Planning
Domain 4 - Planning - tests features, importance, limitations, the seven-step process and the classification of plans into standing and single-use types.
Features
Primary function; pervasive; continuous; futuristic; goal-oriented; a mental exercise; involves choice among alternatives; flexible.
Importance
Provides direction; reduces uncertainty and risk; reduces overlapping and wasteful activity; promotes innovation; facilitates decision-making; sets standards for controlling.
Limitations
Rigidity; unsuitable in a very dynamic environment; reduces creativity; does not guarantee success; costly and time-consuming; may rest on inaccurate premises.
Planning process
- Set objectives. 2. Develop premises. 3. Identify alternative courses. 4. Evaluate alternatives. 5. Select one. 6. Implement. 7. Follow up.
Types of plans
Standing plans - objectives, strategy, policy, procedure, rule, method. Single-use plans - programme, budget.
- Policy: general guideline allowing discretion.
- Procedure: step-by-step sequence, limited discretion.
- Rule: specific do/don't, no discretion.
Worked example
A firm sets a 20% sales-growth objective. Premise: GDP growth of 7%. Alternatives: (a) two new outlets, ₹40 lakh; (b) e-commerce tie-up, ₹25 lakh; (c) 5% price cut, margin loss. On evaluation, (b) reaches the widest market at the lowest cost while (a) gives slower returns; the firm selects (b) plus one outlet in year two. Reasoning: planning is choosing among alternatives, not merely listing them - the answer must show evaluation and selection.
Traps
Rule vs policy vs procedure is the classic error. Also remember that planning reduces, but never eliminates, risk.