being discussed in the above paragraph.
Q2. An employee will retire at the age of 60 years. What
type of plan is it?
Q3. What type of plan is defined as long range blue print of
an organisation’s desired image, direction and
destination?
Q4. Saraswati 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 lifestyle. The company
decided to allocate ₹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.
Q5. After completing her studies in product design, Geeta
wishes to start her own business to design products to
cater to the mobility and communication
requirements of persons with special needs. She told
her friend that she wanted to focus on supplying high-
quality products at affordable prices. The Unique
Selling Proposition (U.S.P) of the products would be
sensitivity to the challenges and needs of the
differently abled people. She wants to employ only
differently abled persons in her factory and sales
offices across the country. This decision of Geeta
provides the base for interpreting her strategy. This
also defines the broad parameters within which the
company may recruit the persons. Geeta has also to
decide about the exact manner and the chronological
order of how the selection of the differently abled
applicants will be done. In the above lines, Geeta is
discussing about one of the functions of management.
This function has several types. Identify and explain
the types Geeta is discussing in the above lines.
Q6. Rajeev, the owner of Pathways Constructions decided
to start a campaign to create awareness among people
for developing clean surroundings in their area. He
formed a team of 10 members to list the different ways
for cleaning the surroundings. One suggested to take
the help of local residents, another suggested that they
may involve school-going children in their venture.
One more suggestion was to take the help of
unemployed youth. On evaluation of different ways, it
was decided to take the help of local residents. To
achieve the desired goal various activities were
identified like:
(a) Purchase of necessary items like dustbins,
garbage bags, brooms, etc.;
(b) Collection of garbage;
(c) Disposal of garbage, etc.
After identification of different activities the work
was allocated to different members.
 (i) Identify the concepts of management involved in Q9. The production manager of a company received the
the above situation and quote the lines which complaint that the quality of the goods was not good.
help in their identification. After investigation, it came to light that the machines
(ii) Also identify the values which the company had become very old. That is why, they were unable to
wants to communicate to the society. achieve standardised quality. The production manager
developed several options by way of solution to this
Q7. Suhasini a home science graduate from a reputed
problem. Example, getting the machines repaired,
college has recently done a cookery course. She
purchasing new local machines, purchasing new
wished to start her own venture with a goal to provide
‘health food’ at reasonable price. She discussed her imported machines, if possible taking machines on
rent, etc. The CEO of the company wanted the list of
idea with her teacher (mentor) who encouraged her.
options to be smaller, so that a thorough study could
After analysing various options for starting her
be made for them. In order to make the list of optional
business venture, they shortlisted the option to sell
ways smaller, he decided to give up all those options
readymade and ‘ready to make’ vegetable shakes and
which required the investment of more than ₹10
sattu milk shakes. Then, they both weighed the pros
crores.
and cons of both the shortlisted options.
(a) Name the function of management being (a) Identify the concept described in the paragraph
given above.
discussed above and give any one of its
(b) What do you understand from the fact of company
characteristics.
fixing the maximum investment limit on options?
(b) Also briefly discuss any three limitations of the
function discussed in the case. Q10. Procter and Gamble Ltd. is offering a free bucket on
every purchase of Tide Washing Powder. In response
Q8. A company is manufacturing garments. The manager
to this Hindustan Unilever Ltd. started a new scheme
wants to increase profits by purchasing new high
of giving free one kg of Rin Washing Powder with
speed machines or increasing the sale price or using
every purchase of five kg of Rin Washing Powder.
waste materials in manufacturing stuffed toys. He
Identify the plan stated in the above paragraph and
decided that “using waste material” is the best solution
explain it.
for him. Identify the concept of management involved.
 HOMEWORK
Q1. Name the function of management which involves
setting objectives and developing appropriate courses
of action to achieve these objectives.
(a) Directing
(b) Organising
(c) Planning
(d) Staffing
Q2. “The most feasible, profitable and with least negative
consequences alternative is finalized”. Identify the
step of planning process highlighted here.
(a) Selecting an alternative
(b) Evaluating Alternative Courses
(c) Identifying Alternative Courses of action
(d) Developing Premises
Q3. Tata started offering a discount of ₹12,000 on
purchase of Indica. In response to this, Maruti started
a scheme of free Microwave with Wagon R. Identify the
type of plan highlighted in the given statement.
(a) Policy (b) Strategy
(c) Rule (d) Budget
Q4. Rajat is Marketing head in Growth Ltd. He prepares
sales target for upcoming year. For this, he analysed
the previous year’s sales data, growth trend of the
company, market demand, competitors strategy etc.
Which feature of Planning is highlighted here?
(a) Planning is a goal oriented process
(b) Planning is a Mental Exercise
(c) Planning is Pervasive
(d) Planning is Primary function of Management
Q5. At what level of management generally more time is
consumed on planning as compared to other levels?
(a) Top level
(b) Middle level
(c) Bottom level
(d) Can’t say
Q6. Planning ensures clarity in thoughts and actions, work
is carried on smoothly without any interruptions”.
Which importance of planning is referred here?
(a) Planning facilitates decision making
(b) Planning provides directions
(c) Planning promotes innovative ideas.
(d) Planning reduces overlapping and wasteful
activities.
Q7. It is not always true that just because a plan has
worked before it will work again. Identify the related
limitation of planning.
(a) Planning leads to rigidity.
(b) Planning reduces creativity.
(c) Planning may not work in a dynamic environment.
(d) Planning does not guarantee success.
Q8. Identify the correct sequence of steps involved in the
planning process.
(a) Evaluating alternative courses, Identifying
alternative course of actions, Setting objectives,
Developing premises
(b) Setting objectives, Identifying alternative course
of actions, Evaluating alternative courses,
Developing premises
(c) Setting objectives, Developing premises,
Identifying alternative course of actions,
Evaluating alternative courses
(d) Setting objectives, Developing premises,
Identifying alternative course of actions,
Evaluating alternative courses
Q9. Employees of Diksha Ltd. are directed to stricted to
strictly follow the plans formulated by top
management. There is no employee representative in
the team. Identify the limitation of Planning
highlighted here.
(a) Planning reduces creativity
(b) Planning involves huge costs
(c) Planning does not guarantee success
(d) Planning is a time consuming process
Q10. Peter Ltd. import its raw material from Iraq from the
last live years. But now there is change in the
government and the new government imposes ban on
imports from Iraq. All plan of Peter Ltd. regarding
import from Iraq are fail. The company look for
another source to obtain raw material. Identify the
limitation of planning highlighted in the above case.
(a) Planning may not work in dynamic environment
(b) Planning leads to rigidity
(c) Planning is a time consuming process
(d) Planning does not guarantee success
Q11. A strategy is a comprehensive plan which will not
include this dimension
(a) Determining long term objectives
(b) Adopting a particular course of action
(c) The ends which the management seeks to achieve
by its operations
(d) Allocating resources necessary to achieve the
objective
Q12. They provide a basis for interpreting strategy, which
is usually stated in general terms.
(a) Policies
(b) Procedures
(c) Objectives
(d) Programmes
Q13. If you fail to submit your homework for third time
succession you will be required to pay fine, stay back
and complete your homework. What type of plan is it?
(a) Rule
(b) Strategy
(c) Policy
(d) Budget
Q14. Natural Ltd. is a company working on the principle of
'Best Out of Waste' is engaged in utilising the waste
materials, like used CDs, thrown away card boards,
plastic, thermocoal and almost everything to make
innovative and useful products like pen stands, lamp
shades, decorative pieces, boxes, etc. The company has
already engaged a few uneducated workers for getting
such useful waste materials. So, at negligible cost of
procuring raw material, and use of labour intensive
technique of production, it is able to obtain good prices
for its products.Identify the type of plan highlighted in
the above para.
(a) Strategy
(b) Method
(c) Policy
(d) Procedure
Q15. Realme was India’s largest seller of mobile handsets. It
launched low-cost Chinese manufacturing with some
smart packaging and features like long-lasting
batteries and dual-sim functionality to garner 20%
market share in India’s value-conscious mobile
handset market. Identify the two types of plans being
described in the above lines.
(a) Strategy and Objective
(b) Rule and Programme
(c) Programme and Objective
(d) Method and objective
Q16. According to a survey, these days the young children
have more power in purchasing decisions than ever
before. The parents seek their kids’ opinions about all
kinds of once-adult decisions, including where to go
for dinner, what kind of car to buy, even what to
wear,”. Therefore, the retailers are adapting to this by
enhancing their kids’ sections. If the children want to
shop in the store for their clothes, then there’s a
greater chance the parent will also see something they
want to buy as well. Identify the type of plan being
described in the above lines.
(a) Programme
(b) Method
(c) Strategy
(d) Rule
Q17. The ‘Leela’ hotel has decided to employ female staff for
handling kitchen affairs and male staff for marketing
issues. Identify the type of plan reflected here.
(a) Programme (b) Method
(c) Strategy (d) Policy
Q18. A reputed car manufacturing company in NCR is facing
problem of decline in its market share due to its
internal mismanagement. Therefore, it has planned to
increase its production capacity at its Gurugram plant
by manufacturing low priced ecofriendly cars for price
sensitive consumers and introducing new models with
added features for quality conscious consumers. Name
the type of plan followed by management of the
company.
(a) Programme (b) Method
(c) Strategy (d) Rule
Q19. Lakshay, production Manager of Future Ltd. is
planning to install a new machinery for increasing
production capacity. He compare various models and
brands of machinery available. He also discuss with
supervisors, workers, compare initial cost,
maintenance cost and other overheads before taking
final decision about the machinery to be installed.
Identify the step of the planning process performed in
the above para
(a) Selecting an alternative
(b) Evaluating Alternative Courses
(c) Identifying Alternative Courses of action
(d) Developing Premises
Q20. In a visit to restaurant, some youngsters were found
smoking in spite of sign board indicating ‘No Smoking
Zone’. Name the type of plan referred in the given para.
(a) Method (b) Objective
(c) Strategy (d) Rule
Q21. Packaging is said to have the unique capacity to make
products stand out in a crowded marketplace.
Therefore, convenience of the consumer is at the top
of mind of the marketers as they are focussing on
developing packaging that’s easier to open, to protect
against breakage, maintain freshness during delivery
and keep a consistent look and feel across multiple
channels. Identify the type of plan being described in
the above lines.
(a) Programme (b) Method
(c) Strategy (d) Rule
Q22. Shenoy is the Chief Executive Officer of Star Ltd. He in
accordance with the other board members decides to
formulate a general statement which will be guiding
the thinking of employees. He further goes on to
formulate many such Hap statements in the next six
months. These statements could be divided into two
categories. Identity and state the type of plan
highlighted above.
(a) Programme (b) Method
(c) Strategy (d) Policy
Q23. India is world’s third largest domestic aviation
market. The government plans to make India a hub for
financing aircraft purchases and leasing of planes. In
order to promote this, the government has announced
tax incentives, like tax deductions, for companies
setting up business in IFSC for fifteen years. Identify
the type of plan being described in the above lines.
(a) Method (b) Strategy
(c) Programme (d) Rule
Q24. The government has been doubling down on its efforts
to switch to 100% electric vehicles by 2030. Many
companies such as Tata Motors, Kinetic Motors,
Maruti Suzuki and Hyundai Motors are all readying
their EV models for a 2020 launch in order to support
the plan. Identify the type of plan being described in
the above lines.
(a) Method (b) Strategy
(c) Programme (d) Objective
Q25. Setia Ltd. has a plan of increasing profits by 30%. For
this, it has incurred a lot of time and money. But the
competition starts increasing, so it could not change
its plan to beat its competitors because huge amount
of money had already been spent to the pre-decided
plan. It caused the losses to the company. Identify the
limitations of planning highlighted in the above case.
(i) Planning reduces creativity
(ii)Planning involves huge costs
(iii)Planning leads to rigidity
(iv)Planning is a time consuming process
(a) (i),(ii) and (iv) (b) (ii),(iii) and (iv)
(c) (i),(ii) and (iii) (d) (i),(iii) and (iv)
Q26. Yugal Enterprises adopts different ways to provide
training to employees, like Job Rotation, Coaching,
Vestibule Training, Conference, Lecture Method and
Role Playing. Identify the type of plan being described
in the above lines.
(a) Method (b) Strategy
(c) Programme (d) Procedure
Q27. Nexon Ltd. plans to earn a 20% return on its
investment in a new project. Identify the type of plan
being described in the above lines.
(a) Method (b) Strategy
(c) Programme (d) Objective
Q28. The Haryana Government put restrictions on selling
fast foods in school canteens. Identify the type of plan
Haryana Government has implemented.
(a) Strategy (b) Policy
(c) Method (d) Budget
Q29. Name the type of budget which is prepared to
determine the net cash position.
(a) Purchase budget (b) Sales budget
(c) Cash budget (d) Production budget
Q30. Sandeep Ltd. believed in the phrase-failing to plan is
planning to fail. Therefore the top management
subordinated the plan to junior management. The
junior managers followed the advice and made
monthly, quarterly and yearly plans. Everyone in the
company was told to follow the detailed plans. After
three months, it was found that the company had lost
several orders. It was found that clients had demanded
13% discount as compared to 10% discount offered by
the company but the salespersons refused them. No
new suggestion came in this period for improving
sales of the company. The company decided to rely on
its tried and tested channels of selling through two
level channels. However, sales managers were finding
it difficult to obtain orders as other firms were using
e-tailing and m-tailing for attracting customers.
Identify the limitation of planning which is not
referred in the above case.
(a) Planning leads to rigidity.
(b) Planning reduces creativity.
(c) Planning involves huge costs.
(d) Planning does not guarantee success
SUBJECTIVE QUESTIONS
Q1. “KOHINOOR FOODS Ltd. has banned smoking in the
factory premises.” Identify the plan stated in above
lines.
Q2. PK Ltd. has been well-known for delay in decision-
making and overlapping of work done. Identify the
management function lacking in the organisation and
state the importance of this function.
Q3. 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 computer but also
reduce the cost of production. But instead of
appreciating his idea, his supervisor scolded him and
asked him to complete the work as per the prescribed
technique. Identify and describe the limitations of
planning stated here.
Q4. A company gave its sales executives, the directives that
they would sell goods on credit but told the employees
to strictly inform the customer that if they will not
make payment within one month they will have to pay
an interest of 10% per annum. In the above given
paragraph, two types of plans have been mentioned.
Identify them
Q5. Bhuvan Ltd. is a garment manufacturing company. The
company regularly scans business environment and
constantly adapts itself to the changes in environment.
With all these efforts also it became difficult for
company to foresee future trends. Competition in the
market effects the financial plan of the company, sales
targets have to be revised which in turn effect the cash
budget.
(i) Name and explain the limitation of planning
highlighted in the above para.
(ii) Identify the two types of plans mentioned in above
para.
Q6. A company is manufacturing garments. The manager
wants to increase the profit by:
(a) Purchasing new high speed machine
(b) Increasing the sale price
(c) Using waste material in manufacturing stuff toys
He decided that using waste material to increase
the profit is the best solution for him.
(i) Identify the concept of management involved
(ii) State any four features of that concept.
Q7. An electronic company is facing a problem of declining
market share due to increased competition from other
new and existing players in the market. Its
competitors are introducing lower price models for
mass consumers. Who are price sensitive? For quality
conscious consumers company is introducing new
model with added features and new technological
advancements.
(i) Prepare a model business plan for this company.
Specify which type of plan you are preparing.
 (ii) Identify the limitations of such plans.
(iii) How will you remove these limitations?
Q8. Palvinder, is working as a supervisor in Alpha Ltd. To
achieve the target, he wants to try a new method and
a different way of allocating the work. His superior did
not permit him and forced him to do the work strictly
as per the plan.
(i) Name the limitation of planning indicated in
the above para.
(ii) Name the value overlook by Palvinder’s
superior.
Q9. The management of ABC Ltd. set up the target of
selling 10,000 units per week and made all their plans
based on this target. But due to change in technology
adapted by competitors which reduced their cost, the
ABC Ltd. could not achieve their target.
(i) Identify the limitation of planning discussed in the
above para.
(ii) State any other two limitations.
Q10. Alpha Ltd. spent a lot of money to hire specialised
people for framing their plans and collecting
important facts from environment. The company cut
down their cost by cancelling the employee’s trip for
recreation.
(i) Name the limitation of planning mentioned in
above para.
(ii) Name the value overlook by management.
 SOLUTION FOR PRACTICE QUESTIONS

S1. (d) S8. (b) S15. (c)

S2. (d) S9. (a) S16. (b)
S3. (a) S10. (d) S17. (b)
S4. (c) S11. (a) S18. (c)
S5. (c) S12. (d) S19. (d)
S6. (a) S13. (c) S20. (c)
S7. (b) S14. (d)

SOLUTIONS FOR SUBJECTIVE QUESTIONS

S1. Developing premises (ii) Values: (any two)

Respect for environment:
S2. Policy
Team work
S3. Strategy Fulfilling social responsibility
S4. Strategy S7. (a) Planning.
S5. Types of plans Geeta is discussing in the above lines Characteristics of planning (any one)
are: (i) Planning focuses on achieving objectives.
(a) Policy: Policy is a general guideline which (ii) Planning is a primary function of management.
brings uniformity in decision-making for (iii) Planning is pervasive.
the achievement of predetermined (iv) Planning is continuous.
objectives. (v) Planning is futuristic.
(b) Procedure: It consists of sequence of routine (vi) Planning involves decision-making
steps on how to carry out activities. It (vii) Planning is a mental exercise.
details the exact manner in which any work (b) Limitations of planning (Any three)
is to be performed. (i) Planning leads to rigidity.
S6. (i) Concepts involved: Planning and organising. (ii) Planning may not work in a dynamic
Lines for planning: environment.
‘one suggested…..unemployed youth’ (iii) Planning reduces creativity.
‘on evaluation…… local residents’ (iv) Planning involves huge cost.
‘campaign to create awareness……. (v) Planning is a time consuming process.
Surroundings’ (vi) Planning does not guarantee success.
Lines for organising: S8. (a) Planning.
‘to achieve……. disposal of garbage, etc.’ S9. (a) Planning Process
‘after identification of different activities…… (b) Developing Premises
different members’ S10. Strategy. (Refer page no. 54)
 SOLUTION FOR HOMEWORK QUESTIONS
1. (c) S11. (c) S21. (c)
2. (a) S12. (a) S22. (d)
3. (b) S13. (a) S23. (b)
4. (b) S14. (b) S24. (b)
5. (a) S15. (a) S25. (b)
6. (d) S16. (c) S26. (a)
7. (d) S17. (d) S27. (d)
8. (c) S18. (c) S28. (b)
9. (a) S19. (b) S29. (c)
S10. (a) S20. (d) S30. (c)

SOLUTIONS FOR SUBJECTIVE QUESTIONS

S1. (a) Rule
S2. Planning. (Refer page nos. 50-51)
S3. Reduce creativity limitation. (Refer page no. 52)
S4. Policy and Rule
S5. (i) Planning may not work in dynamic environment.
(ii) Plans:
(a) Strategy (b) Budget
S6. (i) Planning
(ii) Features (Refer page nos.51 and 52)
S7. The type of plan needed to be prepared under this
situation is strategy and the steps involved in
preparing this plan are:
(a) Setting-up of objective. The company may set up a
long term objective of capturing more and more
quality conscious consumers or becoming a leader
in quality and trend setter in market by one year
time.
(b) Adopting a particular course of action. The
company must import latest technology or spend
more on research and development department to
innovate latest technology to make their goods
superior than competitor’s goods.
(c) Allocating resources for achieving the objectives.
Company must take permission for importing
technology and must allocate extra funds to their R
and D section and appoint people with latest
knowledge to innovate new technology.
The common limitations of these plans are:
(a) It may involve huge cost.
(b) It is a time-consuming process.
(c) There is no guarantee of success.
(d) It may not fit in dynamic environment.
To overcome these problems, we may take the
following steps:
(a) Prepare budget to carry on this plan and function
within the revenue allocated in the budget.
(b) Fix a time limit to achieve the plan and then to
execute the plan within that time limit only.
(c) Scan the environment properly before
implementing the plan.
(d) Use the plan with caution and care.
S8. (i) ‘Planning reduces creativity.’
(ii) Value of motivating and encouraging employee to
increase initiative level.
S9. (i) Planning may not work in dynamic environment.
1. Any two limitations:
1. Planning reduces creativity
2. Planning involve huge cost
S10. (i) Limitation: ‘Planning involves huge cost’
(ii) Value overlook: Psychological need of employees.