CHAPTER 4 Planning

4.1 Planning: Concept, Importance and Limitations

MCQ
1. "The purpose of planning is to meet future events effectively to the best advantage of an
organisation". This statement highlights which of the following features of planning?
(a) Planning focuses on achieving objectives

(b) Planning involves decision-making

(c) Planning is the primary function of management

(d) Planning is futuristic

(2023)

2. _______provides the standards against which actual performance is measured.

(a) Controlling
(b) Planning
(c) Directing
(d) Staffing
(Term-I, 2021-22)

3. Planning ensures that the goals 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 to achieve those goals.
The above para highlights the following point of importance of planning:

(a) Planning promotes innovating ideas.

(b) Planning establishes standards for controlling.

(c) Planning provides direction.

(d) Planning is pervasive.

(Term-I, 2021-22)

4. The owner of 'Sweet Moments' wedding hall spent a great deal of time, money and effort in
renovation expecting a bumper wedding season in 2020 but due to the pandemic, weddings became
intimate home affairs and not many bookings happened.
The limitation of planning highlighted in the above case is :

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 (a) It reduces creativity

(b) It may not work in a dynamic environment

(c) It leads to rigidity

(d) It is time consuming.

(Term-I, 2021-22)

5. Prem Lal, the Managing Director of Awasthi Ltd., retired after 33 years of service. The responsibility
was given to Raj. Raj realised that there was lot of rivalry, confusion and misunderstanding among
the departmental heads. He detected inefficiencies, took corrective measures and developed a master
plan for the organisation to follow. This served as a basis for coordinating the activities of all the
departments, led to clarity of thought and action and work got off to a smooth start.
(a) Planning reduces overlapping and wasteful activities.

(b) Planning establishes standards for controlling.

(c) Planning reduces the risks of uncertainty.

(d) Planning promotes innovative ideas.

(Term-I, 2021-22)

6. 'Esya Cars' was founded by engineers who wanted to prove that people don't need to compromise to
drive electric vehicles. They took it as a challenge and new ideas took the shape of concrete plans. In
July, 2021, they launched their first set of all electric cars, proving to the world that electric vehicles
can be better, quicker and more fun to drive than gasoline cars. The point of importance of planning
discussed in the above case is :
(a) Planning reduces the risk of uncertainty

(b) Planning reduces overlapping and wasteful activities

(c) Planning promotes innovative ideas

(d) Planning establishes standards for controlling

(Term-I, 2021-22)

7. 'Surya Fashion Ltd.', hired Suresh Malhotra, an ace fashion designer to develop a new product line.
He charged 50 lakh for consultation. The company spent another 15 crores in formulating the
marketing campaign for launching their new product line. Their products were not liked by the
consumers and the company could generate a revenue of 15 lakh only from this product line. Thus,
the cost incurred is not justifying the benefits derived from the plans.
Which limitation of planning; is reflected in the above para?

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SOLUTIONS
 (a) Planning is time consuming

(b) Planning involves huge costs

(c) Planning leads to rigidity

(d) Planning reduces creativity (Term-I, 2021-22)

8. Which of the following statements correctly explains the limitation of planning 'Planning does not
guarantee success'?
(a) Planning is required at all levels of management and in all the departments of the organization.

(b) Planning involves through examination and evaluation of available alternatives.

(c) Relying on a previously tried and tested successful plan just because it had worked before and will
work again.

(d) By deciding in advance the tasks to be performed, planning shows the way to deal with changes
and uncertain events.

(Term-I, 2021-22)

9. 'Planning is an intellectual activity of thinking rather than doing'. Which feature of planning is
highlighted in this statement?
(a) Planning focuses on achieving objectives.

(b) Planning is futuristic.

(c) Planning involves decision making.

(d) Planning is a mental exercise. (Term-I, 2021-22)

10. 'Uttam Ayurvedic Ltd.' is an established Indian company manufacturing organic consumer goods like
toothpastes and shampoos. It has planned to increase its market share from 30% to 40% in the
current financial year.
With the expanding market of organic products, other companies in the consumer goods industry
have also launched these products with organic components. The competition in the market has
increased and it was found that the sales of Uttam Ayurvedic Ltd. came down and its market share
was reduced to 23%.

Identify the limitation of planning highlighted in the above case :

(a) Planning may not work in dynamic environment

(b) Planning is time consuming

(c) Planning involves huge costs

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SOLUTIONS
 (d) Planning reduces overlapping and wasteful activities.

(Term-I, 2021-22)

VSA (1 mark)
11. Varsha Jain after completing her fashion designing course form Indian Institute of Fashion
Technology planned to enter into designer clothing venture. She had to address issues like her target
customers, channel of distribution to be used, pricing policy etc. Identify the type of plan that Varsha
Jain needs to develop to provide direction and scope to her organisation in the long run.
(Delhi 2019)

12. All business firms would like to increase their sales and earn profits to be successful. All managers
dream of these. To turn their dreams into reality, managers need to work hard in thinking about the
future, in making business predictions and achieving targets.
The above lines describe one of the functions of management. Identify and define this function.

(Al 2019)

13. Define 'Planning premises'.

(Delhi 2015) R

14. Define 'Planning'.

(Delhi 2015, Al 2015 C)

15. 'Dreams can be turned into reality only when a manager thinks in advance, what to do and how to do
it'? Name the function of management indicated by the statement.
(Delhi 2014 C)

16. State the type of plan that does not allow any flexibility.
(Delhi 2014 C)

17. 'Deciding in advance what to do and how to do is one of the basic management functions'. Give the
meaning of this function.
(Al 2014 C)
SA I (3 marks)

18. Explain any three points of importance of 'Planning'.

(Al 2019)

19. Does planning guarantee success? Explain.

(Foreign 2019)

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SOLUTIONS
 SA II (4 marks)
20. Mega Ltd. holds an Annual Management Programme every year in the month of March in which the
top managerial personnel formulate plans for the next year by analysing and predicting the future to
meet future events effectively.
As they are responsible for providing direction to the organisation, facts are thoroughly checked
using scientific calculations.

Detailed plans are prepared after discussion with professional experts. Preliminary investigations are
also undertaken to find out the viability of the plan. Since it is an intellectual activity requiring
intelligent imagination and sound judgement so it is mainly done by the top management. Usually
rest of the members just implement the plans. Middle level managers are neither allowed to deviate
from the plans nor are they permitted to act on their own. The top management ensures that the
expenses incurred in formulating the plans justify the benefits derived from them.

State any two limitations and any two features of planning discussed above.

(Delhi 2019)

21. 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 fulfil 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 learnt every activity from
filling the land to sowing the seeds. To acid farmers he launched his own company 'Innovative
Agriculture Solutions Pvt. Ltd.'

It was difficult initially as no one trusted an urban youth telling farmers about farming. But when
everything was discussed in detail the farmers started taking interest. He wanted to ensure that the
future events meet effectively 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 utilised 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.

(AI 2018)

22. It is deciding in advance what to do and how to do. It is one of the basic managerial functions. It
requires that before doing something, the manager must formulate an idea of how to work on a
particular task. This function is closely connected with creativity and innovation. It seeks to bridge

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SOLUTIONS
 the gap between where we are and where we want to go and is performed at all levels of
management.
Inspite of this, the function of management referred above has a number of limitations. Explain any
two such limitations.

(Delhi 2015 C)

LA (5 marks)
23. State any five features of 'Planning'.

(Delhi 2015)

24. Explain any five limitations of planning.

(NCERT, Delhi 2015)

ET (6 marks)
25. 'It involves setting objectives and developing appropriate course of action from amongst the different
alternative courses of action to achieve these objectives.'
(a) Identify the function of management referred above.

(b) State any five features of the function of management identified in (a) above.

(2023)

26. Explain the following limitations of planning:

(i) Planning reduces creativity

(ii) Planning involves huge costs.

(2023)

27. Planning 'provides direction', 'reduces the risk of uncertainty' and 'promotes innovative ideas'.
Explain.
(2021C)

4.2 Planning Process

MCQ

28. In one of the steps in the process of planning, the manager is required to make certain assumptions
about the future which are the base material upon which plans are to be drawn. Identify the step:
(a) Setting objectives

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SOLUTIONS
 (b) Developing premises (c) Identifying alternative courses of action

(d) Selecting an alternative

(Term-I, 2021-22)

29. Amulya wants to start her own cafe. Her long-term goal is to get 40% of the market share. For this
she gathered information and made forecasts about the potential demand, purchasing power of the
consumers as well as preferences of the consumers and government policy towards this business, etc.
By doing this, Amulya had completed some steps in the process of planning.
Choose the step in the planning process that Amulya has to follow next:

(a) Setting objectives

(b) Developing premises

(c) Identifying alternative courses of action

(d) Evaluating alternative courses

(Term-I, 2021-22)

30. Which step in the process of 'Planning' function of management involves weighing pros and cons of
each alternative?
(a) Developing Premises

(b) Identifying alternative courses of action

(c) Evaluation alternative courses

(d) Selecting an alternative

(Term-I, 2021-22)

31. The step in the process of 'planning' which is concerned with putting the plan into action i.e. doing
what is required is called:
(a) Implementing the plan

(b) Follow-up action

(c) Developing premises

(d) Selecting an alternative.

(Term-I, 2021-22)

32. Ritu Kapoor has set up a bakery, 'Bakes and Cakes' in Pune. She receives online orders for cakes
from within the city and supplies them on the same day. She set a target that she would earn a

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SOLUTIONS
 revenue of ₹ 5,00,000 in the first year. She informed her employees about the target and asked them
to contribute ideas to achieve the same:
Ritu Kapoor has performed the first step in the process of one of the functions of management. The
next step to be performed is:

(a) Identifying alternative courses of action.

(b) Setting objective

(c) Developing premises

(d) Follow-up action

(Term-I, 2021-22)

33. Which of the following is not a step in the process of planning?

(a) Making assumptions about the future

(b) Evaluating different proposals in light of the objectives to be achieved

(c) Allocation of jobs to members of each department

(d) Seeing whether activities are performed as per schedule or not

(2020 C)

VSA (1 mark)

34. Saurabh decided to start a chocolate manufacturing business. He set the target of earning 10% profit
on sale in the first year. As a good businessman, he was concerned about the future of the business,
which was uncertain. He gathered information that the demand for chocolates is increasing day-by-
day. He used this information as the base for future planning and shared it with his team. On the basis
of the gathered information, he scheduled a meeting in the following week to find innovative ways to
achieve the objectives.
List the first two steps, which have been followed by Saurabh that are related to the process of one of
the functions of management.

(2018)

SA I (3 marks)

35. Define 'Planning'. Explain the first two steps in the process of planning.
(Al 2016)

SA II (4 marks)

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SOLUTIONS
36. After the following logical steps in the process of planning, explain the steps required to complete the
following process:
(a) Setting objectives

(b) Developing premises; and

(c) Identifying alternative courses of action.

(Delhi 2014 C)

37. How does planning 'Lead to rigidity' and 'Reduce creativity'? Explain.
(Al 2014 C)

38. 'Process of planning involves certain logical steps.' Explain the first four steps of this process.
(NCERT, AI 2014 C)

LA (5 marks)
39. 'All the available alternatives are evaluated in the light of their feasibility and consequences'. This is
one of the steps in the process of 'planning'. Explain the steps followed by this.
(2021C)

4.3 Single Use and Standing Plans. Objectives, Strategy, Policy, Procedure, Method, Rule,
Budget and Programme
VSA (1 mark)

40. State, giving reason, whether the following statement is true or false:
"A rule is the prescribed way or manner in which a task has to be performed considering the
objective."

(2020 C)

41. How are 'Policies' and 'Procedures' interlinked?

OR
What is meant by 'Developing Premises' in the process of planning?

(Foreign 2019)

42. Give the meaning of 'Method' as a type of plan.

(Al 2019, Delhi 2015, 2018)

43. Give the meaning of 'Objectives' as a type of plan.

(AI 2015)

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SOLUTIONS
44. Give the meaning of 'Policy' as a type of plan.
(Al 2015, Delhi 2014)

45. Give the meaning of 'Programme' as a type of plan.

(Al 2015)

46. Name the type of plan which is in the form of general statement, that guides thinking towards a
particular direction and helps in solving routine problems.
(Al 2014 C)

SA I (3 marks)
47. Explain the following as limitations of planning:
(a) Planning leads to rigidity

(b) Planning involves huge costs

(c) Planning does not guarantee success.

(2020 C)

SA II (4 marks)
48. Give the meaning of 'policy' and 'strategy' as types of plans.
(Delhi 2017)

LA (5 marks)
49. Matta Auto Ltd. is manufacturing different types of commercial vehicles. Their sales were rupees two
hundred crore in the previous year. The company decided to increase sales by 20% during the current
year. It conducted internal as well as external audits for the same. Through internal audit, they
analysed the strengths and weaknesses of the business across all departments. External audit focused
on the opportunities and the threats in the constantly changing business environment. Thus, a
comprehensive plan was prepared taking into consideration the business environment and the
necessary resources were allocated to achieve the target. The company directed its offices throughout
the country to follow the plan. The company's commitment to develop effective plans to achieve a
consistent increase in sales has ensured its continual growth over the past one decade.
Identify and explain the two types of plans discussed above.

(Al 2019)

50. Two years ago Madhu completed her degree in food technology. She worked for sometime in a
company manufacturing chutneys, pickles, murabbas. She was not happy in the company and decided

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SOLUTIONS
 to have her own organic food processing unit. She set the objectives and the targets and formulated
action plan to achieve the same.
One of her objectives 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 decided
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 2016)

ET (6 marks)
51. Explain 'Policy' and 'Method' as type of plans.
(2023)

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SOLUTIONS