PlanningClass 12 Business Studies Part 1 NCERT Solutions
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Q1Exercises
What are the main aspects in the definition of planning?
Solution
The main aspects in the definition of planning are:
- Deciding in advance: It is a forward-looking process that involves thinking before doing, specifically about 'what to do' and 'how to do it'.
- Setting objectives: It involves defining the goals for a given time period that the organization wants to achieve.
- Formulating courses of action: It involves developing various alternative ways to achieve the set objectives.
- Selecting the best alternative: It is a decision-making process that involves choosing the most feasible and profitable course of action from the available alternatives.
In essence, planning seeks to bridge the gap between where an organization is and where it wants to go.
Q1Exercises
Why is it that organisations are not always able to accomplish all their objectives?
Solution
Organisations are not always able to accomplish all their objectives due to several limitations inherent in the planning process and the environment in which they operate. These reasons are:
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Planning Leads to Rigidity: An organization's plans are drawn up with specific goals and time frames. This can make the organization inflexible, as managers may not be in a position to change the course of action even when circumstances change. Adhering to a rigid plan in a changed situation may not be in the organization's best interest.
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Planning May Not Work in a Dynamic Environment: The business environment is constantly changing due to economic, political, social, legal, and technological factors. Planning is based on anticipating the future, which is very difficult in a dynamic environment. Unexpected events or changes can render plans ineffective or obsolete.
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Planning Reduces Creativity: Planning is often done by top management, while other employees are expected to simply implement the plans. This can discourage initiative and creativity at lower levels, as they are not allowed to deviate from the plan or act on their own innovative ideas.
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Planning Involves Huge Costs: The process of formulating plans can be very expensive. It involves costs in terms of time and money for collecting data, conducting preliminary investigations, holding boardroom meetings, and consulting with experts. Sometimes, the costs incurred may outweigh the benefits derived from the plan.
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Planning is a Time-Consuming Process: Drawing up detailed plans can take a significant amount of time. Occasionally, so much time is spent in the planning phase that very little time is left for its proper implementation, defeating the purpose of the plan.
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Planning Does Not Guarantee Success: A well-drafted plan does not automatically lead to success. Its success depends on proper implementation and external factors beyond the management's control. A false sense of security from relying on a previously successful plan can also lead to failure in a new context.
Q1Exercises
How does planning provide direction?
Solution
Planning provides direction by clearly stating the goals and objectives in advance. When objectives are well-defined, they act as a guide for deciding what actions should be taken. This ensures that all employees in the organization are aware of what they must do to achieve those goals, leading them to work in a coordinated manner towards a common direction rather than in different, unproductive directions.
Q2Exercises
If planning involves working out details for the future, why does it not ensure success?
Solution
Planning involves working out details for the future, but it does not ensure success for the following reasons:
- Dynamic Environment: Planning is based on forecasts, but the business environment is dynamic and uncertain. Unforeseen changes in competition, government policies, or economic conditions can disrupt plans.
- Reliance on Past Plans: Managers may rely on previously successful plans, but a plan that worked before may not work again in new circumstances. This can lead to a false sense of security.
- Implementation Issues: The success of an enterprise depends not just on a good plan but also on its proper implementation. A plan becomes meaningless if it is not translated into action effectively.
- External Factors: Many unknown and uncontrollable factors can affect the outcome of a plan, regardless of how carefully it has been prepared.
Q2Exercises
A company wants to increase its market share from the present 10% to 25% to have a dominant position in the market by the end of the next financial year. Ms Rajni, the sales manager has been asked to prepare a proposal that will outline the options available for achieving this objective. Her report included the following options - entering new markets, expanding the product range offered to customers, using sales promotion techniques such as giving rebates, discounts or increasing the budget for advertising activities. Which step of the planning process has been performed by Ms Rajni?
Solution
Ms. Rajni has performed the third step of the planning process, which is 'Identifying alternative courses of action'. After setting the objective (increasing market share to 25%), the next logical step is to identify all the possible ways to achieve it. Ms. Rajni's report, which outlines various options like entering new markets and using sales promotion, is a clear example of this step.
Q2Exercises
What are the steps taken by management in the planning process?
Solution
Management takes the following logical steps in the planning process to systematically develop and implement plans:
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Setting Objectives: This is the primary step. Objectives are defined for the entire organization and for each department. They specify what the organization wants to achieve and provide direction for all managerial actions.
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Developing Premises: This step involves making assumptions about the future, which serve as the base upon which plans are drawn. These premises are forecasts about future conditions like policy changes, demand for a product, interest rates, etc. It is crucial for all managers to use the same set of assumptions.
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Identifying Alternative Courses of Action: Once objectives are set and premises are developed, the next step is to identify all possible ways to achieve the goals. Both routine and innovative courses of action should be considered.
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Evaluating Alternative Courses: Each identified alternative is then analyzed to weigh its pros and cons. The positive and negative aspects of each proposal are evaluated in light of the objectives, feasibility, and potential consequences.
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Selecting an Alternative: This is the core decision-making step. After a thorough evaluation, the best plan is adopted and implemented. The ideal plan is the one that is most feasible, profitable, and has the least negative consequences. Sometimes, a combination of plans may be selected.
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Implementing the Plan: This step involves putting the chosen plan into action. It requires the involvement of other managerial functions, such as organizing for labor and machinery, staffing, and directing employees to carry out the necessary tasks.
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Follow-up Action: The final step is to monitor the plans to ensure they are being implemented correctly and that activities are performed according to schedule. This helps in ensuring that the objectives are being achieved and allows for corrective action if any deviations occur.
Q3Exercises
Why are rules considered to be plans?
Solution
Rules are considered to be plans because they are specific statements that prescribe a required action or forbid an action, thus guiding behavior to achieve organizational objectives. They are the simplest type of plans that detail what must or must not be done in a particular situation without allowing for any flexibility or discretion, thereby ensuring uniformity and order.
Q3Exercises
An auto company C Ltd. 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 priced models for mass consumers who are price sensitive. C Ltd. realized that it needs to take steps immediately to improve its market standing in the future. For quality conscious consumers, C Limited plans to introduce new models with added features and new technological advancements. The company has formed a team with representatives from all the levels of management. This team will brainstorm and will determine the steps that will be adopted by the organisation for implementing the above strategy. Explain the features of Planning highlighted in the situation given below. (Hint: Planning is pervasive, Planning is futuristic and Planning is a mental exercise).
Solution
The given situation highlights the following features of planning:
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Planning is Futuristic: Planning essentially involves looking ahead and preparing for the future. The case states that C Ltd. realized it needs to take steps to "improve its market standing in the future." By planning to introduce new models with advanced features, the company is analyzing and predicting future market trends and consumer preferences. This forward-looking approach is the essence of futuristic planning.
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Planning is Pervasive: Planning is a function required at all levels of management and in all departments of an organization. The fact that C Ltd. "has formed a team with representatives from all the levels of management" demonstrates this feature. It shows that planning is not the exclusive domain of top management but is an activity that permeates the entire organization, with managers at different levels contributing to the planning process.
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Planning is a Mental Exercise: Planning is an intellectual activity that requires foresight, intelligent imagination, and sound judgment rather than just physical action. The team formed by C Ltd. will "brainstorm and will determine the steps" to be taken. This process of brainstorming, analyzing the situation, and making choices involves logical and systematic thinking, which are characteristics of a mental exercise.
Q3Exercises
What kind of strategic decisions are taken by business organisations?
Solution
Strategic decisions taken by business organizations are comprehensive, long-term decisions that define the organization's direction and scope. These decisions include:
- Line of Business: Deciding whether the organization will continue in the same line of business, combine new activities with the existing business, or diversify into new areas.
- Market Position: Formulating plans to acquire a dominant position in the market or to effectively handle competition.
- Long-Term Objectives: Determining the overall long-term goals of the organization.
- Resource Allocation: Making decisions on allocating necessary resources (financial, human, physical) to achieve the strategic objectives.
These decisions take into account the business environment and are crucial for the organization's identity and long-term success.
Q4Exercises
Planning reduces creativity. Critically comment.(Hint: both the points - Planning promotes innovative ideas and planning reduces creativity - will be given).
Solution
The statement that 'Planning reduces creativity' can be viewed from two contrasting perspectives.
Planning Reduces Creativity:
This view holds that planning can stifle creativity, especially at the middle and lower levels of management. Planning is often a centralized activity done by top management. Once plans are made, they can become rigid. Other employees are typically expected to implement these plans without deviation. This leaves little room for individual initiative or creative problem-solving, as they are not permitted to act on their own and must follow the predetermined course of action.
Planning Promotes Innovative Ideas:
Conversely, planning is also a process that promotes creativity and innovation. Since planning is the first and most challenging function of management, it requires managers to think of new ideas and better ways to achieve goals. The process of identifying and evaluating different courses of action encourages creative thinking to find the most viable proposition. New ideas can take the shape of concrete plans, guiding all future actions and leading to the growth of the business.
In conclusion, while the rigid implementation of plans can reduce creativity among subordinates, the process of formulating plans itself is an intellectual and creative exercise for management.
Q4Exercises
Rama Stationery Mart has made a decision to make all the payments by e-transfers only. Identify the type of plan adopted by Rama Stationery Mart.
Solution
The type of plan adopted by Rama Stationery Mart is a Rule. A rule is a specific statement that informs what must be done and does not allow for any flexibility or discretion. The decision to make 'all' payments 'only' through e-transfers is a rigid directive that must be followed, which is the key characteristic of a rule.
Q5Exercises
Can planning work in a changing environment? Give a reason to justify your answer.
Solution
No, planning may not work effectively in a dynamic or rapidly changing environment. The reason is that planning is based on assumptions and forecasts about the future. A dynamic environment is characterized by frequent and unpredictable changes in economic, political, legal, and social dimensions. Such changes can render the initial assumptions invalid, making it difficult to accurately assess future trends and causing well-laid plans to become obsolete or ineffective.
Q5Exercises
In an attempt to cope with Reliance Jio's onslaught in 2018, market leader Bharti Airtel has refreshed its ₹ 149 prepaid plan to offer 2 GB of 3G/4G data per day, twice the amount it offered earlier. Name the type of plan is highlighted in the given example. ? State its three dimensions also.
Solution
The type of plan highlighted in the example is a Strategy.
A strategy is a comprehensive plan for accomplishing an organization's objectives, which takes into consideration the business environment and competitors' actions. Airtel's decision is a strategic move to counter a competitor and maintain its market position.
The three dimensions of this strategy are:
- Determining long-term objectives: The objective here is to retain its customer base and market leadership in the face of intense competition from Reliance Jio.
- Adopting a particular course of action: The specific action adopted is to refresh its ₹149 prepaid plan by doubling the data offered, making it more attractive to consumers.
- Allocating resources necessary to achieve the objective: This involves allocating network resources (bandwidth) to handle the increased data consumption and financial resources for marketing and communicating the new offer.
Q6Exercises
State the type of plan and state whether they are Single use or Standing plan: a. A type of plan which serves as a controlling device as well.(budget) b. A plan based on research and analysis and is concerned with physical and technical tasks. (Method)
Solution
a. The type of plan is a Budget. A budget is a Single-use plan. It is developed for a specific period (e.g., a year) to quantify expected results in numerical terms. Since it serves as a control device for that particular period and is not repeated in the same form, it is considered a single-use plan.
b. The type of plan is a Method. A method is a Standing plan. It provides the prescribed and standardized way to perform a routine task. Since it is used for activities that occur regularly over time to ensure efficiency, it is considered a standing plan.