Planning – Business Management Ethics and Entrepreneurship Notes

→ Planning is a Rational Approach to Future:
Definitions:
Planning is forecasting and deciding in advance a course of action to be followed and activities to be pursued in future but mere forecasting is not planning. Planning is a rational approach to the future.

→ By Philip Kotler:
“Planning means deciding in the present what to do in the future. It is the process whereby companies reconcile their resources with their objective and opportunities.”

→ By George R. Terry:
“Planning is the selecting and relating of facts and the making and using of assumptions regarding the future in the visualisation and formulation of proposed activities believed necessary to achieve desired results”.

→ It is an all-pervasive and a fundamental function of management.

→ With the above definitions, it is very clear that planning involves deciding in advance what is to be done and where, how and by whom it will be done.

→ Planning is a mental work and includes looking in the future and forecasting on the basis of estimates available.

→ More important for higher level of management.

→ Merely ascertaining the future is not planning till it is followed by making provision for it.

→ Planning deals with future and forecasting management does not plan about past but guided by past performance.

Features of Planning:

It is a primary function: Planning prevails at all the levels of management. It is thus the function of every manager.
It is a continuous function: Because plans have to be revised in the light of changing environment and also different functions overlap each other, thus planning process has to be continuously repeated.
Pervasive function: Planning pervades at all levels and all departments of an organisation. The planning horizons broaden and the implications of plans becomes wider as one goes up the level in the management hierarchy.

Importance of Planning:
Planning creates employees conscious of enterprises objectives:
Since the process starts with a clear definition of objectives of Individual department and organisation as a whole, the employees look at the organisation in its entirety which makes possible effective achievement of goals. Objectives represent endpoints of planning.

Planning leads to economy In operation:
It improves the effectiveness of all other functions of management and ensures coordinated functioning of efforts throughout the enterprise.
Planning for repetitive or routine matters reduces the need to revise the whole problem.

PlannIng precedes control:
Management function of control seeks to check the performance against some predetermined standards or projected course of action established through planning process. Control cannot exist without planning.

PlannIng provides a precIous managerial tool for the future:
It Is through this process that forecasting can be done about the future events and activities and a suitable course of action can be found on the basis of these forecasting results. Though forecasting is its essential characteristics, the task of planning does not end merely with assessing the future.

Planning influences the efficacy of other managerial functions:
Planning makes the task of managing more effective and improves efficiency of other functions of management.

Limitations of Planning

Planning premises may not be fully reliable:
Planning is always done on the basis of predictions. Since future is uncertain, planning is also subject to uncertainty.
Rapidity of changesets another limit to planning:
Rapid changes in business environment bring instability and makes the planning job more difficult.

Availability of time and cost involved:
During an emergency situation, decisions have to be taken without planning in advance. Such decisions may result in failure due to shortage of time period. Similarly, longer duration plans involve more cost. Greater are the details more will be the cost. Benefits expected to be derived from the planning should be more than the cost involved. Ascertaining the benefits & cost of planning is a difficult task.

Management and personnel philosophy – A serious limitation: Planning cannot be done with old philosophies of management or with their concepts and beliefs in mind. Since psychologically people are resistant to change they have to be convinced of the value of change.

Procedural and policy rigidities come in the way for planning: Policies and rules once established are difficult to change. Planning may call for a change in the existing procedures. When planning has to go through such rigidities, it becomes a difficult job.

Powerful Internal Constraint in Planning
Capital invested in the firm: Powerful internal constraint in planning. Managers develop a strong tendency to recovery of capital sunk as a result of some of their earlier decision that future planning is constrained and limited to its recovery.

External constraints
These can be:

Labour unrest and policies regarding thereto;
Government rules and regulations.

Types of Plans
Plans
Strategic Plan	Tactical Plan	Operational Plan
Long term plan 3-5 years/above involves competitive analysis, SWOT etc. to compet effectiveness. Top-level managers form and execute them.	Mid-term plan 1 to 3 years creates the blueprint for strategic plan. Middle managers consult with lower-level managers to develop the tactical plans.	Short term plan maximum 1 year covers the entire organisation’s goals & day to day operations. Lower-level managers consult with middle managers.

Strategic Plans: They identify & target internal goals but provide a general guidance on how they can be attained.

Types of Assessment:
1. Environmental Assessment – Environmental assessment is the assessment of the environmental consequences (positive and negative) of a plan, policy, program or actual projects prior to the decision to move forward with the proposed action. It helps the smooth functioning of strategic plan.

2. Operational Assessment – To assess the competitive implications of resources and capabilities relative to other environments, organizations must question four major factors, which are as fallows.

A resource adds value
A resource is rare to the extent
Capability to create a degree of limit ability
A firm must have to maintain its coordination and organisation
Sustaining four elements given above is known as distinctive competence

→ Planning Components
They are usually defined as:
Organisation Mission: It is a statement distinguishing the organisation from others of its type and explains the fundamental reason for existence.
it can be written or may be implicit.

Purpose of mission statement

It Is a benchmark for managers.
It defines common purpose and foster loyalty among employees.
It is a guideline and future direction fOE- outsiders.

Purposes:

The purpose or mission is a definitive statement of the goals of the organisation that ¡t has to achieve.
It shows the way the management works towards the achievement of goals.
Fundamental & unique purpose that sets ¡t apart from other enterprises.
Reflects belief and philosophy of management.

Objectives:
Objectives should be clearty laid down and effectively communicated to all the employees.

They are the end results of any process undertaken in an organisation and should be properly balanced.
All the objectives must be reviewed continuously in. the light of organisational changes.
Objectives can be individualistic or collective, short term or long term, tangible or intangible, generator specific.
Peter F. Drucker has laid down eight key areas.

Objective should be clearly defined and communicated

Market standing
Innovation
Productivity
Physical and financial resources
Profitability
Management performance and development
Work performance and attitude
Public responsibility

→ PolicIes:
Policies are of great help in delegating of authority of a manager.

These help the managers during the decision making pcocess.
Policies define the course of action that should be undertaken to determine present and future decisions.
Every manager has the power to make policies foc his own area of worl but that should be within the limits of his authority.
They should be flexible because rigid policies does not enable the employees to take further initiatives.
Policies cari be written, verbal or implied.
It may pertain to sales, production, personnel, finance and purchase on the functional basis.

Procedures, Methods & Rules:
1. A procedure includes the exact steps in which any task must be undertaken and specifies the chronological sequence for handling future activities.
2. Methods involve a specific step that has to be followed.
3. Rules means any kind of regulation from which no deviation is possible. It can be in favour of against the organisation.
4. Policy is a guide to thinking, procedures are guide to action.

→ Budgets:

Is a single-use plan
They are statements of expected revenue or losses of the organisation in numerical terms.
They are prepared with a view to control the monetary activities of the enterprise so that they fall in line with the anticipated limits.
Budget T making is a planning process, whereas its administration is a part of controlling.
Budget is a statement of income and expenditure.

→ Programme:

These are usually supported by budgets.
These include a brief description of work to be carried out in a proper sequence in order to achieve the goals.
Programme is a complex structure of policies, procedures, methods, rule, budgets and other assignments that can originate at any level in the organisation can be major or minor programmes.
Outline of plan of work to be carried.

→ Strategy:

Strategy is an interpretative planning and very popular in military science. ,
Anthony defines strategies as “the process of deciding on objectives of the organisation, on changes in these objectives, on the resources used to attain these objectives, and on the policies that are to govern the acquisition, use and disposition of these resources.” „
Strategy means deciding upon the goals of the enterprise and then carving out a plan to achieve those goals.
They are a useful framework for guiding enterprise thinking and action.
Chandler defines strategy as, “the determination of the basic long term goals and objectives of an enterprise and the adoption of courses of action and the allocation of resources necessary to carry out these goals.”

→ Steps Involved in Planning
Establishing Objectives:
Objective must be understandable & rational to make planning ‘ effective.

The first and foremost step in planning is deciding the objectives of ihe enterprise.
This means deciding what is to be done, the activities or results to be accomplished, the rules procedures or policies to be laid down.
Objectives of the enterprise must be very clear so as to enable easy achievement of goals.

→ Premising:
1. Premises means the assumptions or future setting within which the planning takes place. Planning is always done for the future and thus assumptions are required because there is no certainty about the activities that will take place in future. All assumptions are not premises.

2. Selection of premises involves skills and experience of the people involved.

3. Premises are not always same for all the industries.

4. (a) Premises can be internal or eyWnal to the firm. Internal premises may include sale forecast, capita! investment or programmes and policies that has been laid down by the management, External premises can be categorised as socio-economic, product market and factor market. Possible to quantify into rupee term.

(b) Premises can also be tangible or intangible. An example of intangible premises is goodwill of a company. An e.g. of tangible premises is when it is possible to quantify in terms of rupee.

Controllable prem Eses are already pre-decided by the management. Whereas uncontrollable premises are absolutely beyond the control of enterprise and prermses that can be modulated and controlled are semi-controllable.

→ Determining Alternative Courses:
Alternative courses of action must always be identified so that the management can resort to these alternatives in case the planning fails due to unforeseen circumstances.

→ Evaluation of Alternatives:

In case more than one alternatives are available, the manager must evaluate all the alternatives on the basis of their strong or weak points and considering the other factors involved.
This evaluation is a must to arrive at a decision.

→ Selecting a Course of Action:
This step involves choosing the best alternative from amongst those available.

→ Formulating Derivative Plan:

To give effect to and make the final plan work a derivative plan is required.
Every manager and department should contribute to the accomplishment of final plan on the basis of derivative plans.

→ Numbering Plans by Budgeting:
Plans should be made workable by allotting them their respective values by converting them into budgets.
Thus, the process of planning can be divided into 3 stages premising, forecasting and decision-making.

→ Factors influencing Goal Commitment

Effective use of goals requires getting individuals and or workgroups to be committed to goals they must carry out.
It is one’s attachment to, or determination to reach a goal.

→ Supervisory Authority:

Goals may be assigned by supervisor who explains the reasons for the goals to the staff and gives needed instructions.
A supportive supervisor will be more effective than an authoritative one.
A supervisor must encourage and offer opportunities,

→ Peer and Group Pressure

This builds goal commitment by focusing everyone’s efforts.
Successful individuals act as role models but if goals are seen as unfair, peer and group pressure can cut goal commitments.

→ Public Display
Commitment may be greater too difficult goals with public commitment rather than private.

→ Expectations of Success

It individuals have high expectations of success then they might be more committed.
If they think they cannot accomplish the tasks, commitment to the goal is less likely.

→ Incentives and Rewards:

During goal setting, incentives may be offered.
Incentives are of two types-tangible and intangible.

→ Tangible – money.
Intangible – Job challenge and recognition of goal achievement.
Positive outcomes may foster commitment but negative ones may inhibit commitment.

→ Participation

Where the individual participates in goal setting, commitment will be stronger.
Participation aids in plan development for goal implementation.

Managers should include subordinate in goal setting and then in planning how to achieve those goals.

→ Planning Period:

Plan can be made either for long-range or intermediate-range or short range.
The planning period should be such that involves flexibility in the plan.
Short-range plans must not be made in a haste or depending upon the current situation. They should always be made keeping in mind the long-range plans.
Promoting on novation: The role of planning process.
Potential obstacles to planning.
Overcoming obstacles to planning.
“Commitment Principle implies that long-range plans are not really for future but for the future impact of today’s decision.”
Commitment principle considered in the light of ‘flexibility principle’ of planning. Which means plans must have an ability to change direction.
A manager periodically checks on events and expectations and redraws plans as necessary to maintain a course towards a desired goal, is called principle of navigational change.

→ Promoting Innovation: The role of planning process

An organisations view of innovation may come from the highest levels.
The CEO sees a future based on innovation and will communicate this to organisation members.
Goals can encourage innovation by having new ideas incorporated into goals.
Plans can also achieve goals by using innovative means in order to achieve stated goals.

→ Potential obstacles to Planning:

A rapidly changing environment may make planning harder.
Some manager may not believe in planning at all.
The manager’s daiiy work schedule pressures may distract from planning.
Some managers have poor planning knowledge and skills.
There may be low managerial involvement which may reduce effective planning.

→ Overcoming obstacles to Planning

Have top management shown strong support for the planning process.
Have lower-level managers engaged in and supported planning.
Increase training of staff in how to develop plans.
Managers should review plans often.
Managers should develop contingency plan.

→ Decisions lie at the core of planning
The plans should be as flexible as possible. The more flexible is the, plan lesser will be the danger of losses to be incurred due to unforeseen events. This is also called the ‘Principle of navigational change.

→ Concept of forecasting:

It means identifying and defining the conditions in future which will help in planning the work in the present.
It may be comprehensive or limited in scope. Since forecasting always involves some amount of guesswork, managers preparing such forecasts must-have skill and experience.

→ Steps in Forecasting:
IdentIfying end Developing the Structure:
It involves the following steps:

Identity strategic factors that are important for the forecast.
Analyse internal and external factors and relations between them.
Analyse the trend of each of such factors.

→ Forecasting Future Course of Business:

Statistical and other mathematical techniques are used for protecting future business.
The experience, clairvoyance and participation of management are important determinants of the quality of forecast.

→ Analysis of Deviations:

The actual resuhs should be analysed along with the differences with the forecasted one.
The reason for the deviation Is then analysed and corrective action is taken for future forecasting.

→ Improving the Existing Forecasting Procedure;
Guesswork should be gradually reduced and substituted by rational judgement and systematic analysis. Skill in forecasting is largely gained through experience and practice.

→ Advantages of Forecasting

Plans the synthesis of various forecasts-annual, short-term, long-term
It helps the management to arrive at a correct decision.
It helps the management to use better control techniques by focusing on areas where there is less control.
It facilitates team spirit in the organisation which helps planning and coordination.
It prepares the management to handle a critical situation that wasn’t expected.
Fayol referred to planning as synthesis of various forecasts annual, long term, short term, special etc.

Forecasts are based on postulations and assumptions and as such, are subject to sanie amount of guesswork.
PossIbility of error cannot be completely eliminated from forecasts.

→ Concept of Decision Making:

DecIsion-making permeates planning, organizing, controlling and all other functions of management.
It involves selection of the best course of action from those available,
It is one of the most Important functions of management since entire success or failure of the enterprise depends upon Its decision.
It is because of this reason, decision should be based on a careful study of the facts available.

Decision-making as a rational process should be based on systematic analysis of all pertinent facts and not guided by intuitions.

→ Principles of Decision Making:
Principle of Definition:
1. It involves the basic fact that a problem well defined Is half solved.
2. A good description of problem reduces managers time and effort to find a correct decision.

→ Principle of Evidence:
Since decision making is one of the most important aspect of an organisation, it must be backed by concrete working papers and documents which serve as an evidence. Decision should not be taken hastily.

→ Principle of Identity:

A situation is viewed differently by different people.
Therefore, before taking a decision views of all the people along with the time period when such situation occurred should also be considered.
This will help in better understanding of the problem and making quality decisions.

→ Decision-Making Conditions:
The 3 possible conditions are:

Certainty:

This arises when the decision-maker knows exactly what will happen.
Under this situation, the manager exactly knows the outcome because of the certainty involved in taking the decision.

Risk:

This condition is most common and widely prevails in most of the organisations.
Under this situation, only a part of the information is available and hence the decision-maker has to make an estimate of the outcome.
This estimate is based on his past experience of the same situation.
To enable managerial success in taking decision. There should always be some amount of risk-taking ability.
If probability estimates are assigned to expected outcomes on the basis of past experience, it is known as objective probability.
If the probability estimates are assigned on the basis of how an individual feels about, the problem (gut feel) then it is called subjective probability.
Decision-makers could be risk takers or risk avengers.

Uncertainty:

Under this situation, the decision-maker cannot estimate the outcome of various alternatives.
Here the outcome is uncertain, hence decision making is difficult.

Steps in Decision Making
Identifying and Diagnosing the Real Problem:

Past acts and decisions, predetermined objectives and environmental considerations provide the structure for current decisions.
Manager must know the gap between what exists and what is expected to happen.
Identifying the reasons for the gap and understanding the problem results in higher achievement of objectives.

→ Discovery of Alternatives:

Manager should search for the alternatives that would help him in making decisions.
Only the key factors or factors critical .for the decision should be considered.
It also has principle of limiting factor, i.e. management should limit itself to the discovery of those key factors which are critical or strategic to the decision involved.
It is described as a search of strategic factor.

Decision-making as a rational process should be based on systematic analysis of all pertinent facts and not guided by intuitions.

→ Principles of Decision Making
Principle of Definition:
1. It involves the basic fact that a problem well defined is half solved.
2. A good description of problem reduces manager’s time and effort to find a correct decision.

Principle of Evidence:
Since decision making is one of the most important aspect of an organisation, it must be backed by concrete working papers and documents which serve as an evidence. Decision should not be taken hastily.

→ Principle of Identity:

A situation is viewed differently by different people.
Therefore, before taking a decision views of all the people along with the time period when such situation occurred should also be considered.
This will help in better understanding of the problem and making quality decisions.

→ Decision-Making Conditions:
The 3 possible conditions are:
Certainty:
1. ThIs arises when the decision-maker knows exactly what will happen.
2. Under this situation the manager exactly knows the outcome because of the certainty involved in taking the decision.

Risk:
This condition is most common and widely prevails Fri most of the organisations.
Under this situation, only a part of the information is available and hence the decision-maker has to make an estimate of the outcome.
ThIs estimate ¡s based on his past experience of the same situation.
To enable managerial success in taking decisions. There should always be some amount of risk-taking ability.
If probability estimates are assigned to expected outcomes on the basis of past experience, it is known as objective probability.
If the probability estimates are assigned on the basis of how an individual feels about the problem (gut feel) then it is called subjective probability.
Decision-makers could be risk takers or risk avengers.

Uncertainty:
1. Under this situation, the decision-maker cannot estimate the outcome of various alternatives.
2. Here the outcome is uncertain, hence decision making is difficult.

→ Steps In Decision Making
identifying and Diagnosing the Real Problem:

Past ats and decisions, predetermined objectives and environmental considerations provide the structure for current decisions.
Manager must know the gap between what exists and what is expected to happen.
Identifying the reasons for the gap and understanding the problem results In higher achievement of objectives.

→ Discovery of Alternatives:

Manager should search for the alternatives that would help him in making decisions.
Only the key factors or factors critical for the decision should be considered.
It also has principle of limiting factor, i.e. management should limit itself to the discovery of those key factors which are critical or strategic to the decision involved.
It is described as a search of strategic factor.

→ Analysis and Evaluation of Available Alternatives:

Once all the alternatives have been identified, the next step is the selection of the best alternative.
Management should consider the risk involved in choosing amongst the available alternatives.
Both tangible and intangible factors must also be considered. For e.g.- profit, time, money, public relations, morale etc.
The techniques of. marginal analysis can be used for the evaluation of alternatives.
Alternatives should be selected on the basis of cost-effectiveness.

→ Selection of Alternative to be followed:
(a) This is mainly done on the basis of past experience. But changes in the circumstances must always be kept in mind, before taking a decision in the present situation.

(b) Selection on the basis of experiments: Experimentation as the basis for final decision has the advantage of incorporating intangible factors and also the environmental changes. But it is the most expensive of the techniques.

(c) Research as the basis for decision: A number of research approaches and techniques have been developed which are contributing to the research as the basis for decision. Break-even analysis, marginal contribution analysis, forecasting, capital budgeting, standard costing, sensitivity analysis, operations research etc. are currently in use in the field of decision making.

→ Communication of Decision:
(a) Management should take into account the attitude and prejudices of the people in the organisation.

Hierarchy of Decisions:
The manager should determine the importance of each decision in forms of its commitment, scope and risk involved.
Less important decision can be based on simple analysis whereas important decisions must be made after a thorough analysis of all the related factors.

Nature of Management and its Process MCQ Questions

1 ……………….. is deciding in advance the course of action to be followed.
(a) Organising
(b) Direction
(c) Controlling
(d) Planning
Answer:
(d) Planning

2. ……………….. represents the end point of planning.
(a) Goals
(b) Strategies
(c) Objectives
(d) None of the above
Answer:
(c) Objectives

3. Strategic plans target …………………. but provide a brief guidance on how to achieve them.
(a) External goals
(b) Internal goals
(c) Organisational objectives
(d) None of the above.
Answer:
(b) Internal goals

4. …………………. reflects belief and philosophy of management.
(a) Objectives
(b) Purposes/Mission
(c) Goals
(d) Rules
Answer:
(b) Purposes/Mission

5. Which qualities should a person possess while planning?
(a) Reflective thinking
(b) Imagination
(c) Farsightedness
(d) All of the above.
Answer:
(d) All of the above.

6. Only economists & technicians employed by the management as staff experts are involved in making forecasts.
(a) True
(b) False
(c) Partly True
(d) Partly False.
Answer:
(b) False

7. Policies must be rigid and should not allow discretion on the part of subordinates.
(a) True
(b) False
(c) Partly True
(d) Partly False
Answer:
(b) False

8. ……………….. specifies the manner of doing work, i.e. sequence for handling future activities.
(a) Rules
(b) Method
(c) Procedures
(d) Programme.
Answer:
(c) Procedures

9. Which amongst the following is rigid and specific & cannot be changed?
(a) Methods
(b) Procedures
(c) Policies
(d) Rules.
Answer:
(d) Rules.

10. ……………………. is supported by capital revenue & expense budgets.
(a) Programme
(b) Strategy
(c) Goals
(d) Policies.
Answer:
(a) Programme

11. Method of evaluation of various alternatives are:
(a) Basis of cost-effectiveness
(b) Marginal analysis
(c) Risk involved and resources available
(d) All of the above
Answer:
(d) All of the above

12. Second step of planning process is the establishment of:
(a) Planning premises
(b) Objectives
(c) Goals to be achieved
(d) All of the above
Answer:
(a) Planning premises

13. Planning Premises can be …….. .
(a) Internal
(b) External
(c) Tangible
(d) All of the above
Answer:
(d) All of the above

14. Quality of forecasts depends upon:
(a) Experience
(b) Clairvoyance
(c) Participation of management
(d) All of the above.
Answer:
(d) All of the above.

15. The possible condition for decision making would be:
(a) Certainty
(b) Risk
(c) Uncertainty
(d) All of the above.
Answer:
(d) All of the above.

16. While planning for expansion ……………….. might be the limiting factor.
(a) Availability of finance
(b) Availability of trained staff
(c) Both (a) & (b)
(d) None of the above
Answer:
(c) Both (a) & (b)

17. Certainty, risk and uncertainty are the three possible conditions of:
(a) Decision making
(b) Planning
(c) Risk management
(d) None of these.
Answer:
(a) Decision making

18. Planning provides for the future.
(a) Managerial tools
(b) Goals
(c) Strategic Plans
(d) Business Plans
Answer:
(a) Managerial tools

19. Planning is fully reliable.
(a) True
(b) False
(c) Can’t say
(d) None of the above
Answer:
(b) False

20. Government rules and regulations are constraints,
(a) External
(b) Organisational
(c) Internal
(d) All of the above
Answer:
(a) External

21. ……………………… helps the managers during the decision making process.
(a) Budget
(b) Strategies
(c) Programme
(d) Policies
Answer:
(d) Policies

22. Every manager has the power to make policies but within the limits of his authority.
(a) False
(b) True
(c) Partly True
(d) Partly False
Answer:
(b) True

23. …………………….. helps the management to arrive at a correct decision.
(a) Planning
(b) Forecasting
(c) Decision Making
(d) Experience
Answer:
(b) Forecasting

24. Which of the following are Principles of Decision making?
(a) Principle of definition
(b) Principle of evidence
(c) Principle of Identity
(d) All of the above
Answer:
(d) All of the above

25. …………….. arises when the decision-maker knows exactly what will happen.
(a) Risk
(b) Certainty
(c) Uncertainty
(d) Both (a) and (b)
Answer:
(b) Certainty

26. “Planning is the selecting and relating of fact.? and the making and using of assumption regarding the future in the visualization and formulation of proposed activities believed necessary to achieve desired results”. This is given by:
(a) Philip Kotler
(b) Buyers and Rue
(c) Kasts & Rosenzweig
(d) George R. Terry
Answer:
(d) George R. Terry

27. Which one is not a feature of Planning?
(a) Planning is Positive
(b) Primary Function
(c) Intellectual Process
(d) Pervasive Function
Answer:
(d) George R. Terry

28. Which one of the following is not an importance of Planning?
(a) Planning makes personal conscious of enterprise objectives.
(b) Planning proceeds direction.
(c) Planning leads to economy in operation.
(d) None of the above.
Answer:
(b) Planning proceeds direction.

29. Which function of management cannot exist without planning?
(a) Organising
(b) Directing
(c) Controlling
(d) Staffing
Answer:
(c) Controlling

30. Which one of the following is not the limitation of planning?
(a) Rapidity of changesets another limit to planning
(b) Planning premise may not be fully reliable.
(c) Procedural and policy rigidities also come in the way of planning.
(d) Planning is applicable in every level.
Answer:
(d) Planning is applicable in every level.

31. Which type of plan describes the goals of an internal organization, a working group or a department?
(a) Project Plans
(b) Strategic Plans
(c) Operational Plans
(d) Marketing Plans
Answer:
(c) Operational Plans

32. Which of the following is a formal statement of business plans?
(a) Largely enforced business goals.
(b) The reason why they are believed attainable
(c) The plan for reaching those goals
(d) All of the above.
Answer:
(d) All of the above.

33. Objective can be:
(a) Individualistic or collective
(b) Short-term or long term
(c) Tangible or Intangible
(d) All of the above
Answer:
(d) All of the above

34. Which one signify some kind of regulation, positive or negative & permit no discretion in its application?
(a) Procedures
(b) Rules
(c) Strategy
(d) Methods
Answer:
(b) Rules

35. Who defines strategies as “the process of deciding on objectives of the organization, on changes in these objectives, on the resources used to attain these objectives and on the policies that are to govern the acquisition, use and disposition of these resources”.
(a) Chandler
(b) Buyers & Rue
(c) Anthony
(d) None of these
Answer:
(c) Anthony

36. Which is a complex structure of policies, procedures, methods, rules, budgets & other assignments?
(a) Strategy
(b) Programme
(c) Both (a) and (b)
(d) None of these
Answer:
(b) Programme

37. ‘TDCI’ Stands for:
(a) Technological Development Corporation of India.
(b) Trade Development Corporation of India.
(c) Tourism Development Corporation of India
(d) None of these.
Answer:
(c) Tourism Development Corporation of India

38. What is the duration of Planning Period?
(a) Long-range
(b) Intermediate-range
(c) Short-range
(d) All of the above.
Answer:
(d) All of the above.

39. Forecasting is done by which level of management?
(a) Top level
(b) Middle level
(c) Lower level
(d) None of these
Answer:
(a) Top level

40. Which of the following is the ‘Decision Making Condition’.
(a) Certainty
(b) Uncertainty
(c) Risk
(d) All of the above.
Answer:
(d) All of the above.

41. According to George R. Terry is the selecting & relating of facts.
(a) Organising
(b) Directing
(c) Controlling
(d) Planning
Answer:
(d) Planning

42. Planning is a mental work and includes …………………. on the basis of estimates available.
(a) Looking
(b) Forecasting
(c) Direction
(d) Controlling
Answer:
(b) Forecasting

43. The first stage in Planning is the deliberate statement of ……………….. .
(a) Organization
(b) Objectives
(c) Direction
(d) Controlling
Answer:
(b) Objectives

44. Planning is always done on the basis of
(a) Instability
(b) Mental work
(c) Predictions
(d) Goals
Answer:
(c) Predictions

45. Types of plans are:
(a) Two
(b) Four
(c) Eight
(d) Five
Answer:
(d) Five

46. Plans defines the working goals of an International organization,
(a) Operational
(b) Marketing
(c) Project
(d) Business
Answer:
(a) Operational

47. Plans which identify & target internal goals.
(a) Project
(b) Marketing
(c) Strategic
(d) Operational
Answer:
(c) Strategic

48. They are statement of expected revenue or losses of the organisation,
(a) Programme
(b) Budget
(c) Policies
(d) Strategy
Answer:
(b) Budget

49. Who defines a strategy as “adaption of courses of action & allocation of resources necessary to carry out these goals”.
(a) Anthony
(b) George R. Terry
(c) Faraday
(d) Chandler
Answer:
(d) Chandler

50. ………………… Premises are those that are largely decided by company management.
(a) Controllable
(b) Uncontrollable
(c) Semi controllable
(d) All of these
Answer:
(a) Controllable

51. …………….. is a must to arrive at a decision.
(a) Evaluation of Alternatives
(b) Determining Alternative Courses
(c) Premising
(d) Objective
Answer:
(a) Evaluation of Alternatives

52. It means identifying & defining the condition in future which will help in planning.
(a) Objective
(b) Controlling
(c) Forecasting
(d) All of these
Answer:
(c) Forecasting

53. What are not the advantages of forecasting.
(a) It helps the Management to arrive at correct decision
(b) It helps the Management to use better techniques
(c) It. increases the guess-work
(d) It facilitates team spirit in organization.
Answer:
(c) It increases the guess-work

54. Who referred to Planning as “synthesis of various forecasts”.
(a) Fayol
(b) Chandler
(c) George R. Terry
(d) Anthony
Answer:
(a) Fayol

55. Discovery of limiting factors is important to the process of
(a) Identifying
(b) Decision making
(c) Diagnosing
(d) Managing
Answer:
(b) Decision making

56. Research techniques currently used in decision making is-
(a) Forecasting
(b) Standard costing
(c) Capital budgeting
(d) All of these
Answer:
(d) All of these

57. While planning for expansion, might be the limiting factor.
(a) Availability of finance
(b) Availability of trained staff
(c) Both (a) & (b)
(d) None of above
Answer:
(c) Both (a) & (b)

58. Example of decision making by group is:
(a) Conferences
(b) Committees
(c) Office meeting
(d) All of these
Answer:
(d) All of these

59. Disadvantage of decision making by groups:
(a) Improves the quality of decisions
(b) Many member evade their individual responsibility
(c) It is a time-consuming affair
(d) Both (b) & (c)
Answer:
(d) Both (b) & (c)

60. Quality of Decisions will be better if the variables are:
(a) Unquantifiable
(b) Ambiguous
(c) Certain
(d) Quantifiable
Answer:
(d) Quantifiable

61. Which qualities should a person possess to succeed in planning.
(a) Reflective thinking
(b) Imagination
(c) Farsightedness
(d) All of the above.
Answer:
(d) All of the above.

62. Strategies show a direction.
(a) Undefined
(b) Well defined
(c) Unified
(d) Parallel
Answer:
(c) Unified

63. ………………… refers to outline of plans of work to be carried out in a pfopei sequence.
(a) Programme
(b) Budget
(c) Organising
(d) None of these
Answer:
(a) Programme

64. Programme is a complex structure of:
(a) Rules
(b) Budget
(c) Methods
(d) All of these
Answer:
(d) All of these

65. Budget may be expressed in:
(a) Non-materials
(b) Money
(c) Numerical expression
(d) Both (b) & (c)
Answer:
(d) Both (b) & (c)

66. These are business plans that have changes in perception and branding as their primary goal.
(a) Marketing
(b) Project
(c) Operational
(d) Strategic
Answer:
(a) Marketing

67. Management is a process.
(a) Static
(b) Dynamic
(c) Both (a) & (b)
(d) None of these
Answer:
(b) Dynamic

68. Which of these contribute to accomplishment of group goals.
(a) Staffing
(b) Direction
(c) Control
(d) All of these
Answer:
(d) All of these

69. After plans are set, the final step to give them meaning is to numberise them by.
(a) Procedures
(b) Budget
(c) Planning
(d) Rules
Answer:
(b) Budget

70. Forecasts may be:
(a) Comprehensive
(b) Unlimited
(c) Limited
(d) Both(a) & (c)
Answer:
(d) Both(a) & (c)

71. Possibility of error cannot be completely eliminated from
(a) Planning
(b) Forecasts
(c) Organising
(d) All of these
Answer:
(d) All of these

72. Which one of the following reflects the belief and philosophy of management in an organisation?
(a) Vision
(b) Mission
(c) Objectives
(d) Goals.
Answer:
(b) The mission of a business is the fundamental unique purpose that sets it apart from other enterprises of its type and identifies the scope of its operations in terms of product and market. The mission is a general enduring statement of the intent of business. It reflects the belief and philosophy of management.

73. In an organisation, policymaking is the function of:
(a) Management
(b) Administration
(c) Personnel Management
(d) Government.
Answer:
(b) In an organisation, admInistration is concerned with policy-making whereas management with policy implementation.

74. ………………… is a primary function.
(a) Controlling
(b) Planning
(c) Co-ordination
(d) Organisation.
Answer:
(b) Planning is an all-pervasive and a primary funchon of management. No manager, irrespective of the position In the organisation can do without it. However, planning ¡s subject to certain limitations and proper understanding of them will go a long way in improving efficiency of planning.

75. Which one of the following deals with future and involves forecasting?
(a) Planning
(b) Organising
(c) Controlling
(d) Leadership
Answer:
(a) Planning deals with future and involves forecasting. A manager does not plan about the past though in his planning for future he is also guided by past performance. Since planning relates activities of the enterprise to its future environment, it requires projecting future activities of the organisation.

76. Premises signify …………….. within which planning will take place.
(a) Planning assumptions
(b) Planning deviations
(c) Planning resources
(d) None of the above.
Answer:
(a) Premises signify planning assumptions within which planning will take place.

77. Which one of the following is the first and primary step in the planning process?
(a) Premising,
(b) Determining alternative courses,
(c) Evaluating alternatives
(d) Establishing objectives.
Answer:
(d) The first and primary step in planning process is the establishment of planning objectives or goals. Definite objectives, in fact, speak categorically about what is to be done, where to place the initial emphasis and things to be accomplished by the network of policies, procedures, budgets and programmes, the lack of which would invariably result in either faulty or ineffective planning.

78. Planning may call for a change in the existing –
(a) Accounting Concepts
(b) Government Mandates
(c) Governance Standards
(d) Procedures and Policies.
Answer:
(d) Procedures, rules and policies once established are difficult to change. But on the other hand, planning may call for a change in the existing procedures and policies.

79. Budget preparation is primarily a planning process whereas its administration is a part of –
(a) Implementation
(b) Controlling
(c) Payments
(d) Approval process.
Answer:
(b) Budget is an important control device. It is often thought of in connection with controlling alone. However, budget-making is primarily a planning process whereas its administration is a part of controlling.

80. Which of the following is incorrect about strategy?
(a) It helps in competitive market
(b) It is innovative
(c) It is creative
(d) It gives long-term process guarantee.
Answer:
(d) Strategy helps us to enter in the competitive market, it is innovative, it is creative but it doesn’t give guarantee for long-term process as in long-term strategy requires changes with change in conditions.

81. ………………… is a single-use plan containing expected results is numerical terms.
(a) Procedures
(b) Methods
(c) Rules
(d) Budget.
Answer:
(d) Budget is a single-use plan containing expected results in numerical terms. They are statements of expected revenue or losses of the organisation in numerical terms.

82. It is the general enduring statement of the extent of business –
(a) Objectives
(b) Policies
(c) Mission
(d) None of the above.
Answer:
(c) Mission is a general enduring statement of the intent of business. It reflects the belief and philosophy of management. It is the unique purpose that sets if apart from other enterprises and identifies the scope of its operations.

83. Discovery of is important to the process of decision making.
(a) Unlimited factors
(b) Co-ordination
(c) Integrity
(d) Limited factors.
Answer:
(d) Discovery of Limited factor is important to the process of decision making, that its management should limit itself to the discovery of those key factors which are critical or strategic to the decision involved.

84. “Planning reconcile their resources opportunities” is given by –
(a) Chester I Barnard
(b) George R Terry
(c) Philip Kotler
(d) Peter. F. Drucker
Answer:
(c) According to Philip Kotler: “Planning means deciding in the present what to do in the future. It is the process whereby companies reconcile their resources with their objectives and opportunities”.

85. Strategy was primarily used in:
(a) Military Science
(b) Practical Science
(c) Political Science
(d) None of these
Answer:
(a) Strategy is a term very popular in military science. It refers to meeting the enemy under conditions advantageous to one’s own.

86. Which of the following is a single-use plan containing expected results in numerical terms?
(a) Budget
(b) Policies
(c) Procedures
(d) Rules.
Answer:
(a) Budget is a single-use plan. They are statements of expected revenue or losses of the organisation in numerical terms.

87. The process of decision making involves several steps that can be divided into distinct categories. The solution phase involves
(a) Acquiring information
(b) Diagnosing the factors affecting the problem or opportunity
(c) Identifying a problem or opportunity
(d) Implementing the decided course of action.
Answer:
(d) The process of decision making involves several steps:

Acquiring Information about the problems.
Identifying a problem or opportunity.
Diagnosing the factors affecting the problem or opportunity.
Discovery of Alternatives.
Analysis and Evaluation of Alternatives.
Selection of the Best Alternatives.

So, the solution phase involves implementing the decided course of action.

88. Decisions that have long-term perspectives of two to five years and affect the entire organisation are:
(a) Programmed decisions
(b) Tactical decisions
(c) Strategic decisions
(d) Operational decisions.
Answer:
(c) Strategic decisions have long term perspective of two to five years and affect the entire organisation.

89. In the organisation ………………. has both short term and long term:
(a) Vision
(b) Mission
(c) Objective
(d) None of the above.
Answer:
(c) The first important task of planning is to lay down objectives or goals. Objectives represent the end towards which not only planning but all other activities of management are directed. Objectives can be individualistic or collective: Short term or long term, tangible or intangible, general or specific.

90. What is the main function of management?
(a) Planning
(b) Organizing
(c) Staffing
(d) Controlling
Answer:
(a) Planning is an all-pervasive and fundamental function of management. All other functions of organizing, staffing, directing and controlling must reflect planning function of management. Thus, planning is the main function of management.

91. It involves looking ahead and projecting the future course of events:
(a) Organizing
(b) Forecasting
(c) Controlling
(d) Co-ordination
Answer:
(b) Forecasting may be defined as analysis and interpretation of the future conditions in relation to operation of the enterprise. It involves looking ahead and projecting the future course of events.

92. Out of the given option, the final step in the decision-making process is:
(a) Choosing best alternatives among a set of alternatives ‘
(b) Identifying problems
(c) Resolving problems
(d) Deciding alternatives for a problem.
Answer:
(c) The final step in the decision-making process is resolving problem and thereby communicating of decisions and its acceptance by the organísatiofl after identifying the problem, deciding alternatives for problems, choosing best alternative among a set of alternatives.

93. By Planning premises we refer to:
(a) Guide to thinking in decision making
(b) A single operation of one particular step and specifies how this step is to be followed.
(c) The exact manner in which a particular activity is to be done
(d) The forecasting and assumption about the future.
Answer:
(d) Planning premises signifies planning assumptions or future setting within which planning will take place. The very nature of planning requires that some assumptions be made regarding future happenings.

94. When the availability of each alternative and its outcomes are associated with probability estimates, decisions are being made under a condition of:
(a) Uncertainty
(b) Risk
(c) Certainty
(d) Conflict.
Answer:
(c) The final step in the decision-making process is resolving problem and thereby communicating of decisions and its acceptance by the organisation after identifying the problem, deciding alternatives for problems, choosing best alternative among a set of alternatives.

95. The most appropriate definition of a “Procedure” is:
(a) It suggests the exact manner in which a particular activity is to be done.
(b) It signifies some kind of regulation, positive or negative and permits no discretion in its application.
(c) It is a single-use plan containing expected results in numerical terms
(d) It involves a single broad guideline for decision making.
Answer:
(d) Planning premises signifies planning assumptions or future settings within which planning will take place. The very nature of planning requires that some assumptions be made regarding future happenings.

96. Which of the following is not considered to be a part of the planning function of a manager?
(a) Mapping out strategy
(b) Motivating
(c) Making decisions
(d) Defining goals
Answer:

97. When the availability of each alternative arid its outcomes are associated with probability estimates, decisions are being made under a condition
(a) Uncertainty
(b) Risk
(c) Certainty
(d) Conflict.
Answer:
(b) Risk: Most of the managerial decisions are made under risk conditions, that is, some information is available but it is insufficient to answer all questions about the outcomes, so a decision-maker has to make probability estimates of these outcomes.

98. The most appropriate definition of a procedure M is:
(a) It suggests the exact manner In which a particular activity is to be done.
(b) It signifies some kind of regulation, positive or negative and permits no discretion in its application.
(c) It is a single-use plan containing expected results in numerical terms
(d) It involves a single broad guideline for decision making.
Answer:
(a) Procedure suggest the exact manner in which a particular activity is to be done. It specifies the chronological sequence for handling future activities.

99. Which of the following is not considered to be a part of the planning function of a manager?
(a) Mapping out strategy
(b) Motivating
(c) Making decisions
(d) Defining goals
Answer:
(b) Planning function includes:

Setting missions
Laying objectives
Mapping policies, procedures, methods & rules
Budgets
Programme
Mapping Strategies

Thus, motivating is not a function of planning, it is a function of directing.

100. Which of the following is not an advantage of Decision making by groups?
(a) Decision making by group provides training to employees.
(b) Decision making by group is a time-consuming process.
(c) Decision made by group is widely accepted.
(d) Decision making by group improves the quality of decision making.
Answer:
(b) Decision-making by groups is not a rare thing observed in business operations. Board meetings, committees, staff meetings and conferences provide examples of decisions-making by groups.

If properly handled, decision-making by groups or committees offers the following advantages:

It improves quality of the decision since different viewpoints and opinions are reflected in it.
Coordination of departmental activities through meetings of their respective heads become easier.
Group decision-making provides opportunity for participation by individuals representing different interests and thus, it boosts their morale and motivates them for a wholehearted cooperation in carrying out the decisions.
It provides opportunity for the training of employees and their development as future decision-makers.

101. Which of the following suggests the exact manner in which a particular activity is to be done?
(a) Procedures
(b) Budget
(c) Policies
(d) Strategy.
Answer:
(a) Procedures suggest the exact manner in which a particular activity is to be done. It specifies the chronological sequence for handling future activities. An enterprise, for example, may have promotion policy based on seniority. To implement this policy, procedures must be established for calculating seniority of employees and granting them actual promotions. It is apparent, procedures are guide to actions.

102. The management function of control is largely a matter of …………. .
(a) Resolving conflicts
(b) Determining what needs to be done
(c) Enforcing rules for employees
(d) Monitoring to see that tasks are accomplished
Answer:
(d) Management function of control seeks to check the performance against some predetermined standard or projected course of action established through planning process. Though planning affects all other functions of management, the unique feature of control is that it cannot exist without planning.

103. Which of the following best define the term planning:
(a) Integrated process to formulate the plans.
(b) Evaluate alternatives
(c) Devise the tools to manage an organisation
(d) Deciding upon the future course of actions to achieve the objectives of an organisation.
Answer:
(d) Planning means deciding upon the future course of actions to achieve the objectives of organisation.

104. Functions of administration are:
(a) Executive and governing
(b) Policymaking and implementation
(c) Legislative and determinative
(d) None of the above
Answer:
(c) Planning / Functions of administration are legislative and determinative.

105. Which one of the following control techniques is associated with recording of expenses and comparing them with the budgeted cost?
(a) Internal Audit
(b) Standard costing
(c) Break-even analysis
(d) Statistical control
Answer:
(b) Standard costing is one of the control techniques which is associated with recording of expenses and comparing them with budgeted cost.

106. Premises signify ………………….. within which planning will take place.
(a) Planning assumptions
(b) Planning deviations
(c) Planning resources
(d) None of the above.
Answer:
(a) Planning will takes place in planning assumption signify by premises.

107. How many principles of management have been suggested by Henry Fayol?
(a) 10
(b)14
(c) 12
(d) 16
Answer:
(b) There are 14 principles of Management suggested by Henry Fayol.

108. Which of the following is the first and primary step in the planning process?
(a) Premising
(b) Determining
(c) Evaluating alternatives
(d) Establishing objectives
Answer:
(d) Planning process is very tedious process and it involves so many steps and its first step is to set objectives i.e. what to achieve. Without objective, nothing can be achieved by organisation. So, setting goals is the Primary Step of Planning Process.

109. Which one of the following method is used frequently by an organisation to decide its strategic goals?
(a) Group discussion
(b) Brainstorming
(c) Interview
(d) None of the above
Answer:
(b) Brain Storming: Brainstorming is a group creativity technique by which efforts are made to find a conclusion for a specific problem by gathering a list of ideas spontaneously contributed by its members. Thus, option (b) is correct answer.

110. The term strategy is derived from:
(a) Strategos
(b) Strata
(c) Strategy
(d) All of the above
Answer:
(a) Strategy is derived from a Greek word Strategos comprising two words Stratos + ago; respectively meaning army and moving or guiding.

111. Planning is a:
(a) One time process
(b) Continuous process
(c) Once in 10-year process
(d) None of these
Answer:
(b)Planning is a continúous process of management.

112. Planning is
(a) Fixed
(b) Flexible
(c) Both (a) and (b)
(d) None of these
Answer:
(b) Planning is flexible as it can be changed in accordance to current situation and can be redrafted.

113. Planning may call for a change in the existing —
(a) Accounting Concepts
(b) Government Mandates
(c) Governance Standards
(d) Procedure and Policies
Answer:
(d) Planning may call for a change in the existing ‘Procedure and Policies’ of the organisation because all other three only affect the planning already done.

114. Strategic plans are required for plans?
(a) Long Range
(b) Short Range
(c) Medium Range
(d) All
Answer:
(a) Strategic plans are detailed action steps laid out to achieve strategic goals. These have a time horizon 5 years and above. These plans often include their mission and goals as these are the basis for action steps.

115. Actual selection of course of action from among the alternative?
(a) Decision Making
(b) Forecasting
(c) Premises
(d) Budgeting
Answer:
(a) Decision making signifies actual selection of a course of action from among a number of alternatives. It is so important to the job of managing that management is sometimes described as consisting essentially of the decision making process.

Planning – Business Management Ethics and Entrepreneurship Notes

Planning – Business Management Ethics and Entrepreneurship Notes

CS Foundation Business Management Ethics and Entrepreneurship Notes