Previous Year Short & Long Questions With Answers - Planning | Business Studies (BST) Class 12 - Commerce PDF Download

Short Answer Type Questions

Q. 1. Explain any three limitations of planning.
                                                              Or
State any three limitations of the planning function of management.
Ans. Limitations of planning:
(i) Leads to rigidity.
(ii) May not work in a dynamic environment.
(iii) Reduces creativity.
(iv) Involves huge costs.
(v) Time-consuming.
(vi) Does not guarantee success.

Detailed Answer: Limitations of Planning:

• Planning leads to rigidity: In an organization, 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. Managers need to be given some flexibility to be able to cope with the changed circumstances. Following a pre-decided plan, when circumstances have changed, may not turn out to be in the organization's interest.
• Planning may not work in a dynamic environment: The business environment is dynamic and consists of a number of dimensions, economic, political, physical, legal, and social dimensions. The organization has to adapt itself to changes constantly. It becomes difficult to accurately assess future trends in the environment if economic policies are modified, political conditions in the country are not stable, or there is a natural calamity.
• Planning reduces creativity: Planning is an activity that is done by the top management. Usually, the rest of the members just implement 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 get lost or reduced. Thus, planning, in a way, reduces creativity since people tend to think along the same lines as others. There is nothing new or innovative.
• Planning involves huge costs: When plans are drawn up, huge costs are involved in their formulation. Detailed plans require scientific calculations to ascertain facts and figures. The costs incurred sometimes may not justify the benefits derived from the plans. There are a number of incidental costs as well, like expenses for boardroom meetings, discussions with professional experts, and preliminary investigations to find out the viability of the plan.
• Planning is a time-consuming process: Sometimes, plans to be drawn up take so much time that there is not much time left for their implementation.
• Planning does not guarantee success: The success of an enterprise is possible only when plans are properly drawn up and implemented. Any plan needs to be translated into action, or it becomes meaningless. Managers have a tendency to rely on previously tried and tested successful plans. It is not always true that just because a plan had worked before, it will work again.

Q. 2. Explain any three points of importance of planning.
                                                            Or
Explain any three points that highlight the importance of planning.
Ans. Importance of planning:
(i) Provides directions.
(ii) Reduces the risk of uncertainty.
(iii) Facilitates decision-making.
(iv) Reduces overlapping and wasteful activities.
(v) Promotes innovative ideas.
(vi) Establishes standards for controlling.

Detailed Answer: Importance of Planning:

• 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 organization has to do and what they must do to achieve those goals.
• Planning reduces the risks of uncertainty: Planning is an activity that 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.
• Planning reduces overlapping and wasteful activities: Planning serves as the basis for 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.
• 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 the growth and prosperity of the business.
• Planning facilitates decision-making: Planning helps the manager to look into the future and make a choice among various alternative courses of action. The manager has to evaluate each alternative and select the most viable proposition.
• Planning establishes standards for controlling: Planning involves the setting of goals. The entire managerial process is concerned with accomplishing predetermined goals through planning, organizing, 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.

Q. 3. What are the main points in the definition of planning?
Ans. The main points in the definition of planning are:
(i) Planning is deciding in advance what to do, how to do and who is going to do it.
(ii) Planning is closely connected with creativity and innovation.
(iii) Planning seeks to bridge the gap between where we are and where we want to go.

Q. 4. Rahul decided to start a desert cooler manufacturing business. He sets the target of earning 20% profit on sales in the first year. He was very much concerned about the future prospects of the business, which were uncertain. For this, he gathered information from the potential market and analyzed that the demand for wall-mounted coolers is increasing day by day. He used this information as the base for future planning. On the basis of the gathered information, he called a meeting in the following week to find new methods to achieve the objective.
(i) Identify the function of management involved in the above case.
(ii) Enumerate the next two steps, which have been followed by Rahul that are related to the process of one of the functions of management.
Ans. (i) The function of planning is involved.
(ii) The next two steps would have been

• Identifying alternative courses of action.
• Evaluating alternative courses of action.

Q. 5. 'Planning is certainly important as it tells us where to go, it provides direction and reduces the risk of uncertainty by preparing forecasts.' This statement enumerates some of the points highlighting the importance of planning. State any three points of importance of planning not mentioned in the statement.
Ans. Importance of Planning:
(i) Planning reduces overlapping and wasteful activities by coordinating the activities of different divisions.
(ii) Planning promotes innovative ideas requiring the application of mind and foresight.
(iii) Planning facilitates decision-making by making a choice among the alternative courses of action.
(iv) Planning establishes standards against which actual performance is measured.

Q. 6. In 2015, Naveen left his luxurious life in Mumbai, where he worked as a manager for Blue Birds Ltd. He shifted to Begampur, Chhattisgarh, to fulfill his grandmother’s dream of converting their 25-acre ancestral land into a fertile farm. For this, he set out specific goals along with the activities to be performed to achieve the goals. Every activity was a challenge since he was clueless about farming. He learned every activity, from tilling the land to sowing the seeds. To aid farmers, he launched his own company ‘Innovative Agriculture Solutions Pvt. Ltd’. It was difficult initially as no one trusted an urban youth to tell farmers about farming. But when everything was discussed in detail, the farmers started taking an interest. He wanted to ensure that future events effectively meet the best interests of the company. Through sales forecasting, he prepared an annual plan for production and sales. He also found that the farmers grew only paddy, which was an activity of 3-4 months and the land remained idle for the rest 8-9 months of the year. He not only identified but evaluated various alternatives through which the farms could be utilized for the remaining months of the year. Through correct foresight and logical and systematic thinking based on analysis of all facts, all alternatives were examined and evaluated. He presented a plan to the farmers, where after harvesting paddy, vegetables could be grown. The above case highlights the features of one of the functions of management. By quoting lines from the above, identify and explain these features.
Ans. Features of planning are:
(i) 'He set out specific goals along with the activities to be performed to achieve the goals'

Planning focuses on achieving objectives: Planning focuses on achieving objectives as specific goals set out in the plans along with activities to be undertaken to achieve the goals.
(ii) ‘He wanted to ensure that the future events meet effectively meet the best interests of the company’ Or ‘Through sales forecasting, he prepared an annual plan for production and sales’
Planning is futuristic: Planning is futuristic as it involves looking ahead and preparing for the future.
(iii) ‘He not only identified but evaluated various alternatives through which the farms could be utilized for the remaining months of the year’ Or ‘…. all alternatives were examined and evaluated’ 

Planning involves decision making: Planning involves decision making as it involves a choice among the various alternative courses of action.
(iv) ‘Through correct foresight and logical and systematic thinking based on analysis of all facts…’. Planning is a mental exercise: Planning is a mental exercise as it is an intellectual activity of thinking rather than doing.

Q. 7. Define ‘Planning.’ Explain the first two steps in the process of planning.
Ans. Planning is the process of setting objectives for a given time period, formulating various courses of action, and then selecting the best possible alternative from among the various courses of action available. The first two steps in the process of planning are:
(i) Setting objectives
(ii) Developing premises.
Detailed Answer:
(i) Setting Objectives: The first step in planning is to identify certain objectives. The objectives set must clearly indicate what is to be achieved, where action should take place, who should perform it, and when it is to be accomplished. The objectives should be established for the entire organization and for each and every department. Planning has no utility if it is not related to certain objectives.
(ii) Developing Premises: The next step is the establishment of planning premises. Planning premises are the assumptions and predictions about the future. The assumptions are the basis of planning. Forecasting is important in planning. It helps in making realistic assumptions about sales, costs, prices, products, etc., in the future. This requires a collection of data on present trends and future possibilities.
Q. 8. ‘Indian Drugs and Pharmaceuticals Ltd.’ is engaged in the manufacturing and distribution of medicines. The company has set up an objective of increasing its sales turnover by 20%. To achieve this objective, the company has decided to diversify into baby health care products. Since the company has already set its objectives and developed premises based on the same, it wants your help for the remaining steps to be taken in this process. Explain these steps briefly.
                                                                    Or
‘Dr. Rao Pharmaceuticals Ltd.’ is engaged in the manufacturing and distribution of medicines. The company has set up an objective of increasing its sales turnover by 18%. To achieve this objective, the company has decided to diversify into baby health care products. Since the company has already set its objectives and developed premises based on the same, it wants your help for the remaining steps to be taken in this process. Explain these steps briefly.
Ans. The remaining steps to be taken in the process of Planning are:
(i) Identifying and Evaluating alternative courses of action.
(ii) Selecting an alternative.
(iii) Preparation of derivative plans.
(iv) Implementing the plan and follow-up action.
Detailed Answer:
(i) Identifying alternative courses of action: All the alternative courses of action are identified.
(ii) Evaluating alternative courses: The positive and negative aspect of each alternative is evaluated.
(iii) Selecting an alternative: The most feasible, profitable, and least negative consequences alternative is selected as the plan.
(iv) Implementing the plan: The selected plan is put into action.

Q. 9. Having transformed 2500 Kirana stores across eight cities into virtual supermarkets, the start-up Quick Bizz further decided in advance to collaborate with 15,000-20,000 store owners in the top 30 cities of the country by the end of this year. The company has set its eye on digitizing over 1,00,000 kiryana stores over the next 18-24 months.
(i) Identify and explain the step in the process of one of the functions of management discussed above.
(ii) Also explain the last step to be performed by Quick Bizz as part of the process.
Ans. (i) Following is the step in process of Planning:
Setting objectives: The first and foremost step is setting objectives. Objectives may be set for the entire organization and each department or unit within the organization. Objectives or goals specify what the organization wants to achieve. Objectives should be stated clearly. Management must contribute ideas and participate in the objective-setting process. If the end result is clear, it becomes easier to work towards the goal.
(ii) Following is the last step to be performed by Quick Bizz as part of the process of Planning: Follow-up action: To see whether plans are being implemented and activities are performed according to schedule is also part of the planning process. Monitoring the plans is equally important to ensure that objectives are achieved.

Q. 10. Explain ‘Objectives’ as a type of Plan.
Ans. Objectives are the desired end results towards which organizational activities are aimed. Objectives are statements of results to be achieved in particular areas of business during a specified period of time. They provide a sense of direction, the rationale or justification for the existence of the organization, for example, to raise the market share of the product produced by our organization by 5% over a period of 2 years.

Q. 11. Explain ‘Programme‘ as a type of Plan.
Ans. Programs are detailed statements about a project which outline the entire gamut of activities, the objectives, policies, procedures, rules, strategies, tasks, and the budget to implement any course of action. Programme is a concrete scheme of action designed to accomplish a given task. Programme is a single-use plan in which the minutest details are worked out i.e., procedures and rules, within the broad policy framework.

Q. 12. Explain ‘Procedure‘ as a type of Plan.
Ans. A Procedure is a series of steps that make up a chronological sequence as an established way of performing the work to be accomplished. It gives a sequence of actions to be followed in particular circumstances to complete a work. For example, the Procedure for the selection of candidates includes the following steps: Preliminary Screening, Selection Tests, Employment interview, Selection decision, Medical examination, Employment contract, Induction, and placement.

Q. 13. Explain 'Policy' as a type of Plan.
Ans. Policies are the general statements that guide the thinking and action of the members of the organization. A policy serves as a guide to decision-makers to channel the energy in a proper direction. It provides direction to deal with a particular situation. Such a policy is the general response to a particular problem or situation.‘ Policies guide the managerial action and decisions in the implementation of the strategy. For example, sales policy, recruitment policy, etc.

Q. 14. Explain ‘Method’ as one of the types of Plans.
Ans. The method provides the prescribed ways or manner in which a task has to be performed considering the objectives. It deals with a task comprising one step of a procedure and specifies how the step is to be performed. Methods may vary from task to task.

Q. 15. Explain 'Strategy' as one of the types of plans.
Ans. A strategy provides the broad contours of an organization’s business. It is a unified comprehensive integrated long-term plan that relates the strategic advantages of the firm to the challenges of the environment. It is designed to ensure that the basic objectives are achieved through proper execution. Thus a strategy includes three dimensions:
(i) Determining long-term objectives.
(ii) Adopting a particular course of action.
(iii) Allocating resources necessary to achieve the objectives.

Q. 16. Vardan Patel started the business of preparation and supplying sweets through home delivery at a production cum show-room ‘Express Sweets’ in Ahmedabad. He made a plan forecasting the sales of different types of sweets in various localities of Ahmedabad for each month of the year to earn a profit of 20% on Capital employed. He sets a sales target of ` 20,00,000 in the current year with a 10% increase every year. He then set the criteria for selecting suppliers from whom he would make purchases of raw materials. The planning paid off, and the business was able to achieve its targets.
(i) Identify any two types of plans by quoting the lines from the above.
(ii) Also, give the meaning of the types of plans identified in part (a) above.
Ans. (i) The two types of plans are:
(a) Objective: ‘He set a sales target of ` 20,00,000 in the current year with a 10% increase every year.’
                                                                  Or
‘He made a plan forecasting the sales of different types of sweets in various localities of Ahmedabad for each month of the year to earn a profit of 20% on Capital employed.’
(b) Policy: ‘He then set the criteria for selecting suppliers from whom he would make purchases of raw material.’
(ii) Objective: An objective is an end that the management seeks to achieve within a given time period, expressed in quantitative terms.
Policy: A policy is a general guideline that brings uniformity in decision-making for the achievement of predetermined objectives.

Long Answer Type Questions

Q. 1. After completing her studies in product design, Sarah wishes to start her own business to design products to cater to the mobility and communication requirements of persons with special needs. She told her friend that she wanted to focus on supplying high quality and affordable products on “no profit – no loss basis”. The Unique Selling Proposition (U.S.P.) of the products will be sensitivity to challenges and needs of the differently abled. She has to follow a series of steps to attain her predetermined objectives. In the above lines, Sarah has discussed about one of the functions of management. Identify the function and state its steps in chronological order other than the one discussed in the above para. [Outside Delhi Set-I, II, III (Comptt.) 2017]
Ans. Planning. Steps in the process of Planning are:
(i) Developing Premises which involves making assumptions about future, upon which plans are to be withdrawn.
(ii) Identifying alternative courses of action which may be used to achieve the set objectives.
(iii) Evaluating alternative courses of action and selecting the best alternative which involves scrutinising the feasibility and consequences of each alternative before a choice is made.
(iv) Implementing the plan which involves seeing whether plans are put into action.
(v) Follow up which involves seeing that activities are performed according to plans.
Detailed Answer:
(i) Developing Premises: Premises refers to making assumptions regarding future. The assumptions are made on the basis of forecasting. Forecast is the technique of gathering information.
(ii) Identifying Alternative Courses of Action: After setting up of objectives the managers make a list of alternatives through which the organisation canachieve its objectives.
(iii) Evaluating Alternative Courses: After making the list of various alternatives along with the assumptions supporting them the manager starts evaluating each and every alternative.
(iv) Selecting an Alternative: The best alternative is selected but as such there is no mathematical formula to select the best alternative. Some times instead of selecting one alternative a combination of different alternatives can also be selected.
(v) Implementing the Plan: This is the step where other managerial functions also come in to the picture. The step is concerned with putting the plan into action i.e., doing what is required.
(vi) Follow-up Action: Planning is a continuous process so the manager’s job does not get over simply by putting the plan into action. The manager monitor the plan carefully while it is implemented.

Q. 2. Two years ago, Madhu completed her degree in food technology. She worked for sometime in a company manufacturing chutneys, pickles and murabbas. She was not happy in the company and decided to have her own organic food processing unit for the same. She set the objectives and the targets and formulated action plan to achieve the same. One of her objective was to earn 10% profit on the amount invested in the first year. It was decided that raw materials like fruits, vegetables, spices etc. will be purchased on three months credit from farmers cultivating organic crops only. She also decided to follow the steps required for marketing of the products through her own outlets. She appointed Mohan as a Production Manager who decides the exact manner in which the production activities are to be carried out. Mohan also prepared a statement showing the number of workers that will be required in the factory throughout the year. Madhu informed Mohan about her sales target for different products, area wise for the forthcoming quarter. While working on the production table a penalty of ` 100 per day for not wearing the caps, gloves and apron was announced. Quoting lines from the above para identify and explain the different types of plans discussed. [Delhi Set I 2016]
OR
Two years ago, Mayank obtained degree in food technology. For some time he worked in a company manufacturing bread and biscuits. He was not happy in the company and decided to have his own bread and biscuits manufacturing units. For this, he decided the objectives and the targets and formulated action plan to achieve the same. One of his objective was to earn 50% profit on the amount invested in the first year. It was decided that raw materials like flour, sugar, salt etc. will be purchased on two months credit. He also decided to follow the steps required for marketing the products through his own outlets. He appointed Harsh as a Production Manager who decided the exact manner in which the production activities are to be carried out. Harsh also prepared a statement showing the requirement of workers in the factory throughout the year. Mayank informed Harsh about his sales target for different products, area wise for the forth coming quarter. While working on the production table, a penalty of ` 150 per day was announced for not wearing the helmet, gloves and apron by the workers. Quoting lines from the above para identify and explain the different types of plans discussed. [Outside Delhi Set I 2016]
Ans. The different types of plans are:
(i) Objective: ‘One of her objective is to earn 10% profit on the amount invested in the first year.’ An objective is the end which the management seeks to achieve within a given time period.
(ii) Policy: ‘It was decided that raw materials like fruits, vegetables, spices etc. will be purchased on three months credit from farmers cultivating organic crops only.’ Policy is a general guideline which brings uniformity in decision making for achievement of predetermined objectives.
(iii) Procedure: ‘She also decided to follow the steps required for marketing of the products through her own outlets.’
OR
‘She appointed Mohan as a Production Manager who decides the exact manner in which the production activities are to be carried out’. It consists of sequence of routine steps on how to carry out activities. It details the exact manner in which any work is to be performed.
(iv) Budget: ‘Mohan also prepared a statement showing the number of workers that will be required in the factory throughout the year.’
OR
‘Madhu informed Mohan about the sales target for different products, areawise for the forthcoming quarter.’ A budget is plan which states expected results of a given future period in numerical terms. It may be expressed in time, money or physical units.
(v) Rule: ‘While working on the production table, a penalty of ` 150 per day for not wearing the caps, gloves and aprons was announced.’ A rule is a statement that specifies what is to be done or not to be done.