Planning Notes (Class 12 - Business Studies)
1. De nition of Planning
• Planning is the process of setting objectives and deciding the best way to achieve them.
• It is a primary function of management as it lays the foundation for other managerial activities
2. Importance of Planning
1. Provides Direction: by deciding in advance what action shoal be taken.
2. Reduces Risks of Uncertainty: Anticipates future events and prepares for them.
3. Facilitates Decision-Making: Helps in choosing the best course of action from alternatives.
4. Minimizes or (overlapping) Wastage of Resources: Ensures e cient use of resources by
avoiding duplication.
5. Promotes Innovative Ideas: Encourages creative thinking by exploring new methods and
solutions.
6. Establishes Standards for Control: Sets benchmarks to evaluate performance.
3. Features of Planning
1. Primary Function of Management: Planning precedes other functions like organizing,
sta ng, etc.
2. Focused on Achieving Objectives: Planning aligns activities to meet organizational goals.
3. Pervasive: Applicable at all levels and in all departments of an organization.
4. Continuous Process: Planning is ongoing due to changing circumstances.
5. Futuristic: Involves forecasting and anticipating future events.
6. Involves Decision-Making: Requires selecting the best option among alternatives.
7. Dynamic: Needs to adapt to environmental changes.
8. Planning is a mental exercise : because it is an intellectual activity of thinking.
4. Steps in the Planning Process [ S-DIES-IF ]
1. Setting Objectives: Determine what needs to be achieved.
2. Developing Premises: Make assumptions about the future in the form of forecasts.
(economic conditions, trends).
3. Identifying Alternative Courses of Action: Brainstorm multiple approaches to achieve
objectives.[ to achieve the set objective ].
4. Evaluating Alternatives: Assess each option based on feasibility, pro tability, and risks.
[ Positive and negative aspects] .
5. Selecting the Best Alternative: Choose the most suitable plan.[ after analysingzing feasibility
and consequences of each alternative ].
6. Implementing the Plan: Put the chosen plan into action.
7. Follow-up and Monitoring: Evaluate the plan’s e ectiveness and modify if required.
5. Types of Plans
1. Standing Plans: Used repeatedly in situations of a similar nature.
◦ Policies: General guidelines for decision-making.
◦ Procedures: Step-by-step methods for handling activities.
◦ Rules: Speci c statements of do's and don’ts.
1. Single-Use Plans: Created for unique, non-repetitive activities.
◦ Budgets: Numerical plans for allocating resources.
◦ Programmes: Detailed plans for executing complex projects
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• All the planning types ( PPP ROMBS )
1. Objective : Objective are ends which are numerically expressed ,
that management seeks to achieve within a. Given time period, e.g.
increasing sales by 10% in the next quarter. :set by the top management .
: focus on the broad general issue .
2. Strategy : Strategy refers to future decisions de ning the
organisation’s direction and scope in the long run . Example
marketing strategy - which channel of distribution to use? What is the pricing policy ? How to
advertise the product?
:- determining long term objectives of the enterprise.
:- adopting a particular course of action and ,
:- allocation resources necessary to achieve the objective .
3. Rule : rules is a statement that speci es what is to be done
or not to be done . It does not allow any exibility ; it prescribes
a penalty for violation . Example : no smoking in the o ce.
:- Rules are usually the simplest type of plans
because there is no compromise or change unless a policy
decision is taken .
4. Methods : Method is the prescribed way or manner in
which a task has to be done or performed . Selection of a right
method saves the time ,money and e ort and increase
e ciency. Example : training method.
5. Policy : Policy is a general guidelines that guides thinking
or channelizes energy towards a particular direction .
:- it de nes parameters within which a manager
may function .
:- it brings uniformity In decision making.
6. Procedure : Procedure means sequence of routine steps
performed in a chronological order to carry out activities.
:- it details the exact manner in which Any work is
to be performed.
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7. Budget : Budget is a statement of expected results for a
given future period expected result for a given period
expressed in numerical terms . Example; sales budget , cash
budget.
:- Budget is a statement of expenses, revenue
and income for a speci ed period .
:- A budget is also a control device from which
deviations can be taken care of. But making a budget involves
forecasting, therefore, it is a fundamental planning instrument.
8. PROGRAMME :-
Programme is a detailed statement about a project which outlines
the objectives, policies, procedures, rules, resources required and
the budget to implement any course of action. Examples:
Construction of a shopping mall, opening a new department, etc.
6. Limitations of Planning
1. Rigidity: Once made, plans may not adapt easily to changes.[ can’t change easily ]
2. Costly Process: Requires time, money, and e ort to create detailed plans.
3. Time-Consuming: The process of planning can delay immediate action.
4. Planning may not work dynamic:
5. Planning reduces creativity as middle:
6. Uncertain Environment: Future conditions may invalidate plans.
7. False Sense of Security: Over-reliance on plans may create complacency. ( it does not
give the guarantee success).
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