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What is the essence of planning according to the text? A) Making profits B) Deciding in advance what to do and how to do it C) Hiring new employees D) Expanding business overseas E) Reducing costs
B) Deciding in advance what to do and how to do it Explanation: The essence of planning is described as deciding in advance what to do and how to do it, which involves setting objectives and developing appropriate courses of action.
Which of the following is NOT mentioned as a type of plan in the text? A) Five-year plans B) Sales plans C) Production plans D) Marketing plans E) Expansion plans
D) Marketing plans Explanation: The text mentions five-year plans, sales plans, production plans, and expansion plans, but does not specifically mention marketing plans.
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p.2
Importance of Planning in Organizations

What is the essence of planning according to the text?
A) Making profits
B) Deciding in advance what to do and how to do it
C) Hiring new employees
D) Expanding business overseas
E) Reducing costs

B) Deciding in advance what to do and how to do it
Explanation: The essence of planning is described as deciding in advance what to do and how to do it, which involves setting objectives and developing appropriate courses of action.

p.2
Types of Plans in Business Management

Which of the following is NOT mentioned as a type of plan in the text?
A) Five-year plans
B) Sales plans
C) Production plans
D) Marketing plans
E) Expansion plans

D) Marketing plans
Explanation: The text mentions five-year plans, sales plans, production plans, and expansion plans, but does not specifically mention marketing plans.

p.2
Importance of Planning in Organizations

Why do managers need to think in advance according to the text?
A) To hire the best employees
B) To make business predictions and achieve targets
C) To reduce operational costs
D) To increase market share
E) To improve customer satisfaction

B) To make business predictions and achieve targets
Explanation: Managers need to think in advance to make business predictions and achieve targets, which is essential for turning dreams into reality.

p.2
Steps in the Planning Process

What is the first step a manager must take in the planning process?
A) Hiring new staff
B) Setting objectives
C) Conducting market research
D) Allocating resources
E) Monitoring performance

B) Setting objectives
Explanation: The first step in the planning process is setting objectives, as it helps the manager know where they need to go and provides direction for all managerial decisions and actions.

p.2
Features of Effective Planning

How does planning help managers according to the text?
A) By reducing the need for decision-making
B) By providing a rational approach for achieving predetermined objectives
C) By eliminating the need for creativity and innovation
D) By ensuring immediate success
E) By avoiding competition

B) By providing a rational approach for achieving predetermined objectives
Explanation: Planning helps managers by providing a rational approach for achieving predetermined objectives, which involves setting objectives and developing appropriate courses of action.

p.3
Importance of Planning in Organizations

What is the primary purpose of planning in an organization?
A) To increase profits
B) To set objectives and formulate an action plan to achieve them
C) To hire new employees
D) To reduce costs
E) To expand the business

B) To set objectives and formulate an action plan to achieve them
Explanation: Planning involves setting objectives and targets and formulating an action plan to achieve them. It is concerned with both ends and means, i.e., what is to be done and how it is to be done.

p.3
Impact of Dynamic Environments on Planning

Why is it important to consider the time factor in planning?
A) To ensure employees are punctual
B) To avoid changes in environmental conditions that could render plans useless
C) To increase the budget
D) To improve employee morale
E) To reduce the workload

B) To avoid changes in environmental conditions that could render plans useless
Explanation: Time is a limited resource and needs to be utilized judiciously. If the time factor is not taken into consideration, conditions in the environment may change, making all business plans go to waste.

p.3
Importance of Planning in Organizations

How does planning provide direction in an organization?
A) By increasing profits
B) By stating in advance how work is to be done
C) By hiring new employees
D) By reducing costs
E) By expanding the business

B) By stating in advance how work is to be done
Explanation: Planning provides direction for action by stating in advance how work is to be done. It ensures that goals or objectives are clearly stated so that they act as a guide for deciding what action should be taken and in which direction.

p.3
Importance of Planning in Organizations

What is one of the major benefits of planning?
A) It increases the budget
B) It provides direction and reduces the risk of uncertainty
C) It improves employee morale
D) It reduces the workload
E) It expands the business

B) It provides direction and reduces the risk of uncertainty
Explanation: Planning is important as it provides direction and reduces the risk of uncertainty by preparing forecasts. It ensures that goals are well defined and employees are aware of what the organization has to do and what they must do to achieve those goals.

p.3
Features of Effective Planning

What is a comprehensive definition of planning according to the text?
A) Setting objectives for a given time period and hiring new employees
B) Formulating various courses of action to achieve objectives and selecting the best alternative
C) Increasing profits and reducing costs
D) Expanding the business and improving employee morale
E) Setting objectives for a given time period, formulating various courses of action to achieve them, and selecting the best possible alternative

E) Setting objectives for a given time period, formulating various courses of action to achieve them, and selecting the best possible alternative
Explanation: Planning is defined as setting objectives for a given time period, formulating various courses of action to achieve them, and then selecting the best possible alternative from among the various courses of action available.

p.11
Types of Plans in Business Management

What is a single-use plan?
A) A plan used for recurring situations
B) A plan developed for a one-time event or project
C) A plan that includes policies and procedures
D) A plan that is modified regularly
E) A plan that ensures smooth internal operations

B) A plan developed for a one-time event or project
Explanation: A single-use plan is developed for a one-time event or project and is not likely to be repeated in the future. Examples include budgets, programs, and projects.

p.11
Steps in the Planning Process

What role does intuition play in the planning process?
A) It is never used
B) It is used to select the most viable alternative
C) It is used to implement the plan
D) It is used to monitor the plan
E) It is used to classify plans

B) It is used to select the most viable alternative
Explanation: Intuition can be important in selecting the most viable alternative among different plans, sometimes even combining multiple plans to find the best course of action.

p.6
Features of Effective Planning

Why is planning considered a mental exercise?
A) It requires physical labor
B) It involves guesswork
C) It requires foresight, intelligent imagination, and sound judgement
D) It is based on wishful thinking
E) It does not involve any thinking

C) It requires foresight, intelligent imagination, and sound judgement
Explanation: Planning is a mental exercise because it involves the application of the mind, requiring foresight, intelligent imagination, and sound judgement to determine the best course of action.

p.16
Steps in the Planning Process

What is the first step in the planning process?
A) Developing premises
B) Setting objectives
C) Identifying alternative courses of action
D) Evaluating alternative courses
E) Implementing the plan

B) Setting objectives
Explanation: The first step in the planning process is setting objectives, which may be set for the entire organization and each department or unit within the organization.

p.7
Importance of Planning in Organizations

Why is planning considered essential for business organizations?
A) It eliminates all unforeseen events
B) It ensures complete control over operations
C) It helps in achieving organizational goals
D) It guarantees financial success
E) It removes the need for flexibility

C) It helps in achieving organizational goals
Explanation: Planning is essential for business organizations because it helps them move towards achieving their goals, even though unforeseen events and changes may require modifications to the plans.

p.10
Steps in the Planning Process

What are assumptions in the context of planning?
A) Random guesses about the future
B) The base material upon which plans are drawn
C) Unrelated historical data
D) Irrelevant information
E) Personal opinions of managers

B) The base material upon which plans are drawn
Explanation: Assumptions, also called premises, are the base material upon which plans are to be drawn. They may be in the form of forecasts, existing plans, or past information about policies.

p.8
Limitations of Planning

Why does planning not guarantee success?
A) Because plans are always perfect
B) Because plans are never implemented
C) Because previously successful plans may not work again
D) Because planning is a useless exercise
E) Because planning always leads to success

C) Because previously successful plans may not work again
Explanation: The text explains that managers often rely on previously successful plans, but this does not guarantee success due to unknown factors and changing circumstances.

p.13
Strategic Decision Making in Organizations

What must be taken into consideration whenever a strategy is formulated?
A) The company's internal policies
B) The business environment
C) The company's financial statements
D) The company's employee satisfaction
E) The company's historical performance

B) The business environment
Explanation: Whenever a strategy is formulated, the business environment, including economic, political, social, legal, and technological changes, must be taken into consideration.

p.5
Role of Objectives in Planning

What is the primary objective of Polaris's expansion plan?
A) To increase their market share
B) To reduce operational costs
C) To employ 800 more professionals
D) To launch a new product line
E) To improve customer satisfaction

C) To employ 800 more professionals
Explanation: Polaris's expansion plan aims to increase their capacity so that they can employ 800 more professionals within a target time of six months.

p.6
Features of Effective Planning

Why is planning considered a continuous process?
A) Because it is only done once
B) Because it is implemented and then forgotten
C) Because it involves drawing new plans based on new requirements and future conditions
D) Because it does not require any updates
E) Because it is unrelated to the planning cycle

C) Because it involves drawing new plans based on new requirements and future conditions
Explanation: Planning is a continuous process as it requires new plans to be drawn based on evolving requirements and future conditions, ensuring that the organization adapts to changes effectively.

p.13
Steps in the Planning Process

What are the three dimensions included in a comprehensive plan for accomplishing an organization's objectives?
A) Determining short-term objectives, adopting a particular course of action, and allocating resources
B) Determining long-term objectives, adopting a particular course of action, and allocating resources
C) Determining medium-term objectives, adopting a flexible course of action, and allocating resources
D) Determining long-term objectives, adopting a flexible course of action, and minimizing resources
E) Determining short-term objectives, adopting a flexible course of action, and minimizing resources

B) Determining long-term objectives, adopting a particular course of action, and allocating resources
Explanation: A comprehensive plan for accomplishing an organization's objectives includes determining long-term objectives, adopting a particular course of action, and allocating the necessary resources.

p.6
Features of Effective Planning

What does planning being 'futuristic' imply?
A) It focuses on past events
B) It prepares for future events
C) It ignores future conditions
D) It only deals with present issues
E) It is based on guesswork

B) It prepares for future events
Explanation: Planning is considered futuristic because it involves looking ahead, analyzing, predicting future events, and preparing to meet them effectively, often through forecasting.

p.6
Features of Effective Planning

What is the basis for a business firm to prepare its annual plan for production and sales?
A) Past performance
B) Sales forecasting
C) Employee preferences
D) Competitor actions
E) Market trends

B) Sales forecasting
Explanation: Sales forecasting is the basis on which a business firm prepares its annual plan for production and sales, as it anticipates future demand and conditions.

p.7
Impact of Dynamic Environments on Planning

Why might planning not work effectively in a dynamic environment?
A) Because it is too flexible
B) Because it can foresee everything
C) Because the environment is constant
D) Because it cannot accurately assess future trends
E) Because it eliminates competition

D) Because it cannot accurately assess future trends
Explanation: Planning may not work effectively in a dynamic environment because it is difficult to accurately assess future trends, especially when economic policies are modified, political conditions are unstable, or natural calamities occur.

p.7
Limitations of Planning

How does planning reduce creativity according to the text?
A) By involving all employees in decision-making
B) By encouraging spontaneous actions
C) By being an activity done by top management
D) By fostering innovation at all levels
E) By promoting flexibility

C) By being an activity done by top management
Explanation: Planning reduces creativity because it is typically done by the top management, leaving middle management and other decision-makers to merely implement these plans without contributing their own ideas.

p.11
Steps in the Planning Process

What is the purpose of follow-up action in the planning process?
A) To select the best alternative
B) To classify plans
C) To monitor the implementation of plans
D) To develop policies
E) To organize resources

C) To monitor the implementation of plans
Explanation: Follow-up action involves monitoring the plans to ensure they are being implemented correctly and that activities are performed according to schedule.

p.8
Limitations of Planning

Why is planning considered a time-consuming process?
A) Because it requires immediate implementation
B) Because it involves quick decision-making
C) Because detailed plans take a lot of time to formulate
D) Because it eliminates the need for implementation
E) Because it is a simple process

C) Because detailed plans take a lot of time to formulate
Explanation: The text explains that planning is time-consuming because detailed plans require significant time for formulation, leaving less time for implementation.

p.5
Features of Effective Planning

Why is planning considered the basis of control in management?
A) Because it is the final function of management
B) Because it determines the nature of corrective actions
C) Because it is only required at the top management level
D) Because it is not related to other managerial functions
E) Because it is a secondary function of management

B) Because it determines the nature of corrective actions
Explanation: Planning provides the basis of control as it helps determine the nature of corrective actions required based on the extent of deviations from the standard.

p.11
Steps in the Planning Process

What is involved in the implementation step of a plan?
A) Selecting the best alternative
B) Monitoring the plan
C) Putting the plan into action
D) Classifying plans
E) Developing policies

C) Putting the plan into action
Explanation: Implementing the plan involves putting the plan into action, which may include organizing resources such as labor and machinery to achieve the plan's objectives.

p.11
Types of Plans in Business Management

What is a standing plan?
A) A plan for a one-time event
B) A plan for non-recurring situations
C) A plan used for activities that occur regularly
D) A plan that includes budgets and projects
E) A plan that is never modified

C) A plan used for activities that occur regularly
Explanation: A standing plan is used for activities that occur regularly over a period of time and is designed to ensure that internal operations run smoothly. It includes policies, procedures, methods, and rules.

p.13
Role of Objectives in Planning

What is the role of policies in an organization?
A) To provide detailed instructions for every task
B) To guide thinking and channelize energies towards a particular direction
C) To replace the need for strategic planning
D) To ensure compliance with legal requirements
E) To manage employee performance reviews

B) To guide thinking and channelize energies towards a particular direction
Explanation: Policies are general statements that guide thinking or channelize energies towards a particular direction, providing a basis for interpreting strategy and guiding managerial actions and decisions.

p.16
Steps in the Planning Process

What is the purpose of 'follow-up action' in the planning process?
A) Setting objectives
B) Developing premises
C) Identifying alternative courses of action
D) Monitoring the plans to ensure objectives are achieved
E) Implementing the plan

D) Monitoring the plans to ensure objectives are achieved
Explanation: Follow-up action involves monitoring the plans to ensure that the objectives are achieved, making it an essential step in the planning process.

p.16
Types of Plans in Business Management

What is a 'budget' in the context of types of plans?
A) A general statement that guides thinking
B) A routine step on how to carry out activities
C) A specific statement that tells what is to be done
D) A statement of expected results expressed in numerical terms
E) A detailed statement about a project

D) A statement of expected results expressed in numerical terms
Explanation: A budget is a plan which quantifies future facts and figures, providing a statement of expected results expressed in numerical terms.

p.8
Steps in the Planning Process

What is the first step in the planning process?
A) Implementing the plan
B) Setting objectives
C) Evaluating alternatives
D) Allocating resources
E) Monitoring progress

B) Setting objectives
Explanation: The text states that the first and foremost step in the planning process is setting objectives, which guides the subsequent steps.

p.16
Types of Plans in Business Management

What does the 'strategy' type of plan refer to?
A) Routine steps on how to carry out activities
B) General statements that guide thinking
C) Future decisions defining the organization's direction and scope
D) Specific statements that tell what is to be done
E) Detailed statements about a project

C) Future decisions defining the organization's direction and scope
Explanation: A strategy provides the broad contours of an organization’s business and refers to future decisions defining the organization's direction and scope in the long run.

p.14
Types of Plans in Business Management

What is the primary purpose of procedures in an organization?
A) To outline the overall business plan
B) To provide flexibility in decision-making
C) To detail the exact manner in which work is to be performed
D) To forecast future sales
E) To allocate human and physical resources

C) To detail the exact manner in which work is to be performed
Explanation: Procedures are routine steps that detail the exact manner in which any work is to be performed, specified in a chronological order to enforce a policy and attain pre-determined objectives.

p.5
Features of Effective Planning

Which of the following best describes the 'primacy of planning'?
A) Planning is the least important function of management
B) Planning is done after all other functions
C) Planning lays the foundation for all other managerial functions
D) Planning is only done by middle management
E) Planning is not related to achieving objectives

C) Planning lays the foundation for all other managerial functions
Explanation: The 'primacy of planning' refers to the fact that planning is the primary function of management, laying the base for all other functions, which are performed within the framework of the plans drawn.

p.9
Role of Objectives in Planning

What is the primary purpose of setting objectives in an organization?
A) To increase employee salaries
B) To specify what the organization wants to achieve
C) To reduce working hours
D) To eliminate competition
E) To diversify product lines

B) To specify what the organization wants to achieve
Explanation: Objectives or goals specify what the organization wants to achieve, such as an increase in sales by 20%, and provide direction to all departments and units within the organization.

p.6
Features of Effective Planning

What is the role of decision making in planning?
A) It involves no choices
B) It involves choosing from various alternatives
C) It is based on a single course of action
D) It does not require evaluation
E) It is unrelated to planning

B) It involves choosing from various alternatives
Explanation: Planning involves decision making, which requires choosing the most appropriate course of action from among various alternatives, ensuring that the best possible plan is implemented.

p.16
Limitations of Planning

Which of the following is a limitation of planning?
A) Increases creativity
B) Reduces rigidity
C) Involves huge costs
D) Guarantees success
E) Works well in dynamic environments

C) Involves huge costs
Explanation: One of the limitations of planning is that it involves huge costs, making it an expensive process for organizations.

p.13
Strategic Decision Making in Organizations

Which of the following is NOT a major strategic decision for an organization?
A) Whether to continue in the same line of business
B) Combining new lines of activity with the existing business
C) Acquiring a dominant position in the same market
D) Deciding on the company's logo design
E) Formulating a marketing strategy

D) Deciding on the company's logo design
Explanation: Major strategic decisions include whether to continue in the same line of business, combining new lines of activity with the existing business, and acquiring a dominant position in the same market. Deciding on the company's logo design is not considered a major strategic decision.

p.7
Limitations of Planning

What is one major limitation of planning mentioned in the text?
A) It increases creativity
B) It leads to rigidity
C) It ensures dynamic adaptation
D) It eliminates the need for forecasts
E) It guarantees success

B) It leads to rigidity
Explanation: One major limitation of planning is that it can lead to rigidity, making it difficult for managers to adapt to changed circumstances if they are strictly following a pre-decided plan.

p.10
Steps in the Planning Process

What is the final step in the decision-making process?
A) Setting objectives
B) Making assumptions
C) Selecting an alternative
D) Identifying problems
E) Ignoring the alternatives

C) Selecting an alternative
Explanation: The final step in the decision-making process is selecting the best alternative, which is the most feasible, profitable, and has the least negative consequences.

p.4
Importance of Planning in Organizations

How does planning help in reducing overlapping and wasteful activities?
A) By increasing the number of tasks
B) By creating confusion and misunderstanding
C) By ensuring clarity in thought and action
D) By eliminating the need for coordination
E) By promoting redundant activities

C) By ensuring clarity in thought and action
Explanation: Planning serves as the basis for coordinating activities, avoiding confusion, and minimizing or eliminating useless and redundant activities.

p.8
Limitations of Planning

What are some of the costs involved in planning?
A) Only financial costs
B) Only time costs
C) Both time and financial costs
D) No costs are involved
E) Only costs for professional experts

C) Both time and financial costs
Explanation: The text highlights that planning involves huge costs in terms of both time and money, including expenses for boardroom meetings, professional experts, and preliminary investigations.

p.13
Types of Plans in Business Management

Which of the following is an example of a policy in an organization?
A) A detailed project plan
B) A recruitment policy
C) A financial statement
D) A marketing campaign
E) A product development timeline

B) A recruitment policy
Explanation: A recruitment policy is an example of a policy in an organization. Policies provide guidelines for managerial actions and decisions, such as recruitment, pricing, and purchasing.

p.10
Steps in the Planning Process

What should be done after setting objectives and making assumptions?
A) Implement the plan immediately
B) Identify alternative courses of action
C) Disregard the assumptions
D) Finalize the plan without further discussion
E) Ignore the objectives

B) Identify alternative courses of action
Explanation: Once objectives are set and assumptions are made, the next step is to identify all the alternative courses of action that could be taken to achieve the objectives.

p.12
Steps in the Planning Process

What is the first step in the planning process?
A) Setting objectives
B) Allocating resources
C) Defining procedures
D) Establishing rules
E) Developing strategies

A) Setting objectives
Explanation: The first step in planning is setting objectives. Objectives are the desired future position that the management would like to reach and serve as the end point of planning.

p.8
Limitations of Planning

How does planning affect creativity in an organization?
A) It enhances creativity
B) It has no effect on creativity
C) It reduces creativity
D) It guarantees innovative solutions
E) It encourages employees to formulate their own plans

C) It reduces creativity
Explanation: The text mentions that planning can reduce creativity because employees tend to follow the same lines of thinking and are not encouraged to formulate their own plans.

p.5
Features of Effective Planning

Which feature of planning emphasizes that it is required at all levels of management?
A) Planning is continuous
B) Planning is a primary function of management
C) Planning focuses on achieving objectives
D) Planning is pervasive
E) Planning is time-bound

D) Planning is pervasive
Explanation: Planning is pervasive, meaning it is required at all levels of management and in all departments of the organization, though the scope of planning differs at different levels.

p.5
Features of Effective Planning

What does the feature 'Planning is continuous' imply?
A) Plans are only made once and never revised
B) Planning is done only at the beginning of the year
C) Plans are prepared for specific periods and revised regularly
D) Planning is exclusive to top management
E) Planning is not necessary for day-to-day operations

C) Plans are prepared for specific periods and revised regularly
Explanation: 'Planning is continuous' implies that plans are prepared for specific periods (e.g., a month, a quarter, or a year) and are continuously revised and updated as needed.

p.15
Types of Plans in Business Management

Why should a business avoid holding an excess balance of cash?
A) It increases production costs
B) It gives little or no return
C) It complicates budgeting
D) It leads to higher taxes
E) It reduces employee morale

B) It gives little or no return
Explanation: Holding an excess balance of cash should be avoided because it gives little or no return, making it an inefficient use of resources.

p.9
Steps in the Planning Process

What is the significance of developing premises in the planning process?
A) It focuses on past achievements
B) It deals with current operations
C) It involves conjecture about future uncertainties
D) It ignores future uncertainties
E) It focuses on employee training

C) It involves conjecture about future uncertainties
Explanation: Developing premises in planning is concerned with the future, which is uncertain, and involves making educated guesses about what might happen.

p.4
Importance of Planning in Organizations

In what way does planning promote innovative ideas?
A) By discouraging new ideas
B) By focusing only on past actions
C) By allowing new ideas to take the shape of concrete plans
D) By eliminating the need for future actions
E) By reducing the scope for creativity

C) By allowing new ideas to take the shape of concrete plans
Explanation: Planning, being the first function of management, allows new ideas to be developed into concrete plans, guiding future actions and leading to growth and prosperity.

p.17
Importance of Planning in Organizations

What are the main aspects in the definition of planning?
A) Setting objectives and developing premises
B) Identifying resources and implementing plans
C) Setting objectives and working out details for the future
D) Evaluating alternatives and making decisions
E) Monitoring progress and making adjustments

C) Setting objectives and working out details for the future
Explanation: The main aspects of planning involve setting objectives and working out the details for achieving those objectives in the future.

p.16
Limitations of Planning

Why does planning not work well in a dynamic environment?
A) It is too flexible
B) It guarantees success
C) It is time-consuming
D) It leads to rigidity
E) It reduces costs

D) It leads to rigidity
Explanation: Planning does not work well in a dynamic environment because it leads to rigidity, making it difficult to adapt to rapid changes.

p.10
Steps in the Planning Process

Why is forecasting important in developing premises?
A) It is a technique of gathering information
B) It eliminates the need for assumptions
C) It replaces the need for planning
D) It ensures all managers have different assumptions
E) It is used only for financial planning

A) It is a technique of gathering information
Explanation: Forecasting is important in developing premises as it is a technique of gathering information, which can be used to make accurate assumptions about future conditions.

p.15
Types of Plans in Business Management

What are cash inflows generally derived from in a cash budget?
A) Loans
B) Cash sales
C) Employee salaries
D) Equipment purchases
E) Rent payments

B) Cash sales
Explanation: Cash inflows in a cash budget generally come from cash sales, which are the revenues generated from selling goods or services.

p.15
Features of Effective Planning

Which of the following is NOT a feature of planning?
A) It focuses on achieving objectives
B) It is a primary function of management
C) It is a one-time activity
D) It is pervasive and continuous
E) It involves decision making

C) It is a one-time activity
Explanation: Planning is not a one-time activity; it is pervasive, continuous, and involves decision making, focusing on achieving objectives.

p.15
Importance of Planning in Organizations

Which of the following is NOT an importance of planning?
A) Provides directions
B) Reduces risks of uncertainty
C) Promotes innovative ideas
D) Increases overlapping activities
E) Facilitates decision making

D) Increases overlapping activities
Explanation: Planning reduces overlapping and wasteful activities, rather than increasing them, making it an important managerial function.

p.9
Investment Plans and Global Expansion

What was the innovative product Mansukhbhai developed after the 2001 earthquake?
A) A solar-powered generator
B) A clay water filter
C) The Mitticool fridge
D) A wind turbine
E) A biodegradable plastic

C) The Mitticool fridge
Explanation: After the 2001 earthquake, Mansukhbhai developed the innovative Mitticool fridge in 2005, which is a clay-based refrigerator.

p.18
Steps in the Planning Process

What is the first step in the planning process?
A) Setting objectives
B) Developing premises
C) Identifying alternative courses of action
D) Selecting an alternative
E) Implementing the plan

A) Setting objectives
Explanation: The first step in the planning process is setting objectives. Objectives provide direction for all managerial decisions and actions and form the basis for the subsequent steps in the planning process.

p.18
Features of Effective Planning

Which feature of planning is demonstrated by C Ltd. forming a team with representatives from all levels of management?
A) Planning is futuristic
B) Planning is pervasive
C) Planning is continuous
D) Planning is flexible
E) Planning is goal-oriented

B) Planning is pervasive
Explanation: Planning is pervasive as it is required at all levels of management and in all departments of the organization. C Ltd. forming a team with representatives from all levels of management highlights this feature.

p.18
Features of Effective Planning

What feature of planning is highlighted by the team brainstorming to determine the steps for implementing the strategy?
A) Planning is pervasive
B) Planning is futuristic
C) Planning is a mental exercise
D) Planning is continuous
E) Planning is flexible

C) Planning is a mental exercise
Explanation: Planning is a mental exercise as it involves thinking, analyzing, and making decisions. The team brainstorming to determine the steps for implementing the strategy highlights this intellectual aspect of planning.

p.15
Features of Effective Planning

What is the primary purpose of a budget in an organization?
A) To increase production
B) To compare actual figures with expected figures and take corrective action
C) To reduce the number of workers
D) To eliminate all risks
E) To increase cash inflows

B) To compare actual figures with expected figures and take corrective action
Explanation: A budget represents all items in numbers, making it easier to compare actual figures with expected figures and take corrective action, thus serving as a control device.

p.15
Types of Plans in Business Management

What does a cash budget primarily help management to do?
A) Increase sales
B) Plan and control the use of cash
C) Hire more employees
D) Reduce production costs
E) Expand the business

B) Plan and control the use of cash
Explanation: A cash budget is a basic tool in the management of cash, helping management to plan and control cash inflows and outflows over a given period.

p.10
Steps in the Planning Process

What is the purpose of evaluating alternative courses of action?
A) To select the first option available
B) To weigh the pros and cons of each alternative
C) To avoid making any decision
D) To finalize the assumptions
E) To disregard the objectives

B) To weigh the pros and cons of each alternative
Explanation: Evaluating alternative courses of action involves weighing the pros and cons of each alternative to determine their feasibility and consequences in light of the objectives to be achieved.

p.14
Types of Plans in Business Management

What is a budget in the context of business planning?
A) A statement of expected results expressed in numerical terms
B) A detailed statement about a project
C) A specific statement that informs what is to be done
D) A prescribed way to perform a task
E) A sequence of steps to be followed in particular circumstances

A) A statement of expected results expressed in numerical terms
Explanation: A budget is a plan which quantifies future facts and figures, such as a sales budget that may forecast the sales for a future period.

p.4
Importance of Planning in Organizations

What role does planning play in reducing the risks of uncertainty?
A) It eliminates all changes and uncertain events
B) It allows managers to anticipate changes and develop responses
C) It increases the unpredictability of future events
D) It reduces the need for decision making
E) It focuses only on current tasks

B) It allows managers to anticipate changes and develop responses
Explanation: Planning enables managers to look ahead, anticipate changes, and develop responses to deal with uncertain events, thereby reducing risks.

p.18
Steps in the Planning Process

Which step in the planning process involves determining the steps that will be adopted by the organization for implementing the strategy?
A) Setting objectives
B) Developing premises
C) Identifying alternative courses of action
D) Selecting an alternative
E) Implementing the plan

E) Implementing the plan
Explanation: Implementing the plan involves putting the chosen plan into action. This step includes determining the specific steps and actions that will be taken to achieve the objectives set during the planning process.

p.15
Importance of Planning in Organizations

How does planning facilitate decision making?
A) By eliminating all risks
B) By providing a clear course of action
C) By increasing production costs
D) By reducing employee morale
E) By complicating the budgeting process

B) By providing a clear course of action
Explanation: Planning facilitates decision making by providing a clear course of action to achieve set objectives, thus guiding managers in their decisions.

p.9
Role of Objectives in Planning

How should objectives be communicated within an organization?
A) Only to the top management
B) Only to the sales department
C) Clearly to all departments, units, and employees
D) Only to external stakeholders
E) Only to the finance department

C) Clearly to all departments, units, and employees
Explanation: Objectives should be stated clearly for all departments, units, and employees to ensure everyone understands their role in achieving the organizational goals.

p.9
Investment Plans and Global Expansion

What are Mitticool's future plans as mentioned in the text?
A) Expanding into the luxury market
B) Starting a factory with the aid of the National Innovation Foundation
C) Developing a new line of plastic products
D) Opening stores in Europe
E) Investing in fossil fuels

B) Starting a factory with the aid of the National Innovation Foundation
Explanation: Mitticool's future plans include starting a factory with the aid of the National Innovation Foundation at IIM Ahmedabad and making a MittiCool house.

p.14
Types of Plans in Business Management

How do methods differ from procedures?
A) Methods outline the overall business plan
B) Methods provide the prescribed ways to perform a task within a procedure
C) Methods are broader than procedures
D) Methods are used to allocate resources
E) Methods are used to set organizational policies

B) Methods provide the prescribed ways to perform a task within a procedure
Explanation: Methods deal with a task comprising one step of a procedure and specify how this step is to be performed, aiming to save time, money, and effort while increasing efficiency.

p.9
Role of Objectives in Planning

What role do managers play in the objective-setting process?
A) They only execute the objectives
B) They contribute ideas and participate in the process
C) They ignore the objectives
D) They only communicate the objectives
E) They set objectives without input from others

B) They contribute ideas and participate in the process
Explanation: Managers must contribute ideas and participate in the objective-setting process, understanding how their actions contribute to achieving the objectives.

p.17
Types of Plans in Business Management

In an attempt to cope with Reliance Jio’s onslaught in 2018, Bharti Airtel refreshed its `149 prepaid plan to offer 2 GB of 3G/4G data per day. What type of plan is highlighted in this example?
A) Objective
B) Strategy
C) Policy
D) Rule
E) Budget

B) Strategy
Explanation: The decision to refresh the prepaid plan to offer more data is a strategic decision aimed at competing with Reliance Jio and retaining market share.

p.12
Types of Plans in Business Management

Which type of plan outlines the steps to be followed in particular circumstances?
A) Policy
B) Procedure
C) Method
D) Rule
E) Strategy

B) Procedure
Explanation: Procedures describe steps to be followed in particular circumstances, such as the procedure for reporting progress in production.

p.7
Limitations of Planning

What can cause plans to be modified according to the text?
A) Stable political conditions
B) Decrease in costs and prices
C) Unforeseen events and changes
D) Consistent economic policies
E) Predictable market competition

C) Unforeseen events and changes
Explanation: Plans may need to be modified due to unforeseen events and changes, such as rises in costs and prices, environmental changes, government interventions, and legal regulations.

p.14
Types of Plans in Business Management

What do programmes in an organization typically include?
A) Only the procedures and rules
B) Only the budget and resources
C) Detailed statements about a project including objectives, policies, procedures, rules, tasks, resources, and budget
D) Only the overall business plan
E) Only the methods for training employees

C) Detailed statements about a project including objectives, policies, procedures, rules, tasks, resources, and budget
Explanation: Programmes are detailed statements about a project that outline the objectives, policies, procedures, rules, tasks, human and physical resources required, and the budget to implement any course of action.

p.4
Importance of Planning in Organizations

How does planning facilitate decision making?
A) By eliminating the need for choices
B) By focusing only on current conditions
C) By helping managers evaluate alternatives and select the most viable option
D) By reducing the number of alternatives
E) By ignoring future conditions

C) By helping managers evaluate alternatives and select the most viable option
Explanation: Planning helps managers look into the future, evaluate various alternatives, and make rational decisions by selecting the most viable course of action.

p.17
Steps in the Planning Process

Which step of the planning process has been performed by Ms Rajni when she outlined options for achieving the sales objective?
A) Setting objectives
B) Developing premises
C) Identifying alternative courses of action
D) Evaluating alternative courses
E) Implementing the plan

C) Identifying alternative courses of action
Explanation: Ms Rajni has identified various options such as entering new markets, expanding the product range, and using sales promotion techniques, which corresponds to the step of identifying alternative courses of action in the planning process.

p.17
Impact of Dynamic Environments on Planning

Can planning work in a changing environment? Give a reason to justify your answer.
A) Yes, because it provides a fixed roadmap
B) No, because it is rigid and inflexible
C) Yes, because it allows for proactive adjustments
D) No, because it ignores external factors
E) Yes, because it eliminates uncertainty

C) Yes, because it allows for proactive adjustments
Explanation: Planning can work in a changing environment because it allows organizations to anticipate changes and make proactive adjustments to their plans, ensuring they remain relevant and effective.

p.17
Types of Plans in Business Management

State the type of plan and whether it is a Single use or Standing plan: A type of plan which serves as a controlling device as well (budget).
A) Objective, Single use
B) Strategy, Standing plan
C) Budget, Single use
D) Budget, Standing plan
E) Rule, Standing plan

D) Budget, Standing plan
Explanation: A budget is a type of plan that serves as a controlling device and is typically a standing plan, as it is used repeatedly over a period of time.

p.12
Strategic Decision Making in Organizations

What is a strategy in the context of business planning?
A) A specific task to be performed
B) A general plan prepared by top management outlining resource allocation and priorities
C) A set of rules for reporting for work at a particular time
D) A method for performing a task
E) A single-use plan for a specific project

B) A general plan prepared by top management outlining resource allocation and priorities
Explanation: A strategy is part of strategic planning or management. It is a general plan prepared by top management outlining resource allocation, priorities, and takes into consideration the business environment and competition.

p.14
Types of Plans in Business Management

What is a key characteristic of rules in an organization?
A) They allow for flexibility and discretion
B) They are detailed statements about a project
C) They are specific statements that inform what is to be done without flexibility
D) They quantify future facts and figures
E) They outline the sequence of steps to be followed

C) They are specific statements that inform what is to be done without flexibility
Explanation: Rules are specific statements that inform what is to be done and do not allow for any flexibility or discretion, reflecting a managerial decision that a certain action must or must not be taken.

p.15
Types of Plans in Business Management

What is the net cash position in a cash budget?
A) Total inflows plus total outflows
B) Total inflows minus total outflows
C) Total expenses minus total revenues
D) Total assets minus total liabilities
E) Total sales minus total costs

B) Total inflows minus total outflows
Explanation: The net cash position in a cash budget is determined by subtracting total cash outflows from total cash inflows, resulting in either a surplus or deficiency.

p.9
Investment Plans and Global Expansion

What is a key feature of Mitticool's product pricing policy?
A) High prices for premium customers
B) Prices based on market demand
C) Lower rates to be affordable for poor people
D) Prices set by international standards
E) Prices fluctuate daily

C) Lower rates to be affordable for poor people
Explanation: Mitticool has a policy of keeping all its products at lower rates to make them affordable for poor people.

p.4
Importance of Planning in Organizations

What is the relationship between planning and controlling?
A) Planning eliminates the need for controlling
B) Controlling is independent of planning
C) Planning provides the goals or standards for controlling
D) Controlling sets the goals for planning
E) Planning and controlling are unrelated

C) Planning provides the goals or standards for controlling
Explanation: Planning involves setting goals, which serve as standards against which actual performance is measured, making it a prerequisite for effective controlling.

p.17
Features of Effective Planning

Planning reduces creativity. Critically comment.
A) Planning always promotes innovative ideas
B) Planning never reduces creativity
C) Planning promotes innovative ideas but can also reduce creativity
D) Planning eliminates the need for creativity
E) Planning is irrelevant to creativity

C) Planning promotes innovative ideas but can also reduce creativity
Explanation: While planning can promote innovative ideas by providing a structured approach, it can also reduce creativity by imposing rigid guidelines and limiting flexibility.

p.12
Role of Objectives in Planning

What is the primary purpose of setting objectives in an organization?
A) To outline the steps to be followed in particular circumstances
B) To describe the manner in which a task has to be performed
C) To define the future state of affairs the organization strives to realize
D) To state exactly what has to be done like reporting for work at a particular time
E) To allocate resources and set priorities

C) To define the future state of affairs the organization strives to realize
Explanation: Objectives are set by top management and focus on broad, general issues. They define the future state of affairs which the organization strives to realize and serve as a guide for overall business planning.

p.12
Role of Objectives in Planning

How should objectives be expressed to be effective?
A) In broad, general terms
B) In qualitative terms
C) In specific, measurable terms
D) As a list of tasks
E) As a set of rules

C) In specific, measurable terms
Explanation: Objectives need to be expressed in specific terms, i.e., they should be measurable in quantitative terms, in the form of a written statement of desired results to be achieved within a given time period.

p.4
Importance of Planning in Organizations

How does planning help in achieving coordination within an organization?
A) By increasing competition among employees
B) By allowing employees to work in different directions
C) By enabling employees to work in coordination
D) By reducing the number of employees
E) By eliminating the need for communication

C) By enabling employees to work in coordination
Explanation: Planning ensures that employees work in coordination towards the organization's goals, preventing them from working in different directions.

p.17
Types of Plans in Business Management

What type of plan has Rama Stationery Mart adopted by deciding to make all payments by e-transfers only?
A) Objective
B) Strategy
C) Policy
D) Rule
E) Procedure

D) Rule
Explanation: The decision to make all payments by e-transfers only is a rule, as it is a specific directive that must be followed by all employees in the organization.

p.17
Limitations of Planning

If planning involves working out details for the future, why does it not ensure success?
A) Because it is always accurate
B) Because it is a static process
C) Because it cannot predict all variables
D) Because it guarantees outcomes
E) Because it eliminates risks

C) Because it cannot predict all variables
Explanation: Planning does not ensure success because it cannot predict all variables and uncertainties that may arise in the future, which can impact the outcomes.

p.18
Features of Effective Planning

How does C Ltd.'s plan to introduce new models with added features and technological advancements reflect the feature of planning being futuristic?
A) It shows planning is goal-oriented
B) It shows planning is flexible
C) It shows planning is futuristic
D) It shows planning is continuous
E) It shows planning is pervasive

C) It shows planning is futuristic
Explanation: Planning is futuristic as it involves looking ahead and preparing for future conditions. C Ltd.'s plan to introduce new models with added features and technological advancements reflects this forward-looking aspect of planning.

p.17
Types of Plans in Business Management

Why are rules considered to be plans?
A) They are flexible and adaptable
B) They provide a broad framework for action
C) They are specific statements that guide behavior
D) They are long-term objectives
E) They are financial projections

C) They are specific statements that guide behavior
Explanation: Rules are considered plans because they are specific statements that guide behavior and actions within an organization, ensuring consistency and compliance.

p.17
Strategic Decision Making in Organizations

What kind of strategic decisions are taken by business organizations?
A) Day-to-day operational decisions
B) Long-term decisions affecting the entire organization
C) Decisions on employee promotions
D) Decisions on office supplies
E) Decisions on customer complaints

B) Long-term decisions affecting the entire organization
Explanation: Strategic decisions are long-term decisions that affect the entire organization and are crucial for its overall direction and success.

p.12
Types of Plans in Business Management

What distinguishes a rule from other types of plans?
A) It outlines the broad contours of an organization’s business
B) It describes the steps to be followed in particular circumstances
C) It provides the manner in which a task has to be performed
D) It is very clearly stated as to exactly what has to be done
E) It is a comprehensive plan for the long run

D) It is very clearly stated as to exactly what has to be done
Explanation: Rules are very clearly stated as to exactly what has to be done, such as reporting for work at a particular time.

p.17
Types of Plans in Business Management

State the type of plan and whether it is a Single use or Standing plan: A plan based on research and analysis and is concerned with physical and technical tasks (Method).
A) Objective, Single use
B) Strategy, Standing plan
C) Method, Single use
D) Method, Standing plan
E) Rule, Standing plan

D) Method, Standing plan
Explanation: A method is a type of plan based on research and analysis, concerned with physical and technical tasks, and is typically a standing plan as it is used repeatedly.

Study Smarter, Not Harder
Study Smarter, Not Harder