Planning and Decision Making
What this domain tests
Planning as the primary function, its features, process, types and limitations, plus rational decision making and bounded rationality. Applied payback questions can appear.
Core rules
- Planning is deciding in advance what to do, how, when and by whom; it is goal-oriented, intellectual, continuous and forward-looking, but it does not eliminate risk.
- Steps: set objectives, develop premises, identify alternatives, evaluate alternatives, select one, implement and follow up.
- Standing plans (policy, procedure, rule) differ from single-use plans (programme, budget); strategic plans differ from tactical plans.
- Decision making: define the problem, gather information, generate alternatives, evaluate, choose, implement and review. Simon's bounded rationality leads to satisficing, not optimising.
Worked example
Machine A costs Rs 5 lakh and saves Rs 1.2 lakh a year; Machine B costs Rs 7 lakh and saves Rs 1.8 lakh. Payback for A = 5/1.2 = 4.17 years; for B = 7/1.8 = 3.89 years. B recovers capital faster, but if funds are capped at Rs 5 lakh, A is the feasible choice. Show the reasoning, not just the answer.
Traps that cost marks
- Writing that planning removes uncertainty.
- Treating planning premises as facts rather than assumptions.
- Confusing a policy guideline with a rigid rule.
- Assuming decisions are always fully rational; satisficing is examinable.