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Class 12 Planning: cheat sheet
CBSE Business Studies. Planning as deciding in advance: its features, importance and limitations, the steps in the planning process, and the types of plans.
Key ideas
- Planning is deciding in advance what to do and how to do it; it bridges the gap between where we are and where we want to be.
- It focuses on objectives and is the primary function; it is pervasive, continuous, futuristic, a mental exercise, and involves decision making.
- It gives direction, reduces the risk of uncertainty, cuts overlapping and waste, encourages new ideas, eases decisions and sets standards for control.
- Its limits: rigidity, a poor fit in a fast-changing environment, less creativity, high cost, time taken, and no guarantee of success.
- Planning premises are assumptions about the future, such as forecasts of demand, on which plans rest.
- Single-use plans (programme, budget) serve one occasion; standing plans (policy, procedure, method, rule) are used again and again.
- A policy guides thinking and leaves room for judgement; a rule says exactly what must or must not be done and leaves none.
Remember
| Steps of planning | set objectives → develop premises → identify alternatives → evaluate them → select one → implement → follow up |
| Sales target from a premise | last year’s sales × (1 + growth% ÷ 100) |
| Budgeted revenue | target units × price |
| Budget difference | actual spending − budget: above zero over budget, below zero under |
| Strategy | a comprehensive plan for the objectives, including how resources are allocated |
| Procedure vs method | the sequence of steps for a routine task vs the way one step is done |
| Budget | expected results in numbers: both a plan and a control device |
Watch out
- Putting developing premises before setting objectives: objectives always come first.
- Calling a policy a rule: a policy leaves room for judgement, a rule does not.
- Taking the growth alone as the target: add it to last year’s sales.
Worked example
Put these steps of the planning process in order: (a) identifying alternative courses of action (b) selecting an alternative (c) evaluating alternative courses
Working: identifying alternative courses of action → evaluating alternative courses → selecting an alternative
Answer: a, c, b
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