Planning Class 12 Business Studies NCERT Solutions PDF

Concept used. Planning is the managerial function of deciding in advance what is to be done and how. Setting objectives is the very first step of planning, and these objectives act as the direction for every action that follows.

1. Planning starts with setting clear objectives for the organisation and for each department within it.
2. When objectives are stated in writing, every employee knows where the organisation is headed and what is expected of them.
3. This shared understanding eliminates random effort: departments coordinate, duplication is avoided, and resources flow only toward the stated objective.
4. Without planning, employees would work in different directions and the organisation would not achieve its goals efficiently.

Planning provides direction by stating objectives in advance so that every department and employee works in unison toward those stated goals.

Concept used. The planning process has seven steps. The third step is identifying alternative courses of action: once objectives are set and premises developed, the planner lists out the different ways in which the objective can be reached.

1. The objective in the situation is given: raise market share from 10% to 25% by year-end.
2. Ms Rajni has been asked to outline options for reaching this objective. She lists four: enter new markets, expand the product range, use sales promotion, and increase the advertising budget.
3. Listing options for reaching an already-set objective is the textbook definition of identifying alternative courses of action, the third step of the planning process.

Ms Rajni has performed the third step of the planning process, namely identifying alternative courses of action.

Concept used. A plan is any statement that decides in advance what is to be done and how. Rules are specific statements telling exactly what is or is not to be done in a given situation. Because they decide future conduct in advance, they fit the definition of a plan.

1. Rules dictate behaviour: example, "no smoking in the factory premises" or "office hours are 9 a.m. to 6 p.m."
2. Rules are decided before the situation arises and apply repeatedly whenever that situation occurs.
3. Since rules predetermine action and require no further decision-making by the employee at the time of action, they satisfy the definition of a plan.
4. Rules differ from other plans in that they leave no discretion to the employee, but this lack of discretion does not stop them from being plans.

Rules are plans because they decide in advance what specific action is to be taken (or avoided) in a given situation and apply repeatedly thereafter.

Concept used. A rule is a specific statement that tells what is to be done (or not done) in a particular situation. Rules leave no scope for discretion and any violation attracts disciplinary action.

1. Rama Stationery Mart has decided that all payments must be made through e-transfers - there is no flexibility and no alternative method permitted.
2. This is a specific instruction about how a routine activity (payments) is to be carried out, with no choice left to the person executing it.
3. A direction of this kind that prescribes a single, fixed course of action is, by definition, a rule.

The type of plan adopted by Rama Stationery Mart is a rule.

Concept used. Planning is the function of deciding in advance what to do and how. A changing environment (new competitors, technology shifts, new government policies) makes the future hard to predict, but planning is still required because without it, the firm has no direction at all.

1. Yes, planning can work in a changing environment, but it cannot guarantee success in such an environment.
2. Reason: Planning is based on forecasts about the future. When the environment changes rapidly, those forecasts may not hold. The plan must then be revised in response.
3. However, the alternative - operating without any plan - is worse, because the firm would have no objectives, no coordination, and no benchmark against which to measure results.
4. Therefore planning still works in a changing environment, but managers must keep the plan flexible and update it as the environment changes.

Yes, planning works in a changing environment but cannot guarantee success there; managers must build flexibility into the plan and revise it as forecasts shift.

Concept used. Planning is defined as deciding in advance what to do, how to do it, when to do it, and who is to do it. From this definition four main aspects of planning emerge.

1. Setting objectives. Planning starts by deciding what the organisation wants to achieve - sales targets, profit levels, market share - for the planning period.
2. Forward-looking. Planning is concerned with the future. It bridges the gap between where the firm is today and where it wants to be tomorrow.
3. Choosing among alternatives. Several routes are usually available to reach an objective. Planning evaluates the routes and selects the best one.
4. Mental exercise. Planning is intellectual work, based on logical thinking and judgement, not on guesswork or wishful thinking.

Planning is built on four aspects: setting objectives, looking ahead to the future, choosing the best alternative, and applying logical mental work to reach decisions.

Concept used. Planning works out the details of future action based on forecasts and premises. But because the future is uncertain, those forecasts may not hold. Hence planning does not guarantee success even though it improves the chance of success.

1. Planning is built on premises - assumptions about future conditions like demand, prices, government policy, and competition.
2. These premises are forecasts. Forecasts can be wrong because the environment changes in ways that no planner can fully predict.
3. When the actual environment differs from the assumed environment, the plan fails to deliver the expected result.
4. Other reasons planning may not ensure success: rigidity (the plan resists change), employee resistance, sudden natural calamities, technological disruption, or miscalculation in cost-benefit analysis.
5. Hence the textbook line: planning reduces uncertainty but does not eliminate it; it improves the probability of success but does not guarantee it.

Planning does not ensure success because it is based on forecasts that can fail, and the environment may change in ways that the plan did not anticipate.

Concept used. A strategy is a comprehensive plan that gives the broad direction of the organisation. Strategic decisions therefore deal with long-term, organisation-wide questions about where the firm will compete and how.

1. Determining long-term objectives. For example, becoming the market leader in a segment within five years.
2. Adopting a particular course of action. For example, choosing to compete on cost vs choosing to compete on differentiation.
3. Allocating resources. Deciding how much of the firm's capital, manpower and capacity to direct toward each business or product line.
4. Examples of strategic decisions: entering a new geographical market, launching a new product line, acquiring another firm, entering into a joint venture, or revising the pricing approach in response to a competitor.

Strategic decisions cover three areas - setting long-term objectives, choosing a course of action to compete, and allocating resources to that course - and shape the firm's future direction and scope.

Concept used. Critical comment requires presenting both sides of the issue. Planning has the effect of reducing creativity at lower levels of management, but it promotes innovation at the top where the plan is drawn up.

1. Side 1 - Planning reduces creativity (the limitation). Plans are drawn at the top and passed down. Lower-level managers and employees are expected to follow the plan as given, not deviate from it. Their freedom to think creatively about how the work could be done differently is reduced.
2. This rigidity becomes more pronounced when the plan is very detailed or when rules and procedures are spelt out for every step.
3. Side 2 - Planning promotes innovation. At the top level, drawing up the plan is itself a creative activity: managers identify alternatives, weigh them, and choose the best. Strategy formulation involves substantial creative thinking.
4. Therefore the correct conclusion is balanced: planning reduces creativity at the implementation level but encourages creativity at the planning level. Whether it reduces overall creativity in the firm depends on how rigidly the plan is enforced.

Planning reduces creativity at lower levels of implementation but promotes creativity at the planning level; the net effect on the firm depends on how rigidly the plan is enforced.

Concept used. A strategy is a comprehensive plan that gives the broad direction of the business and is normally drawn up in response to changes in the competitive environment. Strategy has three dimensions: long-term objectives, course of action, and allocation of resources.

1. In the case, Airtel has redesigned its tariff plan specifically to counter Reliance Jio's competitive onslaught.
2. Responding to a competitor's move by changing the broad approach to the market is, by definition, a strategy.
3. The three dimensions of strategy in this case:
   • Long-term objective: defending market leadership against Jio's entry.
   • Course of action: doubling the daily data allowance at the same Rs. 149 price point - a value-based competitive response.
   • Resource allocation: diverting network bandwidth, ncert-notes-class-12-business-studies-chapter-10-marketing spend and revenue from premium plans to support the refreshed Rs. 149 plan.

The plan highlighted is a strategy; its three dimensions are long-term objectives, course of action, and allocation of resources.

Concept used. Plans are classified as single-use (prepared for a one-time activity, e.g. a programme or budget) or standing (used repeatedly, e.g. objective, strategy, policy, procedure, rule, method). A budget is a numerical statement of expected results and also functions as a control device because actual results are compared with the budget. A method is the prescribed way of performing a task, developed through research and analysis of physical and technical work.

1. (a) A plan which serves as a controlling device: this is the description of a budget. A budget states expected results in numbers; deviation between actual and budgeted figures is the basis of control.
2. Budget is a single-use plan because it is prepared afresh for each planning period (year, quarter).
3. (b) A plan based on research and analysis and concerned with physical and technical tasks: this is the description of a method. For example, the method of valuing closing inventory, or the method of testing a product before despatch.
4. Method is a standing plan because once the best method is identified, it is used every time that task is performed.

(a) Budget - single-use plan; (b) Method - standing plan.

Concept used. Organisations set objectives during the planning function, but reaching them depends on the planning's quality and the environment in which it is executed. Six limitations of planning explain why objectives are sometimes missed.

1. Planning leads to rigidity. Once a plan is drawn up, managers tend to stick to it even when conditions change. Rigid adherence to the plan prevents the firm from adapting and may cause objectives to be missed.
2. Planning reduces creativity. Lower-level managers are expected to follow the plan as given. They may not raise better alternatives that emerge during execution, so objectives that could have been raised remain unrevised.
3. Planning involves huge cost. Detailed plans require market surveys, expert opinions, and management time, all of which cost money. Smaller firms may under-invest in planning and produce weak plans that miss objectives.
4. Planning is a time-consuming process. If too much time is spent at the planning stage, the firm loses first-mover advantage; objectives like "be the first in the market" then become unattainable.
5. Planning does not work in a dynamic environment. Premises about the future may be invalidated by sudden changes - new technology, policy shifts, pandemic. When the premises fail, the plan fails with them.
6. Planning does not guarantee success. Even a well-drafted plan does not assure success; managers may commit execution errors, employees may resist change, or competitors may respond unexpectedly.

Organisations fail to accomplish all objectives because of six limitations of planning - rigidity, reduced creativity, high cost, time consumption, inability to handle dynamic environments, and the fact that planning does not guarantee success.

Concept used. The planning process consists of seven sequential steps. Each step builds on the previous one, and skipping any step weakens the plan.

1. Setting objectives. Objectives are decided for the organisation as a whole and for each department. They state what the firm wants to achieve in the planning period.
2. Developing premises. Premises are assumptions about future conditions - demand, prices, competition, government policy. The plan is built on these assumed conditions.
3. Identifying alternative courses of action. Once the objective and premises are set, the planner lists out the possible routes to reach the objective.
4. Evaluating alternative courses. Each alternative is weighed for its pros and cons - cost, time required, feasibility, risk, and expected return.
5. Selecting an alternative. On the basis of the evaluation, the best alternative is chosen. This is the actual point of decision-making in the planning process.
6. Implementing the plan. The selected plan is put into action by allocating resources, communicating it to employees, and giving each department its share of the work.
7. Follow-up action. Actual results are monitored, compared with the plan, and any deviation is corrected. Follow-up closes the loop and feeds learning into the next planning cycle.

The planning process has seven steps: set objectives, develop premises, identify alternatives, evaluate them, select the best, implement the chosen plan, and follow up to compare actual results with the plan.

Concept used. Features of planning describe what the function inherently does. Three of these features - pervasive, futuristic, and mental exercise - are directly visible in the given case.

1. Planning is pervasive. Planning happens at every level of management - top, middle, and lower. Application to the case: "the company has formed a team with representatives from all the levels of management". The fact that all levels participate in drawing up the plan confirms its pervasiveness.
2. Planning is futuristic. Planning is concerned with the future, not the past. Application to the case: C Ltd. is planning to "introduce new models with added features and new technological advancements" to improve "its market standing in the future". The plan is aimed at a future event, confirming this feature.
3. Planning is a mental exercise. Planning is intellectual work that requires logical analysis and judgement. Application to the case: "this team will brainstorm and determine the steps that will be adopted". Brainstorming and determining the right course of action are intellectual activities, confirming planning's nature as a mental exercise.

The features of planning highlighted are: (i) pervasive - all levels of management participate; (ii) futuristic - aimed at future market standing; and (iii) mental exercise - the team brainstorms to identify the right steps.