Chapter-4-Planning 

(c)

Explanation: Planning is deciding in advance what is to be done in future. Thinking is necessary if something is to be decided for future.

(b)

Explanation: Goals are the directions where an organisation wants to go in future.

(d)

Explanation: Policies are not the actual procedures of doing things but the things that we have to keep in mind while following the actual procedure. “Honesty is the best policy” means that we have to keep this in mind while following procedures.

(a)

Explanation: Rules are the plans that cannot be violated. Non-compliance of rules invites penalty e.g. parking vehicle in no parking zone invites fine.

(b)

Explanation: Derivative plans refer to the policies, procedures, rules programmes, budgets etc. These are detailed plans to achieve the basic or main plan.

(a)

Explanation: While preparing budget, we measure past activities and projected future activities in numerical terms so that actual performance can be compared to standard performance and improved and corrected.

(a)

Explanation: External environment can render the whole planning useless. Suppose a company plans to sell old vehicles in the capital and subsequently government bans the sale of old vehicles. The external environment thus can nullify the planning process. Planning should be such that it has flexibility to cope with ever changing environment.

(d)

Explanation: In planning we decide a favourable course of action and we choose this favourable course after evaluating various possible courses of actions.

(a)

Explanation: Planning involves predicting the future which is uncertain. If future is not predicted with reasonable accuracy, planning may become useless in changed environment.

(b)

Explanation: An organisation cannot change its external environment, it can only adapt to it. If external environment is not predicted reasonably accurately, planning becomes useless. Tata Motors planned their vehicle production in West Bengal but they had to shift it to other place because of the external factors and thus their planning regarding production in West Bengal had to be discarded.

(a)

Explanation: Planning means predicting external environment and then moulding the internal environment so that it can keep pace with external environment to achieve organisational goals and objectives.

(c)

Explanation: Planning consists a process that needs time and in emergency due to limited time, it is not possible to plan.

(d)

Explanation: Planning is the first function of management. In any human activity, implementation comes after deciding which way to implement.

(b)

Explanation: Competitors may formulate more favourable policies for customers that can affect the planning of the organisation.

(a)

Explanation: Programme is a single use plan because it is used once and needs to be adjusted for next uses e.g. programme to build a school.

(c)

Explanation: After planning various courses of actions, it needs to be reviewed if the plans fit in the scenario for which they are drafted.

(a)

Explanation: These plans need to be adjusted for using second time because they are used for specific situations.

(d)

Explanation: Sales budget is prepared to produce the goods and meet the market demand.

(c)

Explanation: Sequence of different steps in an activity is called procedure.

(d)

Explanation: A procedure is a collection of different steps organised in a sequential order and such steps are called methods.

(b)

Explanation: Planning takes time to evaluate alternatives and decide which one best suits the projected environment.

(a)

Explanation: Change in fashion can nullify the process of planning. If an organisation plans to manufacture suits and afterwards suits become less popular, then planning to prepare suits becomes useless.

(b)

Explanation: The main purpose of planning is to find a course of action which helps in effective and efficient utilisation of given human, material and technical resources. The course of action is found after evaluating different possible alternatives.

(c)

Explanation: Planning means deciding in advance the purpose for which an entity has been set up. Thus it includes setting objectives.

(b)

Explanation: This is a policy because this has to be kept in mind while following procedures of selection. Policy is not a procedure but the guidelines that should be kept in mind while following the procedure.

(d)

Explanation: The aim of planning is to place a visible purpose in the minds of people so as to attain organisational objectives.

(d)

Explanation: Appealed policy is followed on the request of subordinates so as to improve the sense of belonging of employees.

(d)

Explanation: Improving sales is a goal because it tells the desired direction not its extent or quantity e.g. improving sales is a goal whereas improving sale by 10% is an objective.

(c)

Explanation: “No parking” is an example of rule because it will invite penalty if not followed and it is more specific than general like policy.

(c)

Explanation: These plans are standard plans that are used in repeated situations and are changed only in exceptional situations.

(d)

Explanation: Procedures and programmes are made to materialise the plans. They relate to daily activities of production purchase, sale etc.

(b)

Explanation: Objectives are the basic or main goals of the organisation, while policies are one of the subsidiary or derivative plans like methods, rules, procedures etc.

(a)

Explanation: Planning reduces flexibility as it defines a course of action that is to be followed while execution.

(d)

Explanation: Increasing sales by 15% are an objective because here we are quantifying the desired direction (goal) that is “increasing sales”.

(b)

Explanation: Procedures are collections of steps to be taken for day-to-day activities like purchase, sale or production.

(b)

Explanation: In planning we chalk out different courses of actions that will lead to the goal we want to achieve and then decide which plan of action will lead to the goals with efficient and effective utilisation of resources in a shorter period of time.

(a)

Explanation: Policies are used repeated while following procedures, methods or programmes which is why they are standing plans.

(b)

Explanation: “No Smoking” is a rule because its non-compliance will invite punishment or fine.

(c)

Explanation: Planning helps to reach the goals in a short period of time, and planning in advance means that unnecessary action will not be followed while execution.

(b)

Explanation: Planning recommends a desired course of action, thus it helps to reduce chaos due to unnecessary actions while execution.

(d)

Explanation: Policies provide guidelines to be kept in mind while following procedures. For non-repetitive situations policies are not required and rule can be sufficient.

(c)

Explanation: Planning may become useless due to changes in external environment of the organisation. If a company plans to export gold and government imposes heavy tax on gold or bans the export of gold, in that scenario planning to deal in gold may not be profitable for the organisation.

(b)

Explanation: Policies are general guidelines that are concerned with whole of the organisation. Top management decides on matters regarding the whole organisation.

(d)

Explanation: In planning, we first set up objectives to know where we want to go in future and then chalk out the desired course of action.

(c)

Explanation: Objectives are the main goals of the organisation in measurable terms. Increasing production by 20% is an objective.

(d)

Explanation: Objectives are main or basic plans of an organisation and policy is a subsidiary plan to achieve the main plan. This is why the subsidiary plans are derived from objectives.

(b)

Explanation: These plans are formulated once and used repeatedly in similar situations. That is why they are called standing plans.

(d)

Explanation: Improving quality from 90% to 98% is an objective. Goals converted into measurable terms are called objectives.

(a)

Explanation: Planning means looking into the future. Planning aims at achieving objectives in future. Objectives cannot be achieved in past as past cannot be altered.

(b)

Explanation: Imposed policy is one that is adopted due to outside forces e.g. giving preference to local people while hiring.

(c)

Explanation: The policy of hiring only trained workers is an originated policy because this is deliberately formulated by management to guide decision-making at lower levels.

(c)

Explanation: First line management is responsibility for running day-to-day operations which is the reason why first line management plans for day-to-day operations.

(b)

Explanation: Procedures bring about rigidity as they discourage new initiative and thinking and employees may not think for new and better ways of doing things.

(d)

Explanation: Budget is single use plan because one budget cannot used repeatedly or every year.

(b)

Explanation: Objectives are the basis to the very existence of an organisation they give direction to efforts of the personnel of the organisation.

(d)

Explanation: Procedures are influenced by policies. Policies provide guidelines that have to be kept in mind while following procedures.

(d)

Explanation: A budget is generally prepared for one year.

(b)

Explanation: Top management formulates overall organisational goals and objectives. Top management takes the decisions regarding the whole organisation.

(c)

Explanation: This is an example of appealed policy because this type of policy is formulated on the appeal or request of subordinates.

(b)

Explanation: The limitations in which planning is to be done is called planning premises. If an organisation plans to produce goods, then it will have to analyse different options of producing it. It will not consider the options of purchasing it readymade. So purchasing goods readymade in this case is not a part of planning premises.

(c)

Explanation: A budget is a numerical expression of the desired performance in near future. Budgets provide basis for controlling by giving standards.

(d)

Explanation: Objectives are the first steps in the process of planning because they provide a rough idea of the direction in which an organisation wants to move. It is important to know the basic or main plans before making subsidiary or derivative plans.

(c)

Explanation: Master budget is the summary budget incorporating all functional budgets sales budget, cash budget, production budget etc.

(a)

Explanation: Top management is mainly concerned with the formulation of organisational objectives and polices, which are concerned with the organisation as a whole.

(c)

Explanation: A series of steps arranged in some predetermined best order is called a procedure. Procedures define in advance the course of action to be followed and thus reducing unnecessary actions and delay in the production of goods and services.

(a)

Explanation: Departmental goals are formulated by departmental heads which are a part of middle level management.

(b)

Explanation: A budget is a part of planning because it provides standards of performance before the actual work. It is an instrument of controlling because it provides standards with which actual performance is to be compared.

(c)

Explanation: Planning means deciding in advance what plan of action to be followed. To decide the desired plan of action, alternatives need to be evaluated.

(b)

Explanation: Strategies are formulated to successfully cope with the ever-changing external environment and the policies of the competitors.

(c)

Explanation: Policies are derivative plans to achieve the main or basic plan. Main plans or directions are provided by objectives.

(c)

Explanation: Planning is the first function of management. Planning provides the action plan that is to be followed. Planning is the primary function before any action to be taken.

(d)

Explanation: In planning we decide a course of action that provides most efficient way of achieving the goals. For deciding the most profitable way, alternatives are evaluated.

(a)

Explanation: After planning, an organisation may feel sure that it will achieve desired goals and it may not actually concentrate on following the procedures towards it effectively.

(d)

Explanation: Giving preference to local people while recruiting is a policy. This is a guideline that is to be kept in mind while following the procedures of selection.

(a)

Explanation: Policies provide the guiding principles while implementing a plan and procedures provide the way of doing things. The guiding principle has to be followed while execution.

(c)

Explanation: Originated, imposed and appealed are different types of policies that provide guidelines to be kept in mind while following the procedures.

(a)

Explanation: Planning involves deciding a course of action to be followed after evaluating alternatives. This plan of action provides standards that are to be followed while execution.

(b)

Explanation: Sales is one of the main functions of an organisation that is why it is called a functional budget.

(d)

Explanation: Limiting factor is the most influential factor while planning. If an activity is to be performed within a week, the alternatives that help in competing the activity in more than one week have to be ignored however efficient they may be. Planning has to revolve around the limiting factor.

(a)

Explanation: Evaluation of alternatives is a step in the planning process, which is done before taking follow-up. First we establish planning premises, them we identify alternatives, then evaluate alternatives and then we follow-up whether the activities planned are running as planned so that obstacles can be removed.

d
Explanation: If an organisation wants to export sugar, and subsequently government bans sugar exports, then the planning regarding sugar export may go waste.

(b)

Explanation: Planning provides a course of action to be followed while execution. The employees may follow this procedure as it is even if they can suggest a better way of doing it.

(c)

Explanation: Objectives are the main plans that provide the basis for the formulation of policies, procedures, programmes, rules and budgets. These derivative plans should be in sync with the main objectives.

(b)

Explanation: Technological change is an external factor that can affect the existing planning. If an organisation wants to produce music cassettes and due to technical advancement customers start to prefer compact discs in place of music cassettes, then planning to produce music cassettes may go waste.

(b)

Explanation: Objectives are the main plans and programmes are derivative plans. Derivative plans are formulated to achieve main or basic plan.

(c)

Explanation: Planning provides direction to the organisation. It defines a course of action. It is primary function of management because any action can be taken only after knowing the direction where we want to go.

(d)

Explanation: All the activities are related to increasing the sales of the organisation and thus increasing the profits. That is why sales budget is the basis of all the budgets. One an organisation know what amount it is to sell, it will be easier to know what amount to purchase and how much to produce.

(c)

Explanation: Planning premises means the limitations within which planning is to be done. This includes predicting future.

(a)

Explanation: This is a policy because it has to be kept in mind while following the procedures of admissions of students. Policies provide guidelines that have to be kept in mind while executing the procedures.

(c)

Explanation: Planning involves identifying and evaluating alternatives which requires skills and analytical skills. It also requires considerable time if there are too many alternatives to evaluate.

(c)

Explanation: Master budget is the sum total of all functional budgets.

(c)

Explanation: Procedures are formed to deal with routine activities to avoid unnecessary actions.

(c)

Explanation: The hierarchy of objectives is also called end means chain because it provides information regarding the end objectives to be achieved and the means or course of action to be followed to achieve them.

(b)

Explanation: Strategies are formulated to deal with external environment and the medium and long-term objectives of the organisation. Decisions regarding a new product have to be taken while taking into consideration the external environment and the strategies of competitors.

(d)

Explanation: Planning involves time and skills to decide the course of action. If the cost of planning is more than its benefit, it is useless to plan like any other activity.

(b)

Explanation: A plan should be easy to understand, to the point without recommending unnecessary activities. It should also have room for flexibility so that it can be adjusted with changing future conditions.

(c)

Explanation: Goals are the directions where an organisation wants to strive. Goals do not quantify the direction. Increasing sales is a goal and increasing sales by 20% is an objective. Goals give rough idea about the desired direction.

(d)

Explanation: Intangible planning premises are those factors which can affect planning process and which cannot be seen or touched or measured. Employees moral cannot be quantified and goodwill can be quantified only when business is being sold.

(c)

Explanation: Budget provides the information regarding desired performance in measurable figures and provides the basis on which actual performance is to be judged after the completion of the production.

Explanation- Changes in the government policies and political situations – changes in the government, its ideology and its fiscal, industrial, monetary and economics policy may create hurdle in the planning process. So, it is the external limitation of the planning.

(a) Co-ordination

Explanation- Effective Co- ordination:- Planning determines the activities of different individuals, groups and departments in such a way, that maximum co-ordination between physical and human resources may emerge.

(d) Objective

Explanation- Policies are objective oriented- Policies are framed to achieve the predetermined objectives of the business as such they should be supplementary and complementary to objectives.

(b) Top-level management

Explanation- Objectives are determined by owners or top level management.

Explanation- Estimate of future needs arranged according to an orderly basis covering the activities of the enterprise for a definite period of time is known as budget.

(a) Methods

Explanation- Methods by nature regarded as logical and rational.

(c) Procedures

Explanation- Series of related tasks that make up the chronological sequence and establish ways of performing the work to be accomplished are known as procedures.

(d) Quality

Explanation- Plans must be simple to be understood and worked upon by different individuals and groups.

(a) Middle level management

Explanation- Procedures are decided by medium and low level executives.

(b) Concrete plans

Explanation- Concrete plans- Programmes are plans to accomplish given work. It deals with the systematic detailed development of the work.

(a) Procedure

Explanation- Rules do not have any procedure rather Procedures may have their rules.

(d) Methods

Explanation- Formalised and standardized way of doing routine jobs are known as methods. These are standard ways of doing work. It increases efficiency. There is no penalty for violation of methods. So, Valuation of stock by LIFO and FIFO methods comes under Methods.

(b) Rules

Explanation- Rules are regarded as official and authoritative by nature.

(a) Planning

Explanation- Changes in the government, its ideology and its fiscal, industrial, monetary and economic policy may create hurdle in the planning process.

(c) Objectives

Explanation- Goals established to guide the efforts of the company and each of its components are known as Objectives.

(a) Procedures

Explanation- Series of related tasks that make up the chronological sequence and establish ways of performing the work to be accomplished are known as Procedures.

(d) Planning

Explanation- Collecting and analysing information- Certain facts and information regarding the anticipated problems, requirements or opportunity are to be collected and properly analysed. This analysis of the facts will prepare sound basis in the formation of plans.

(c) Finance

Explanation- Budgeting implementation of plans requires finance- It is necessary that budgets for master plan and different derivative plans to be prepared. Plans for the arrangement of requisite funds should also be made. Budgeting keeps a check on extravagance and unnecessary expenses. It is a strategy of making planned expenditure.