Business Studies 3 Marks Question

It refers to a plan which takes into account the environment opportunities and threats and the organisational strengths and weaknesses and provides an optimal match between the organisational and the environment.It includes the following three dimensions:

1. Determining long-term objectives.
2. Adopting a particular course of action to achieve objectives.
3. Allocating resources necessary to achieve the objectives.

key elements of planning are as follows:

1. Determining the objectives.
2. Identifying alternative courses of action.
3. Selecting the best course of action.

Difference between Policy and Rule:

S. No.	Basis of Difference	Policy	Rule
1.	Meaning	Policy is a general guideline whichbrings uniformity in decision making.	A rule is a statement that tells uswhat is to be done and what is notto be done in a particular situation.
2.	Freedom in Decision	A manager can use his discretionwhile using policy.	A rule does not allow any discretionto the manager.

Planning is deciding in advance what to do, how to do it, when and who is to do it. It is the process of thinking before doing. First three steps of planning are as follows:

1. Setting objectives: Objectives specify what an organisation wants to achieve. Therefore, the first step in planning is to set up clear objectives for the organisation as well as all the departments of the organisation.
2. Developing premises: Premises are the base upon which plans are drawn. They may be forecasts, existing plans or past information. Therefore, the manager is required to make certain assumptions about the future, called premises.
3. Identifying alternative courses of action: After the setting up of objectives, the managers make a list of alternatives through which the organisation can achieve its objectives as there can be many ways to achieve the objectives and managers must know all those ways to reach these objectives.

Planning helps to reduce the risks associated with uncertainties. In the process of planning, attempt is made to look into the future and predict it. Planning helps to identify potential threats of future and helps to develop contingency plan to deal with them.

Planning lays down the basis for all other functions of management. All the other managerial functions are performed within the framework of the plans drawn.
Since, planning precedes all the other functions, it is called the primary function of management or primacy of planning.

The existence of a plan puts managerial activities in a rigid framework. Programmes are carried out according to the plan and deviations are considered to be highly undesirable. This attitude makes managers and employees inflexible in their operations. In this manner, planning restricts creativity.

Planning involves thinking before doing. It anticipates future and decides the course of action to be taken. It is the process which decides in advance the objectives to be achieved and formulates plans, policies and methods to achieve them. In this way we can say that, it bridges the gap between where we are and where we want to go.

Two steps which should be examined critically by a manager are:

1. Planning is concerned with future, which is uncertain. Thus, it is required that manager should make assumptions for the future.
2. Manager should think twice before selecting an alternative, as it is the real point of decision-making.

Planning states in advance what is to be done. It defines the goals and objectives to be achieved. These goals and objectives as stated in the plan gives direction to the managers about what course of action is to be followed for achieving them. Planning ensures clarity in thoughts so that the right action is taken in the right direction for the achievement of objectives. Planning ensures that each department in the organisation work in a coordinated manner towards the common objective of the organisation. That is, with planning each department knows exactly what is to be done and thereby, moves in the right direction. Without planning work would be done in a haphazard manner with each department going in different directions. Thus, planning ensures smooth functioning towards the desired goals of an organisation.

Planning leads to economy and increased efficiency because it reduces wasteful and overlapping of activities. While planning, each alternative course is duly evaluated and the best alternative is selected which ensures best utilisation of resources. The activities are performed in a coordinated way, without any bottlenecks, minimising the cost of production and promoting efficiency in the organisation.

Planning is a small work but its process is really big. Planning becomes meaningful only after traversing a long path. It takes a lot of time to cover this path. During this entire period the managers remain busy in collecting a lot of information and analysing it. In this way, when so many people remain busy in the same activity, the organisation is bound to face huge costs.

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. In case, it is necessary to change the previously decided course of action for the attainment of objectives, there is no hesitation to do so. It is thus clear that planning is helpful in the attainment of objectives.

Planning is Known as a Mental-exercise as it is related to thinking before doing something. A planner has mainly to think about the following questions:

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

Following are the assumptions, which should be considered:

1. Tangible premises are units of production, capital investment, etc. Intangible premises are employee morale, goodwill, etc.
2. Controllable premises are policies, procedures, etc. Uncontrollable premises are trade cycle, political changes, etc.

The main strategic decisions may include the following:

1. Whether the company will continue the existing business?
2. Whether the company will combine some new products to the existing business?
3. Whether the company will try to acquire the maximum market share in the existing business?

These are the detailed statements stating the objectives, policies, procedures and budgets related to an activity to be undertaken. They clearly state how, when and by whom work is to be done. Since they are developed for a particular project, they are considerd as single use plan. e.g. programme developed for construction of a shopping mall.

Planning is Futuristic: Planning decides the plan of action– what is to be done, how is it to be done, when is it to be done, by whom is it to be done, all these questions are related to future. Under planning, answers to these questions are found out. Since planning is concerned with future activities, it is called futuristic.

Planning essentially involves decision making to choose the best alternative from amongst the various alternatives. The positive and negative aspect of each alternative is evaluated and most feasible and profitable one is chosen for implementation.

Planning is the primary function of management. All other functions of management are performed within the framework of plans drawn. Planned activities serve as the basis of harmonising the efforts of different divisions, departments and people. It makes coordination of various activities, departments and groups relatively easy. Planning is a step by step approach and through this systematic approach, it helps in coordination, e.g., while planning about a product, its marketing plan is also thought of so that there could by complete coordination between production and sales department.

Meaning of Planning: It refers to thinking before band.Steps in the Process of Planning:

1. Setting Objectives: Objectives are those end points for whose attainment all the activities are undertaken. In the planning process objectives are determined and defined first of all so that all the employees concerned can be informed about them to get their complete cooperation. Objectives have a hierarchy of their own, e.g., organisational objectives, departmental objectives, and individual objectives. They are determined and defined in the same hierarchical order.
2. Developing Premises: The basis of planning are those factors/ assumptions which influence the possible results of different alternatives. Before taking a final decision about any alternative a forecast of these assumptions is made. The rate of success of planning will be in direct proportion to the rate of the success of forecasting. The assumptions/ premises of planning are of two types:

1. Internal Premises: Capital, labours, raw material, machinery, etc.
2. External Premises: Governmental policies, business competition, tastes of customers, rate of interest, rate of taxes, etc.

An ideal plan should be effective, simple and should make the objectives of an organisation clear. It helps in achieving the targets, reduces the risk of uncertainty, helps in coordination and encourages innovation and creativity. Some main characteristics are:

1. Clarity The objectives and goals to be achieved should be clearly defined.
2. Practicability The plan should be based on facts and their implementation should be possible.
3. Flexibility A plan should be flexible, so that it can adopt the changes.

Planning serves as the basis of coordinating the activities and efforts of different divisions, departments and individuals. It helps in avoiding confusion and misunderstanding. As it ensures clarity in thought and action, work is carried on smoothly without interruptions. Thus, we can say, by opting planning, managers can eliminate or minimise the useless and redundant activities.

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.

S. No.	Basis	Policy	Procedure
1.	Meaning	It guides thinking for decision-making.	It guides action. It contains steps to be taken in a chronological order.
2.	Source	It is derived from objectives of the enterprise.	It is laid down to implement some policy.
3.	Flexibility	It is flexible.	It is more or less rigid.
4.	Scope	It leaves some scope for the manager's discretion.	It gives no discretion to the person concerned with its implementation.
5.	Nature	It is expressed in the form of a general statement.	It is expressed in more specific terms.

Evaluating alternative courses.

Derivative plans are the supporting plans, which are formulated for executing the primary plan. When the primary plan is decided, the next logical step is to formulate the derivative plans. e.g. if the basic plan is to increase the sale of a product, the derivative plans would be to recruit and train employees, launch an advertising campaign, procure funds, etc.

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.” In other words, planning refers to thinking before hand. It involves the anticipation of future course of even ts and give it a desired direction.
Importance of Planning: The following points clarify the importance of planning:

1. Planning provides Direction.
2. Planning reduces Risks of Uncertainty.

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.

Difference between method and budget:

S. No.	Basis	Method	Budget
1.	Meaning	It provides the prescribed ways or manner, in which a task is performed	It is a statement of expected results, expressed in numerical terms.
2.	Purpose	They provide standardised ways of doing routine jobs.	They provide a basis for control of activities
3.	Kind	They come under standing plans.	They come under single-use plans.

Planning ensures foreseeing future and choosing the best alternative amongst the various alternatives. The manager evaluates the positive and negative aspect of each alternative and chooses the one with least negative consequence, having feasibility and profitability. Through this, a direction is provided to all the activities of the organisation which gives the basic guidelines to the manager for decision making.

Decision making means the process of taking decisions. Under it, a variety of alternatives are discovered and the best alterative is chosen. The planning sets the target for decision making. It also lays down the criteria for evaluating courses of action. In this way, planning facilitates decision making.

Limitation of Pninglan: Following are the limitations of planning:

1. Planning Creates Rigidity: 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.
2. Planning does not work in a Dynamic Environment: Planning is based on the anticipation of future happenings. Since future is uncertain and dynamic, therefore, the future anticipations are not always true. Therefore, it can be said that planning does not work in dynamic environment.
3. Planning Reduces Creativity: Under planning all the activities connected with the attainment of objectives of the organisation are pre-determined. Consequently, everybody works as they have been directed to do and as it has been made clear in the plans. Therefore, it checks their incisiveness. It means that they do not think about appropriate ways of discovering new alternatives.

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.

An organisation may need different types of plans for accomplishment of its goals. Types of plans can be broadly classified into:

1. Standing Plan: Standing plans are used over and over again. These are the policies and procedures developed to ensure that the internal operation of the business goes on smoothly. Once developed, they are used again and again with some modification to suit business requirements. Policies, procedures. methods and rules are included in standing plans.
2. Single-use Plan: Single-use plans are made to be used only once. They aim at dealing with some unique or rare situation within the organisation Budget, programmes and projects are included in single-use plans.

It is said that planning is pre-requisite for controlling because planning provides the standards with which actual performance is compared, evaluated and hence controlled by the managers. It helps in finding deviations between desired and actual results, and take corrective action.