Planning — NCERT Solutions

Given: A question on the types of strategic decisions taken by business organisations.

Concept: A strategy provides the broad contours of an organisation's business and defines its direction and scope in the long run.

Answer:

Business organisations take the following kinds of strategic decisions:

1. Market-related decisions: Deciding which markets to enter or exit, which customer segments to target, and how to position the product in the market.

2. Product-related decisions: Deciding what products or services to offer, whether to diversify the product range, or whether to discontinue certain products.

3. Competitive strategy decisions: Deciding how to respond to competition — whether to compete on price (cost leadership), quality (differentiation), or focus on a niche market.

4. Resource allocation decisions: Deciding how to allocate financial, human, and physical resources among different departments or business units.

5. Growth strategy decisions: Deciding whether to grow through internal expansion, mergers, acquisitions, or joint ventures.

6. Technology decisions: Deciding whether to adopt new technologies, invest in research and development, or upgrade existing systems.

7. Long-term direction: Defining the long-term goals and the scope of the organisation's activities.

In essence, strategic decisions are long-term, broad, and organisation-wide decisions that define the direction and future of the business.

Given: A critical comment is required on the statement "Planning reduces creativity."

Answer:

The statement "Planning reduces creativity" is partially true. Let us examine both sides:

How Planning Reduces Creativity:

1. Rigidity: Once a plan is made, managers and employees tend to follow it strictly. This leaves little room for new ideas or innovative approaches.
2. Discourages initiative: Middle-level and lower-level managers are expected to implement plans made by top management. They are not encouraged to think independently or suggest new methods.
3. Mechanical approach: Employees may follow plans mechanically without applying their own judgment or creativity.
4. Resistance to change: Since planning involves commitment to a particular course of action, managers may resist deviating from the plan even when better alternatives emerge.

How Planning Promotes Innovative Ideas:

1. Encourages thinking: Planning requires managers to think ahead, anticipate problems, and find creative solutions. This stimulates innovative thinking.
2. Identifying alternatives: The planning process involves identifying and evaluating multiple alternatives, which encourages creative and out-of-the-box thinking.
3. Problem-solving: Planning forces managers to think of new and better ways to achieve objectives, thereby promoting innovation.

Conclusion:

While planning can reduce creativity at the implementation level (especially for lower-level managers), it promotes innovative ideas at the planning stage itself. The key is to maintain a balance — plans should be flexible enough to accommodate new ideas while still providing direction. Therefore, the statement is only partially correct.

Given: Bharti Airtel revised its ₹149 prepaid plan to offer 2 GB of 3G/4G data per day (double the earlier offer) in response to competition from Reliance Jio.

Answer:

The type of plan highlighted in the given example is a Strategy.

Reason: Airtel formulated a strategy to counter the competitive threat posed by Reliance Jio. A strategy provides the broad contours of an organisation's business and defines its direction and scope in the long run. Here, Airtel strategically revised its pricing and data offering to retain and attract customers.

Three Dimensions of Strategy:

1. Determining long-term objectives: The strategy aims to maintain and improve Airtel's market position in the long run by retaining existing customers and attracting new ones away from Jio.

2. Adopting a particular course of action: Airtel chose the specific course of action of doubling the data offered at the same price (₹149) to make its plan more competitive and attractive.

3. Allocating resources necessary to achieve objectives: Airtel would need to allocate financial and technical resources (network infrastructure, bandwidth, marketing) to implement this strategy effectively.

Conclusion: The plan adopted by Bharti Airtel is a Strategy with the three dimensions of setting long-term objectives, choosing a course of action, and allocating necessary resources.

Given: Two descriptions of types of plans are provided.

Concept: Plans can be classified as Single-use plans (prepared for a specific situation/period and not repeated) or Standing plans (prepared once and used repeatedly for recurring situations).

(a) A type of plan which serves as a controlling device as well. (Budget)

Type of Plan: Budget

Definition: A budget is a statement of expected results expressed in numerical terms. It quantifies future facts and figures (e.g., expected revenues, costs, cash flows).

Single-use or Standing Plan: A budget is a Single-use plan because it is prepared for a specific period (e.g., monthly, quarterly, or annually) and is not repeated in the same form. A new budget is prepared for each period.

Why it is also a controlling device: Since a budget sets numerical targets, actual performance can be compared against budgeted figures, and corrective action can be taken. Hence, it serves as both a planning and a controlling tool.

(b) A plan based on research and analysis and is concerned with physical and technical tasks. (Method)

Type of Plan: Method

Definition: A method is a prescribed way or manner in which a task has to be performed, considering the objectives. It deals with the physical and technical aspects of how a task should be carried out.

Single-use or Standing Plan: A method is a Standing plan because once established through research and analysis, it is used repeatedly for recurring tasks and activities. It provides a standardised way of performing a task every time it occurs.

Summary Table:

Given: A question on why organisations fail to accomplish all their objectives.

Concept: Planning is the primary function of management, but several limitations of planning and external factors prevent organisations from always achieving all their objectives.

Answer:

Organisations are not always able to accomplish all their objectives due to the following reasons:

1. Planning Premises May Be Incorrect:
Planning is based on assumptions and forecasts about the future. If these premises turn out to be wrong (e.g., incorrect market forecast, wrong assumption about competitor behaviour), the plans built on them will fail.

2. Dynamic and Changing Environment:
The business environment is constantly changing — new competitors enter the market, government policies change, technology evolves, and consumer preferences shift. Plans made in the past may become outdated and irrelevant in such a dynamic environment.

3. Rigidity of Plans:
Once plans are made, organisations tend to follow them rigidly. This inflexibility prevents them from adapting to new situations, causing them to miss opportunities or fail to counter threats.

4. Reduction in Creativity:
Planning can reduce the creativity and initiative of managers, especially at middle and lower levels. When employees simply follow pre-set plans without thinking innovatively, the organisation may fail to find better solutions to problems.

5. Huge Costs Involved:
Planning is an expensive process in terms of time, money, and managerial effort. Sometimes the cost of planning exceeds the benefits, and resources are wasted on elaborate plans that are never fully implemented.

6. Time-Consuming Process:
Planning takes a lot of time. By the time a plan is finalised, the situation may have already changed, making the plan less effective or even irrelevant.

7. False Sense of Security:
Managers may develop a false sense of security, believing that since a detailed plan exists, success is guaranteed. This complacency can lead to poor execution and failure to achieve objectives.

8. Internal Limitations:
Organisations may face internal constraints such as lack of skilled personnel, inadequate financial resources, poor communication, or resistance to change from employees, which prevent the full implementation of plans.

9. Unforeseen Events:
Natural disasters, pandemics, political instability, or sudden economic crises are unforeseen events that no amount of planning can fully anticipate. These can derail even the best-laid plans.

10. Conflicting Objectives:
Sometimes an organisation sets too many objectives, some of which may conflict with each other. For example, the objective of maximising profit may conflict with the objective of employee welfare. In such cases, not all objectives can be fully achieved simultaneously.

Conclusion:
While planning is essential and improves the probability of success, it cannot guarantee the achievement of all objectives due to the inherent uncertainty of the future, internal limitations, and the dynamic nature of the business environment. Planning is a necessary but not sufficient condition for organisational success.

Given: A question on the steps involved in the planning process.

Concept: Planning is a systematic process that involves a series of logical steps.

Answer:

The following are the steps in the planning process:

Step 1: Setting Objectives

• The first and most important step is to set clear objectives for the entire organisation and for each department.
• Objectives specify what is to be achieved and when.
• They provide direction to all planning activities.
• Example: A company may set an objective to increase sales by 20% in the next financial year.

Step 2: Developing Premises

• Planning involves making assumptions about the future environment in which the plan will operate.
• These assumptions are called planning premises and include forecasts about economic conditions, market trends, government policies, competitor actions, etc.
• Example: Assuming that the economy will grow at 7% and inflation will remain at 4%.

Step 3: Identifying Alternative Courses of Action

• Once objectives are set and premises are established, the next step is to identify all possible ways (alternatives) to achieve the objectives.
• There is usually more than one way to reach a goal.
• Example: To increase sales, alternatives could be — entering new markets, launching new products, increasing advertising, or reducing prices.

Step 4: Evaluating Alternative Courses of Action

• Each alternative is carefully evaluated by weighing its pros and cons in light of the objectives and planning premises.
• Factors such as cost, risk, feasibility, and expected outcomes are considered.
• Example: Entering a new market may offer high growth but involves high risk and cost.

Step 5: Selecting the Best Alternative

• This is the real point of decision making.
• The best alternative — one that is most feasible, profitable, and least risky — is selected.
• Sometimes a combination of alternatives may be chosen.
• Example: The company may decide to increase advertising and also enter one new market.

Step 6: Implementing the Plan

• Once the best alternative is selected, the plan is put into action.
• Resources are allocated, responsibilities are assigned, and activities are initiated.
• Example: The marketing team begins the new advertising campaign and the sales team starts exploring the new market.

Step 7: Follow-up Action (Monitoring and Review)

• Plans must be continuously monitored to ensure that they are being implemented correctly and that objectives are being achieved.
• If there are deviations from the plan, corrective action is taken.
• This step links planning with the controlling function of management.
• Example: Monthly sales reports are reviewed to check if the 20% growth target is on track.

Conclusion:
The planning process is a systematic, logical, and continuous process. Each step is interrelated and builds upon the previous one. Effective planning requires careful attention to all these steps to ensure that organisational objectives are achieved efficiently and effectively.

Given: C Ltd., an auto company, is facing declining market share. It plans to introduce new models with added features for quality-conscious consumers. A team with representatives from all levels of management has been formed to brainstorm and determine implementation steps.

Concept: Planning has several features — it is pervasive, futuristic, a mental exercise, continuous, involves decision making, and focuses on achieving objectives.

Answer:

The following features of planning are highlighted in the given situation:

Feature 1: Planning is Pervasive

"The company has formed a team with representatives from all the levels of management."

• Planning is pervasive means it is required at all levels of management and in all departments of the organisation.
• It is not the exclusive responsibility of top management alone.
• In the given case, C Ltd. has formed a team with representatives from all levels of management — top, middle, and lower — to brainstorm and determine the steps for implementing the strategy.
• This clearly shows that planning is a function performed across all levels of the organisation, not just at the top.

Feature 2: Planning is Futuristic

"C Ltd. realized that it needs to take steps immediately to improve its market standing in the future." and "C Limited plans to introduce new models with added features and new technological advancements."

• Planning is futuristic means it is always done for the future. It involves looking ahead and preparing for what is to come.
• Planning helps the organisation to anticipate future challenges and opportunities and prepare accordingly.
• In the given case, C Ltd. is planning to introduce new models with added features and technological advancements to improve its future market standing.
• The company is looking ahead and making decisions today to secure a better position in the future, which is the essence of futuristic planning.

Feature 3: Planning is a Mental Exercise

"This team will brainstorm and will determine the steps that will be adopted by the organisation for implementing the above strategy."

• Planning is an intellectual activity that requires thinking, analysis, judgment, and foresight. It is not a physical task but a mental one.
• It involves applying intelligence to anticipate and prepare for the future.
• In the given case, the team formed by C Ltd. will brainstorm — a purely mental and intellectual activity — to determine the best steps for implementing the strategy.
• Brainstorming involves creative thinking, analysis of alternatives, and careful judgment, all of which are mental activities.

Conclusion:

The situation of C Ltd. effectively illustrates three important features of planning:

1. Pervasive — planning involves all levels of management.
2. Futuristic — planning is done to prepare for and improve future performance.
3. Mental exercise — planning requires intellectual effort, brainstorming, and careful thinking.

These features make planning a comprehensive and indispensable function of management.