Planning Class 12 Notes CBSE Business Studies Chapter 4 [PDF]

Planning in Business Studies

Definition

• Planning: Defined as an intellectual process involving conscious determination of actions, decisions based on purpose, facts, and estimates. (Koontz and O'Donnell)

Meaning

• Purpose of Planning: Involves deciding what to achieve and how to do it in advance, being a fundamental managerial function.

• Goal Setting: Establishes goals and strategies to achieve those goals within a limited time frame, emphasizing careful use of time as a resource.

Importance of Planning

1. Provides Directions:

   • Guides actions by clearly defining how tasks will be accomplished, ensuring goals are specified for cohesive efforts.

2. Reduces Risk of Uncertainty:

   • Enables management to anticipate changes and adapt strategies, minimizing surprises.

3. Reduces Overlapping and Wasteful Activities:

   • Coordinates actions across divisions, eliminating ineffective

   • activities and ensuring clarity.

4. Promotes Innovative Ideas:

   • Management's planning initiates new ideas leading to strategies for growth and prosperity.

5. Facilitates Decision Making:

   • Establishing goals and forecasting aids in making informed choices from various options.

6. Establishes Standards for Controlling:

   • Provides benchmarks against which performance can be measured, essential for control.

Features of Planning

1. Focuses on Achieving Objectives:

   • Organizations set general goals and specific strategies to achieve them.

2. Primary Function of Management:

   • Foundational for all subsequent management activities.

3. Pervasive:

   • Required at all management levels and within all departments, although varies by department.

4. Continuous:

   • Involves ongoing cycles of planning, implementation, and reevaluation.

5. Futuristic:

   • Plans are made to effectively address future events and situations for the organization.

6. Involves Decision Making:

   • Choosing among various options is inherent to planning; singular options negate planning.

7. Mental Exercise:

   • Requires logical thinking and foresight, distinguishing it from mere guesswork.

Limitations of Planning

1. Leads to Rigidity:

   • Established plans may become inflexible, needing adaptability to changing environments.

2. May Not Work in a Dynamic Environment:

   • Anticipatory nature of planning can fail as the future is unpredictable.

3. Reduces Creativity:

   • Predefined plans might restrict lateral thinking and creativity of managers.

4. Involves Huge Costs:

   • High financial investment in gathering data and constructing detailed plans may not always yield justifiable benefits.

5. Time Consuming:

   • Developing strategies requires extensive consideration and can be lengthy.

6. Does Not Guarantee Success:

   • Success depends on execution; past successes cannot assure future results.

Planning Process

1. Setting Objectives:

   • Clear articulation of organizational goals, involving all levels and departments.

2. Developing Premises:

   • Making assumption-based forecasts as planning relies on uncertain future events.

3. Identifying Alternative Courses of Action:

   • Generating all possible strategies for achieving objectives, keeping creativity in mind.

4. Evaluating Alternative Courses of Action:

   • Weighing pros and cons of options, using tools like risk-return analysis.

5. Selecting the Best Alternative:

   • Choosing the most feasible and beneficial strategy, potentially combining several plans.

6. Implementing the Plan:

   • Actual execution of the selected plan, requiring resource allocation and organization.

7. Follow Up Action:

   • Continuous monitoring of plan execution to ensure alignment with goals, making adjustments as necessary.

Types of Plans

• Plans fall under Single-use and Standing plans based on their application and duration.

Single Use Plan

• Specifically designed for unique situations; created for one-time events with a variable duration.

  • Example: Marketing campaign outline that becomes obsolete post-event.

Standing Plans

• Established for repeated, ongoing actions; remains relevant over time with necessary updates.

  • Includes policies, procedures, methods, norms.

Components of Plans

1. Objectives:

   • Desired outcomes that are measurable and clearly articulated.

2. Strategy:

   • Long-term direction defining organizational scope and response to conditions.

3. Policy:

   • General guidelines to steer decisions within the organization.

4. Procedure:

   • Detailed steps for completing tasks.

5. Rules:

   • Strict, specific guidelines regarding conduct or actions.

6. Method:

   • Prescribed approaches for task completion.

7. Programme:

   • Comprehensive initiative detailing objectives, processes, and necessary resources.

8. Budget:

   • Financial outline depicting expected results within a set timeframe.