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Business Studies 4 Marks Question

Planning · CBSE STD 12 Commerce (CBSE - English Medium). 36 questions.

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Question 14 Marks
Give the meaning of ‘Objectives’ and ‘Procedure’ as types of plans.
Answer
Objectives: The first step in planning is setting objectives. Objectives, therefore, can be said to be the desired future position that the management would like to reach. Objectives are very basic to the organisation and they are defined as ends which the management seeks to achieve by its operations. Therefore, an objective simply stated is what you would like to achieve, i.e., the end result of activities. For example, an organisation may have an objective of increasing sales by 10% or earning a reasonable rate of return on investment, earn a 20% profit from business. They represent the end point of planning.Procedure: Procedures are routine steps on how to carry out activities. They detail the exact manner in which any work is to be performed. They are specified in a chronological order. For example, there may be a procedure for requisitioning supplies before production. Procedures are specified steps to be followed in particular circumstances. They are generally meant for insiders to follow. The sequence of steps or actions to be taken are generally to enforce a policy and to attain pre-determined objectives. Policies and procedures are interlinked with each other. Procedures are steps to be carried out within a broad policy framework.
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Question 24 Marks
Give the meaning of ‘Policy’ and ‘Budget’ as types of plans.
Answer
Policy: Policies are general statements that guide thinking or channelise energies towards a particular direction. Policies provide a basis for interpreting strategy which is usually stated in general terms. They are guides to managerial action and decisions in the implementation of strategy. For example, the company may have a recruitment policy, pricing policy within which objectives are set and decisions are made accordingly.
Budget: A budget is a statement of expected results expressed in numerical terms. It is a plan which quantifies future facts and figures. For example, a sales budget may forecast the sales of different products in each area for a particular month. A budget may also be prepared to show the number of workers required in the factory at peak production times. Since budget represents all items in numbers, it becomes easier to compare actual figures with expected figures and take corrective action subsequently. Thus, a budget is also a control device from which deviations can be taken care of. But making a budget involves forecasting, therefore, it clearly comes under planning. It is a fundamental planning instrument in many organisations.
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Question 34 Marks
Give the meaning of ‘Strategy’ and ‘Rule’ as types of plans.
Answer
Straterfy: Strategy refer to future decisions defining the organisations direction and scope in the long run. Thus, we can say a strategy is a comprehensive plan for accomplishing an organization objectives. This comprehensive plan will include three dimensions,
  1. Determining long term objectives,
  2. Adopting a particular course of action, and
  3. Allocating resources necessary to achieve the objective.
The changes in the economic, political, social, legal and technological environment will also affect an organisation’s strategy. Major strategic decisions will include decisions like whether the organisation will continue to be in the 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.
Rule:
Rules are specific statements that inform what is to be done. They do not allow for any flexibility or discretion. It reflects a managerial decision that a certain action must or must not be taken. They are usually the simplest type of plans because there is no compromise or change unless a policy decision is taken.
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Question 44 Marks
Explain ‘objective’ and ‘strategy’ as types of plans.
Answer
  1. Objective: An objective is the end which the management seeks to achieve. An objective needs to be expressed in specific terms and is to be achieved within a given time period.
  2. Strategy: A strategy is a comprehensive plan for accomplishing an organisation’s objectives. It is a term used in defence parlance which means to prepare plans considering the plan of adversary. Whenever a strategy is formulated, the business environment needs to be taken into consideration.
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Question 54 Marks
Explain ‘Procedure’ and ‘Programme’ as types of plans, with a suitable example.
Answer
Procedure: Procedures are routine steps on how to carry out activities. They detail the exact manner in which any work is to be performed. They are specified in a chronological order. For example, there may be a procedure for requisitioning supplies before production. Procedures are specified steps to be followed in particular circumstances. They are generally meant for insiders to follow. The sequence of steps or actions to be taken are generally to enforce a policy and to attain pre-determined objectives. Policies and procedures are interlinked with each other. Procedures are steps to be carried out within a broad policy framework.Programmes are detailed statements about a project which outlines the objectives, policies, procedures, rules, tasks, human and physical resources required and the budget to implement any course of action. Programmes will include the entire gamut of activities as well as the organisation’s policy and how it will contribute to the overall business plan. The minutest details are worked out i.e., procedures, rules, budgets, within the broad policy framework.
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Question 64 Marks
Two years ago, Mayank obtained a degree in food technology. For some time, he worked in a company that manufactured bread and biscuits. He was not happy in the company and decided to have his own bread and biscuits manufacturing unit. For this, he decided the objectives and the targets, and formulated an action plan to achieve the same.
One of his objectives was to earn 50% profits on the amount invested in the first year. It was decided that raw materials like flour, sugar, salt, etc. will be purchased on two months credit. He also decided to follow the steps required for marketing the products through his own outlets. He appointed Harsh as the Production Manager who decided the exact manner in which the production activities were to be carried out. Harsh also prepared a statement showing the requirement of workers in the factory throughout the year. Mayank informed Harsh about his are a wise sales target for different products, for the forthcoming quarter. While working on the production table, a penalty of ?150 per day was announced for not wearing the helmet, gloves and apron by the workers.
Quoting lines from the above paragraph, identify and explain the different types of plans discussed.
Answer
The different types of plans discussed above are listed below :
  1. Objectives: Objectives are the end results of the activities that an organisation seeks to achieve through its existence. All other activities within the organisation are directed towards achieving these objectives.
    “One of her objectives was to earn 50% profit on the amount invested in the first year.”
  2. Policy: A policy is a set of general guidelines that help in managerial decision making and action.
    “It was decided that the raw materials like flour, wheat, sugar, etc. will be purchased on two months credit.”
  3. Method: A method refers to the prescribed ways or manner in which a task has to be performed considering the objective.
    “..decided the exact manner in which production activities were to be carried out.”
  4. Procedure: A procedure contains a series of specific steps to be performed in a chronological order to carry out the routine activities.
    “He also decided to follow the steps required for marketing of the products through his own outlets.”
  5. Rule: A rule is a specific statement relating to the general norms in terms of Do’s and Dont’s that guide the behaviour of people. It commands strict obedience and a penalty is likely to be imposed on its violation.
    “While working on the production table, a penalty of Rs. 150 per day was announced for not wearing helmets, gloves and aprons by the workers.”
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Question 74 Marks
Give the meaning of ‘Budget’ and ‘Strategy’ as types of plans.
Answer
Strategy: Strategy is a comprehensive plan for accomplishing an organization objectives. Whenever a strategy is formulated, the business environment needs to be taken into consideration. The changes in the economic, political, social, legal and technological environment will affect an organisation’s strategy.This comprehensive plan will include three dimensions:
  1. Determining long term objectives,
  2. Adopting a particular course of action, and
  3. Allocating resources necessary to achieve the objective.
Budget: A budget is a statement of expected results expressed in numerical terms. It is a plan which quantifies future facts and figures. For example, a sales budget may forecast the sales of different products in each area for a particular month. A budget may also be prepared to show the number of workers required in the factory at peak production times. Since budget represents all items in numbers, it becomes easier to compare actual figures with expected figures and take corrective action subsequently. Thus, a budget is also a control device from which deviations can be taken care of. But making a budget involves forecasting, therefore, it clearly comes under planning. It is a fundamental planning instrument in many organisations.
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Question 84 Marks
Give the meaning of ‘Objectives’ and ‘Policy’ as types of plans.
Answer
Objectives: The first step in planning is setting objectives. Objectives, therefore, can be said to be the desired future position that the management would like to reach. Objectives are very basic to the organisation and they are defined as ends which the management seeks to achieve by its operations. Therefore, an objective simply stated is what you would like to achieve, i.e., the end result of activities. For example, an organisation may have an objective of increasing sales by 10% or earning a reasonable rate of return on investment, earn a 20% profit from business. They represent the end point of planning.Policy: Policies are general statements that guide thinking or channelise energies towards a particular direction. Policies provide a basis for interpreting strategy which is usually stated in general terms. They are guides to managerial action and decisions in the implementation of strategy. For example, the company may have a recruitment policy, pricing policy within which objectives are set and decisions are made accordingly.
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Question 94 Marks
Give the meaning of 'Procedure' and 'Method' as types of plans.
Answer
Procedure: Procedures are routine steps on how to carry out activities. They detail the exact manner in which any work is to be performed. They are specified in a chronological order. For example, there may be a procedure for requisitioning supplies before production. Procedures are specified steps to be followed in particular circumstances. They are generally meant for insiders to follow. The sequence of steps or actions to be taken are generally to enforce a policy and to attain pre-determined objectives. Policies and procedures are interlinked with each other. Procedures are steps to be carried out within a broad policy framework.
Method: Methods provide the prescribed ways or manner in which a task has to be performed considering the objective. It deals with a task comprising one step of a procedure and specifies how this step is to be performed. The method may vary from task to task. Selection of proper method saves time, money and effort and increases efficiency. For imparting training to employees at various level from top management to supervisory, different methods can be adopted. For example for higher level management orientation programmes, lectures and seminars can be organized whereas at the supervisory level, on the job training methods and workoriented methods are appropriate.
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Question 104 Marks
Give the meaning of 'policy' and 'strategy' as types of plans.
Answer
  1. Policy: Policies are general statements that guide thinking or channelise energies towards a particular direction. Policies provide a basis for interpreting strategy which is usually stated in general terms. They are guides to managerial action and decisions in the implementation of strategy. For example, the company may have a recruitment policy, pricing policy within which objectives are set and decisions are made accordingly.
  2. Strategy: Strategy is a comprehensive plan for accomplishing an organization objectives. Whenever a strategy is formulated, the business environment needs to be taken into consideration. The changes in the economic, political, social, legal and technological environment will affect an organisation’s strategy.
This comprehensive plan will include three dimensions:
  1. Determining long term objectives,
  2. Adopting a particular course of action,
  3. Allocating resources necessary to achieve the objective.
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Question 114 Marks
Give the meaning of ‘procedure’ and ‘rule’ as types of plans.
Answer
  1. Procedure: Procedures are routine steps on how to carry out activities. They detail the exact manner in which any work is to be performed. They are specified in a chronological order. For example, there may be a procedure for requisitioning supplies before production. Procedures are specified steps to be followed in particular circumstances. They are generally meant for insiders to follow. The sequence of steps or actions to be taken are generally to enforce a policy and to attain pre-determined objectives. Policies and procedures are interlinked with each other. Procedures are steps to be carried out within a broad policy framework.
  2. Rule: Rules are specific statements that inform what is to be done. They do not allow for any flexibility or discretion. It reflects a managerial decision that a certain action must or must not be taken. They are usually the simplest type of plans because there is no compromise or change unless a policy decision is taken.
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Question 124 Marks
Give the meaning of 'objectives' and 'budget' as types of plans.
Answer
Objectives: The first step in planning is setting objectives. Objectives, therefore, can be said to be the desired future position that the management would like to reach. Objectives are very basic to the organisation and they are defined as ends which the management seeks to achieve by its operations. Therefore, an objective simply stated is what you would like to achieve, i.e., the end result of activities. For example, an organisation may have an objective of increasing sales by 10% or earning a reasonable rate of return on investment, earn a 20% profit from business. They represent the end point of planning.Budget: A budget is a statement of expected results expressed in numerical terms. It is a plan which quantifies future facts and figures. For example, a sales budget may forecast the sales of different products in each area for a particular month. A budget may also be prepared to show the number of workers required in the factory at peak production times. Since budget represents all items in numbers, it becomes easier to compare actual figures with expected figures and take corrective action subsequently. Thus, a budget is also a control device from which deviations can be taken care of. But making a budget involves forecasting, therefore, it clearly comes under planning. It is a fundamental planning instrument in many organisations.
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Question 134 Marks
Explain policy and procedure as types of plans.
Answer
Procedures are routine steps on how to carry out activities. They detail the exact manner in which any work is to be performed. They are specified in a chronological order.
  1. Procedures are specified steps to be followed in particular circumstances. They are generally meant for insiders to follow.
  2. The sequence of steps or actions to be taken are generally to enforce a policy and to attain pre-determined objectives.
  3. Policies and procedures are interlinked with each other. Procedures are steps to be carried out within a broad policy framework
Policies are general statements that guide thinking or channelise energies towards a particular direction.
  1. Policies provide a basis for interpreting strategy which is usually stated in general terms.
  2. They are guides to managerial action and decisions in the implementation of strategy.
  3. There are policies for all levels and departments in the organization ranging from major company policies to minor policies.
  4. Policies define the broad parameters within which a manager may function.
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Question 144 Marks
Explain ‘objective’ and ‘policy’ as types of plans using suitable examples.
Answer
Objectives:The first step in planning is setting objectives. Objectives, therefore, can be said to be the desired future position that the management would like to reach. Objectives are very basic to the organisation and they are defined as ends which the management seeks to achieve by its operations. Therefore, an objective simply stated is what you would like to achieve, i.e., the end result of activities. For example, an organisation may have an objective of increasing sales by 10% or earning a reasonable rate of return on investment, earn a 20% profit from business. They represent the end point of planning.
Policy:
Policies are general statements that guide thinking or channelise energies towards a particular direction. Policies provide a basis for interpreting strategy which is usually stated in general terms. They are guides to managerial action and decisions in the implementation of strategy. For example, the company may have a recruitment policy, pricing policy within which objectives are set and decisions are made accordingly.
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Question 154 Marks
In 2015, Naveen left his luxurious life in Mumbai, where he worked as a manager for Blue Birds Ltd. He shifted to Begampur, Chhattisgarh to fulfil his grandmother’s dream of converting their 25-acre ancestral land into a fertile farm. For this he set out specific goals along with the activities to be performed to achieve the goals.
Every activity was a challenge since he was clueless about farming. He learnt every activity from filling the land to sowing the seeds. To aid farmers he launched his own company ‘Innovative Agriculture Solutions Pvt. Ltd.’.
It was difficult initially as no one trusted an urban youth telling farmers about farming. But when everything was discussed in detail the farmers started taking interest. He wanted to ensure that the future events meet effectively the best interests of the company. Through sales forecasting, he prepared an annual plan for production and sales.
He also found that the farmers grew only paddy, which was an activity of 3-4 months and the land remained idle for the rest 8-9 months of the year. He not only identified but evaluated various alternatives through which the farms could be utilised for the remaining months of the year. Through correct foresight and logical and systematic thinking based on analysis of all facts, all alternatives were examined and evaluated. He presented a plan to the farmers, where after harvesting paddy, vegetables could be grown.
The above case highlights the features of one of the functions of management. By quoting lines from the above identify and explain these features.
Answer
The given case highlights the planning function of management. The features of planning discussed in the given case:
  1. Planning focuses on achieving objectives: Planning starts when an objective is set and proper planning gives a boost to a well-organised and goal-oriented management. Plans ensure that the desired objective is attained economically and quickly, if possible.
Quote 1: He shifted to Begampur, Chhattisgarh, to fulfil his grandmother's dream of converting their 25-acre ancestral land into a fertile farm.
  1. Planning is futuristic: Being an intellectual process, planning seeks to bridge the gap between where we are and where we want to go; it is a trap to capture the future, i.e. it is futuristic in nature.
Quote 2: He wanted to ensure that the future events meet effectively the best interests of the company. Through sales forecasting, he prepared an annual plan for production and sales.
  1. Planning involves decision making: After coming up with all possible alternatives and its outcome, the managers need to evaluate them. This evaluation is based on the utility and consequences of the options and the performance study of various actions.
Quote 3: He not only identified but evaluated various alternatives through which the farms could be utilised for the remaining months of the year.
  1. Planning is a mental exercise: Planning is a mental activity, in which the manager uses his mind for logical and systematic thinking.
Quote 4: Through correct foresight and logical and systematic thinking based on analysis of all facts, all alternatives were examined and evaluated.
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Question 164 Marks
In 2015, Naveen left his luxurious life in Mumbai, where he worked as a manager for Blue Birds Ltd. He shifted to Begampur, Chhattisgarh to fulfil his grandmother’s dream of converting their 25-acre ancestral land into a fertile farm. For this he set out specific goals along with the activities to be performed to achieve the goals.
Every activity was a challenge since he was clueless about farming. He learnt every activity from filling the land to sowing the seeds. To aid farmers he launched his own company ‘Innovative Agriculture Solutions Pvt. Ltd.’.
It was difficult initially as no one trusted an urban youth telling farmers about farming. But when everything was discussed in detail the farmers started taking interest. He wanted to ensure that the future events meet effectively the best interests of the company. Through sales forecasting, he prepared an annual plan for production and sales.
He also found that the farmers grew only paddy, which was an activity of 3-4 months and the land remained idle for the rest 8-9 months of the year. He not only identified but evaluated various alternatives through which the farms could be utilised for the remaining months of the year. Through correct foresight and logical and systematic thinking based on analysis of all facts, all alternatives were examined and evaluated. He presented a plan to the farmers, where after harvesting paddy, vegetables could be grown.
The above case highlights the features of one of the functions of management. By quoting lines from the above identify and explain these features.
Answer
The given case highlights the planning function of management. The features of planning discussed in the given case:
  1. Planning focuses on achieving objectives: Planning starts when an objective is set and proper planning gives a boost to a well-organised and goal-oriented management. Plans ensure that the desired objective is attained economically and quickly, if possible.
Quote 1: He shifted to Begampur, Chhattisgarh, to fulfil his grandmother's dream of converting their 25-acre ancestral land into a fertile farm.
  1. Planning is futuristic: Being an intellectual process, planning seeks to bridge the gap between where we are and where we want to go; it is a trap to capture the future, i.e. it is futuristic in nature.
Quote 2: He wanted to ensure that the future events meet effectively the best interests of the company. Through sales forecasting, he prepared an annual plan for production and sales.
  1. Planning involves decision making: After coming up with all possible alternatives and its outcome, the managers need to evaluate them. This evaluation is based on the utility and consequences of the options and the performance study of various actions.
Quote 3: He not only identified but evaluated various alternatives through which the farms could be utilised for the remaining months of the year.
  1. Planning is a mental exercise: Planning is a mental activity, in which the manager uses his mind for logical and systematic thinking.
Quote 4: Through correct foresight and logical and systematic thinking based on analysis of all facts, all alternatives were examined and evaluated.
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Question 174 Marks
Two years ago, Madhu completed her degree in food technology. She worked for sometime in a company that manufactured chutneys, pickles and murabbas. She was not happy in the company and decided to have her own organic food processing unit for the same. She set the objectives and the targets and formulated an action plan to achieve the same.
One of her objectives was to earn 10% profit on the amount invested in the first year. It was decided that raw materials like fruits, vegetables, spices, etc. will be purchased on three months credit from farmers cultivating only organic crops. She also decided to follow the steps required for marketing of the products through her own outlets. She appointed Mohan as the Production Manager who decided the exact manner in which the production activities were to be carried out. Mohan also prepared a statement showing the number of workers that will be required in the factory throughout the year. Madhu informed Mohan about her area wise sales target for different products for the forthcoming quarter. While working on the production table, a penalty of ? 100 per day for not wearing caps, gloves and apron was announced.
Quoting lines from the above paragraph, identify and explain the different types of plans discussed.
Answer
The different types of plans discussed above are listed below:
  1. Objectives: Objectives are the end results of the activities that-an organisation seeks to achieve through its existence. All other activities within the organisation are directed towards achieving these objectives.
    “One of her objectives was to earn 10% profit on the amount invested in the first year.”
  2. Policy: A policy is a set of general guidelines that helps in managerial decision making and action.
    “It was decided that the raw materials like fruits, vegetables, spices, etc. will be purchased on three months credit from farmers cultivating only organic crops.”
  3. Procedure: A procedure contains a series of specific steps to be performed in a chronological order to carry out the routine activities.
    “She also decided to follow the steps required for marketing of the products through her own outlets.”
    “The exact manner in which the production activities are to be carried out.”
  4. Rule: A rule is a specific statement relating to the general norms in terms of Do’s and Dont’s that guide the behaviour of people. It commands strict obedience and a penalty is likely to be imposed on its violation.
    “While working on the production table, a penalty of ? 100 per day for not wearing caps, gloves and aprons was announced.”
  5. Budget: A budget refes to a financial plan that is expressed in numerical terms.
    “Mohan also prepared a statement showing the number of workers different products for the forthcoming quater.”
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Question 184 Marks
Mega Ltd. holds an Annual Management Programme every year in the month of March in which the top managerial personnel formulate plans for the next year by analyzing and predicting the future to meet future events effectively.
As they are responsible for providing direction to the organization, facts are thoroughly checked using scientific calculations. Detailed plans are prepared after discussion with professional experts. Preliminary investigations are also undertaken to find out the viability of the plan. Since it is an intellectual activity requiring intelligent imagination and sound judgement so it is mainly done by the top management. Usually rest of the members just implement the plans. Middle level managers are neither allowed to deviate from the plans nor are they permitted to act on their own. The top management ensures that the expenses incurred in formulating the plans justify the benefits derived from them.
State any two limitations and any two features of planning discussed above.
Answer
Two limitations of planning discussed above are:
  1. Planning reduces creativity as it is mostly done by the top management; rest of the members just carry out orders and think on the same lines as others.
  2. Planning involves huge costs in terms of time and money. The costs incurred sometimes may not justify the benefits derived from the plans.
Two features of planning discussed above are:
  1. Planning is futuristic as it involves looking ahead and preparing for the future to meet future events effectively to the best advantage of the organisation.
  2. Planning is a mental exercise as it requires application of mind involving foresight, intelligent imagination and sound judgement. It is an intellectual activity of thinking rather than doing.
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Question 194 Marks
Holistic Education Public School in Bahadurgarh decides to implement the literacy programme of the government in the school. It is decided that within the year, the forty five support staff employees of the school will be made literate by the school counsellors and social workers. In order to enhance the learning process, the school decides to use audio-visual aids. To start the programme, the school has to first procure the literacy books from State Resource Centre at Jamia. Besides the curriculum, each literacy book contains a series of nine tests which the volunteers have to get completed by the learners during the programme. Moreover, by implementing the plan of ‘each one teach one’, each student of the school from classes fifth to tenth will be encouraged to make one person literate. The student volunteers may select a learner by adopting any one of the two ways; either from the slum areas adopted by the school or on their own within the vicinity of their residence. As per the norms of the Delhi Government, it is mandatory for the volunteers to send back the filled copy of only the ninth test paper in the series to the authorities as a conclusive proof of the completion of the course, else the certificate of commendation will not be awarded to them. Considering the implementation of the programme to be a part of its corporate social responsibility initiative, the school has decided to spend around Rs. 50,000 on the distribution of free stationery items, refreshments of the learners, etc.
In context of the above case :
  1. Identify the various types of plans being used by Holistic Education Public School in order to implement the literacy programme in their school by quoting the lines from the paragraph.
  2. Categorise the various types of plans as identified in part (a) into single use plans and standing plans.
Answer
  1. The various types of plans being used by the school to implement the literacy programme in the school are :
    • Objectives: “It is decided that within the year, all the forty five support staff employees of the school will be made literate by the school counsellors and social workers.”
    • Strategy: “In order to enhance the learning process, the school decides to use audio visual aids.”
    • Policy: “Moreover, by implementing the plan of ‘each one teach one,’ each student of the school from classes fifth to tenth will be encouraged to make one person literate.”
    • Procedure: “To start the programme the school has to first procure the literacy books from State Resource Centre at Jamia. Besides the curriculum, each literacy book contains a series of nine tests which the volunteers have to get completed by the learners during the programme.”
    • Method: “The student volunteers may select a learner by adopting any one of the two ways; either from the slum areas adopted by the school or on their own within the vicinity of their residence.”
    • Rule: “As per the norms of the Delhi Government, it is mandatory for the volunteers to send back the filled copy of only the ninth test paper in the series to the authorities as a conclusive proof of the completion of the course, else the certificate of commendation will not be awarded to them.”
    • Budget: “Considering the implementation of the programme to be a part of its corporate social responsibility initiative, the school has decided to spend around ? 50,000 on the distribution of free stationery items, refreshments of the learners, etc.”
  2. Single use plans are the ones that are formulated to deal with new or non-repetitive situations that may arise in an organisation from time to time. This includes programmes, budgets and projects.
    Standing plans refer to the types of plans which once formulated may be used for a long period of time in similar or repetitive situations that may prevail in an organisation. These include objectives, strategies, policies, procedures methods and rules.
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Question 204 Marks
Arush joins as a sales manager of a company dealing in naturotherapy products. Being proficient in his work, he knew that without good planning he will not be able to organise, direct, control or perform any of the other managerial functions efficiently and effectively. Only on the basis of sales forecasting, he would assist in the preparation of the annual plans for its production and sales. Besides, he will have to prepare sales plans regularly on weekly, monthly, quarterly and half yearly basis. While preparing the sales forecasts, he undertakes intellectual thinking involving foresight, visualization and issued judgement rather than wishful thinking or guess work. Most importantly, all these planning activities will be meaningful only if they will coincide with the purpose fob which the business is being carried out.
In context of the above case, identify the various features of planning highlighted in the above paragraph by quoting lines from it.
Answer
The features of planning highlighted in the above paragraph are explained below:
  1. Planning is a primary function: Planning precedes all the functions of management i.e. organizing, staffing, directing and controlling. This refers to primacy of planning. Planning provides the basis of all other functions.
    “… without good planning he will not be able to organise, direct, control or perform any of the other managerial functions efficiently and effectively. “
  2. Planning is futuristic: Planning is called a forward looking function as it enables an organization to meet future events effectively.
    “Only on the basis of sales forecasting, he would assist in the preparation of the annual plans for its production and sales.”
  3. Planning is continuous: Plans need to be continuously made, implemented and followed by another plan and so on till an organization exists
    “Besides, he will have to prepare sales plans regularly on weekly, monthly, quarterly and half yearly basis.”
  4. Planning is a mental exercise: Planning is done on the basis of rational thinking involving foresight, visualization and issued judgement rather than wishful thinking or guess work.
    “While preparing the sales forecasts, he undertakes intellectual thinking involving foresight, visualisation and issued judgement rather than wishful thinking or guess work.”
  5. Planning focuses on achieving objectives: Planning is a purposeful activity as it contributes to the achievement of predetermined goals of the organisation both efficiently and effectively.
    “Most importantly, all these planning activities will be meaningful only if they will coincide with the purpose for which the business is being carried out.”
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Question 214 Marks
‘Agile Ltd.’ is a well-known automobile manufacturing company in India. The company plans to increase the sale of its sedan cars by 20% in the next quarter. In order to achieve the desired target, the marketing team of the company considers the impact of policy of the government towards diesel vehicles and the level of competition in this segment of cars. They explore the various available options like offering more discount to dealers and customers, providing more customer friendly finance options, lucky draws on test drives, increasing advertising, offering more of free accessories on the purchase of the car, etc. A thorough analysis of the various available options is done keeping in view the relative viability of each option. The company decides to pursue the option of offering more discount to dealers and customers in order to boost the sale of sedan cars. In order to implement the plan, they determine the various discount packages and communicate the same to their product dealers. To make the prospective consumers aware about the new available benefits, advertisements are made through various sources of print and electronic media. The market analysts of the company keep a close watch on the revenue from the sedan cars to study the effect of new initiatives by the company to promote its sales.
In context of the above case:
  1. Name the function of management described in the above paragraph.
  2. Identify and explain the various steps involved in process the function of management as identified in part (a) by quoting lines from the paragraph.
Answer
  1. Planning is the function of management which is being described in the above paragraph.
  2. The various steps involved in the planning process are explained below :
    • Setting objectives: The planning process is initiated by setting the objectives in clear, specific and measurable terms. The objectives may be set for the organization as a whole and for each department or unit within the organization.
      “The company plans to increase the sale of its sedan cars by 20% in next quarter.”
    • Developing Premises: Planning process is carried out keeping in view the assumptions related to the future, which is uncertain. These assumptions are called premises and may relate to government policy, interest rate, inflation, etc. Accurate forecasts are therefore essential for successful planning.
      “In order to achieve the desired target the marketing team of the company considers the impact of policy of the government towards diesel vehicles and level of competition in this segment of cars.” .
    • Identifying alternative courses of action: The next step in the planning process involves identification of the various ways in which the goals can be achieved.
      “They explore the various available options like offering more discount to dealers and customers, providing more customer friendly finance options, lucky draws on test drives, increasing advertising, offering more of free accessories on the purchase of the car, etc.”
    • Evaluating alternative courses: In order to select the best option, the relative positive and negative aspects of each alternative should be evaluated in the light of their feasibility and consequences.
      “A thorough analysis of the various available options is done keeping in view the relative viability of each option.”
    • Selecting an alternative: The best plan is adopted to achieve the desired goals. Sometimes, a combination of plans may be selected instead of one best course of action.
      “The company decides to pursue the option of offering more discount to dealers and customers in order to boost the sale of sedan cars.”
    • Implement the plan: This step is concerned with putting plans into action.
      “In order to implement the plan, they determine the various discount packages and communicate the same to their product dealers. To make the prospective consumers aware about the new available benefits, advertisements are made through various sources of print and electronic media.”
    • Follow up action: Monitoring of plans is equally important to ensure that objectives are achieved efficiently and effectively.
      “The market analysts of the company keep a close watch on the revenue from the sedan cars to study the effect of new initiatives by the company to promote its sales.”
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Question 224 Marks
Distinguish between rule and method.
OR
Explain ‘Method' and 'Rule' as types of plans.
Answer
S. No.
Basis
Rule
Method
1.
Purpose
It seeks to ensure discipline.
It seeks to increase efficiency of operations.
2.
Standardisation
No standardisation required.
Standardisation is essential.
3.
Basis
It is based on objectives.
It is Based on research and analysis.
4.
Penalty
Penalty attached to violation.
No penalty for violation.
5.
Perspective
Regarded as official and authoritative.
Regarded as logical and rational.
6.
Association
Associated with control.
Not associated directly with control.
7.
Effect
Related to behaviour of individuals and groups.
Related to physical and other tasks.
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Question 234 Marks
What kind of strategic decisions are taken by business organisations.
Answer
Strategy refers to a broad outline for the business of an organisation. It has three broad objectives- to determine the objectives, to decide the course of action, and appropriate allocation of objectives for the achievement of the objectives. Following are a few strategic decisions which a business organisation may look out for.
  1. Deciding about which line of business should be taken.
  2. Whether a new line of production should be adopted or not.
  3. What position should the company aim for in the existing market.
  4. What kind of pricing policy should be used.
  5. Decisions regarding the advertising policy and costs.
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Question 244 Marks
Differentiate between standing and single use plans.
Answer
Difference between standing and single use plans:
S. No.
Basis
Standing plans
Single use plans
1.
Period
They are formed for a long period.
They are formed for a short period and discarded when the assignment/ project is Over.
2.
Scope
They have a wide scope as they involve the whole organisation in its scope.
They have a narrow scope and they are formulated for a specific project/ assignment/ situation.
3.
Frequency of use
These are repetitive in nature.
They are one time plan, not used for recurring situations.
4.
Examples
Policies, procedures, methods, etc.
Objectives, budgets, etc.
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Question 254 Marks
Define ‘Planning’. State any four points of importance of planning.
Answer
Definition of Planning: According to Koontz and O’Donnell, “Planning is deciding in advance what to do, how to do it, when to do it, and who is to do it.”
Importance of Planning: The following facts show the advantages of planning and its importance for a business organisation:
  1. Planning Provides Direction: Under the process of planning the objectives of the organisation are defined in simple and clear words. The obvious outcome of this is that all the employees get a direction and all their efforts are focussed towards a particular end. In this way, planning has an important role in the attainment of the objectives of the organisation.
  2. Planning Reduces Risks of Uncertainty: Planning is always done for future and future is uncertain. With the help of planning possible changes in future are anticipated and various activities are planned in the best possible way. In this way, the risk of future uncertainties can be minimised.
  3. Planning Reduces Overlapping and Wasteful Activities: Under planning, future activities are planned in order to achieve objectives. Consequently, the problems of when, where, what and why are almost decided. This puts an end to disorder and suspicion. In such a situation coordination is established among different activities and departments. It puts an end to overlapping and wasteful activities.
  4. Planning Promotes Innovative Ideas: It is clear that planning selects the best alternative out of the many available. All these alternatives do not come to the manager on their own, but they have to be discovered. While making such an effort of discovery, many new ideas emerge and they are studied intensively in order to determine the best out of them. In this way, planning imparts a real power of thinking in the managers. It leads to the birth of innovative and creative ideas.
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Question 264 Marks
If planning involves working out details for the future, why does it not ensure success?
Answer
It is true that planning is a forward looking function and is based on analysing and predicting the future elements. However, future involves uncertainity and cannot be predicted. There are various external forces that affect the functioning of an organisation. These forces are complex and ever changing in nature. For example, social trends, political conditions, technology, government rules and regulations change continuously. Due to such uncertainties, one cannot be sure of the success rate of the plans rather, the plans need to be modified to adapt to the changing environment. For example, suppose due to entry of a competitor, the demand for the products of a company reduces. While planning out production the company could not foresee such a change. Thus, the previous plans of the company fail and it must formulate new plans keeping in view the change in demand. Similarly, suppose the government announces a relaxation in the rules for foreign investment, as a result of which competition in the market increases. The sales and manufacturing plans of the domestic companies might fail in the face of the increased competition. Thus, it can be said that despite the fact that planning involves working out details for the future, it does not ensure success.
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Question 274 Marks
What is budget? Give an example of a sales budget.
Answer
Budget describes the desired results in numerical terms. It can be understood with the help of following diagram:
Sales Budget
(For the year Ending December 31, 2017)
Product
Area
Sales(in units)
Selling Price(Per Unit)(₹)
Total Sales(₹)
X
East Zone
50,000
20
10,00,000
West Zone
1,00,000
20
20,00,000
North Zone
80,000
20
16,00,000
South Zone
40,000
20
8,00,000
Total
54,00,000
Y
East Zone
1,00,000
30
30,00,000
West Zone
2,00,000
30
60,00,000
North Zone
1,00,000
30
30,00,000
South Zone
3,00,000
30
90,00,000
Total
2,10,00,000
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Question 284 Marks
Explain ‘Procedure’ and ‘Programme’ as types of plans, with a suitable example.
Answer
Procedure: Procedures are those plans which determine the sequence of any work performance. For example, the recovery of money from the debtors can be done in the following order:
  1. Writing letters.
  2. Contacting on telephone.
  3. Meeting personally.
  4. Taking legal action.
Programme: It refers to a plan that covers a relatively large organisational activities and specifies main steps, their order and timing and the department responsible for each step.
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Question 294 Marks
Distinguish between Policies and Objectives.
Answer
S. No.
Basis
Policies
Objectives
1.
Meaning
They are guidelines which facilitate the achievement of pre-determined objectives.
These are the ends towards which all activities of the enterprise are directed.
2.
Purpose
They determine how the work is to be done.
These determine what is to be done.
3.
Nature
They prescribe the mode and manner in which objectives can be achieved.
These are the end points of planning.
4.
Level of Management
They are formulated at the top level, middle level and lower level management.
These are determined by the owners or top management of the business.
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Question 304 Marks
Explain “Policy” and “Procedure” as types of plans.
Answer
  1. Policies: Policies are those general statements which are decided for the guidance of the employees while taking decision. Their purpose is to lay down a limit within which a particular work can be done or a decision taken. Objectives decide what is to be achieved and the policies tell us how it can be achieved. Sometimes we hear the following in connection with policies:
Personnel Policy: Under this policy it can be decided that the basis for the promotion of employees will be their age. Once this is decided, no departmental manager will need the permission of the General Manager regarding the promotion of the employees.
  1. Procedures: Procedures are those plans which determine the sequence of any work performance. For example,the recovery of money from the debtors can be done in the following order:
  1. Writing letters.
  2. Contacting on telephone.
  3. Meeting personally.
  4. Taking legal action.
  5. This is the procedure of collecting money from all the debtors.
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Question 314 Marks
What are the main points in the definition of planning.
Answer
Planning is a psychological process of 'thinking and deciding in advance' about 'what is to be done' and 'how it is to be done'. It is a mental activity, in which the manager decides about the goals to be achieved, and actions through which they are to be accomplished. It is futuristic in nature as it involves looking ahead, along with analysing and predicting the future. Planning can be defined as a process of setting up of goals and objectives for a given period of time, formulating alternatives for the course of action to be taken, and finally deciding an appropriate action from the various alternatives. The following are the main points in the definition of planning.
  1. Setting Objectives: Planning must pertain to a particular objective. That is, there must be a definite objective for the achievement of which planning is to be done.
  2. Time Period: The plan must be formulated for a definite time period. If planning is not done with a time frame, it may prove futile. This is because with time business environment changes and requires fresh planning and action.
  3. Formulating Alternatives for Course of Action: Once the objective is decided, the next task is to decide how it is to be achieved. For the achievement of any objective there can be various alternative course of action. These alternatives must be appropriately formulated.
  4. Deciding a Course of Action: From the various available alternatives, the best one must be decided.
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Question 324 Marks
Direction Read the following text and answer the question:
Simplex limited had been taken over by Mundhra Group immediately following India’s independence. Since then it enjoys a rich record of industry presence and experience. In 2005, with the aim to accelerate growth the company had gone through several rounds of meetings and discussions before launching ERP system to attract large projects. The management had done effective forecast and critical thinking regarding allocation resources to reduce wastage. For this purpose the company had laid down multiple courses of action to meet the challenge of adverse situations. In 2008, the company suffered loss in many projects due to the great recession despite taking many cost cutting measures. The management had taken utmost care regarding the possible outcome and timely review of the plans to achieve the set target during that hard time. In 2010 the system implemented successfully which subsequently helped the company to execute numerous projects with precision and timeliness.
  1. “In 2005, with the aim to accelerate growth the company had gone through several rounds of Meetings and discussions.” What is the objective mentioned here according to the process stated here?
  1. Developing Premises
  2. Growth & development
  3. Launching IT enabled system
  4. Cost cutting.
  1. In 2008, the company suffered loss in many projects due to the great recession despite taking many cost cutting measures.” Which limitation of the management process is indicated here?
  1. It fails to cope with sudden changes
  2. It involves huge cost
  3. It requires critical thinking
  4. Need to construct multiple action plans
  1. State whether the given statement is True or False: “The management had done effective forecast and critical thinking regarding allocation of resources to reduce wastage.
  1. The management had taken utmost care regarding the possible outcome and timely review of the Plans to achieve the set target during that hard time.” Which is the last step of the Process mentioned here?
  1. Implementation of plan
  2. Timely execution of projects
  3. Follow up
  4. To prepare alternative course of action
Answer
  1. (b) Growth & development
  2. (a) It fails to cope with sudden changes
  3. True
  4. (c) Follow up
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Question 334 Marks
Explain ‘objective’ and ‘strategy’ as types of plan.
Answer
  1. Objectives: Objectives are those end points for the attainment of which all the activities are undertaken. It is a special target to be achieved by an organisation, e.g., it can be the objective of a school to impart education in the subject of commerce to 100 students during an year.
  2. Strategy: It refers to a plan which takes into account the environmental opportunities and threats and the organisational strengths and weaknesses and provides an optimal match between the organisation and the environment.
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Question 344 Marks
Explain ‘objective’ and ‘policy’ as types of plans using suitable examples.
Answer
Objectives: Objectives are those end points for the attainment of which all the activities are undertaken. It is a special target to be achieved by an organisation, e.g., it can be the objective of a school to impart education in the subject of commerce to 100 students during an year.
Policies: Policies are those general statements which are decided for the guidance of the employees while taking decision. Like Personnel Policy: Under this policy it can be decided that the basis for the promotion of employees will be their age. Once this is decided, no departmental manager will need the permission of the General Manager regarding the promotion of the employees.
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Question 354 Marks
Clarify the difference between standing plans and single use plans.
Answer
Difference between Standing and Single-use Plans:
S. No.
Basis of Difference
Standing Plans
Single-use Plans
1.
Period
These plans are formulated for along period.
These plans are for a short periodand are repeatedly formulated in case of need.
2.
Object
These plans are formulated to bring about informity in the decisions.
These plans are designed torun successfully some particular activities.
3.
Types
They are of six types:
i. Objectives.
ii. Strategies.
iii. Policies.
iv. Procedures.
v. Methods.
vi. Rules.
They are of two types:
i. Budget.
ii. Programme.
4.
Scope
They guide the managers inparticular matters like price policyand sales policy.
These plans guide in matters of daily routine.
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Question 364 Marks
Explain “Procedure' and 'Programme' as types of plans.
Answer
Procedures are plans that establish required steps for handling future activities. It is a systematic way of handling regular events. It explains what is to be done in a particular type of situation, e.g., Mc Donald's has a procedure explaining how Big Macs are to be cooked, how long they can stay in the warming rack, and so forth.
Programme is a sequence of activities directed towards achievement of certain obiectives. It is a concrete scheme of action worked out by the management to accomplish certain objectives. A programme is action-based and result-oriented. Programmes are a combination of goals, policies, procedures, rules, task assignments, steps to be taken, resources to be employed and other elements necessary to carry out a given course of action, e.g., the five year programme embarked upon by the Hindustan Motor Company several years ago to improve the status and quality of its thousands of foremen.
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