NCERT Textbook - Planning Commerce Notes | EduRev

Business Studies (BST) Class 12

Commerce : NCERT Textbook - Planning Commerce Notes | EduRev

 Page 1


Planning Planning
CHAPTER
Gas Authority of India (GAIL) – New Plans Gas Authority of India (GAIL) – New Plans
GAIL India, which has had a monopoly in the gas transmission 
sector is set to see some tough competition in the coming days. 
While Reliance is poised to get into the trunk pipeline segment, 
British Gas is trying to get into the city gas distribution sector. 
GAIL’s new chairman, shares his  thoughts on how he plans to 
take the company ahead.
What are GAIL’s main priorities?
Going by its business strategy, the focus areas are gas sourcing, 
transmission, marketing, processing, petrochemicals, globalisation 
and city gas distribution. We are focussing on sourcing of gas from 
indigenous finds and through LNG and crossborder pipelines. We 
intend to develop the gas market by extending our gas grid from 
5,600 km to 10,000 km. The city gas project is expected to rise 
from 6 to 45 by the end of the 11th five year Plan.
What are GAIL’s plans for acquiring an exploration and 
production (E&P) company abroad?
GAIL has plans to strengthen its exploration and production 
activities. To become a formidable company, GAIL is exploring 
options - acquiring an E&P company is one such option.
What are your Capex plans and how do you plan to fund it?
GAIL’s budgeted Capex plan for FY 06-07 is Rs. 2967.28 crore. 
This includes capital expenditure of Rs. 2579.58 crore on pipeline 
and other projects and Rs. 387.7 crore on petrochemical projects. 
This will be funded through internal reserves. 
What are your plans on city gas distribution? Will GAIL 
continue with its plans on fuel management?  
We have already established the business successfully in Mumbai, 
Delhi, Vadodara, Vijaywada, Agra, Lucknow, Kanpur. Till date GAIL 
has formed eight joint venture companies to implement city gas 
projects. The projects have had an impact on the pollution levels. 
GAIL is in the process of forming state-wise Joint Ventures with oil 
marketing companies to implement city gas projects in Rajasthan.
What are GAIL’s plans to diversify into telecom and what is 
the current status?
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
2015-16(21/01/2015)
Page 2


Planning Planning
CHAPTER
Gas Authority of India (GAIL) – New Plans Gas Authority of India (GAIL) – New Plans
GAIL India, which has had a monopoly in the gas transmission 
sector is set to see some tough competition in the coming days. 
While Reliance is poised to get into the trunk pipeline segment, 
British Gas is trying to get into the city gas distribution sector. 
GAIL’s new chairman, shares his  thoughts on how he plans to 
take the company ahead.
What are GAIL’s main priorities?
Going by its business strategy, the focus areas are gas sourcing, 
transmission, marketing, processing, petrochemicals, globalisation 
and city gas distribution. We are focussing on sourcing of gas from 
indigenous finds and through LNG and crossborder pipelines. We 
intend to develop the gas market by extending our gas grid from 
5,600 km to 10,000 km. The city gas project is expected to rise 
from 6 to 45 by the end of the 11th five year Plan.
What are GAIL’s plans for acquiring an exploration and 
production (E&P) company abroad?
GAIL has plans to strengthen its exploration and production 
activities. To become a formidable company, GAIL is exploring 
options - acquiring an E&P company is one such option.
What are your Capex plans and how do you plan to fund it?
GAIL’s budgeted Capex plan for FY 06-07 is Rs. 2967.28 crore. 
This includes capital expenditure of Rs. 2579.58 crore on pipeline 
and other projects and Rs. 387.7 crore on petrochemical projects. 
This will be funded through internal reserves. 
What are your plans on city gas distribution? Will GAIL 
continue with its plans on fuel management?  
We have already established the business successfully in Mumbai, 
Delhi, Vadodara, Vijaywada, Agra, Lucknow, Kanpur. Till date GAIL 
has formed eight joint venture companies to implement city gas 
projects. The projects have had an impact on the pollution levels. 
GAIL is in the process of forming state-wise Joint Ventures with oil 
marketing companies to implement city gas projects in Rajasthan.
What are GAIL’s plans to diversify into telecom and what is 
the current status?
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
2015-16(21/01/2015)
96 Business Studies
IntroductIon IntroductIon You have just read about the plans of 
Gas Authority of India Limited (GAIL), 
It is one of our leading public sector 
companies. The plans discussed by  
the Chairperson, GAIL are real plans  
of the company and how they 
would like to go about achieving 
their objectives. 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 
in the public sector 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 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 
Gailtel, the telecom service arm of GAIL, offers telecom services 
commercially to lead telecom operators across India. Gailtel 
owns and operates approximately 13,000 route km of fibre optic 
network, GAIL is evaluating various options to work out its future 
growth plans.
Source: The Economic Times, October 2006 
2015-16(21/01/2015)
Page 3


Planning Planning
CHAPTER
Gas Authority of India (GAIL) – New Plans Gas Authority of India (GAIL) – New Plans
GAIL India, which has had a monopoly in the gas transmission 
sector is set to see some tough competition in the coming days. 
While Reliance is poised to get into the trunk pipeline segment, 
British Gas is trying to get into the city gas distribution sector. 
GAIL’s new chairman, shares his  thoughts on how he plans to 
take the company ahead.
What are GAIL’s main priorities?
Going by its business strategy, the focus areas are gas sourcing, 
transmission, marketing, processing, petrochemicals, globalisation 
and city gas distribution. We are focussing on sourcing of gas from 
indigenous finds and through LNG and crossborder pipelines. We 
intend to develop the gas market by extending our gas grid from 
5,600 km to 10,000 km. The city gas project is expected to rise 
from 6 to 45 by the end of the 11th five year Plan.
What are GAIL’s plans for acquiring an exploration and 
production (E&P) company abroad?
GAIL has plans to strengthen its exploration and production 
activities. To become a formidable company, GAIL is exploring 
options - acquiring an E&P company is one such option.
What are your Capex plans and how do you plan to fund it?
GAIL’s budgeted Capex plan for FY 06-07 is Rs. 2967.28 crore. 
This includes capital expenditure of Rs. 2579.58 crore on pipeline 
and other projects and Rs. 387.7 crore on petrochemical projects. 
This will be funded through internal reserves. 
What are your plans on city gas distribution? Will GAIL 
continue with its plans on fuel management?  
We have already established the business successfully in Mumbai, 
Delhi, Vadodara, Vijaywada, Agra, Lucknow, Kanpur. Till date GAIL 
has formed eight joint venture companies to implement city gas 
projects. The projects have had an impact on the pollution levels. 
GAIL is in the process of forming state-wise Joint Ventures with oil 
marketing companies to implement city gas projects in Rajasthan.
What are GAIL’s plans to diversify into telecom and what is 
the current status?
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
2015-16(21/01/2015)
96 Business Studies
IntroductIon IntroductIon You have just read about the plans of 
Gas Authority of India Limited (GAIL), 
It is one of our leading public sector 
companies. The plans discussed by  
the Chairperson, GAIL are real plans  
of the company and how they 
would like to go about achieving 
their objectives. 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 
in the public sector 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 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 
Gailtel, the telecom service arm of GAIL, offers telecom services 
commercially to lead telecom operators across India. Gailtel 
owns and operates approximately 13,000 route km of fibre optic 
network, GAIL is evaluating various options to work out its future 
growth plans.
Source: The Economic Times, October 2006 
2015-16(21/01/2015)
Planning 97
approach for achieving predetermined 
objectives. All  members, therefore, 
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 lannIng Importance of  p lannIng 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 
individuals in  the organisation 
are able to work in coordination. 
If there was no planning, empl-
oyees would be working in different 
Planning: Keeping the 
objective in view and 
being in action
2015-16(21/01/2015)
Page 4


Planning Planning
CHAPTER
Gas Authority of India (GAIL) – New Plans Gas Authority of India (GAIL) – New Plans
GAIL India, which has had a monopoly in the gas transmission 
sector is set to see some tough competition in the coming days. 
While Reliance is poised to get into the trunk pipeline segment, 
British Gas is trying to get into the city gas distribution sector. 
GAIL’s new chairman, shares his  thoughts on how he plans to 
take the company ahead.
What are GAIL’s main priorities?
Going by its business strategy, the focus areas are gas sourcing, 
transmission, marketing, processing, petrochemicals, globalisation 
and city gas distribution. We are focussing on sourcing of gas from 
indigenous finds and through LNG and crossborder pipelines. We 
intend to develop the gas market by extending our gas grid from 
5,600 km to 10,000 km. The city gas project is expected to rise 
from 6 to 45 by the end of the 11th five year Plan.
What are GAIL’s plans for acquiring an exploration and 
production (E&P) company abroad?
GAIL has plans to strengthen its exploration and production 
activities. To become a formidable company, GAIL is exploring 
options - acquiring an E&P company is one such option.
What are your Capex plans and how do you plan to fund it?
GAIL’s budgeted Capex plan for FY 06-07 is Rs. 2967.28 crore. 
This includes capital expenditure of Rs. 2579.58 crore on pipeline 
and other projects and Rs. 387.7 crore on petrochemical projects. 
This will be funded through internal reserves. 
What are your plans on city gas distribution? Will GAIL 
continue with its plans on fuel management?  
We have already established the business successfully in Mumbai, 
Delhi, Vadodara, Vijaywada, Agra, Lucknow, Kanpur. Till date GAIL 
has formed eight joint venture companies to implement city gas 
projects. The projects have had an impact on the pollution levels. 
GAIL is in the process of forming state-wise Joint Ventures with oil 
marketing companies to implement city gas projects in Rajasthan.
What are GAIL’s plans to diversify into telecom and what is 
the current status?
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
2015-16(21/01/2015)
96 Business Studies
IntroductIon IntroductIon You have just read about the plans of 
Gas Authority of India Limited (GAIL), 
It is one of our leading public sector 
companies. The plans discussed by  
the Chairperson, GAIL are real plans  
of the company and how they 
would like to go about achieving 
their objectives. 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 
in the public sector 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 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 
Gailtel, the telecom service arm of GAIL, offers telecom services 
commercially to lead telecom operators across India. Gailtel 
owns and operates approximately 13,000 route km of fibre optic 
network, GAIL is evaluating various options to work out its future 
growth plans.
Source: The Economic Times, October 2006 
2015-16(21/01/2015)
Planning 97
approach for achieving predetermined 
objectives. All  members, therefore, 
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 lannIng Importance of  p lannIng 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 
individuals in  the organisation 
are able to work in coordination. 
If there was no planning, empl-
oyees would be working in different 
Planning: Keeping the 
objective in view and 
being in action
2015-16(21/01/2015)
98 Business Studies
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: Plan-
ning serves as the basis of 
coordinating the activities and 
efforts of different divisions, 
departments and individuals. It 
helps in avoiding confusion and 
misunderstanding. Since plan-
ning  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 eva-
luate 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 inv-
olves 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 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.
2015-16(21/01/2015)
Page 5


Planning Planning
CHAPTER
Gas Authority of India (GAIL) – New Plans Gas Authority of India (GAIL) – New Plans
GAIL India, which has had a monopoly in the gas transmission 
sector is set to see some tough competition in the coming days. 
While Reliance is poised to get into the trunk pipeline segment, 
British Gas is trying to get into the city gas distribution sector. 
GAIL’s new chairman, shares his  thoughts on how he plans to 
take the company ahead.
What are GAIL’s main priorities?
Going by its business strategy, the focus areas are gas sourcing, 
transmission, marketing, processing, petrochemicals, globalisation 
and city gas distribution. We are focussing on sourcing of gas from 
indigenous finds and through LNG and crossborder pipelines. We 
intend to develop the gas market by extending our gas grid from 
5,600 km to 10,000 km. The city gas project is expected to rise 
from 6 to 45 by the end of the 11th five year Plan.
What are GAIL’s plans for acquiring an exploration and 
production (E&P) company abroad?
GAIL has plans to strengthen its exploration and production 
activities. To become a formidable company, GAIL is exploring 
options - acquiring an E&P company is one such option.
What are your Capex plans and how do you plan to fund it?
GAIL’s budgeted Capex plan for FY 06-07 is Rs. 2967.28 crore. 
This includes capital expenditure of Rs. 2579.58 crore on pipeline 
and other projects and Rs. 387.7 crore on petrochemical projects. 
This will be funded through internal reserves. 
What are your plans on city gas distribution? Will GAIL 
continue with its plans on fuel management?  
We have already established the business successfully in Mumbai, 
Delhi, Vadodara, Vijaywada, Agra, Lucknow, Kanpur. Till date GAIL 
has formed eight joint venture companies to implement city gas 
projects. The projects have had an impact on the pollution levels. 
GAIL is in the process of forming state-wise Joint Ventures with oil 
marketing companies to implement city gas projects in Rajasthan.
What are GAIL’s plans to diversify into telecom and what is 
the current status?
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
2015-16(21/01/2015)
96 Business Studies
IntroductIon IntroductIon You have just read about the plans of 
Gas Authority of India Limited (GAIL), 
It is one of our leading public sector 
companies. The plans discussed by  
the Chairperson, GAIL are real plans  
of the company and how they 
would like to go about achieving 
their objectives. 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 
in the public sector 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 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 
Gailtel, the telecom service arm of GAIL, offers telecom services 
commercially to lead telecom operators across India. Gailtel 
owns and operates approximately 13,000 route km of fibre optic 
network, GAIL is evaluating various options to work out its future 
growth plans.
Source: The Economic Times, October 2006 
2015-16(21/01/2015)
Planning 97
approach for achieving predetermined 
objectives. All  members, therefore, 
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 lannIng Importance of  p lannIng 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 
individuals in  the organisation 
are able to work in coordination. 
If there was no planning, empl-
oyees would be working in different 
Planning: Keeping the 
objective in view and 
being in action
2015-16(21/01/2015)
98 Business Studies
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: Plan-
ning serves as the basis of 
coordinating the activities and 
efforts of different divisions, 
departments and individuals. It 
helps in avoiding confusion and 
misunderstanding. Since plan-
ning  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 eva-
luate 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 inv-
olves 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 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.
2015-16(21/01/2015)
Planning 99
f eatures of p lannIng f eatures of p lannIng 
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 predet-
ermined organisational goals.
 (ii) Planning is a primary function 
of management: Planning lays  
down the base for other func-
tions of management. All other 
managerial functions are perfor-
med 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 
IT Company Polaris Software Lab is planning a new facility in Mumbai with a capacity 
for 800 professionals.
The company currently has 1,200 professionals across its three centers in Mumbai, 
and the new facility is expected to come up in the next six months.
Polaris chairman and CEO said that the company was well on the track to meet its 
earlier announcement to increase the headcount by 1,500-2,000 professionals in the 
current year to reach the 9,000 mark by March 2007. We will look at acquisition of 
small boutique consulting companies that are focused on banking, financial services 
and insurance (BFSI) space. This will strengthen customer service and account 
management capabilities.
Source: The Economic Times, October 06
Polaris Plans New Facility in Mumbai Polaris Plans New Facility in Mumbai
2015-16(21/01/2015)
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