Planning Class 12 Notes CBSE Business Studies Chapter 4: Full Explanation

Definition

“Planning is an intellectual process, conscious determination of course of action, the basing of decision on purpose, facts and considered estimates.”

    Koontz O'Donnell

Meaning

• Planning entails deciding what to accomplish and how to accomplish it ahead of time. It is a fundamental managerial function.

• It entails establishing goals and devising strategies for achieving them.

• The plan that is created must be completed within a certain time frame, yet time is a limited resource. It should be used with caution.

Importance of Planning

1. Planning Provides Directions: Planning provides guidance for action by defining how the task will be done in advance. Planning ensures that goals are clearly specified so that the best course of action may be devised. Once the strategies are in place, the department and individuals may work together.

2. Planning Reduces the Risk of Uncertainty: Planning is a task that allows the management to see into the future and predict changes. Changes and occurrences cannot be avoided, but managers may anticipate them and adapt their strategies accordingly by deciding plans and courses of action ahead of time.

3. Planning Reduces Overlapping and Wasteful Activities: The basis for coordinating the actions and efforts of several divisions, departments, and individuals is planning. It eliminates ineffective and unnecessary activities, prevents misunderstandings, and assures clarity of thinking and action.

4. Planning Promotes Innovative Ideas: The first role of management is planning. Managers are given the opportunity to generate fresh ideas, which can then be turned into tangible strategies. It directs all future actions that will lead to the company's growth and prosperity.

5. Planning Facilitates Decision Making: Setting goals and forecasting future situations are all part of planning, which aids in making sensible judgments among various options.

6. Planning Establishes Standards for Controlling: Planning establishes the benchmarks against which actual performance is assessed. As a result, planning is a must for controlling.

Features of Planning

1. Planning Focuses on Achieving Objectives: Organizations are formed with a certain goal in mind. The goals, general and specific as well as the strategies and activities to attain these goals, are established by organizations under the planning function.

2. Planning is a Primary Function of Management: Planning lays the groundwork for all other management tasks, without planning no other function can take place.

3. Planning is Pervasive: Planning is required in all types of organizations, at all the levels of management, as well as all the departments within the organization. Though at different levels and for different departments, the extent of planning varies.

4. Planning is Continuous: The planning cycle is linked to planning continuity. It indicates that a strategy is devised, implemented, and then followed by another strategy, and so on. Hence planning keeps on going, and is a never ending process.

5. Planning is Futuristic: The goal of planning is to efficiently meet future occurrences to an organization's benefit. Planning entails predicting future events and situations and making plans based on those predictions.

6. Planning Involves Decision Making: Choosing among a variety of options and activities is the essence of planning. There is no need to plan if there is just one conceivable aim or course of action because in that case no planning or decision making is required.

7. Planning is a Mental Exercise: Planning necessitates the use of the mind and foresight. Rather than guesswork, planning is an intellectual activity that necessitates logical and organized thought.

Limitations of Planning

1. Planning Leads to Rigidity: A well-defined plan is drawn up in an organization with specified goals to be reached within a specific time frame, but managers may not be able to amend it. Managers must be given some flexibility to react with changing conditions because the corporate environment is dynamic. 

2. Planning May Not Work in a Dynamic Environment: Planning is based on anticipating future events, and because the future is unpredictable and dynamic, the organization must react to changes. However, planning will not be able to adequately predict future events.

3. Planning Reduces Creativity: Top management plans and intermediate management executes the plan, but they are not allowed to depart from the plan, limiting the creativity of these managers.

4. Planning Involves Huge Costs: The plan's formulation entails a significant financial investment. To determine data, detailed strategies necessitate scientific computations. The costs of preparation may not always be justified by the benefits gained.

5. Planning is Time Consuming: Many factors must be considered when developing a strategy, making it a lengthy process.

6. Planning Does Not Guarantee Success: Only carefully planned and implemented plans can lead to the success of a business. Managers are prone to implementing previously successful ideas, but a plan that worked in one context may not work in another.

Planning Process

1. Setting Objectives:

• Specify the goals that the company wishes to attain.

• Establish goals for the overall organization, as well as individual departments, units, and personnel. Clearly state the organization's objectives and define how all departments will contribute to the overall goals.

• Objectives must be communicated to each unit and to personnel at all levels so that they are aware of how their actions contribute to the achievement of the goals.

• Managers must engage in the goal-setting process and give ideas.

• For example, setting sales goals, launching a new product, or expanding into new markets.

2. Developing Premises:

• Because planning is a future-oriented activity and the future is uncertain, managers must make certain assumptions while creating organizational plans

• These assumptions about the future are referred to as premises, and they serve as the foundation for creating plans.

• All planning managers should be familiar with the same assumption, and they must all agree on it. 

• Internal and external factors that affect the planning are

• External: Even a well-run corporation may not be able to survive in a terrible economy. Customers will spend less on sports, recreation, presents, luxury products, and new automobiles if they lose their employment or take positions that are barely enough to support them. Credit card interest rates that are too high can deter clients from spending. Although you can't control the economy, knowing how it works can help you detect risks and opportunities. Hence the firm needs to have a constant eye on the external environment.

• Internal: Employees play a significant role in the internal environment of a firm. Whether they're creating code or selling things to strangers, the employees must be good at what they do. Managers must be capable of managing lower-level personnel as well as controlling other aspects of the workplace. Internal politics and disagreements can destroy a good organization, even if everyone is skilled and talented. Internal factors also includes suppliers, customers, etc.

• Forecasting, for example, is a technique for accumulating data to create premises. For various goals, an organization employs numerous forecasts such as policy changes, new markets, product demand, and so on.

• For successful plans, forecast accuracy is required.

3. Identifying Alternative Courses of Action: 

• After the objectives have been established, assumptions are formed, and different courses of action are chosen.

• Managers must identify all possible courses of action for accomplishing the organization's objectives.

• The course of action could be standard or novel. By integrating more people and sharing their ideas, an innovative course can be implemented. 

• For example, A business planned based on your idea, like a startup of a café is a smart establishment. This requires a populated area where school, colleges or offices are nearby in order to make it a profitable business.

4. Evaluating Alternative Courses of Action: 

• The next stage is to weigh the benefits and drawbacks of each prospective course of action.

• Each proposal's positive and negative characteristics must be assessed considering the goals to be met.

• For example, in financial decisions, the risk-return trade-off is critical. The larger the risk, the higher the return. To assess such suggestions, extensive calculations of earnings, taxes, earnings per share, and dividends are performed, followed by a judgement.

5. Selecting the Best Alternative: 

• From all the options, the best strategy is chosen and implemented.

• The optimal strategy is the one that is the most practicable, profitable, and has the fewest drawbacks.

• Because a mathematical analysis is not possible in most plans, the manager's expertise, judgement, and intuition play a vital part in determining the best viable option.

• Rather than choosing the optimal option, a combination of plans may be chosen.

6. Implementing the Plan

• In this step, the best plan is implemented, i.e. the plan is put into action.

• Managers start organizing & assembling resources for implementing the plans.

• For example, if output is to be increased, more labour and machinery will be necessary. This phase would also entail the hiring of more labour and the acquisition of new machinery.

7. Follow Up Action

• It entails keeping track of the plans that have been implemented and ensuring that the actions are being carried out on time.

• Continuous monitoring is required to identify deviations from plans, and corrective action is required to meet organizational goals.

Types of Plan

A plan is a commitment to taking a certain course of action to achieve specific goals. Depending on the use and length of the planning period, plans can be categoried into many types.

Single-use and standing plans are the two types of plans available.

1. Single Use Plan

• A single-use plan is a set of instructions designed to handle a one-time only problem. It was created for a one-time endeavour or event with a single goal in mind.

• A plan like this is made to satisfy the requirements of a certain situation.

• A single usage plan's duration varies based on the type of project; for example, a single event plan may last one day, but a single project may last one week or months.

• Single-use plans can't be reused because they're no longer useful once they've accomplished their goal. Budgets, programmes, project reports, and other documents are examples.

2. Standing Plans

• Standing plans are used for actions that occur on a regular basis over time.

• It is created once and retains its worth over time as it undergoes changes and upgrades.

• It is created once and then adjusted as needed to satisfy business requirements.

• Policies, procedures, methods, and norms are all part of the standing plans.

Plans Can Be Classed Into the Following Categories Based on What Goals the Plan Desires To Achieve.

1. Objectives:

• Objectives are the desired outcomes that management hopes to attain through its activities.

• They could be intended to reflect the anticipated future position that management aspires to. Setting organizational objectives is the first and most important phase in the planning process.

• Objectives must be in stated terms, i.e., they must be quantifiable and documented in the form of a written declaration of desired outcomes to be achieved within a certain time frame.

• For example, a 20% return on investment, a 10% increase in sales target, and so forth. The objectives should be achievable, and realistic.

2. Strategy:

• Strategy refers to long-term decisions that define an organization's direction and scope.

• These are the plans that an organization develops to deal with a variety of conditions, threats, and opportunities.

• Internal strategy refers to the process of an organization's managers developing a new business strategy, whereas external strategy refers to the process of developing strategies in response to competitors' strategies.

• For example, selecting an advertising medium, distribution networks, and so on Mainly strategy formulation takes place at three levels

• Corporate level 

• Business level 

• Function level

3. Policy:

• Policies are broad statements that direct people's thoughts or energies in a specific direction. It serves as a foundation for interpreting strategy..

• Policies exist for all levels and departments within an organization, including large and small policies.

• Policies establish the boundaries within which a management can operate.

• They are adaptable because they can be altered as needed.

• For example, selling things on a cash-only basis, single source purchasing, and so forth.

4. Procedure:

• Procedures are step-by-step instructions that specify how a task should be completed.

• They specify which tasks should be completed in which order.

• In general, the sequence of actions to be taken is to implement a policy and achieve predetermined goals.

• For example, a company's recruitment procedure.

5. Rule:

• Rules are specific statements that specify what should and should not be done in situations.

• Rules are rigid and do not allow for flexibility, ensuring organizational discipline.

• For example, ‘Smoking is prohibited in the office.'

6. Method:

• Methods describe the prescribed ways or manners in which a work can be completed considering the goal.

• Choosing the right solution saves time, money, and effort while increasing efficiency.

• The methods are adaptable.

• For example, numerous training methods used by an organization to train its personnel, such as apprenticeship training, induction programmers, and so on.

7. Programme:

• A programme may include a complete list of project objectives, policies, processes, regulations, tasks, and the physical and human resources needed to carry out any course of action.

8. Budget:

• A budget is a numerical description of expected results for a specific time in the future.

• For example, a sales budget, a production budget, research and development budget, master budget, cash budget etc.

Planning: Class 12 Business Studies Chapter 4 Revision Notes Summary

Planning is probably the most important term in the student’s life. Proper planning helps a student to achieve his goals by accomplishing every step in it. This simple concept has been modulated according to business studies, an important subject in the Class 12 Commerce syllabus. In order to make this chapter easy to study, the experienced commerce teachers in the team have scripted these revision notes so that every student can relate to the concepts easily. it will become a lot easier to study and understand the concepts of planning with the help of Class 12 Business Studies revision notes solution Chapter 4. Let us take a precise look into the subject matter of these revision notes.

In these revision notes, every section of the chapter has been properly described and explained using simpler language so that all the students can understand easily. The definition and explanation of planning will surely facilitate the learning of this chapter. Here, you will find the importance of planning in business. It is done to reduce the risks appearing while doing a business. Every phase of a business requires proper planning. Studying this chapter will also make the students more efficient in their personal life. Every feature of Planning will be discussed in the Business Studies Class 12 Chapter 4 revision notes. It is a futuristic step that helps a business to identify risks beforehand, to figure out the necessary steps, and to forecast growth. It is also a continuous process that certainly impacts future events. As you can see that every step in business needs planning. Hence, it can be concluded that planning is dynamic. A plan changes according to the outcomes and consequences of previous steps.

As per the Class 12 notes Planning, another important factor is making a decision. A plan can only be executed when a proper decision is made. It all depends on the competency and potential of the decision-maker. In fact, the decisions will be influenced by several factors such as awareness of the situation, how a person reacts, and what resources he has to deploy. Planning is and always will be the primary function of Business Studies and Business Management. Utilizing the Class 12 Business Studies Planning revision notes will become mandatory to grab hold of the advanced concepts.

It will describe how a person should focus on the goals and systematically achieve them one by one. An objective should be there to provide a base for every plan. The strategic development of a business totally depends on the plans and decisions made. In this revision note, you will also study how a logical and systematic approach can influence and decide the outcome of a plan. Delve deeper to learn more about the limitations regarding planning to understand the threats and weaknesses. This is where Planning Class 12 Business Studies revision notes will come in very handy.

Important Topics Covered Under Chapter 4 of CBSE Class 12 Business Studies

Some of the important topics or concepts discussed in this chapter are listed below:

• Meaning of planning

• The importance of planning

• The features of planning

• The limitations of planning

• The planning process

• Types of plan

CBSE Class 12 Revision Notes and Key Points

Chapter 4 - Planning of Business Studies is one of the important chapters for the CBSE Class 12 students as this chapter mainly deals with the basic managerial function that is planning. The students facing difficulty in understanding the concepts related to planning can refer to the Revision Notes pdf of Chapter 4 to clear their doubts. These concepts have been explained in a simple and easy language which will help students to have an in-depth knowledge of the concepts.

Our commerce specialist lecturers develop the revision notes to give you with the highest quality study resources. Students may use these review notes for last-minute revision immediately before the test, which will help them enhance their Business Studies results. Visit Vedantu's website or download the app for the greatest learning experience and more excellent study resources such as Crucial Questions for Class 12 Business Studies and NCERT Answers for Class 12 Business Studies.

Important Topics Covered Under Chapter 4 of CBSE Class 12 Business Studies

Some of the important topics or concepts discussed in this chapter are listed below:

• Meaning of planning

• The importance of planning

• The features of planning

• The limitations of planning

• The planning process

• Types of plan

Other Chapter Links On CBSE Class 12 Business Studies Revision Notes

• Chapter 1 - Nature and Significance of Management Notes

• Chapter 2 - Principles of Management Notes

• Chapter 3 - Business Environment Notes

• Chapter 4 - Planning Notes

• Chapter 5 - Organising Notes

• Chapter 6 - Staffing Notes

• Chapter 7 - Directing Notes

• Chapter 8 - Controlling Notes

• Chapter 9 - Financial Management Notes

• Chapter 10 - Financial Markets Notes

• Chapter 11 - Marketing Notes

• Chapter 12 - Consumer Protection Notes

• Chapter 13 - Entrepreneurship Development Notes