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Decision making in planning refers to selecting best alternative course of action for accomoplishment of the objectives of an organisation.

They are the general statements which serve as guideline in the decision making process.

According to Koontz and O’Donnell “Planning is deciding in advance what to do, how to do, when to do it and who should do it. Planning bridges the gap from where we are & where we want to go”

OR 

According to Louis Allen “Planning involves a development of forecast, objectives, polices, programs procedures, schedules and budgets.

Budget is a statement of expected results expressed in numerical terms.

Correct option is (A) To ensure discipline among employees

A budget is a statement of expected results expressed in numerical terms, it is a plan which quantifies future facts and figures.

(a) Planning involves decision making: planning essentially involves choice from among various alternatives and activities. If there is only one possible goal or a possible course of action, there is no need for planning because there is no choice. The need for planning arises only when alternatives are available. In actual practice, planning pre-supposes the existence of alternatives. Planning, thus, involves thorough examination and evaluation of each alternative and choosing the most appropriate one.

(b) Planning is pervasive: Planning is required at all levels of the management as well as in all departments of the organisation. It is not an exclusive function of top management or of any particular department. But the scope of planning differs at different levels and among different departments. For example, the top management undertakes planning for tire organisation as a whole. Middle management does the departmental planning. At the lowest Ievel, day-to-day operational planning is done by the supervisors.

At all the three levels of management.

Rules are the specific statement which prescribes code of behaviour to the people of and organization and specifies what is to be done and what is not to be done.

Planning is a pervasive function as it is required in all organisations and at all levels of management.

No, efforts have to be made to get success.

Procedures are plan prescribing the exact chronological sequence of specific task. It provides details about series of steps to be followed in a regular order for accomplishing any work.

a.Objectives 

b. Strategy

a. Planning leads to rigidity 

b. Planning does not guarantee success

A single-use plan is developed for a one-time event or project. Such a course of action is not likely to be repeated in future, i.e., they are for non-recurririg situations. These plans include budgets, programmes and projects. It is also called adhoc plan.

A standing plan is used for activities that occur regularly over a period of time. It is designed to ensure internal operations of an organisation run smoothly. Standing plans include policies, procedures, methods and rules.

a. Capital

b. Raw Material.

Correct option is (C) Function of choice

They are the plans prescribing the exact time sequence for the work to be done. Procedures are the guidelines to action and they are suited to the works which are repetitive in nature. 

Examples: Procedure for execution of the customer’s order for supply of goods, Procedure for the admission of students in a college.

(i) Planning provides direction for action: 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 organisation has to do and what they must do to achieve those goals.

(ii) Planning leads to rigidity: In an organisation, 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 organisations interest.

a. Government policies

b. Business competition.

Adhoc plan are also called as single use plan. Adhoc plan are non repetitive in nature. They are designed for a specific situation and for short duration.

Follow up action refers to see whether plans are being implemented it is also a part of planning process. Monitoring the plan is equally important to ensure that objectives are achieved.

Correct option is (A) Defining objectives

It means a constant review of plans so as to ensure success in the uncertain future.

It means choosing the best possible alternative after a careful analysis of various alternatives.

Features of Planning:

i. Planning focuses on Achieving Objectives: Management begins with planning and planning begins with the determining of objectives. In the absence of objectives no organisation can ever be thought about. With the determining of objective, the way to achieve the objective is decided in the planning. It is thus clear that planning is helpful in the attainment of objectives.

ii. Planning is Primary Function of Management: Planning is the first important function of management. The other functions, e.g., organising, staffing, directing and controlling come later. In the absense of planning no other function of management can be performed. This is the base of other functions of management.

iii. Planning is Pervasive: Since the job of planning is performed by the managers at different levels working in the enterprise, it is appropriate to call it all pervasive. Planning is an important function of every manager, he may be a managing director of the organisation or a foreman in a factory.

It means to ensure whether plans are being implemented and activities are performed according to schedule which will help in achievement of goals. 

Setting objectives is the first step in planning process.

Method is that plan which determines how different activities of the procedure are completed. A method is not related to all steps but only to one step of the procedure. It is more detailed than procedure. There may be many methods to do a particular work. After extensive study, a method has to be selected from which a worker feels minimum fatigue, increase in productivity and there is reduction in costs.

 Evaluating alternative courses.

Objective are the ends which the management seeks to achieve by its operations, e,g increase sales by 10%.

Class 12 Business Studies MCQ Questions of Planning with Answers were prepared based on the latest syllabus and examination pattern issued by CBSE. Refer to more MCQ Questions for Class 12 Business studies with Answers for better preparations for exam. So, students can easily understand the logic behind each answer.

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Check the below Class 12 MCQ Questions of Business Studies Planning with Answers to improve score high in exams.

1. Pervasiveness of planning indicates that planning

(a) is a top management function
(b) extends throughout the organisation
(c) is a future-oriented activity
(d) is the first element of management process

2. Which one of the following is an importance of planning?

(a) Reducing uncertainty
(b) Identifying alternatives critically
(c) Developing leadership
(d) Selecting the most appropriate plan

3. Which one of the following is not a limitation of planning?

(a) Dynamic environment
(b) Costly process
(c) Rigidity
(d) Top management approach

4. The basic role of strategy is to provide

(a) setting procedures.
(b) direction for action
(c) direction for motivation.
(d) direction for control

5. Which one of the following plans prescribes chronological steps for performing activities?

(a) Procedure
(b) Rule
(c) Policy
(d) Method

6. Which one of the following is a single-use plan?

(a) Strategy
(b) Rule
(c) Budget
(d) Method

7. Decision-making is the case of __

(a) Planning
(b) Organising
(c) Staffing
(d) Directing

8. ..........is a statement of expected results in numerical terms.

(a) Forecast
(b) Budget
(c) Plan
(d) Estimate

9. .....is a comprehensive plan for achieving its objectives.

(a) Strategy
(b) Method
(c) Rule
(d) Policy

10. ___ is the type of plan which is time-bound and linked with measurable outcome.

(a) Strategy
(b) Policy
(c) Rule
(d) Budget

11. ...specifies the end to be achieved.

(a) Objective
(b) Strategy
(c) Policy
(d) Method

12. ___ are relevant to recurring activities.

(a) Single-use plans
(b) Standing plans
(c) Objectives
(d) Programmes

13. In 2019 alone, Swiggy has launched operations in 300 towns and cities. Swiggy follows a two-step sequence while expanding to a small town. First, it provides more laborious training to restaurants and delivery partners compared to their counterparts in the city. Second, it focuses on building scale in operations and increase the restaurant’s reach to a larger base of consumers, including optimizing kitchens, resource planning among others. Identify the type of plan being described in the above lines.

(a) Method
(b) Strategy
(c) Programme
(d) Procedure

14. Deepak is striving to earn a profit of 30% in the current financial year. Identify the type of plan being described in the above lines.

(a) Method
(b) Objective
(c) Strategy
(d) Programme

15. Which of the following is not a benefit of planning?

(a) Planning reduces overlapping and wasteful activities
(b) Planning is a mental exercise
(c) Planning provides directions
(d) Planning reduces the risks of uncertainty

16. Which of the following statements is not true with reference to planning?

(a) Planning is a pre-requisite for controlling
(b) Planning does not lead to rigidity
(c) Planning enables a manager to look ahead and anticipate changes
(d) Planning facilitates co-ordination among departments and individuals in the organisation

17. Making decisions on the basis of experience, feelings and accumulated judgement is called as

(a) Decision making
(b) Structured problems
(c) Intuitive decision making
(d) None of the above

18. If a firm has decided to sell its product on a cash basis only, it is part of firms

(a) Procedure
(b) Policy
(c) Method
(d) Objectives

19. Is a rule of thumb that managers use to simplify decision making.

(a) Sunk costs
(b) Framing
(c) Heuristics
(d) None of the above

20. The very first Five year plan of India was based on the model of: 

(a) Harrod - Domar model
(b) Mahalanobis model
(c) Bombay plan
(d) All of the above

21. From which country India adopted the Five year plans: 

(a) USSR
(b) USA
(c) Australia
(d) Germany

22. Panchayati Raj system was first adopted by the state 

(a) Uttar Pradesh
(b) Gujrat
(c) Rajasthan
(d) Goa

23. Which of the following is the first step in planning?

(a) Analysing the environment
(b) Establishing objectives
(c) Selecting the best course
(d) Evaluating alternatives

24. Main purpose of Rule is:

(a) To decide that when is to be done
(b) To set the organizational objectives
(c) To Maintain Discipline
(d) To choose the best alternative

25. Development of a new product is a ___________

(a) Programme
(b) Strategy
(c) Procedure
(d) Policy

Answer:

1. Answer: (b) extends throughout the organisation

Explanation: It implies that planning is required at all levels of management as well as in all departments of the organisation.

2. Answer: (a) Reducing uncertainty

Explanation: For example, one way to estimate the amount of time it takes something to happen is to simply time it once with a stopwatch. You can decrease the uncertainty in this estimate by making this same measurement multiple times and taking the average.

3. Answer: (d) Top management approach

Explanation: The plans are rigid in nature and have to be complied with throughout the organisation. Such rigidity of plans may be internal as well as external. Internal rigidity relates to plans, policies, programs, rules, and methods, etc.

4. Answer: (b) direction for action

Explanation: The basic role of a strategy is to provide Direction of Action. A strategy is a plan or a set of plans of action which is formulated by the management or the development team in order to attain long term organizational objectives or the overall aim of the firm.

5. Answer: (a) Procedure

Explanation: A plan differs from a set of procedures in that it is generally more specific as to who will do each task, and when it is to be done. Unlike a set of procedures, a plan may "name names" by identifying the people responsible for each item, and it should ordinarily include target dates and documentation of progress made.

6. Answer: (c) Budget

Explanation: For example, objectives, policies, strategies, rules, procedures etc., are standing plans because once formulated, they will be used for a long period and repeatedly. On the other hand, programmes and budgets are single use plans because once these are achieved, these are to be formulated again.

7. Answer: (a) Planning

Explanation: Planning is thinking of doing. Decision-making is a part of planning. Planning is the process of selecting a future course of action, where Decision-making means selecting a course of action. Planning and decision-making, organizing, leading and controlling are all interrelated.

8. Answer: (b) Budget

Explanation: A statement of expected results expressed in numerical terms for a definite period of time in the future is known as budgets. A budget is an internal tool used by management and is often not required for reporting by external parties.

9. Answer: (a) Strategy

Explanation: Strategy is a comprehensive plan for accomplishing an organisation's objectives. Policies These are general guidelines which facilitate achievement of pre determined objectives. Procedures It is a stipulated sequence of a course of action for handling activities.

10. Answer: (d) Budget

Explanation: Budget is the type of plan which is time bound and linked with measurable outcome.

11. Answer: (a) Objective

Explanation: Objectives or goals, often used interchangeably, are the ends toward which activity is aimed. They represent not only the endpoint of planning but also the end toward which all other managerial functions are aimed.

12. Answer: (b) Standing plans

Explanation: Standing plans are made to be used multiple times. I.e. again and again. These plans are formulated to guide managerial decisions and actions on problems which are recurring in nature.  Like any other plan, standing plans also include goals, procedures, methods and steps, and the ground rules.

13. Answer: (b) Strategy

Explanation: First, it provides more laborious training to restaurants and delivery partners compared to their counterparts in the city. Second, it focuses on building scale in operations and increase the restaurant's reach to a larger base of consumers, including optimizing kitchens, resource planning among others.

14. Answer: (b) Objective

Explanation: Objectives are to bring economy or revenue in managerial operations, to provide specific direction, to bring certainty in future events, to attain predetermined goals, to get victory over competitions, and to forecast.

15. Answer: (b) Planning is a mental exercise

Explanation: Planning is a mental exercise as it includes deciding and thinking ahead of time about what one can do, when it is to be done and how it is to be finished.

16. Answer: (b) Planning does not lead to rigidity.

Explanation: All business activities run on the planning that is made by the managers. The managers tend to observe the procedures and the guidelines that are laid out in a plan. They change accordingly to the existing changes in the business environment.

17. Answer: (c) Intuitive decision making

Explanation: Making decisions on the basis of experience, feelings and accumulated judgement is called as Intuitive decision making.

18. Answer: (b) Policy

Explanation: It is policy of the firm because it is written in the terms of the firm that they would sale goods on cash basis only and cannot change it .Under policy every thing is pre decided by the firm to sale only on cash basis hence answer is policy.

19. Answer: (c) Heuristics

Explanation: A heuristic is a mental shortcut that allows people to solve problems and make judgments quickly and efficiently. These rule-of-thumb strategies shorten decision-making time and allow people to function without constantly stopping to think about their next course of action.

20. Answer: (a) Harrod - Domar model

Explanation: First Five Year Plan of India: It was launched for the duration of 1951 to 1956, under the leadership of Jawaharlal Nehru. It was based on the Harrod-Domar model with a few modifications. Its main focus was on the agricultural development of the country.

21. Answer: (a) USSR

Explanation: India adopted the Five Year Plans from USSR. Five-Year Plans (FYPs) are regional development plans -centralised and implemented. In 1928, Joseph Stalin initiated the Soviet Union's first Five Year Strategy.

22. Answer: (c) Rajasthan

Explanation: The system later came to be known as Panchayati Raj, which was inaugurated by the then Prime Minister Pandit Jawaharlal Nehru on 2 October 1959 at Nagaur in Rajasthan. The first elections under the Rajasthan Panchayat Samitis and Zilla Parishads Act, 1959 were held in September-October 1959.

23. Answer: (a) Analysing the environment

Explanation: Planning is a step by step process. The first step in planning process is analysing the environment. Firstly, a proper check or we can say deep observation should be made about the requirement of the environment. Then only the objectives to be fulfilled will set up properly.

24. Answer: (c) To Maintain Discipline

Explanation: In any organisation, rules are the code of behaviour or basic guidelines. It states what should be done and what should not be done.

25. Answer: (a) Programme

Explanation: NPD is the process of establishing a new product, from concept generation to market launch. In simple terms, it is nothing more than the set of actions that puts your idea into effect. The development includes a number of stages that any new product experiences.

1. Objectives,
2. Strategy,
3. Policy,
4. Method/procedure,
5. Rules,
6. Budget and
7. Programme

Planning is deciding in advance what is to be done, why it is to be done, when it is to be done and how it is to be done.

Planning is called the primary function of management because it lays down the standards for performance and it logically proceeds the performance of all other managerial activities functions.

Standing Plan is a plan that is developed once but is modified from time-to-time to met business needs as required.

                                           Or

It is used for activities that occur regularly over a period of time.

Standing plan:

• When there is repetition of some specific activities in an organization then the organization forms a plan to take care of that activity. Such a plan is called standing plan. These activities could be delivering goods to a customer in case he has crossed his credit limit, developing plan or policy to decide the quantity of a specific good to be produced during the end of sale season, etc.
• Standing plans provide guidelines for taking decisions in repetitive situation hence standing plan can be used repeatedly.
• Standing plans help the subordinates to take prompt decision.
• If the standing plan is framed then employees need not take permission from their superiors for executing the plans in case if situation arise.

Standing plan represent guideline for decisions in repetitive situation hence it can be used repeatedly. When there is repetition of organizational activities and’a standard policy are decided for prompt action, it is known as standing plan.

Planning is called a mental exercise in management because it involves application of high order thinking skills and intellectual faculties, involving vision and foresightedness to decide the things to be done in the future.

Five features of planning are:- 

i. Planning focuses on achieving objectives: 

(a) Planning contributes to objectives in the sense that it involves the determination of the activities required to be under taken to achieve objectives of organization. Planning is the exercise of creative thinking in the solution of various problems. 

(b) Planning has no meaning unless it contributes to the achievements of predetermined organizational goals. 

ii. Planning is a primary function of management: 

(a) Planning is a primary function in the sense that it provides the basis for the other functions of organising, staffing, directing and controlling. 

(b) Planning proceeds other function, i.e., it is primary of planning. It starts with objectives which are the basis of all these functions. 

iii. Planning is pervasive: planning is a pervasive function in the sense that it is required-

a At all the levels of management (top, middle or lower). For example, the top management under takes planning for the organization as a whole. Middle management does the departmental planning. At the lowest level, day-to-day operational planning is done by supervision. 

(b) In all departments of an organization (purchase, production, personal, finance or research development). 

iv. Planning is continuous: 

(a) Plans are prepared for a specific period of time, may be for a month, a quarter, or a year. 

(b) At the end of that period there is need for a new plan to be drawn on the basis of new requirements and future conditions. Hence, planning is a continuous process. 

v. Planning is futuristic: 

(a) Planning is futuristic in the sense that it essentially involves looking ahead into the future and making provision to tackle future events and situations. Planning is intended to cope with future uncertainties and unknowns. 

(b) Planning is, therefore, regarded as a forward looking function based on forecasting. Through forecasting, future events and conditions are anticipated and plans are drawn accordingly. 

Meaning of Planning: It refers to thinking before band.

Steps in the Process of Planning:

i. Setting Objectives: Objectives are those end points for whose attainment all the activities are undertaken. In the planning process objectives are determined and defined first of all so that all the employees concerned can be informed about them to get their complete cooperation. Objectives have a hierarchy of their own, e.g., organisational objectives, departmental objectives, and individual objectives. They are determined and defined in the same hierarchical order.

ii. Developing Premises: The basis of planning are those factors/assumptions which influence the possible results of different alternatives. Before taking a final decision about any alternative a forecast of these assumptions is made. 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:

a. Internal Premises: Capital, labours, raw material, machinery, etc.

b. External Premises: Governmental policies, business competition, tastes of customers, rate of interest, rate of taxes, etc.

Following are the features of planning:

i. Planning focuses on Achieving Objectives: Management begins with planning and planning begins with the determining of objectives. In the absence of objectives no organisation can ever be thought about. With the determining of objective, the way to achieve the objective is decided in the planning. It is thus clear that planning is helpful in the attainment of objectives.

ii. Planning is Primary Function of Management: Planning is the first important function of management. The other functions, e.g., organising, staffing, directing and controlling come later. In the absense of planning no other function of management can be performed. This is the base of other functions of management.

iii. Planning is Pervasive: Since the job of planning is performed by the managers at different levels working in the enterprise, it is appropriate to call it all pervasive. Planning is an important function of every manager, he may be a managing director of the organisation or a foreman in a factory.

iv. Planning is Continuous: Planning is a continuous process because:

a. A plan is prepared for a particular period. Hence, there is need for a new plan after the expiry of that period.

b. In case of any discrepancy plans are to be revised.

c. In case of rapid changes in the business environment plans are to be revised.

v. Planning is Futuristic: Planning decides the plan of action-what is to be done, how is it to be done, when is it to be done, by whom is it to be done, all these questions are related to future. Under planning, answers to these questions are found out. While an effort is made to find out these answers, the possibility of social, economic, technical and changes in legal framework are kept in mind. Since planning is concerned with future activities, it is called futuristic.

The main features to be considered by the management while planning are 

(i) It Focuses on Achieving Objectives: Planning is purposeful. Planning has no meaning unless it contributes to the achievement of predetermined organisational goals. 

(ii) It is the Primary Function: Planning lays down the base for other functions of management. All other managerial functions are performed within the framework of the plans drawn. Thus, planning precedes other function. 

(iii) Planning is Pervasive: Planning is required at all levels of management as well as in all departments of the organisations. The top management undertakes planning for the organisation as a whole. Middle management does the departmental planning. At the lowest level, day-to-day operational planning is done by supervisors. 

(iv) Planning is Continuous: Plans are prepared for a specific period of time, may be for a month, a quarter or a year. At the end of that period, there is need for a new plan to be drawn on the basis of new requirements and future conditions. Hence, planning is a continuous process.

(v) Planning is Futuristic: The purpose of planning is to meet future events effectively to the best advantage of an organisation. It implies peeping into the future, analysing it and predicting it. 

(vi) Planning Involves Decision Making: Planning essentially involves choice from among various alternatives and activities. If there is only one possible goal then there is no need for planning. The need only arises when alternatives are available. Planning thus, involves thorough examination and evaluation of each alternative and choosing the most appropriate one. 

(vii) Planning is a Mental Exercise: Planning is basically an intellectual activity of thinking rather than doing, because planning determines the action to be taken. Planning requires logical and systematic thinking rather than guesswork or wishful thinking.