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CBSE Class 12 Business Studies, Planning Chapter 4 Notes

Class 12 Business Studies Chapter 4 Planning

Planning and creativity are closely related concepts. The manager would first need to define goals, though. Managers at all levels engage in planning as a crucial stage. Since choosing from several performance options requires decision-holding, it is necessary.

Planning- Scope And Nature

There are certain unique characteristics to the management function of planning. These characteristics shed information on its extent and nature.


  • Planning is centered on achieving goals: Businesses are established with a shared objective in mind. The projects and the actions to be taken to achieve the objectives both lay forth explicit purposes. Planning is so beneficial.
  • Planning lays the groundwork for other management processes: making it a key component of management. All additional managerial tasks are carried out within the framework of the aforementioned concepts. Planning consequently results in other procedures. The superiority of planning is also mentioned in relation to this.
  • Planning is continuous: Plans are laid out for a specific time frame, such as a period, a quarter, or an entire year. There is a requirement that a new policy be developed on the basis of fresh circumstances after that time has passed.
  • Planning is futuristic: Usually, planning is preparing for the future by looking forward. The goal of planning is to efficiently align future outcomes for an association’s legitimate advantage. It entails peering into the future, researching it, and predicting it. As a result, planning is thought of as a capacity that looks ahead and is based on prediction.

Limitations of Planning 

The limitations of Planning are furnished below:

(1) Planning Leads to Rigidity


  • The plans must be followed throughout the entire organization and are strict in character.
  • Both internal and external planning can be so tight.
  • Plans, policies, programmes, procedures, and other internal rigidity factors into these and other areas.
  • Political, industrial, technological, legal, and economic changes, among other things, are related to external rigidity.
  • A superb branch of a super-specialty hospital exists in a metropolis, for instance. The leader of the hospital branch and their subordinates must abide by whatever the hospital’s top administration chooses. Even while they occasionally realize they might have done a better job on their own, the laid-out plan gives their approach stability.


(2) Planning May Not Work in Dynamic Environment

  • A dynamic environment is one where things are always changing and a business can exist.
  • An organization finds it challenging to access future trends, consumer preferences, natural disasters, competition policies, and the effects of changes in the environment’s various elements.
  • Since it is challenging to foresee changes in the future with 100 percent precision, the organization must constantly adapt.
  • The changing environment can occasionally cause plans to fail.
  • Example: Successful manufacturer Nestle was highly proactive in formulating business plans for Maggi noodles. Despite high demand, Maggi noodles were unavailable owing to political and legal issues. This was brought on by the high lead concentration of Maggi noodles.

(3) Planning Reduces Creativity

  • The top management is primarily responsible for planning, while intermediate and lower levels of management must implement these plans.
  • They are unable to alter or diverge from the plans made by their seniors.
  • In such situations, employees become automatons that follow directions without exercising any original thought.
  • Some gifted people’s originality is killed by such rigidity to follow the laid plans.
  • Example: Customized shoes have a lot of potential, which makes a branch of a well-known shoe manufacturing company necessary. The company makes standardized shoes, thus the senior management is not interested in this proposal.

(4) Planning Involves Huge Cost

  • Making plans can be very expensive because it takes a lot of time and resources.
  • Some expenses are incidental in nature, such as those for board meetings, consultations with professionals, and initial research to determine the viability of the idea.
  • It may take a long time to verify the accuracy of data and calculations in science.
  • Sometimes the expenses incurred may not be worth the benefits received from the plans; this could have a negative impact on the business.
  • Example:Businesses like IBM invest a lot of money in research. This company receives guidance from several experts at the highest levels, which changes their fee. But without such meticulous work, a major organization like that couldn’t survive. Consequently, it becomes vital to prepare for IBM.

(5) Planning is a Time-consuming  Process

  • Planning is a very lengthy process as it consumes a lot of time for collection, analysis, and interpretation of data.
  • Due to such a lengthy process, sometimes decisions get delayed, opportunities are lost and there is not much time left for the implementation of plans.
  • Example:On World Health Day, Health is Wealth Ltd. intended to host 25 health checkup camps and sent a request to the top management. However, the management could only give its clearance one day prior, which allowed the sales manager to host only five camps, losing a significant chance. The implementation in this case was delayed.

(6) Planning Does Not Guarantee Success

  • Only when plans are adequately created and carried out is an organization likely to succeed.
  • Plans lose their purpose if they are not carried out.
  • Managers have a propensity to stick with tried-and-true strategies that have worked before.
  • A successful plan from the past does not guarantee success in the future because every company organization must thrive in a changing and unpredictable environment.
  • Plans must be carried out in light of the changing environment otherwise the business may collapse.
  • Example: The top management of a paint manufacturing firm methodically outlined a successful strategy. The plan was diligently developed by the entire firm. The entire scheme, however, was derailed when a rival with greater paint quality entered the market. The dynamic circumstances, over which the organization had no control, were the cause of the failure.

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Features of Planning

(1) Primary Function

  • Planning comes first because it establishes the framework for all other management responsibilities.
  • The plans are the framework within which all other management tasks, such as organizing, staffing, directing, and controlling, are carried out.
  • Other management tasks cannot be performed without planning.
  • Planning, sometimes known as the “Primacy of Planning,” is the fundamental task of management.
  • Example: Following the setting of the goal of 2400 refrigerators, the corporation organizes the work, hires and selects the appropriate types of personnel, motivates and directs them, monitors their performance, and finally controls it to move toward the achievement of the goal. However, it is clear that other tasks could not have been accomplished without a goal of selling 2400 refrigerators.

(2) Achieving Objectives

  • When we establish plans, we pay attention to two things: the actions necessary to achieve the precise goals in question.
  • To attain goals, these particular actions become objectives, and objectives can be measured.
  • Planning is not possible without objectives.
  • Without planning, people would be working in separate directions, which would prevent the organization from achieving its stated goals.
  • Example: In the event that a business chooses to sell 2400 refrigerators in six months. If sales don’t happen, the company may consider better strategies, such as a sales discount, to accomplish the goal. We can see that no strategy is feasible or appropriate without the goal of selling 2400 refrigerators.

(3) Futuristic/ Forward-Looking

  • Planning entails thinking forward and preparing for upcoming events.
  • Planning is viewed as a function that looks forward and is based on predictions.
  • Future conditions and events are expected and plans are made as a result of forecasting.
  • Example: Plans are developed for how much to create, how to promote the product, how to make it available in the market, how to make the client aware of the product, etc. based on sales forecasts. All of these procedures are futuristic since they are aimed towards the future. A sales projection enables a business to look forward.

(4) All Pervasive

  • Every sort of organization, at every level of management, needs to plan. The breadth of planning, however, varies.
  • top-level management makes plans for the entire organization. They consider the entire organization when they think.
  • Middle management participates in departmental planning and thinks from the viewpoint of their departments.
  • Lower level management makes plans for the company’s daily operations.
  • Example: A worker may plan for his production schedule, a worker may plan to introduce a new product in the market, a sales manager may plan to meet his sales target, a student may plan for his monthly test, a husband may plan to surprise his wife with a gift on the occasion of their anniversary, etc.

(5) Continuous Process

  • Plans are created for a specified time period and are an ongoing activity.
  • These could be set up for a day, week, month, quarter, or even a whole year.
  • New plans are created at the conclusion of a set time and are periodically changed in light of feedback on the prior plans, fresh specifications, and potential future developments.
  • Examples: Planners may need to make multiple adjustments for the time period or develop an alternative approach to reach the desired goals if plans are created during a period of recession and the market crashes into a boom during their execution. A firm had intended to sell 5000 automobiles, but flooding prevented them from doing so. To hit its sales goal, the corporation will need to adjust its plans. As a result, it is clear that planning is ongoing in each of the aforementioned situations.

(6) Decision Making

  • Making decisions entails selecting the greatest option out of all the available options.
  • Planning is impossible without considering alternatives.
  • Planning is not necessary if a substitute is not available.
  • The finest option is selected after a comprehensive evaluation of all the choices.Hence the need for planning arises.


  • When there is no other option, such as when a company needs to import raw materials and there is only one agency that can provide them, like State Trading Corporation (STC), the company is forced to import the material through STC.
  • Where there are alternatives, the importer has the option to acquire from any agency at market-competitive pricing if an import is free and more than one import agency is involved in this activity.

(7) Planning is Mental Exercise

  • Planning is the result of a logical process rather than speculation and wishful thinking.
  • Planning is a process of thought that is distinct from organizational operations.
  • It is founded on reasoned argument, verifiable data, vision, foresight, and good judgment.
  • Example:All successful CEOs, like Mark Zuckerberg of Facebook and Tim Cook of Apple, have incredible imaginations. These folks then exercise great judgment and aid in the extraordinary development of their companies.

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Question.1 What Would Happen if Objectives Are Not Set in the Planning Process?

Ans. In the absence of objectives, employees working at different levels of management would be working in different directions and the goals of the organizations cannot be achieved.


Question 2  What is the Primacy of Planning?

Ans. Planning precedes all other functions of management like Organizing, staffing, directing and controlling. So, planning becomes a primary function of management.


Question 3 What is the Role of Lower Level Management in the Process of Planning?

Ans. Lower level management plans for day-to-day operations of the organization.

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What Would Happen if Objectives Are Not Set in the Planning Process?

In the absence of objectives, employees working at different levels of management would be working in different directions and the goals of the organizations cannot be achieved.

What is the Primacy of Planning?

Planning precedes all other functions of management like Organizing, staffing, directing and controlling. So, planning becomes a primary function of management.

What is the Role of Lower Level Management in the Process of Planning?

Lower level management plans for day-to-day operations of the organization.

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