GSEB Class 12 Organization of Commerce and Management Important Questions Chapter 3 Planning

Gujarat Board GSEB Class 12 Organization of Commerce and Management Important Questions Chapter 3 Planning Important Questions and Answers.

GSEB Class 12 Organization of Commerce and Management Important Questions Chapter 3 Planning

Short Answer Type Questions

Question 1.
Give the definition of planning according to George R Terry.
Answer:
Function of planning means, assumptions for results, policy to follow function, stages and to decide the method to be followed.

Question 2.
Who said ‘task of planning is choosing’?
Answer:
Bill Goentz

Question 3.
List down any four characteristics of planning.
Answer:

1. Universal process,
2. Primary function,
3. Conscious and mental process,
4. Flexibility,
5. Precise,
6. Forecasting is essential,
7. List of alternatives,
8. Concerned with future,
9. Continuous process,
10. Objective oriented activity and
11. Requires decision process.

Question 4.
Why is planning said to be a primary function?
Answer:
Planning is said to be a primary function because management starts with planning. All other functions of management like organization, staffing, directing, controlling are implemented on the basis of planning. Hence

Question 5.
Why planning should be precise?
Answer:
Planning has to be precise – because planning is a process for the future. Since, future is uncertain, the planning is to be done precisely and minutely.

Question 6.
List down four importance of planning.
Answer:

1. Wastage of resource can be avoided,
2. Planning leads to precision,
3. Smoothness in other managerial functions, and
4. Effective control becomes possible.

Question 7.
List down any four limitations of planning.
Answer:

1. Uncertain future,
2. Expensive process,
3. Time consuming,
4. Planning is irrelevant,
5. Tends towards rigidity,
6. Uncertainty of external factors,
7. Incomplete information,
8. Restrictions on employees creativity, and
9. Use of faulty method.

Question 8.
Why is planning known as expensive process?
Answer:
Planning is known as expensive process because experts have to be engaged for planning function. These experts charge high fees. Moreover, framing of plan requires large amount of time, energy and money making it an expensive process.

Question 9.
‘Is planning a full proof key to success.’? Why?
Answer:
Planning is not a full proof key to success because plannihg is based on assumptions and forecasting which is made’ for future. Future is not certain and thus, assumptions are not fully correct.

Question 10.
When does planning become irrelevant for an organization?
Answer:
Planning becomes irrelevant for an organization when the assumptions on the basis of which planning is done changes, circumstances or factors affecting business unit changes, and time taken for implementation increases.

Question 11.
How is the evaluation of alternatives done in a business unit?
Answer:
Mathematical and statistical methods as well as management tools and techniques are used for evaluation of alternatives.

Question 12.
How does a business unit prepare an ideal plan as a model?
Answer:
Business unit prepares an ideal plan as a model with the help of Operation Research.

Question 13.
What are subsidiary or derivative plans?
Answer:
Different alternatives are to be considered as per basic plan or in support of basic plan. These plans are known as subsidiary plan.

Question 14.
Which are the different types of planning?
Answer:

1. Standing plan,
2. Strategic plan,
3. Tactical plan,
4. Operational plan,
5. Single use plan and
6. Contingency plan are important types of plans.

Question 15.
What do you mean by standing plan?
Answer:
Standing plan represent guideline for decisions in repetitive situation hence it can be used repeatedly. When there is repetition of organizational activities and’a standard policy are decided for prompt action, it is known as standing plan.

Question 16.
What are tactical plans?
Answer:
Tactical plans are short term plans prepared by middle level of management for the accomplishment of business objectives.

Question 17.
What is important for formulation of tactical plan?
Answer:
[Specialized knowledge and skills are necessary for the formulation of tactical plans.

Question 18.
What are operational plans?
Answer:
Operational plans are the specific result expected plans from the departments, work groups and individuals.

Question 19.
Who builds the operational plans?
Answer:
Departmental heads build the operational plans.

Question 20.
What is single use plan? Give
Answer:
Single use plan is a plan made for examples. achieving special objectives. It is applied to activities which do not recur. For example, it is made for activities like construction of house or office, packaging, printing of office banners, etc.

Question 21.
Explain contingency plan.
Answer:
A plan designed to take account of a possible future event or circumstance is called a contingency plan. Contingency plan is a new plan made if there are changes that occur due to political, economic, social or natural factors.

Question 22.
What are the components/elements of a plan?
Answer:

1. Objectives,
2. Strategy,
3. Policy,
4. Method/procedure,
5. Rules,
6. Budget and
7. Programme

Question 23.
What is strategy?
Answer:
Contrivance used for the accomplishment of pre-decided objectives of planning is known as strategy.

Question 24.
Define policy.
Answer:
Decisions and strategies decided by management for accomplishment of objectives is known as policy.

Question 25.
What is the importance of rules in planning?
Answer:
Rules give clear understanding and decide the procedure of doing planning. It ensures discipline among employees. Rules make accomplishment of objectives and supervision easy.

Question 26.
What is a programme?
Answer:
Programme is a sequence of activities to be undertaken by a business unit-as per planning.

Long Answer Type Questions

Question 1.
State the steps for planning process.
Answer:
The planning process consists of following steps:

1. Determination of objectives
2. Clarifying planning premises
3. Collection and analysis of information
4. Preparation of alternative plan
5. Evaluation of alternatives
6. Selection of the best alternative
7. Formulation and evaluation of subsidiary plan
8. Evaluation of plan

Question 2.
Write a note on standing plan.
Answer:
Standing plan:

• When there is repetition of some specific activities in an organization then the organization forms a plan to take care of that activity. Such a plan is called standing plan. These activities could be delivering goods to a customer in case he has crossed his credit limit, developing plan or policy to decide the quantity of a specific good to be produced during the end of sale season, etc.
• Standing plans provide guidelines for taking decisions in repetitive situation hence standing plan can be used repeatedly.
• Standing plans help the subordinates to take prompt decision.
• If the standing plan is framed then employees need not take permission from their superiors for executing the plans in case if situation arise.

Question 3.
Write a note on strategic plan.
Answer:
Strategic plan:

• Strategic planning is an organization’s process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy.
• Based on their philosophies the business units decide several business objectives.
• The unit then develops short term as well as long term strategies for achieving the desired objectives. This is called strategic planning.
• Foresightedness and experience are essential for developing strategic plans.
• The effects of strategic plans are seen in the long. These plans shape the future of the business.
• These plans demand that the unit takes consistent decisions that are in line with the strategy formed.

Question 4.
Write a note on tactical plan.
Answer:
Tactical plan:

• Tactical plan is a short-term plan that emphasizes the current operations of various parts of the organization.
• These plans span for maximum period of 1 year.
• Since these are short term plans, they clarify short term objectives that the business aims at. Hence business activities remain goal oriented and take place in a systematic manner.
• The tactical plans or say short term plans are prepared by middle level management.
• These plans guide the departmental heads and employees about the roles that they must play to achieve tactical plans.
• It requires specialized knowledge and skills to formulate these plans.

Question 5.
Write a note on operational plan.
Answer:
Operational plan:

• An operational plan is a detailed plan which provides a clear picture of how a team, department or an individual will contribute for achieving strategic goals of the organization. Operational plan is almost similar to tactical plan.
• Generally, operational plans are formed for short duration say about one year.
• Under.this, plans related to monthly or quarterly production, sales, etc. are made for achieving of objectives of annual production.
• These plans are made by departmental heads for the implementation of strategic plan.
• These plans are mainly formed for performing routine work and achieving daily targets. Hence, implementation of operational plans becomes easy, if they are made by involving concerned employees in the decisions, as these plans are related with routine work.

Question 6.
What is single use plan?
Answer:
Single Use plan:

• As the name suggests, single use plans are made for handling one-time, non-recurring problems. Single-use plans are also referred to as ‘specific plans’ since these are meant to solve a particular problem.
• These plans are formulated to handle non-repetitive and unique problem. These plans cannot be used again and again. These plans become obsolete after achieving their purpose.
• Examples of these plans could be constructing a dam, making budget, organizing an event, etc.

Question 7.
What is contingency plan?
Answer:
Contingency plan:

• A plan designed to take account of a possible future event or circumstance is called a contingency plan.
• Business unit face changing market situations. These changes could be change in political, economical, social or natural factors.
• If the business has to make changes in the original plan or make a new plan due to such reasons then the plan made is called contingency plan.

Question 8.
Differentiate between budget and forecast.
Answer:

Basis for comparison	Budget	Forecast
Meaning	A budget is a financial plan expressed in quantitative terms, prepared by the management in advance for a pre defined period.	It is the estimation of future trends and outcomes, based on the past and present data.
What it contains?	It is the financial expression of a business plan or target.	It is the prediction of upcoming events or trends in business, on the basis of present business conditions.
Targets	Budget sets targets	Forecast does not set any target
What it estimates?	What business wants to achieve	What business will achieve

Question 9.
Differentiate between planning and strategy.
Answer:

Basis of comparison	Planning	Strategy
Meaning	Planning is thinking in advance, for ,the actions which are going to take place in the future.	A plan of action designed to achieve a pre decided long term or overall aim is called a strategy.
What is it?	Planning is a road map for accomplishing any task.	Strategy is the path chosen for achieving the objectives set under planning
Basis	It is based on assumptions	It is based on practical considerations
Term	Term depends upon the circumstances	Long term

Question 10.
Differentiate between standing plan and single-use plan.
Answer:

Basis of comparison	Standing plan	Single use plan
Approach for preparing	It is prepared for long term.	It is prepared for short term.
Who prepares?	It is prepared by top level managers.	It is prepared by lower level managers.
Objective	To attain primary objectives of the organization.	To attain specific goals or to solve specific problems that the organization face
Stability	They are very stable in nature and cannot be changed.	These plans are flexible and can be changed as per the conditions of the organization

Question 11.
Differentiate between strategic planning and tactical planning.
Answer:

Basis of comparison	Strategic plan	Tactical plan
Developed by	Developed by upper level management.	Developed by lower level management
Time period	Developed for long term	Developed for short term
Gathering fact and information	It is difficult to gather facts and information for these plans.	It is easier to gather facts and information for these plans.
Orientation	Towards the future	Towards the present condition
Based on	These plans are based on prediction and forecasting.	These plans are based on known situations that exist within the organization.

Multiple Choice Questions

Question 1.
Who said that ‘task of planning is choosing’?
(A) George R. Terry
(B) Henry Gantt
(C) Bill Goetz
(D) Henri Fayol
Answer:
(C) Bill Goetz

Question 2.
Decisions in a business unit have to be taken on the basis of
(A) Calculative assumptions
(B) Future
(C) Majority of board of directors
(D) Expertise knowledge
Answer:
(A) Calculative assumptions

Question 3.
What step has the central government taken to implement the importance of planning in the country?
(A) The government has campaigned the importance of planning
(B) Formed planning commission
(C) Increased awareness amongst all the government departments
(D) All of these
Answer:
(B) Formed planning commission

Question 4.
Which of the following is an importance of planning?
(A) Planning leads to precision
(B) Planning helps in appropriate placement of staff
(C) Planning increases profit
(D) Planning helps in increasing enthusiasm amongst employees
Answer:
(A) Planning leads to precision

Question 5.
Which of the following is not required for framing plans?
(A) Time
(B) Money
(C) Employees
(D) Energy
Answer:
(C) Employees

Question 6.
Which of the following factors makes planning irrelevant?
(A) Efficient employees
(B) Delay in implementation
(C) Undesired results
(D) Controllable factors
Answer:
(B) Delay in implementation

Question 7.
Which stage of planning helps the organization to take a decision of selling of goods either by producing or by purchasing?
(A) Clarifying planning premises
(B) Evaluation of alternatives
(C) Preparation of alternative plan
(D) Evaluation of plan
Answer:
(C) Preparation of alternative plan

Question 8.
In which step of planning, operation research plays an important role?
(A) Selection of best alternative
(B) Evaluation of-alternatives
(C) Evaluation of plan
(D) Evaluation of subsidiary plan
Answer:
(B) Evaluation of-alternatives

Question 9.
What does the organization do so that there is no obstacle in the basic plan in future?
(A) Makes a subsidiary plan
(B) Keep the second best alternate plan ready
(C) Try and keep going with the same plan
(D) Makes another plan when basic plan deviates
Answer:
(A) Makes a subsidiary plan

Question 10.
Who evaluates the plan in the business unit?
(A) Employees
(B) Manager
(C) Shareholders
(D) Experts
Answer:
(D) Experts

Question 11.
Which principle is adopted in planning process?
(A) Look and leap principle
(B) The principle of creativity
(C) Teamwork principle
(D) All of these
Answer:
(A) Look and leap principle

Question 12.
_______ consists guidelines for decisions in repetitive situations.
(A) Strategic plan
(B) Operational plan
(C) Standing plan
(D) Tactical plan
Answer:
(C) Standing plan

Question 13.
Planning of the credit policy of a company on permanent basis is an example of _______
(A) Tactical plan
(B) Operational plan
(C) Strategic plan
(D) Standing plan
Answer:
(D) Standing plan

Question 14.
Which level of management prepares tactical plan?
(A) Top level management
(B) Middle level management
(C) Bottom level management
(D) Both (a) and (b)
Answer:
(B) Middle level management

Question 15.
Which of the following plans have short term objectives?
(A) Tactical plan
(B) Single use plan
(C) Strategic plan
(D) Standing plan
Answer:
(A) Tactical plan

Question 16.
What is the main objective of making operational plans?
(A) It helps business activities’ remain goal oriented
(B) For the implementation of the strategic plan
(C) For long term benefit and profit
(D) For helping employees take prompt decisions
Answer:
(B) For the implementation of the strategic plan

Question 17.
Which type of plan is made for special activities?
(A) Tactical plan
(B) Operational plan
(C) Single use plan
(D) Strategic plan
Answer:
(C) Single use plan

Question 18.
If changes are to be made in original plan or a new plan has to be made due to political, economic and social factors, it is known as
(A) Single use plan
(B) Strategic plan
(C) Contingency plan
(D) Tactical plan
Answer:
(C) Contingency plan

Question 19.
Which of the following is not an element of planning?
(A) Objectives
(B) Strategies
(C) Rules
(D) Code of conduct
Answer:
(D) Code of conduct

Question 20.
What is contrivance used for the accomplishment of pre-decided objectives known as?
(A) Rules
(B) Policy
(C) Strategy
(D) Procedure
Answer:
(C) Strategy

Question 21.
_______ is an arrangement to carry out business programmes.
(A) Rules
(B) Policy
(C) Procedure
(D) Strategy
Answer:
(C) Procedure

Question 22.
What is the _______ main objective to build rules in the business unit?
(A) To ensure discipline among employees
(B) To control the business activities
(C) To sequence the business activities
(D) To increase the efficiency and working style of business unit
Answer:
(A) To ensure discipline among employees

Question 23.
Which of the following is not a type of budget prepared by business unit?
(A) Sales budget
(B) Capital expenditure budget
(C) Production cost budget
(D) None of these
Answer:
(D) None of these