Explore topic-wise InterviewSolutions in .

1. Universal process,
2. Primary function,
3. Conscious and mental process,
4. Flexibility,
5. Precise,
6. Forecasting is essential,
7. List of alternatives,
8. Concerned with future,
9. Continuous process,
10. Objective oriented activity and
11. Requires decision process.

(A) Planning: The task of collecting information for the activities to be undertaken in business, consider them in advance and plan out how to do these activities is called planning. Planning is an intellectual process to achieve business goals.

(B) Process of planning:

The stage-wise process of framing a plan is discussed below:

1. Determination of objectives:

• The first step in planning is to set the objectives.
• It is said that, if objectives are determined properly then it becomes extremely useful for the management.
• Planners should set realistic, intellectual and achievable objectives.

2. Clarifying planning premises:

• The forecast or the assumptions about future which provide a base for planning in present are known as planning premises.
• After determining the objective, it is important to clarify the planning premises.
• Forecasting is made after considering the internal and external factors that affects the business unit.
• Unclear and imprecise premises can fail a plan.

3. Collection and analysis of information:

• Once the planning premises is done, the planners gather necessary information. The information may be gathered through direct sources or indirect sources.
• The information is then classified, analyzed and interpreted. This helps to make assumptions for desired results.

4. Preparation of alternative plan:

• After collecting, analyzing and interpreting information, alternative plan is to be made. An alternative plan and list of alternatives help in case if the main plan does not work as planned or if there are some unforeseen changes in the market.
• The list of alternative steps could be whether to sale the goods by producing on our own or by purchasing and re-selling, second alternative for the material to be used, etc.

5. Evaluation of alternatives:

• Once the list of alternatives is prepared, they are evaluated to see if they are suitable alternatives or not.
• How each alternative will affect the business and its processes is evaluated.
• Evaluation of alternatives is an intellectual process. Mathematical and statistical methods are used for the evaluation of alternatives.
• Business, units make use of a subject called Operation Research (O.R.) to ‘ prepare the model of an ideal plan.

6. Selection of the best alternative: The various alternatives are evaluated, analyzed and scrutinized and then the best alternative is selected.

7. Formulation and evaluation of subsidiary plan:

• Over and above the main plan, different projects or alternatives have to be considered as per basic plan or in support of basic plan. These plans are known as subsidiary/derivative plan.
• For example, a car manufacturing company is trying to make a decision to make tyres for its cars. On the other hand, it is also thinking to buy them rather than manufacturing. Such an alternative is considered subsidiary plan.
• Even the subsidiary plan is evaluated to assess that it does not obstruct the basic plan in future.

8. Evaluation of plan:

• Once the basic plan and the subsidiary plan are formed the entire plan is thoroughly evaluated. The business unit takes the help of experts and consultants to evaluate the plan as and when necessary.
• This third-party opinion helps the unit to get a correct opinion and also mistakes if any.
• The business unit follows the principle of ‘Look and Leap’ at every stage i.e. it evaluates the plan at every stage and then moves forward accordingly.

Correct option is (C) Bill Goetz

(a) Planning: The task of collecting information for the activities to be undertaken in business, consider them in advance and plan out how to do these activities is called planning. Planning is an intellectual process to achieve business goals.

(b) Characteristics of planning:

1. Universal process: Planning is a universal process. Planning is required in each and every field may it be business, politics, education, religion or a social event.

2. Primary function: Planning is the primary function of management. Management starts with planning. Other functions of management like organization, staffing directing, controlling are implemented on the basis of planning.

3. Conscious and mental process: Planning is done using mental abilities while remaining conscious about the outcomes. This is so because during planning decisions are taken consciously and on the basis of calculative assumptions.

4. Flexibility:

• Although planning is done so that tasks take place as per planned method, still planning holds a good amount of flexibility.
• During the execution of planned steps the business may experience certain external factors. These factors may disturb the planned process. Hence, the unit may have to make necessary changes as per time, circumstances and situations.
• Thus, planning is dynamic and flexibility is the precondition for planning.

5. Precise: Planning is a process done for the future.
Since, future is uncertain, the planning is to be done precisely and minutely by rigorous brain storming, collecting and analyzing statistical data, collecting relevant information, etc.

6. Forecasting is essential: Forecasting and planning are considered as the first function of management. Forecasting is done by considering the uncertainties of future that will take place while making a plan for the business unit.

7. List of alternatives: While planning for any objective there exist a variety of alternatives. For example, there can be several alternatives (i.e. ways) to increase the sales in future. These alternatives could be increasing advertisement, reducing prices, training to sales staff, announcing attractive offers, etc. The planners need to select the best suitable alternative from these.

8. Concerned with future:

• Planning presumes that there are uncertainties involved in future.
• While remaining in present, planning evaluates future and hence we can say that planning is concerned with the happenings of future and is focused on – taking best steps for the same.

9. Continuous process:

• Planning is a continuous process.
• It is such a process which begins with the establishment of the organization and continues till the end i.e. till the organization lasts. However, the plans and planning process keep on changing continuously as per time and situation.

10. Objective oriented activity:

• Planning is done to achieve a specific, pre-determined business objective.
• Once an objective is accomplished the management decides the next objective for business.
• It is desirable that realistic objectives are set so that they can be planned and achieved well. Thus planning is an objective oriented activity.

11. Planning considers various available options and then selects the best suited one. Since the planners need to make such decisions on a regular and continuous basis it is said that planning is a decision oriented process.

Importance of Planning:

(i) Planning reduces overlaping and wasteful activities by co-ordinating the activities of different divisions.

(ii) Planning promotes innovative ideas requiring application of mind and foresight.

(iii) Planning facilitates decision making by making a choice from among the alternative courses of action.

(iv) Planning establishes standards against which actual performance is measured.

Concerned with future:

• Planning presumes that there are uncertainties involved in future.
• While remaining in present, planning evaluates future and hence we can say that planning is concerned with the happenings of future and is focused on – taking best steps for the same.

Remaining steps, to be taken in the process of Planning are:

(i) Identifying and Evaluating  alternative courses of action.

(ii) Selecting an alternative.

(iii) Preparation of derivative plans.

(iv) Implementing the plan and follow up action.

Detailed Answer:

(i) Identifying alternative courses of action: All the alternative courses of action are identified.

(ii) Evaluating alternative courses: The positive and negative aspect of each alternative is evaluated.

(iii) Selecting an alternative: The most feasible, profitable and with least negative consequences alternative is selected as plan.

(iv) Implementing the plan: The selected plan is put into the action.

(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 is a mental exercise: Planning requires  application of the mind involving foresight, intelligent imagination and sound judgment. It is basically an intellectual activity of thinking rather than doing. Because, planning determines the action to be taken. However, planning requires logical and systematic thinking rather than guess work or wishful thinking. In other words, thinking for planning must be orderly and based on the analysis of facts and forecasts.

Planning is irrelevant: Although planning is extremely important but future is uncertain. There are chances of changes in government policies, tax slabs, price, demand, supply, etc.

Any major change can fail even a solid plan and hence planning becomes irrelevant in such a situation.

Remaining steps, to be taken in the process of Planning are:

(i) Identifying and Evaluating  alternative courses of action.

(ii) Selecting an alternative.

(iii) Preparation of derivative plans.

(iv) Implementing the plan and follow up action.

Detailed Answer:

(i) Identifying alternative courses of action: All the alternative courses of action are identified.

(ii) Evaluating alternative courses: The positive and negative aspect of each alternative is evaluated.

(iii) Selecting an alternative: The most feasible, profitable and with least negative consequences alternative is selected as plan.

(iv) Implementing the plan: The selected plan is put into the action.

Conscious and mental process: Planning is done using mental abilities while remaining conscious about the outcomes.
This is so because during planning decisions are taken consciously and on the basis of calculative assumptions.

A plan designed to take account of a possible future event or circumstance is called a contingency plan. Contingency plan is a new plan made if there are changes that occur due to political, economic, social or natural factors.

Single Use plan:

• As the name suggests, single use plans are made for handling one-time, non-recurring problems. Single-use plans are also referred to as ‘specific plans’ since these are meant to solve a particular problem.
• These plans are formulated to handle non-repetitive and unique problem. These plans cannot be used again and again. These plans become obsolete after achieving their purpose.
• The examples of these plans could be constructing a dam, making budget, organizing an event, etc.

Contingency plan:

• A plan designed to take account of a possible future event or circumstance is called a contingency plan.
• Business unit face changing market situations. These changes could be change in political, economical, social or natural factors.
• If the business has to make changes in the original plan or make a new plan due to such reasons then the plan made is called contingency plan.

A Single Use Plan is a one time plan specifically designed to achieve particular goal that, once achieved will not recur in the future.

Single Use plan:

• As the name suggests, single use plans are made for handling one-time, non-recurring problems. Single-use plans are also referred to as ‘specific plans’ since these are meant to solve a particular problem.
• These plans are formulated to handle non-repetitive and unique problem. These plans cannot be used again and again. These plans become obsolete after achieving their purpose.
• Examples of these plans could be constructing a dam, making budget, organizing an event, etc.

Difference between standing plan and single-use plan

Single use plan is a plan made for examples. achieving special objectives. It is applied to activities which do not recur. For example, it is made for activities like construction of house or office, packaging, printing of office banners, etc.