CBSE Class 12 Business Studies - Planning 

Concept of Planning 

  • Planning is the function of management that involves setting objectives and determining a course of action for achieving those objectives.
  • It seeks to bridge the gap between where we are and where we want to go.
  • It is a predetermined course of action.
  • It specifies the objectives to achieved in future.
  • It involves both decision making and problem solving.
  • It is concerned with both ends and means i.e., what is to be done and how it is to be done.


1.Provides Direction

  • Objectives are clearly stated -act as a guide for deciding what action should be taken and in which direction.
  • If goals are well defined, employees are aware of what the org. has to do & what they must do to achieve those goals.
  • Departments and individuals in the organization are able to work in coordination.

2.Reduces Risks of Uncertainty

  • Biz operates in an uncertain environment & faces several types of risks.
  • Planning pre-assesses the future uncertainties + enables the firm to face these uncertainties with minimum wastage of resources.
  • Changes/ events can ‘t be eliminated but can be anticipated & managerial responses can be developed.

3.Reduces Overlapping and Wasteful Activities

  • Provides the basis for coordinating activities of different departments & Individuals.
  • Avoid misunderstandings, eliminates useless activities &provides clarity of thought &action so work is carried out smoothly without interruption.

4.Promotes Innovative Ideas

  • Planning is an intellectual process – looks for scope for finding better ideas, methods, and procedures to perform a particular job.
  • Forces managers to think differently & assume future conditions- makes managers creative and innovative.

5.Facilitates Decision Making

  • No need for planning if only one possible course.
  • Involves choice among various alternatives & activities-examining & evaluating each alternative & choosing the most appropriate one.
  • Helps in taking rational decisions.

6.Establishes Standards of Control

  • Objectives of the org. determines the what, why, and how of everything.
  • Standards are prescribed in the context of their work, time and cost.
  • By comparing actual work performance with standards, deviations are found and corrective action is taken.

Features of Planning 

1. Focuses on Achieving Objectives:

  • Not an end in itself but means towards the achievement of an objective.
  • Specifies the objectives to be attained in the future and steps necessary to achieve them.
  • Act as a guide for deciding what action should be taken & in which direction.
  • Thus, planning is purposeful. No meaning unless it contributes to the achievement of pre-determined org. goals.

2. Primary Function of Management:

  • Precedes all other functions & all other functions are done within the framework of the plans drawn.
  • Without planning, there is nothing to organize, no one to direct & no need for control.

3. Pervasive:

  • Not an exclusive function of top-level management- required in all organization, all levels & all depts.
  • However, the scope, nature & extent of planning differs at different levels and departments:

        • Top M Plans for organization as a  whole.

       • Middle M Prepares departments plans.

       • Lower M Supervisors formulate day-to-day operational plans.

4. Continuous:

  • Once a plan is framed, it is implemented & then followed by another plan & so on since conditions & requirements change.
  • Prepared for a specific time period, after which, new plans have to be prepared.

5. Futuristic:

  • Considered to be forward-looking, as it requires looking ahead & forecasting future events (customers ‘demand, competition, government policies, etc.).
  • Involves looking ahead & preparing for future opportunities/ threats so as to take advantage of them or deal with them effectively.

6. Involves Decision Making:

  • No need if only one possible course of action.
  • It involves choosing the best course among various alternative courses of action available.
  • It evaluates each alternative & chooses the most appropriate one.

7. Mental Exercise:

  • as it requires the application of mind and sound judgment.
  • The intellectual activity that requires logical & systematic thinking rather than empty guesswork.
  • Thus, closely related w/ creativity & innovation & based on proper analysis.


Setting Objectives:

  • Objectives specify what the organization wants to achieve.
  • Objectives can be set for the entire org. & stated to each dept. within the org. very clearly, to determine how all depts. would contribute towards overall objectives.
  • FOR EXAMPLE-Objectives could be to achieve sales, expansion of business etc.
  • Then these have to percolate down to all employees at all levels so that they understand how their actions contribute to achieving objectives.

Developing Premises:

  • Plans are made on the basis of some assumptions.
  • These assumptions, which provide the basis for planning, are called premises.
  • All managers involved in the planning should be familiar with them because plans are expected to operate & reach their destination subject to these.
  • They can be - Internal premises: Cost of products, capital, machinery, profitability, etc.External premises: Changes in technology, population growth, competition, govt. policies etc

 Identifying Alternative Courses of Action:

  • After setting the objectives, managers make a list of alternatives through which the org. can achieve its objectives as there can be many ways to achieve the objectives & managers must know all of them.
  • FOR EXAMPLE-Sales could be increased through any of the following ways-

-  By enhancing advertising expenditures

Appointing salesman for the door to door sales

-   By offering discounts

-   By adding more product lines

Evaluating Alternative Courses

  • Positive & negative aspects of each &every proposal need to be evaluated to determine the feasibility and consequences in the light of each objective to be achieved.
  • FOR EXAMPLE-In financial plans, risk-return, trade-off are important. Riskier the investment, higher the returns it is likely to give. To evaluate such proposals, detailed calculation of earnings, taxes, earnings, earnings per share, etc. should be done.

Selecting the Best Alternative

  • The real point of decision-making - Best plan has to be adopted and implemented.
  • The ideal plan = most feasible, profitable and with least negative consequences.
  • Most plans may not be subjected to mathematical analysis. In such cases, subjectivity & manager ‘s experience, judgment, and intuition are important to select the most viable alternative.
  • Sometimes a combination of plans may be selected instead of one best course.

 Implementing the Plan

  • Concerned with putting the plan into action.
  • For implementing the plans, managers start organizing & assembling resources for it.
  • FOR EXAMPLE-If there is a plan to increase in production , then more labor, more machinery will be required. This step would also involve organizing for more labor and purchase of machinery

Follow Up Action 

  • This involves monitoring the plans and ensuring that activities are performed according to the schedule.
  • Whenever there are deviations from plans, immediate action has to be taken to bring implementation according to the plan or make changes in the plan.


1.Single use plan.

2.Standing plan.

Single-use and standing plans are part of the operational planning process.

  • Single-use plans apply to activities that do not recur or repeat.
  • It is a one-time plan specifically designed to achieve a particular goal that, once achieved will not recur in the future. Such Plan is developed to meet the needs of a unique situation.
  • The length of a single-use plan differs greatly depending on the project in question, as a single event plan may only last one day while a single project may last weeks or months.
  • FOR EXAMPLE-Policies, Procedures, Methods, Rules.
  • Standing plans are used over and over again because they focus on organizational situations that occur repeatedly.
  • They are usually made once and retain their value over a period of years while undergoing
  • Revisions and updates. That is why they are also called repeated use plans.
  • FOR EXAMPLE- Budgets, Programmes, Projects, Procedures.