Planning — NCERT Solutions

Business organisations take strategic decisions such as:

• whether to continue in the same line of business,
• whether to add new lines of activity with the existing business, or
• whether to acquire a dominant position in the market.

These decisions are taken after considering the business environment and competition.

Planning has two sides in relation to creativity.

On the one hand, planning promotes innovative ideas because new ideas can be converted into concrete plans, and planning is the first and most challenging function of management.

On the other hand, planning reduces creativity because plans are usually made by top management and other employees are expected mainly to follow them. They may not be allowed to deviate from the plan or use their own initiative, so their originality may reduce.

Therefore, planning both supports innovation and can also restrict creativity depending on how it is carried out.

The example highlights strategy. A strategy is a comprehensive plan for accomplishing an organisation's objectives.

Its three dimensions are:

1. Determining long-term objectives
2. Adopting a particular course of action
3. Allocating resources necessary to achieve the objective

a. A budget is a plan expressed in numerical terms and it also serves as a controlling device because actual results can be compared with expected results.

b. A method gives the prescribed way or manner in which a task has to be performed. It is a standing plan because it is used repeatedly for routine work.

Organisations are not always able to accomplish all their objectives because planning has several limitations. Plans may be affected by:

• rigidity in the plan,
• a dynamic business environment,
• reduced creativity,
• huge costs,
• the time-consuming nature of planning, and
• the fact that planning does not guarantee success.

Also, unforeseen events, changes in costs, government intervention and legal regulations can disturb the plan.

The steps in the planning process are:

1. Setting objectives
2. Developing premises
3. Identifying alternative courses of action
4. Evaluating alternative courses
5. Selecting an alternative
6. Implementing the plan
7. Follow-up action

The situation shows these features of planning:

• Planning is pervasive: The company has formed a team with representatives from all levels of management, showing that planning is done at all levels.
• Planning is futuristic: The company is taking steps to improve its future market standing and is planning new models for future consumers.
• Planning is a mental exercise: The team will brainstorm and determine the steps to be adopted, which shows planning involves thinking, foresight, and judgement.