NCERT Textbook - Planning | Business Studies (BST) Class 12 - Commerce PDF Download

 Page 1


Planning
CHAPTER
Indian Oil Company Limited (IOCL) - Plans to 
Energize with sustainability
Indian Oil is India’s largest commercial organisation. It is top 
ranked Indian company in the latest Fortune ‘Global 500’ 
listings (2017). Indian Oil’s vision is driven by a group of 
dynamic leaders who have made it a name to reckon with. 
With over 34,000 strong work force, a Maharatna Company, 
Indian Oil has been helping to meet India’s energy demands 
and reaching petroleum products to every part of India for 
over five decades. It plans to increase its business operations 
all around the world. The company plans to invest ` 20,000 
crore in 2017-18 acquisitions and plans to expand overseas. 
The company always believed to be ahead of the demand. Last 
year too, IOC had invested close to ` 20,000 crore, including 
around ` 16,000 crore in various Indian projects and on 
acquisition for upstream in Russia.
It is noteworthy, between 2012-17, IOCL ended up investing 
around ` 75,000 crore against the targeted planned investment 
of around ` 56,200 crore. All investments have been in refinery 
expansion, upgradation of quality of refineries, building new 
pipelines, getting more aggressive in petrochemical projects, 
setting up new natural gas facilities etc. IOC is also looking at the 
overseas market. Recently it was decided to open an office in 
Bangladesh apart from talking to the Government of Bangladesh 
on many accounts, especially regarding LPG and natural gas 
where it is trying to take a linkage from IOC pipeline going 
up from Damra project and West Bengal border before finally 
connecting to the Bangladesh network. For Nepal, IOC plans 
to build a pipeline between Motihari terminal of IOCL, which is 
currently coming up, and their own facilities inside Nepal. The 
company has already signed a memorandum of understanding 
(MoU) with Bhutan and looking at newly opening markets such 
as Myanmar. 
The company always feels that they have to keep their eyes 
open for new acquisitions. The company has got good reserves 
and were able to generate funds through internal accruals. But 
4
After studying this 
chapter, you will be 
able to:
n State the meaning 
of planning;
n Describe the 
features and 
importance of 
planning;
n Explain the 
limitations of 
planning;
n Analyse the steps 
in the planning 
process; and
n Identity the 
different types of 
plans.
LEARNING 
OBJECTIVES
Ch_04.indd   91 08-08-2022   09:43:21
Reprint 2024-25
Page 2


Planning
CHAPTER
Indian Oil Company Limited (IOCL) - Plans to 
Energize with sustainability
Indian Oil is India’s largest commercial organisation. It is top 
ranked Indian company in the latest Fortune ‘Global 500’ 
listings (2017). Indian Oil’s vision is driven by a group of 
dynamic leaders who have made it a name to reckon with. 
With over 34,000 strong work force, a Maharatna Company, 
Indian Oil has been helping to meet India’s energy demands 
and reaching petroleum products to every part of India for 
over five decades. It plans to increase its business operations 
all around the world. The company plans to invest ` 20,000 
crore in 2017-18 acquisitions and plans to expand overseas. 
The company always believed to be ahead of the demand. Last 
year too, IOC had invested close to ` 20,000 crore, including 
around ` 16,000 crore in various Indian projects and on 
acquisition for upstream in Russia.
It is noteworthy, between 2012-17, IOCL ended up investing 
around ` 75,000 crore against the targeted planned investment 
of around ` 56,200 crore. All investments have been in refinery 
expansion, upgradation of quality of refineries, building new 
pipelines, getting more aggressive in petrochemical projects, 
setting up new natural gas facilities etc. IOC is also looking at the 
overseas market. Recently it was decided to open an office in 
Bangladesh apart from talking to the Government of Bangladesh 
on many accounts, especially regarding LPG and natural gas 
where it is trying to take a linkage from IOC pipeline going 
up from Damra project and West Bengal border before finally 
connecting to the Bangladesh network. For Nepal, IOC plans 
to build a pipeline between Motihari terminal of IOCL, which is 
currently coming up, and their own facilities inside Nepal. The 
company has already signed a memorandum of understanding 
(MoU) with Bhutan and looking at newly opening markets such 
as Myanmar. 
The company always feels that they have to keep their eyes 
open for new acquisitions. The company has got good reserves 
and were able to generate funds through internal accruals. But 
4
After studying this 
chapter, you will be 
able to:
n State the meaning 
of planning;
n Describe the 
features and 
importance of 
planning;
n Explain the 
limitations of 
planning;
n Analyse the steps 
in the planning 
process; and
n Identity the 
different types of 
plans.
LEARNING 
OBJECTIVES
Ch_04.indd   91 08-08-2022   09:43:21
Reprint 2024-25
92 Business Studies
Introduct Ion You have just read about the plans 
of Indian Oil Company Limited 
(IOCL). Of course, these are broad 
statements given by the company 
and they have to be broken down 
into steps for implementation. This 
is an example of a company with a 
nation-wide reach striving to be one 
of the top companies in India. Further 
more, every organisation whether 
it is government- owned, a privately 
owned business or a company in the 
private sector requires planning. The 
government makes five year plans 
for the country, a small business 
has it’s own plans, while other 
companies have big plans, sales 
plans, production plans. All of them 
have some plans.
All business firms would like to be 
successful, increase their sales and 
earn profits. All managers dream 
of these and strive to achieve their 
goals. But to turn these dreams 
into reality managers need to work 
hard in thinking about the future, 
in making business predictions and 
achieving targets. Dreams can be 
turned into reality only if business 
managers think in advance on what 
to do and how to do it. This is the 
essence of planning. 
c oncept Planning is deciding in advance what 
to do and how to do. It is one of the 
basic managerial functions. Before 
doing something, the manager must 
formulate an idea of how to work on 
a particular task. Thus, planning is 
closely connected with creativity and 
innovation. But the manager would 
first have to set objectives, only then 
will a manager know where he has 
to go. Planning seeks to bridge the 
gap between where we are and where 
we want to go. Planning is what 
managers at all levels do. It requires 
taking decisions since it involves 
making a choice from alternative 
courses of action.
Planning, thus, involves setting 
objectives and developing appropriate 
courses of action to achieve these obj- ectives. Objectives provide direction 
for all managerial decisions and  
actions. Planning provides a rational 
approach for achieving predetermined 
objectives. All  members, therefore, 
on a project basis IOC will certainly go into the market — both 
India and Overseas, depending on which is cheaper — to borrow 
money, if needed.
Source: https://www.business-standard.com/article/
companies/ioc-to-invest-around-rs-20-000-in-2017-18-
plans-expansion-acquisitions-117051600438_1.html.
Ch_04.indd   92 08-08-2022   09:43:21
Reprint 2024-25
Page 3


Planning
CHAPTER
Indian Oil Company Limited (IOCL) - Plans to 
Energize with sustainability
Indian Oil is India’s largest commercial organisation. It is top 
ranked Indian company in the latest Fortune ‘Global 500’ 
listings (2017). Indian Oil’s vision is driven by a group of 
dynamic leaders who have made it a name to reckon with. 
With over 34,000 strong work force, a Maharatna Company, 
Indian Oil has been helping to meet India’s energy demands 
and reaching petroleum products to every part of India for 
over five decades. It plans to increase its business operations 
all around the world. The company plans to invest ` 20,000 
crore in 2017-18 acquisitions and plans to expand overseas. 
The company always believed to be ahead of the demand. Last 
year too, IOC had invested close to ` 20,000 crore, including 
around ` 16,000 crore in various Indian projects and on 
acquisition for upstream in Russia.
It is noteworthy, between 2012-17, IOCL ended up investing 
around ` 75,000 crore against the targeted planned investment 
of around ` 56,200 crore. All investments have been in refinery 
expansion, upgradation of quality of refineries, building new 
pipelines, getting more aggressive in petrochemical projects, 
setting up new natural gas facilities etc. IOC is also looking at the 
overseas market. Recently it was decided to open an office in 
Bangladesh apart from talking to the Government of Bangladesh 
on many accounts, especially regarding LPG and natural gas 
where it is trying to take a linkage from IOC pipeline going 
up from Damra project and West Bengal border before finally 
connecting to the Bangladesh network. For Nepal, IOC plans 
to build a pipeline between Motihari terminal of IOCL, which is 
currently coming up, and their own facilities inside Nepal. The 
company has already signed a memorandum of understanding 
(MoU) with Bhutan and looking at newly opening markets such 
as Myanmar. 
The company always feels that they have to keep their eyes 
open for new acquisitions. The company has got good reserves 
and were able to generate funds through internal accruals. But 
4
After studying this 
chapter, you will be 
able to:
n State the meaning 
of planning;
n Describe the 
features and 
importance of 
planning;
n Explain the 
limitations of 
planning;
n Analyse the steps 
in the planning 
process; and
n Identity the 
different types of 
plans.
LEARNING 
OBJECTIVES
Ch_04.indd   91 08-08-2022   09:43:21
Reprint 2024-25
92 Business Studies
Introduct Ion You have just read about the plans 
of Indian Oil Company Limited 
(IOCL). Of course, these are broad 
statements given by the company 
and they have to be broken down 
into steps for implementation. This 
is an example of a company with a 
nation-wide reach striving to be one 
of the top companies in India. Further 
more, every organisation whether 
it is government- owned, a privately 
owned business or a company in the 
private sector requires planning. The 
government makes five year plans 
for the country, a small business 
has it’s own plans, while other 
companies have big plans, sales 
plans, production plans. All of them 
have some plans.
All business firms would like to be 
successful, increase their sales and 
earn profits. All managers dream 
of these and strive to achieve their 
goals. But to turn these dreams 
into reality managers need to work 
hard in thinking about the future, 
in making business predictions and 
achieving targets. Dreams can be 
turned into reality only if business 
managers think in advance on what 
to do and how to do it. This is the 
essence of planning. 
c oncept Planning is deciding in advance what 
to do and how to do. It is one of the 
basic managerial functions. Before 
doing something, the manager must 
formulate an idea of how to work on 
a particular task. Thus, planning is 
closely connected with creativity and 
innovation. But the manager would 
first have to set objectives, only then 
will a manager know where he has 
to go. Planning seeks to bridge the 
gap between where we are and where 
we want to go. Planning is what 
managers at all levels do. It requires 
taking decisions since it involves 
making a choice from alternative 
courses of action.
Planning, thus, involves setting 
objectives and developing appropriate 
courses of action to achieve these obj- ectives. Objectives provide direction 
for all managerial decisions and  
actions. Planning provides a rational 
approach for achieving predetermined 
objectives. All  members, therefore, 
on a project basis IOC will certainly go into the market — both 
India and Overseas, depending on which is cheaper — to borrow 
money, if needed.
Source: https://www.business-standard.com/article/
companies/ioc-to-invest-around-rs-20-000-in-2017-18-
plans-expansion-acquisitions-117051600438_1.html.
Ch_04.indd   92 08-08-2022   09:43:21
Reprint 2024-25
Planning 93
need to work towards achieving 
organisational goals. These goals 
set the targets which need to be 
achieved and against which actual 
performance is measured. Therefore, 
planning means setting objectives 
and targets and formulating an 
action plan to achieve them. It 
is concerned with both ends and 
means i.e., what is to be done and 
how it is to be done.
The plan that is developed has to 
have a given time frame but time 
is a limited resource. It needs to be 
utilised judiciously. If time factor 
is not taken into consideration, 
conditions in the environment may 
change and all business plans may 
go waste. Planning will be a futile 
exercise if it is not acted upon or 
implemented.
Do you think from the above we 
can formulate a comprehensive 
definition of planning? One of the 
ways to do so would be to define 
planning as 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.
Importance of  p lann Ing You must have seen in films and 
advertisements how executives 
draw up plans and make powerful 
presentations in boardrooms. Do 
those plans actually work? Does 
it improve efficiency? After all why 
should we plan? These are numerous 
questions to which we would like to 
find solutions. Planning is certainly 
important as it tells us where to go, 
it provides direction and reduces 
the risk of uncertainty by preparing 
forecasts. The major benefits of 
planning are given below:
 (i) Planning provides directions: 
By stating in advance how 
work is to be done planning 
provides direction for action. 
Planning ens ures 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. Departments and 
Planning: Keeping the 
objective in view and 
being in action
Ch_04.indd   93 08-08-2022   09:43:23
Reprint 2024-25
Page 4


Planning
CHAPTER
Indian Oil Company Limited (IOCL) - Plans to 
Energize with sustainability
Indian Oil is India’s largest commercial organisation. It is top 
ranked Indian company in the latest Fortune ‘Global 500’ 
listings (2017). Indian Oil’s vision is driven by a group of 
dynamic leaders who have made it a name to reckon with. 
With over 34,000 strong work force, a Maharatna Company, 
Indian Oil has been helping to meet India’s energy demands 
and reaching petroleum products to every part of India for 
over five decades. It plans to increase its business operations 
all around the world. The company plans to invest ` 20,000 
crore in 2017-18 acquisitions and plans to expand overseas. 
The company always believed to be ahead of the demand. Last 
year too, IOC had invested close to ` 20,000 crore, including 
around ` 16,000 crore in various Indian projects and on 
acquisition for upstream in Russia.
It is noteworthy, between 2012-17, IOCL ended up investing 
around ` 75,000 crore against the targeted planned investment 
of around ` 56,200 crore. All investments have been in refinery 
expansion, upgradation of quality of refineries, building new 
pipelines, getting more aggressive in petrochemical projects, 
setting up new natural gas facilities etc. IOC is also looking at the 
overseas market. Recently it was decided to open an office in 
Bangladesh apart from talking to the Government of Bangladesh 
on many accounts, especially regarding LPG and natural gas 
where it is trying to take a linkage from IOC pipeline going 
up from Damra project and West Bengal border before finally 
connecting to the Bangladesh network. For Nepal, IOC plans 
to build a pipeline between Motihari terminal of IOCL, which is 
currently coming up, and their own facilities inside Nepal. The 
company has already signed a memorandum of understanding 
(MoU) with Bhutan and looking at newly opening markets such 
as Myanmar. 
The company always feels that they have to keep their eyes 
open for new acquisitions. The company has got good reserves 
and were able to generate funds through internal accruals. But 
4
After studying this 
chapter, you will be 
able to:
n State the meaning 
of planning;
n Describe the 
features and 
importance of 
planning;
n Explain the 
limitations of 
planning;
n Analyse the steps 
in the planning 
process; and
n Identity the 
different types of 
plans.
LEARNING 
OBJECTIVES
Ch_04.indd   91 08-08-2022   09:43:21
Reprint 2024-25
92 Business Studies
Introduct Ion You have just read about the plans 
of Indian Oil Company Limited 
(IOCL). Of course, these are broad 
statements given by the company 
and they have to be broken down 
into steps for implementation. This 
is an example of a company with a 
nation-wide reach striving to be one 
of the top companies in India. Further 
more, every organisation whether 
it is government- owned, a privately 
owned business or a company in the 
private sector requires planning. The 
government makes five year plans 
for the country, a small business 
has it’s own plans, while other 
companies have big plans, sales 
plans, production plans. All of them 
have some plans.
All business firms would like to be 
successful, increase their sales and 
earn profits. All managers dream 
of these and strive to achieve their 
goals. But to turn these dreams 
into reality managers need to work 
hard in thinking about the future, 
in making business predictions and 
achieving targets. Dreams can be 
turned into reality only if business 
managers think in advance on what 
to do and how to do it. This is the 
essence of planning. 
c oncept Planning is deciding in advance what 
to do and how to do. It is one of the 
basic managerial functions. Before 
doing something, the manager must 
formulate an idea of how to work on 
a particular task. Thus, planning is 
closely connected with creativity and 
innovation. But the manager would 
first have to set objectives, only then 
will a manager know where he has 
to go. Planning seeks to bridge the 
gap between where we are and where 
we want to go. Planning is what 
managers at all levels do. It requires 
taking decisions since it involves 
making a choice from alternative 
courses of action.
Planning, thus, involves setting 
objectives and developing appropriate 
courses of action to achieve these obj- ectives. Objectives provide direction 
for all managerial decisions and  
actions. Planning provides a rational 
approach for achieving predetermined 
objectives. All  members, therefore, 
on a project basis IOC will certainly go into the market — both 
India and Overseas, depending on which is cheaper — to borrow 
money, if needed.
Source: https://www.business-standard.com/article/
companies/ioc-to-invest-around-rs-20-000-in-2017-18-
plans-expansion-acquisitions-117051600438_1.html.
Ch_04.indd   92 08-08-2022   09:43:21
Reprint 2024-25
Planning 93
need to work towards achieving 
organisational goals. These goals 
set the targets which need to be 
achieved and against which actual 
performance is measured. Therefore, 
planning means setting objectives 
and targets and formulating an 
action plan to achieve them. It 
is concerned with both ends and 
means i.e., what is to be done and 
how it is to be done.
The plan that is developed has to 
have a given time frame but time 
is a limited resource. It needs to be 
utilised judiciously. If time factor 
is not taken into consideration, 
conditions in the environment may 
change and all business plans may 
go waste. Planning will be a futile 
exercise if it is not acted upon or 
implemented.
Do you think from the above we 
can formulate a comprehensive 
definition of planning? One of the 
ways to do so would be to define 
planning as 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.
Importance of  p lann Ing You must have seen in films and 
advertisements how executives 
draw up plans and make powerful 
presentations in boardrooms. Do 
those plans actually work? Does 
it improve efficiency? After all why 
should we plan? These are numerous 
questions to which we would like to 
find solutions. Planning is certainly 
important as it tells us where to go, 
it provides direction and reduces 
the risk of uncertainty by preparing 
forecasts. The major benefits of 
planning are given below:
 (i) Planning provides directions: 
By stating in advance how 
work is to be done planning 
provides direction for action. 
Planning ens ures 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. Departments and 
Planning: Keeping the 
objective in view and 
being in action
Ch_04.indd   93 08-08-2022   09:43:23
Reprint 2024-25
94 Business Studies
individuals in  the organisation 
are able to work in coordination. 
If there was no planning, empl- oyees would be working in 
different directions and the 
organisation would not be able 
to achieve its desired goals.
 (ii) 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.
 (iii) Planning reduces overlapping 
and wasteful activities: Planning 
serves as the basis of coordinating 
the activities and efforts of different 
divisions, departments and 
individuals. It helps in avoiding 
confusion and misunderstanding. 
Since planning  ensures 
clarity in thought and action, 
work is carried on smoothly 
without interruptions. Useless 
and redundant activities are 
minimised or eliminated. It is 
easier to detect inefficiencies and 
take corrective measures to deal 
with them.
 (iv) Planning promotes innovative 
ideas: Since planning is the 
first function of management, 
new ideas can take the shape 
of concrete plans. It is the most 
challenging activity for the 
management as it guides all 
future actions leading to growth 
and prosperity of the business. 
 (v) 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.
 (vi) Planning establishes standards 
for controlling: Planning 
involves setting of goals. The 
entire managerial process is 
concerned with accomplishing 
predeter mined goals through 
planning, organising, staffing, 
directing and controlling. 
Planning provides the goals or 
standards against which actual 
performance is measured. By 
comparing actual performance 
with some standard, managers can 
know whether they have actually 
been able to attain the goals. If 
there is any deviation it can be 
corrected. Therefore, we can say 
that planning is a prerequisite 
for controlling. If there were 
no goals and standards, then 
finding deviations which are a 
Ch_04.indd   94 08-08-2022   09:43:23
Reprint 2024-25
Page 5


Planning
CHAPTER
Indian Oil Company Limited (IOCL) - Plans to 
Energize with sustainability
Indian Oil is India’s largest commercial organisation. It is top 
ranked Indian company in the latest Fortune ‘Global 500’ 
listings (2017). Indian Oil’s vision is driven by a group of 
dynamic leaders who have made it a name to reckon with. 
With over 34,000 strong work force, a Maharatna Company, 
Indian Oil has been helping to meet India’s energy demands 
and reaching petroleum products to every part of India for 
over five decades. It plans to increase its business operations 
all around the world. The company plans to invest ` 20,000 
crore in 2017-18 acquisitions and plans to expand overseas. 
The company always believed to be ahead of the demand. Last 
year too, IOC had invested close to ` 20,000 crore, including 
around ` 16,000 crore in various Indian projects and on 
acquisition for upstream in Russia.
It is noteworthy, between 2012-17, IOCL ended up investing 
around ` 75,000 crore against the targeted planned investment 
of around ` 56,200 crore. All investments have been in refinery 
expansion, upgradation of quality of refineries, building new 
pipelines, getting more aggressive in petrochemical projects, 
setting up new natural gas facilities etc. IOC is also looking at the 
overseas market. Recently it was decided to open an office in 
Bangladesh apart from talking to the Government of Bangladesh 
on many accounts, especially regarding LPG and natural gas 
where it is trying to take a linkage from IOC pipeline going 
up from Damra project and West Bengal border before finally 
connecting to the Bangladesh network. For Nepal, IOC plans 
to build a pipeline between Motihari terminal of IOCL, which is 
currently coming up, and their own facilities inside Nepal. The 
company has already signed a memorandum of understanding 
(MoU) with Bhutan and looking at newly opening markets such 
as Myanmar. 
The company always feels that they have to keep their eyes 
open for new acquisitions. The company has got good reserves 
and were able to generate funds through internal accruals. But 
4
After studying this 
chapter, you will be 
able to:
n State the meaning 
of planning;
n Describe the 
features and 
importance of 
planning;
n Explain the 
limitations of 
planning;
n Analyse the steps 
in the planning 
process; and
n Identity the 
different types of 
plans.
LEARNING 
OBJECTIVES
Ch_04.indd   91 08-08-2022   09:43:21
Reprint 2024-25
92 Business Studies
Introduct Ion You have just read about the plans 
of Indian Oil Company Limited 
(IOCL). Of course, these are broad 
statements given by the company 
and they have to be broken down 
into steps for implementation. This 
is an example of a company with a 
nation-wide reach striving to be one 
of the top companies in India. Further 
more, every organisation whether 
it is government- owned, a privately 
owned business or a company in the 
private sector requires planning. The 
government makes five year plans 
for the country, a small business 
has it’s own plans, while other 
companies have big plans, sales 
plans, production plans. All of them 
have some plans.
All business firms would like to be 
successful, increase their sales and 
earn profits. All managers dream 
of these and strive to achieve their 
goals. But to turn these dreams 
into reality managers need to work 
hard in thinking about the future, 
in making business predictions and 
achieving targets. Dreams can be 
turned into reality only if business 
managers think in advance on what 
to do and how to do it. This is the 
essence of planning. 
c oncept Planning is deciding in advance what 
to do and how to do. It is one of the 
basic managerial functions. Before 
doing something, the manager must 
formulate an idea of how to work on 
a particular task. Thus, planning is 
closely connected with creativity and 
innovation. But the manager would 
first have to set objectives, only then 
will a manager know where he has 
to go. Planning seeks to bridge the 
gap between where we are and where 
we want to go. Planning is what 
managers at all levels do. It requires 
taking decisions since it involves 
making a choice from alternative 
courses of action.
Planning, thus, involves setting 
objectives and developing appropriate 
courses of action to achieve these obj- ectives. Objectives provide direction 
for all managerial decisions and  
actions. Planning provides a rational 
approach for achieving predetermined 
objectives. All  members, therefore, 
on a project basis IOC will certainly go into the market — both 
India and Overseas, depending on which is cheaper — to borrow 
money, if needed.
Source: https://www.business-standard.com/article/
companies/ioc-to-invest-around-rs-20-000-in-2017-18-
plans-expansion-acquisitions-117051600438_1.html.
Ch_04.indd   92 08-08-2022   09:43:21
Reprint 2024-25
Planning 93
need to work towards achieving 
organisational goals. These goals 
set the targets which need to be 
achieved and against which actual 
performance is measured. Therefore, 
planning means setting objectives 
and targets and formulating an 
action plan to achieve them. It 
is concerned with both ends and 
means i.e., what is to be done and 
how it is to be done.
The plan that is developed has to 
have a given time frame but time 
is a limited resource. It needs to be 
utilised judiciously. If time factor 
is not taken into consideration, 
conditions in the environment may 
change and all business plans may 
go waste. Planning will be a futile 
exercise if it is not acted upon or 
implemented.
Do you think from the above we 
can formulate a comprehensive 
definition of planning? One of the 
ways to do so would be to define 
planning as 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.
Importance of  p lann Ing You must have seen in films and 
advertisements how executives 
draw up plans and make powerful 
presentations in boardrooms. Do 
those plans actually work? Does 
it improve efficiency? After all why 
should we plan? These are numerous 
questions to which we would like to 
find solutions. Planning is certainly 
important as it tells us where to go, 
it provides direction and reduces 
the risk of uncertainty by preparing 
forecasts. The major benefits of 
planning are given below:
 (i) Planning provides directions: 
By stating in advance how 
work is to be done planning 
provides direction for action. 
Planning ens ures 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. Departments and 
Planning: Keeping the 
objective in view and 
being in action
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94 Business Studies
individuals in  the organisation 
are able to work in coordination. 
If there was no planning, empl- oyees would be working in 
different directions and the 
organisation would not be able 
to achieve its desired goals.
 (ii) 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.
 (iii) Planning reduces overlapping 
and wasteful activities: Planning 
serves as the basis of coordinating 
the activities and efforts of different 
divisions, departments and 
individuals. It helps in avoiding 
confusion and misunderstanding. 
Since planning  ensures 
clarity in thought and action, 
work is carried on smoothly 
without interruptions. Useless 
and redundant activities are 
minimised or eliminated. It is 
easier to detect inefficiencies and 
take corrective measures to deal 
with them.
 (iv) Planning promotes innovative 
ideas: Since planning is the 
first function of management, 
new ideas can take the shape 
of concrete plans. It is the most 
challenging activity for the 
management as it guides all 
future actions leading to growth 
and prosperity of the business. 
 (v) 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.
 (vi) Planning establishes standards 
for controlling: Planning 
involves setting of goals. The 
entire managerial process is 
concerned with accomplishing 
predeter mined goals through 
planning, organising, staffing, 
directing and controlling. 
Planning provides the goals or 
standards against which actual 
performance is measured. By 
comparing actual performance 
with some standard, managers can 
know whether they have actually 
been able to attain the goals. If 
there is any deviation it can be 
corrected. Therefore, we can say 
that planning is a prerequisite 
for controlling. If there were 
no goals and standards, then 
finding deviations which are a 
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Planning 95
part of controlling would not be 
possible. The nature of corrective 
action required depends upon 
the extent of deviations from the 
standard. Therefore, planning 
provides the basis of control.
f eatures of p lann Ing 
In the example of Polaris, the 
company has plans of expansion. 
Their objective is to increase their 
capacity so that they can employ 800 
more professionals. Their target time 
is six months. The objective of the 
current year has also been clearly 
stated which is to increase capacity 
by 1500- 2000 more professionals. 
Since planning is the primary 
function of management they have 
set their objectives first. Thus, all 
businesses follow a set pattern of 
planning. You will be able to find 
some similarities in the features of 
planning and what you see in real 
life. Try and identify them.
The planning function of the 
management has certain special 
features. These features throw light 
on its nature and scope.
 (i) 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.
 (ii) 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.
 (iii) 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 organisation as 
a whole. Middle management 
does the departmental planning. 
At the lowest level, day-to-day 
operational planning is done by 
supervisors.
 (iv) Planning is continuous: Plans 
are prepared for a specific period 
of time, may be for a month, a 
quarter, or a year. At the end 
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