Business Studies 3 Marks Question

(i) The concept of management involved is planning.
(ii) The steps involved are :
(a) Setting objectives Quoted in the line- The manager wants to increase the profits’.
(b) Developing planning premises Making certain assumptions about future.
(c) Identifying alternative courses of action By purchasing new high speed machines, or increasing sale price, or using waste material in manufacturing stuffed toys.
(iii) Evaluating alternatives and selecting an alternative Using waste material in manufacturing stuffed toys.
(iv) Further steps required to complete the process are :
(a) Implementing the plan
(b) Follow-up action

Three importance of planning are as follows:

1. Planning provides directions: By stating in advance how work is to be done planning provides direction for action. Planning ensures that the goals or objectives are clearly stated so that they act as a guide for deciding what action should be taken and in which direction. If goals are well defined, employees are aware of what the organisation has to do and what they must do to achieve those goals.
2. Planning reduces the risks of uncertainty: Planning is an activity which enables a manager to look ahead and anticipate changes. By deciding in advance the tasks to be performed, planning shows the way to deal with changes and uncertain events.
3. Planning facilitates decision making: Planning helps the manager to look into the future and make a choice from amongst various alternative courses of action. The manager has to evaluate each alternative and select the most viable proposition. Planning involves setting targets and predicting future conditions, thus helping in taking rational decisions.

Planning is the process of setting objectives for a given time period, formulating various courses of action to achieve them and then selecting the best possible alternative from among the various courses of action available.Alternate Answer
First, two steps in the process of planning are:

1. Setting objectives.
2. Developing premises.

Training is important for the employees because:

1. It improves skills and knowledge leading to better career.
2. It enhances the earning capacity because of better performance.
3. It increases efficiency.
4. It increases the satisfaction and morale of employees.
5. It reduces accidents.

Objectives	Strategy
An objective simply stated is what you would like to achieve, i.e., the end result of activities.	Atrategy is a comprehensive plan for accomplishing an organisation objectives.
Objectives, therefore, can be said to be the desired future position that the management would like to reach.	Strategy refer to future decisions defining the organisations direction and scope in the long run.
Objectives are usually set by the top management and serve as a guide for overall planning.	strategy, for example, is part of strategic planning or management. It is a general plan prepared by top management outlining resource allocation, priorities and takes into consideration the business environment and competition.

Planning means setting objectives for a given time period, formulating various courses of action to achieve them and then selecting the best possible alternative from among the various courses of action available.Alternate Answer
Planning is deciding in advance what to do. how to do, when to do and by whom it is to be done.Limitations of planning:
Planning leads to rigidity: In an organisation, a well-defined plan is drawn up with specific goals to be achieved within a specific time frame. These plans then decide the future course of action and managers may not be in a position to change it. This kind of rigidity in plans may create difficulty . Planning may not work in a dynamic environment: The,business environment is dynamic, nothing is constant. The environment consists of a number of dimensions, economic, political, physical, legal and social dimensions. The organization has to constantly adapt itself to changes.

Planning reduces the risk of uncertainty because:

1. It enables a manager to look ahead and anticipate changes.
2. It shows the way to deal with changes and uncertain events.
3. Changes or events cannot be eliminated but they can be anticipated, and managerial responses to them can be developed.

Three importance of planning are as follows:

1. Planning provides directions: By stating in advance how work is to be done planning provides direction for action. Planning ensures that the goals or objectives are clearly stated so that they act as a guide for deciding what action should be taken and in which direction. If goals are well defined, employees are ware of what the organisation has to do and what they must do to achieve those goals. Departments and individuals in the organization are able to work in coordination.If there was no planning, employees would be working in different directions and the organization would not be able to achieve its desired goals
2. Planning reduces the risks of uncertainty: Planning is an activity which enables a manager to look ahead and anticipate changes. By deciding in advance the tasks to be performed, planning shows the way to deal with changes and uncertain events. Changes or events cannot be eliminated but they can be anticipated and managerial responses to them can be developed.
3. Planning facilitates decision making: Planning helps the manager to look into the future and make a choice from amongst various alternative courses of action. The manager has to evaluate each alternative and select the most viable proposition. Planning involves setting targets and predicting future conditions, thus helping in taking rational decisions.

Steps of planning process:Step - 1 Setting Objectives: The first and foremost step is setting objectives. Every organisation. must have certain objectives. Objectives may be set for the entire organisation and each department or unit within the organisation. Objectives or goals specify what the organization wants to achieve.
Step - 2 Developing Premises: Planning is concerned with the future which is uncertain and every planner is using conjecture about what might happen in future. Therefore, the manager is required to make certain assumptions about the future. These assumptions are called premises. Assumptions are the base material upon which plans are to be drawn.
Step - 3 Identifying alternative courses of action: Once objectives are set, assumptions are made. Then the next step would be to act upon them. There may be many ways to act and achieve objectives. All the alternative courses of action should be identified. The course of action which may be taken could be either routine or innovative.

The planning function of the management has certain special features. These features throw light on its nature and scope.

1. Planning focuses on achieving objectives: Organisations are set up with a general purpose in view. Specific goals are set out in the plans along with the activities to be undertaken to achieve the goals. Thus, planning is purposeful. Planning has no meaning unless it contributes to the achievement of predetermined organisational goals.
2. Planning is a primary function of management: Planning lays down the base for other functions of management. All other managerial functions are performed within the framework of the plans drawn. Thus, planning precedes other functions. This is also referred to as the primacy of planning. The various functions of management are interrelated and equally important. However, planning provides the basis of all other functions.
3. Planning is pervasive: Planning is required at all levels of management as well as in all departments of the organisation. It is not an exclusive function of top management nor of any particular department. But the scope of planning differs at different levels and among different departments. For example, the top management undertakes planning for the organization as a whole. Middle management does the departmental planning. At the lowest level, day-to-day operational planning is done by supervisors.

Three importance of planning are as follows:

1. Planning provides directions: By stating in advance how work is to be done planning provides direction for action. Planning ensures that the goals or objectives are clearly stated so that they act as a guide for deciding what action should be taken and in which direction. If goals are well defined, employees are aware of what the organisation has to do and what they must do to achieve those goals.
2. Planning reduces the risks of uncertainty: Planning is an activity which enables a manager to look ahead and anticipate changes. By deciding in advance the tasks to be performed, planning shows the way to deal with changes and uncertain events.
3. Planning facilitates decision making: Planning helps the manager to look into the future and make a choice from amongst various alternative courses of action. The manager has to evaluate each alternative and select the most viable proposition. Planning involves setting targets and predicting future conditions, thus helping in taking rational decisions.

1. Planning leads to rigidity: In an organisation, a well-defined plan is drawn up with specific goals to be achieved within a specific time frame. These plans then decide the future course of action and managers may not be in a position to change it. This kind of rigidity in plans may create difficulty.
2. Planning may not work in a dynamic environment: The business environment is dynamic, nothing is constant. The environment consists of a number of dimensions, economic, political, physical, legal and social dimensions. The organization has to constantly adapt itself to changes. It becomes difficult to accurately assess future trends in the environment if economic policies are modified or political conditions in the country are not stable or there is a natural calamity.
3. Planning reduces creativity: Planning is an activity which is done by the top management. Usually the rest of the members just implements these plans. As a consequence, middle management and other decision makers are neither allowed to deviate from plans nor are they permitted to act on their own. Thus, much of the initiative or creativity inherent in them also gets lost or reduced.

1. Planning is continuous: As a matter of fact, the planning process continues so long as enterprise is in existence. A business enterprise comes across new threats and opportunities in the business environment every day. A manager cannot possibly plan for all the situations to come. He has to modify existing plan or formulate new ones, as and when the need arises in the changing business environment. Thus, the process of planning has to be carried out on a continuous basis. A plan is framed, implemented, and is followed by another plan, and soon.
2. Planning is futuristic: Planning involves looking ahead and preparing for the future to meet future events effectively to the best advantage of the organization. In short, planning involves thinking about the future while doing the action in present.

Objective: Every organization is established to achieve some purposes which are called its objectives. Objectives are the ends or result to be achieved. All the activities of an organization and all functions of management are directed towards the objectives. An objective needs to be expressed in measurable terms and is to be achieved within a given time period.
Example: The objective of a mobile company can be to increase the mobile users by 10% in 2 years.

Differentiation between Policy and Rule:

Policy	Rule
Policies are general statements that guide thinking or channelise energies towards a particular direction	Rules are specific statements that inform what is to be done
They are guides to managerial action and decisions in the implementation of strategy.	It reflects a managerial decision that a certain action must or must not be taken.
Policies provide a basis for interpreting strategy which is usually stated in general terms.	Rules are usually the simplest type of plans because there is no compromise or change unless a policy decision is taken.

Planning means setting objectives for a given time period, formulating various courses of action to achieve them and then selecting the best possible alternative from among the various courses of action available.Alternate Answer
Planning is deciding in advance what to do, how to do, when to do and by whom it is to be done.
Features of planning:

1. Planning focuses on achieving objectives: Organisations are set up with a general purpose in view. Specific goals are set out in the plans along with the activities to be undertaken to achieve the goals. Thus, planning is purposeful. Planning has no meaning unless it contributes to the achievement of predetermined organisational goals.
2. Planning is a primary function of management: Planning lays down the base for other functions of management. All other managerial functions are performed within the framework of the plans drawn. Thus, planning precedes other functions. This is also referred to as the primacy of planning. The various functions of management are interrelated and equally important.

Planning provides direction to action:

1. By stating in advance how work is to be done planning provides direction for action.
2. Planning ensures that the goals or objectives are clearly stated so that they act as a guide for deciding what action should be taken and in which direction.
3. Goals should be well defined.
4. Departments and individuals in the organization should work in coordination. If there was no planning, employees would be working in different directions and the organization would not be able to achieve its desired goals.
5. Irections for achieving the objectives.

A programme means a single-use comprehensive plan laying down the what, how, who and when of accomplishing a specific job. Through programme the managers are informed in advance about various needs so that there is no problem in future. Introduction of a new product in the market is an example of a programme.

Once goals have been set, the second step involves establishing the planning premises or assumptions. It consists of forecasting future conditions and events which are likely to have bearing on the pursuit of goals like market demand for goods, cost of raw materials, state of technology, intensity of competition, government policies, interest rates, tax rates, etc. Such forecasts give an insight of how the future is likely to behave. Certain assumptions about the conditions expected to prevail are derived from the forecast. These are known as the planning premises which form the base of plans.

Features of Planning:

1. Planning focuses on Achieving Objectives: Management begins with planning and planning begins with the determining of objectives. In the absence of objectives no organisation can ever be thought about. With the determining of objective, the way to achieve the objective is decided in the planning. It is thus clear that planning is helpful in the attainment of objectives.
2. Planning is Primary Function of Management: Planning is the first important function of management. The other functions, e.g., organising, staffing, directing and controlling come later. In the absense of planning no other function of management can be performed. This is the base of other functions of management.
3. Planning is Pervasive: Since the job of planning is performed by the managers at different levels working in the enterprise, it is appropriate to call it all pervasive. Planning is an important function of every manager, he may be a managing director of the organisation or a foreman in a factory.

It is a sequence of steps undertaken to complete a certain activity. It describes the exact manner in which an activity is performed. e.g. in the process of staffing of employees, following steps are followed:

1. Estimating manpower.
2. Recruitment.
3. Selection.
4. Placement/ Orientation.
5. Training.
6. Performance appraisal.
7. Career planning.
8. Remuneration.

Objective It refers to the desired future positions that an organisation seeks to reach. It is usually framed by the top management. They are the end results of managerial activities, set in specific, quantitative terms for all the departments and units of the organisation, e.g. to achieve 10% increase in sales in the next quarter. Policy It is a general statement that defines the boundaries within which the decisions are made. It helps in solving recurring problems easily. e.g. sale on cash basis only.

Difference between Objective and Strategy:

S. No.	Basis of Difference	Objective	Strategy
1.	Meaning	An objective is the end towards which all activities of the organisation are directed.	A strategy is a comprehensive planformulated to achieve an objective
2.	Main Element	An objective needs to be expressed in measurable terms and is to be achieved within a given time period.	The business environment needs to be taken into consideration whenever a strategy is formulated.

Political climate. When government regulates the business practices or introduces certain new trade policies, the plans of many enterprises get upset. Policies of competitors. Sometimes the effective policies of competitors make our plans ineffective. For example, Sales targets may have to be revised according to competitors plans.

Planning is the first important function of management. The other functions, e.g., organising, staffing, directing and controlling come later. In the absense of planning no other function of management can be performed. This is the base of other functions of management.

Difference between Method and Budget:

S. No	Basis of Difference	Methods	Budgets
1.	Meaning	Method is that plan whichdetermines how different activities of the procedure are completed.	Budgets describe the desired results in numerical terms.
2.	Selection	There may be many methods to do a particular work. After extensive study a most suitable method has to be selected.	It is an instrument of both planning and controlling, hence no question of selection arises.

Planning is concerned with future, which is uncertain and every planner is using conjecture about what might happen in future. Therefore, the manager is required to make certain assumptions about future. These assumptions are known as premises. Premises are the base, upon which plans are drawn. e.g. they may be forecasts, existing plans or past information. Forecasts can be made for demand for a particular product, changes in tax rate, etc.

Following are the steps included in planning:

1. Setting Objectives: In the planning process, objectives are determined and defined first of all.
2. Developing Premises: At this stage planning premises are developed. They affect the possible results of various alternates.
3. Identifying Alternative courses of Action: On the basis of the objectives of the organisation and limitations of planning, alternative courses of doing a particular work can be discovered.
4. Evaluating Alternative Courses: At this stage, it is seen as to what extent a particular alternative course can help in the attainment of objectives of the organisation.
5. Selecting of Alternative: After careful analysis, the best alternative is selected.
6. Implementing the Plan: The next step is to implement the chief and the subsidiary plans.
7. Follow up Action: In the end, there is a constant review of plans so as to ensure success in the uncertain future.

Following are the main points in the definition of planning:

1. What to do?
2. How to do it?
3. When to do it?
4. Who is to do it?

Planning is Continuous: Planning is a continuous process because:

1. A plan is prepared for a particular period. Hence, there is need for a new plan after the expiry of that period.
2. In case of any discrepancy plans are to be revised.
3. In case of rapid changes in the business environment plans are to be revised.

S. No.	Basis	Budget	Procedure
1.	Meaning	They are the statements of expected results expressed in numerical terms.	It provides guidelines to the action, prescribing the steps to be taken, persons to perform and also the time limit for completion of work.
2.	Flexibility	It is flexible, as it can be changed if the situation so demands.	It prescribes the set of sequence of activities without any discretion to manage. Hence, a procedure is rigid.
3.	Formulation	They are pronounced at higher levels.	They are more prevalent at . lower levels.

Planning makes the work of controlling easier. Therefore, it is considered as the base of controlling. By determining the objectives of the organisation through planning all the people working in the organisation and all the departments are informed about ‘when’, ‘what’ and ‘how’ to do things. Standards are laid down about their work, time and cost, etc. Under controlling, the actual work done is compared with the standard work and deviations are found out and if the work has not been done as desired, the person concerned is held responsible. For example, a labourer is to do 10 units of work in a day (it is a matter of planning), but actually he completes 8 units. Thus there is a negative deviation of 2 units. For this, he is held responsible. (Measurement of actual work, knowledge of deviation and holding the labourer responsible falls under controlling). Thus, in the absence of planning controlling is not possible.

No, planning may not work right in a changing environment. Business environment is dynamic in nature and changes continuously. For example, political conditions, social conditions, consumer tastes and preferences, government rules and regulations change continuously. Planning cannot foresee such changes and may prove futile. That is, due to uncertainty of future, planning may remain ineffective. For example, suppose a garment manufacturing company plans to increase the production of silk shirts. But over a period of time, the market demand shifts towards cotton shirts. Thus, in this case the previous plans of the company fail and it must modify its plans to cater to the change in demand. Similarly, if the government announces a reduction in the interest rates for consumer durables, the demand for such products increases. The plans of an organisation may not foresee such changes and may prove ineffective. The production and sales plan of the organisation must change as per the changing market demand. Likewise, with an entry of a competitor in the market a company needs to alter the previous plans so as to face the competition in a better manner.

Rules tell us what is to be done and what is not to be done in a particular situation. In the presence of rules there is no need to take any decision. Whatever is said in the rules has to be followed without any thinking. For example, the rule ‘No Smoking in the Factory’ is applicable to everybody and it must be observed. Provision for punishment in case of non-observing of the rule can also be made.

Although the quality of flexibility is inherent in planning, but it must be admitted that only small changes are possible. Big changes are neither possible nor in the interest of the organisation. Since it is not possible to introduce desired changes according to the changed situations, the organisation loses many chances of earning profits.

Method is that plan which determines how different activities of the procedure are completed. A method is not related to all steps but only to one step of the procedure. It is more detailed than procedure. There may be many methods to do a particular work. After extensive study, a method has to be selected from which a worker feels minimum fatigue, increase in productivity and there is reduction in costs.

Method It provides the ways or manner in which a task is to be performed. They are standardised ways to perform routine jobs and are considered standing plan. It may be a step of a procedure, e.g. Methods of training, methods of recruitment, etc. Rule It is a specific statement that informs what is to be done and what not. There is no discretion allowed in rules. They must be strictly followed and one cannot make changes in them.

Planning involves Decision Making: Planning becomes a necessity when there are many alternatives to do a job. A planner chooses the most appropriate alternative. Therefore, it can be asserted that planning is a process of selecting the best and rejecting the inappropriate. It is, therefore, observed that planning involves decision making.

Under procedure.

Rules refer to standard or specific statements that inform about what is to be done. 'Rules' are considered to be 'Plans' because both are very similar in nature. Rules are considered to be simplest of plans. Planning aims at thinking and deciding about the futuristic course of action. Similarly, rules are statements that help in deciding if an action is to be taken or not. However, rules are rigid in nature and are to be followed as it is unless a change is stated. Non-compliance of the rules leads to disciplinary actions by the organisation. For example, an organisation may have rules regarding the punch in timings of the employees and every employee of the organisation must follow this rules. Rules act as a guide for general behaviour of the employees in the organisation.

Plan is a sort of commitment to accomplish all the activities needed for the attainment of special results. In this way, rules are also plans as they are helpful for the attainment of special results.

Yes, Planning is mainly a mental exercise, comprising of foreseeing future, imagining the different situation and making sound judgement for setting the objective and ways to achieve it. It involves more of the thinking work rather than the physical one.

Planning is Pervasive: Since the job of planning is performed by the managers at different levels working in the enterprise, it is appropriate to call it all pervasive. Planning is an important function of every manager, he may be a managing director of the organisation or a foreman in a factory. The time spent by the higher level managers in the process of planning is comparatively more than the time spent by the middle-level and lower-level managers. It is, therefore, clear that all the managers working in an enterprise have to plan their activities.

1. Standing Plans: It refers to those plans which are formulated once and they are repeatedly used.
2. Single-use Plan: It refers to those plans which are formulated to solve some special problems and these plans end the moment the problem is solved.