NCERT Questions for Class 12 Business Studies Chapter 4 – Planning

Important Questions with Solutions of Class 12 Business Studies Chapter 4 – Planning

1) What aspect of financial management helps to predict fund demands in terms of the amount needed and the timing of those needs?

Ans – Financial Planning is the component of financial management concerned with projecting fund requirements in terms of quantity and timing. It also develops an effective plan to ensure that a firm has the appropriate finances when needed. It helps to foresee the cash required for various activities & ensure that these funds are accessible at the proper times to satisfy the company’s financial needs.

2) What are the 3 challenges of the planning management operation?

Ans – Management’s planning role is limited in multiple ways, including:

Rigidity: Once a plan is created, it can lead to operational rigidity. The organization must adapt or adjust the plan in response to changing situations. Because the corporate environment is always changing, managers may need to be flexible to deal with unexpected developments.

Inability to Predict Dynamic Environments: Planning is based on projecting events to come, yet the future is inherently unpredictable and subject to fast change. As a result, strategies may become outdated or useless in the face of unexpected changes, making it impossible to anticipate and respond to all possible scenarios.

Reduced Creativity: Top management is normally in charge of planning, while intermediate management is responsible for implementing action plans. This structure might inhibit middle managers’ creativity since they are limited by restricted submission to the set plan and are restricted to exploring new alternatives.

3) What are the first three steps in the planning process?

Ans: The first phases in the planning process are critical to establish a firm base for effective planning. The steps are:

1. Setting Objectives: The first stage is to define clear & defined objectives for the company. Objectives give guidance and a foundation for decision-making. Managers must describe these goals to guide subsequent planning efforts and ensure consistent actions are placed to meet the desired goals.
2. Establishing Premises: Planning is based on certain assumptions about the future known as premises. These assumptions apply to forecasts and projections, which serve as the foundation for the planning process. Accurate and realistic premises are critical for building successful strategies and making solid decisions.
3. Identifying Alternatives: Once the objectives and premises have been set, the following phase represents investigating and identifying potential courses of action. Managers must evaluate several techniques to reach the goals, fostering creativity and innovation to discover the most effective solutions.

4) Describe any 3 attributes of “Planning.”

Ans – The primary characteristics of planning are as follows:

1. Goal-oriented: Planning depends on reaching specified goals. It involves setting broad and detailed objectives & the methods and actions required to achieve them. Effective planning ensures activities are aligned with these goals, working for the expected results.
2. Planning is the foundation for all other management functions. It comes before organizing, directing, staffing, and controlling. By setting objectives and strategies, planning sets a structure for all future management functions to be carried out by the identified aims.
3. Organizational Pervasiveness: Planning is required at every management level across departments. The scope & purpose of planning vary based on critical activity for top, middle & lower management. Top managers define broad policies, intermediate managers devise specific strategies for delegation and coordination, and junior managers establish particular operational objectives. This ensures that planning governs all organizational levels, resulting in greater unity and effective management.

5) Define “procedure” & “rule” as different plan variants.

Ans –
Procedures: A process is a step-by-step series of operations that can complete a given activity or apply a policy. It specifies the specific sequence to perform a task successfully. It’s an organized manner for workers to carry out tasks consistently within broad company policies. They are often designed for internal usage to ensure regular procedures are completed systematically.

Rule: A rule is a precise guideline that specifies which actions are permissible and which are banned. It is a core strategy that defines clear standards for actions and operational procedures. Rules do not allow for any flexibility and must be carefully followed. The parameters where choices and actions may be taken, and any departures from these norms need higher-level management permission.

6) Somnath Ltd. is engaged in the export of garments. In the past. The company’s performance is streamlined with the latest technology to upgrade its machinery. For this, the Finance Manager. Dalmia calculated the funds required & the deadline. This will help the company to merge the investment & finance continuously.

Dalmia began with a sales forecast for the next four years. He also collected relevant data about the profit estimates in the coming years. By doing this, he wanted to ensure the availability of funds from the internal sources for the remaining funds. Externally, he also looks for a different source.

Justify the financial concept discussed in the given scenario involving Somnath Ltd., and state the objectives to be achieved by this concept.

Ans – The financial idea covered in the scenario is financial planning. This idea involves creating an extensive plan for properly managing a company’s financial resources. It includes projecting future financial demands, calculating the necessary quantity of finances, and establishing the timing of these requirements.

Financial planning ensures the company has enough finances accessible at the proper moment and can make appropriate investment and financing decisions.

Objectives of Financial Planning:

• Timely Availability of Funds: Financial planning ensures funds are accessible for various corporate processes. It involves predicting future financial requirements and determining the best sources of funding, whether internal or external, to meet those requirements.
• Optimal Financial Management: Financial planning may avoid financial problems and excesses. Insufficient finances may prevent operations, while excess funds might lead to greater expenses and inefficiencies. Effective planning allows a firm to use its financial resources more efficiently, improving operational performance and supporting its growth objectives.

This method guarantees that the company’s financial requirements are satisfied effectively by allowing for smooth operations and strategic growth.