Revision Notes for Class 12 Business Studies Chapter 4 Planning
Here we are providing Revision Notes for Class 12 Business Studies Chapter 4 Planning. These are the important points related to the chapter. Students should remember these points.
CONCEPT OF PLANNING
Planning is deciding in advance what to do, how to do, when to do and who has to do it. Thus, it involves setting objectives and developing an appropriate course of action to achieve these objectives.
FEATURES OF PLANNING
(a) Planning focuses on achieving objectives: Planning is a purposeful activity as it seeks to realise the predetermined organisational goals by deciding upon the activities to be undertaken.
(b) Planning is a primary function of management: Planning precedes all functions of management i.e. organising, staffing, directing & controlling.
(c) Planning is pervasive: Planning function is essential at all the levels of management and in all the departments of an organisation.
(d) Planning is continuous: Planning is considered to a continuous ongoing process as plans needs to be made on endlessly till an organisation exists.
(e) Planning is futuristic: Planning is regarded as a forward looking function which is based on forecasting.
(j) Planning involves decision-making: In real life situations a manager may have an option to choose among various alternatives in order to achieve the predetermined goals.
(g) Planning is a mental exercise: Planning is an intellectual activity based on logical thinking involving foresight, visualisation and judgement rather than guess work.
STEPS INVOLVED IN THE PLANNING PROCESS
The various steps involved in the process of planning a detailed below:
(a) Setting objectives: The first step in the planning process involves laying down clear, specific and measurable objectives for the organisation as a whole and also with respect to each department or unit within the organisation.
(b) Developing Premises: As future is uncertain the managers are required to make certain assumptions about the future in terms of customer preferences, competition, interest rates, state of economy, government policy and so on. The premises so developed set the limits within which the planning should be carried out.
(c) Identifying alternative course of actions: The next logical step is identifying all the alternative courses of action which are available for consideration.
(d) Evaluating alternative courses: After listing the various possible alternatives, it is important to analyse the relative pros and cons of each alternative in light of their viability and significances.
(e) Selecting an alternative: A prudent manager will always select an alternative that appears to be most viable, cost-effective and with least negative implications. Many a times a combination of plans appears to be most feasible.
(f) Implement the plan: After selecting a plan the manager has to take appropriate steps to put the plan into action.
(g) Follow up action: In order to achieve the desired objectives efficiently and effectively regular monitoring of the plans is essential.
IMPORTANCE OF PLANNING
(a) Planning provides directions: The plans act as a guide for deciding what course of action should be taken to attain the organisational goals. Moreover, it facilitates coordination within and among departments
(b) Planning reduces the risk of uncertainty: Planning enables a manager to anticipate and meet changes arising due to the dynamic nature of business environment effectively.
(c) Planning reduces overlapping and wasteful activities: Well defined plans serves as the basis for coordinating the activities and efforts of different divisions and individuals.
(d) Planning promotes innovation: Planning is done for future and it encourages new ideas that can take shape of concrete plans for the benefit of the organisation.
(e) Planning facilitates decision making: Planning enables a manager choose the best alternative course action in light of present and future conditions to serve the interest of the organisation in the most appropriate way.
(f) Planning establishes standards for controlling: Planning and controlling are interdependent and interrelated functions. The standards set in the process of planning provide the basis for performing controlling function.
LIMITATIONS OF PLANNING
(a) Planning leads to rigidity: It is said that planning makes the working of an organisation rigid because the plans are drawn in advance and managers may not be in a position to change it in the light of changed conditions.
(b) Planning may not work in a dynamic environment: The success of planning depends upon the extend to which an organisation can adapt itself to its business environment.
(c) Planning reduces creatively: In reality, planning and its execution may be done by managers at different levels. Like, the plans may be drawn by the top level management whereas the middle managers are made responsible for their implementation.
(d) Planning involves huge costs: Planning involves costs of varied types like money spend on research/forecasting, expert advices, expenses on boardroom meetings and so on in order to assess the feasibility of the plans. If the managers must ensure that the benefits derived from planning should supersede the cost incurred on its formulation.
(e) Planning does not guarantee success: Planning tends to instil a false sense of security among the managers as they may feel that just because a plan has worked before it will work again.
(f) Planning is a time consuming process: In order to formulate suitable plans, the managers need to spend great deal of time in conducting research, analysing data and interpreting results.
TYPES OF PLANS
• Single use plans are the ones that are formulated to deal with unique, new or non-repetitive situations that may arise in an organisation from time to time like programmes, budgets and projects.
• Standing plans refers 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 like objectives, strategies, policies, procedures and rules.
• Objectives: Objectives are the end results of the activities that an organisation seeks to achieve through its existence. Objectives serve as a guide for overall planning of the enterprise. Objectives may be formulated both with respect to short term and long term.
• Strategy: Strategy is a comprehensive plan that serves as a means to accomplish organisational objectives. The three aspects involved in formulating a strategy are:
(z) determining long term objectives
(it) adopting a particular course of action and
(iii) allocating resources necessary to achieve the objective.
It lays down the broad contours in terms of an organisation’s business.
• Policy: Policies serve as a guideline for implementing a strategy. They are expressed in the form of general statements that guides managerial decision making and action. The application of a policy requires a manager to exercise his/her discretion to interpret it a particular manner.
• Method: Methods contain the prescribed ways in which a particular task is to be carried out in order to realise the predetermined objective. A method relates to one step in a procedure.
• Procedure: Procedures contain a series of steps to be performed in a chronological order so as to carry out routine activities within an organisation.
• Budget: A budget is referred to as a numerical plan. It is a basic planning instrument that is used for forecasting in most of the organisations.
• Rules: Rules are the simplest form of plans which specifies the action that must or must not be taken i.e. the Do’s and Dont’s that guide the behaviour of people. They are expressed in specific forms and a penalty is generally imposed on violation of a rule.
• Programme: Programme are very detailed plans which include a objective, strategy, policy, procedure, rule and method and supported by a budget.
