Notes of Ch 4 Planning| Class 12th Business Studies

Summary and Notes of Ch 4 Planning| Class 12th Business Studies 

Definition of Planning (according to Haimann)

"Planning is deciding in advance what is to be done."

Features of planning

• Planning focuses on achieving objectives.

• Planning is primary function of management.

• Planning is pervasive.

• Planning is continuous.

• Planning is futuristic.

• Planning involves decision making.

• Planning is a mental exercise.

Importance of Planning

• Planning provides Direction: 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.

• Planning reduces the risk of uncertainty: With the help of planning possible changes in future are anticipated and various activities are planned in the best possible way.

• Planning reduces overlapping and wasteful activities: With the help of planning when, how, why are decided in advance so, planning ensures clarity in thought and action, work is carried on smoothly without interruptions.

• Planning promotes innovative ideas: New ideas can take shape when we planned for something.

• Planning facilitates decision: Planning helps the manager to look into the future and make a choice amongst various alternative courses of action.

• Planning establishes standards for controlling: Planning provides the goals or standard against which actual performance is measured.

Limitations of Planning

• Planning leads to rigidity.

• Planning may not work in a dynamic environment.

• Planning reduces creativity.

• Planning involves huge costs.

• Planning is a time-consuming process.

• Planning does not guarantee success.

Planning Process

1. Setting objective
2. Developing premises
3. Identifying alternative courses of action
4. Evaluating alternative courses
5. Selecting an alternative
6. Implementing the plan
7. Follow up action

1. Setting objective: The first and foremost step is setting objectives. Objectives or goals specify what the organisation wants to achieve. So first we set objective of the organisation.

Developing Premises: The rate of success of planning will be in direct proportion to the rate of the success of forecasting. The assumptions/premises of planning are of two types:
• Internal premises: capital, labour, raw material, machinery, etc.
• External premises: Government policies, business competition, tastes of customers, rate of interest, rate of taxes.

2. Identifying alternative courses of action: All the alternative courses of action should be identified. The course of action which may be taken could be either routine or innovative.

3. Evaluating alternative courses: All those alternative courses which are up to the expectations of the minimum preliminary criteria are selected for intensive study.

4. Selecting an Alternative: After a careful analysis of different alternatives the best one is selected and one of such alternatives is adopted and the other is kept in reserve because in case of future forecast proves wrong than the reserve one is applied.

5. Implementing the Plan: After having decided the chief plan and subsidiary plans they are to be implemented and decided who will do a particular job and at what time.

6. Follow-up action:  Monitoring the plans are equally important to ensure that objectives are achieved.

Types of Plans

Single-use and standing plans

• Single-use plans: It refers to a plan that is used to meet the needs of a particular or unique situation. A single-use plan is developed for a one-time event or project and it is not repeated in future.

• Standing plan: It refers to a plan that is ongoing and provides guidance for repeatedly performed actions in an organisation. A standing plan is used for activities that occur regularly over a period of time.

Standing or Repeatedly Used plans

• Objectives: These are very basic to the organisation and they are defined as ends which the management seeks to achieve by its operations.

• Strategy:  A strategy is a comprehensive plan formulated to achieve an objective. This comprehensive plan will include 
1) Determining long term objectives.
2) Adopting a particular course of action. 
3) Allocating resources necessary to achieve the objectives.

• Policy: Policies are those general statements which are decided for the guidance of the employees while taking decision.

• Procedure: Procedures are those plans which determine the sequence of any work performance for example the recovery of money from the debtors.

• Method: Method is that plan which determines how different activities of the procedure are completed. The method may vary from task to task.

• Rule: Rules tell us what is to be done and what is not to be done in a particular situation. They are usually the simplest type of plans because there is no compromise or change unless a policy decision is taken.

• Programme: Programmes are detailed statements about a project which outlines the objectives, policies, procedures, rules, tasks, human and physical resources required and the budget to implement any course of action.

• Budget: A budget is that planning which provides details about estimated money, material, time and other resources for the achievement of pre-determined objectives of various departments.

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