Class 12 Business Studies Chapter 4 Notes

Business Studies is an integral part of the Commerce curriculum. Students interested in commerce, business management, chartered accounting, business administration, and other related fields should study this topic diligently. Planning is the fourth Chapter for Class 12 Business Studies. It is crucial  to master this chapter to lay a solid foundation to understand some of the complex topics covered in higher classes. The knowledge of planning will be required later in advanced professional courses also. 

Extramarks has developed Class 12 Business Studies Chapter 4 Notes by following CBSE guidelines and using an easy to understand format. Include the Class 12 Business Studies Chapter 4 Notes in your study plan to gain an in-depth understanding of the Planning subject. You can access our chapter notes by registering on our website.

You may simply prepare the chapter and proceed to an advanced level by using these Business Studies Class 12 Chapter 4 Notes as reference material. The study format presented in our Chapter 4 Business Studies Class 12 Notes can help you improve your overall examination score. The chapter notes are prepared by Business Studies subject experts and are considered to be one of the most reliable study materials available in the market today. 

Class 12 Business Studies Chapter 4 Notes: Overview

Probably the most essential term in a student’s life is planning. By completing each phase in the planning process, a student can attain his / her goals. This straightforward concept has been tweaked to fit the needs of Business Studies, a significant subject in the Commerce curriculum in Class 12. 

To make this chapter easier to study, Extramarks experienced commerce teachers have structured these Class 12 Business Studies Chapter 4 Notes so that any student can easily relate to the concepts. With the help of Class 12 Business Studies Chapter 4 Notes and solutions, studying and understanding Planning principles will become manageable. Let’s take a closer look at the content of these Class 12 Business Studies Chapter 4 Notes.

Chapter Summary:

This chapter discusses in detail about the importance of planning in business. Planning is done to limit the issues those may arise while conducting business. Every element of a business necessitates meticulous preparation. Students will become more effective even in their personal lives after studying this chapter.

The Business Studies Class 12 Notes Chapter 4 will go over every aspect of planning. It is a foresight phase that assists a company in identifying hazards, determining the necessary steps, and forecasting growth. It’s also a never-ending process that will undoubtedly impact future occurrences. As you can see, every stage in the business process necessitates planning. As a result, we can conclude that planning is dynamic. A plan evolves due to the effects and consequences of the preceding phases. 

Extramarks team has covered every aspect of the Planning process in great depth in the Class 12 Business Studies Chapter 4 Notes. Our study notes will explain how a person should concentrate on their objectives and work towards achieving them one by one. Every plan should have a goal to serve as a foundation. The strategies and decisions taken are entirely responsible for a company’s strategic development. You will also learn how a logical and systematic approach can impact and determine the conclusion of a plan in our Class 12 Business Studies Chapter 4 Notes. Further the chapter notes dives into the investigation of planning restrictions to explain the dangers and weaknesses of businesses better. 

Key Topics Covered in Class 12 Business Studies Chapter 4 Notes

Definition of Planning: 

“Planning is an intellectual process, conscious determination of a course of action, the basing of a decision on purpose, facts and considered estimates.” – Koontz and O’Donnell.

The primary function of Business Studies and Business Management has always been and will continue to be planning. Students are advised to refer to good study materials such as  Class 12 Business Studies Chapter 4 Notes to grasp the advanced level concepts covered in this chapter.

Meaning of Planning: 

Planning involves deciding what to accomplish and how to do it ahead of time. Planning is a fundamental managerial function.

• It entails first establishing goals and then devising strategies for achieving them.
• The created plan must be completed within a specific time period, yet time is a limited resource. It should be used with caution.

Importance of Planning:

• Planning provides directions: 

By describing how the work will be completed in advance, planning provides direction for action. Planning ensures that objectives are clearly defined, allowing the optimal plan of action to be devised. The department and individuals can collaborate once the strategies are in place.

• Planning reduces the risk of uncertainty: 

Planning is a task that enables management to see into the future and anticipate changes. Changes and occurrences cannot be prevented, but managers may expect them and modify their strategies accordingly by planning ahead of time and deciding on plans and courses of action.

• Planning reduces overlapping and wasteful activities: 

Planning is the foundation for coordinating the actions and efforts of multiple divisions, departments, and individuals. It eliminates useless and needless activities, avoids misunderstandings, and ensures clear thoughts and actions.

• Planning promotes innovative ideas: 

The first job of management is planning, which promotes innovative ideas. Managers are allowed to develop new ideas that can subsequently be translated into actionable strategies. All future actions that can lead to the company’s growth and prosperity are directed by it.

• Planning facilitates decision making: 

Setting goals and projecting future scenarios are all part of the planning process, which aids in making rational decisions among many possibilities.

• Planning establishes standards for controlling: 

Planning establishes the standards by which actual performance is measured. As a result, preparation is essential for maintaining control.

As you see from the above points, Planning is very crucial for every stage of the business. We recommend students to study the topic of Importance of Planning with daily life examples from our Class 12 Business Studies Chapter 4 Notes.

Features of Planning:

• Planning focuses on achieving objectives: 

Organisations are founded with specific objectives, and planning focuses on achieving that goal. Organisations develop general and particular plans and strategies and activities to achieve these goals through the planning function.

• Planning is a primary function of management: 

Planning is the core foundation for all other management duties; no other function can be run without it.

• Planning is pervasive: 

Planning is required in all types of organisations, at all levels of management, and in all departments. The scope of planning varies at different levels and for various departments.

• Planning is continuous: 

The planning cycle is linked to planning continuity. It means a strategy is developed, implemented, followed by another plan, and so on. As a result, planning is an ongoing and never-ending process.

• Planning is futuristic: 

The purpose of planning is to meet future occurrences efficiently and to the benefit of an organisation. Predicting future events and situations and developing plans based on those forecasts is what planning includes.

• Planning involves decision making:

The essence of planning is selecting from a variety of options and activities. There is no need to plan if there is just one feasible goal or line of action. 

• Planning is a mental workout: 

Planning requires the use of one’s head and foresight. Planning is an intellectual endeavour that demands rational and ordered thought rather than guesswork.

Limitations of Planning:

• Planning leads to rigidity:

In an organisation, a well-defined plan is written up with particular goals to be achieved within a specific time frame, but management may not be able to change it. As the corporate environment is dynamic, managers must be given some flexibility to respond to changing conditions.

• Planning may not work in a changing and dynamic environment: 

Planning may not work in a dynamic environment since it is dependent on forecasting future occurrences, which are generally uNCERTain and dynamic. Thus the organisation must adapt. On the other hand, planning will not be able to predict future events effectively.

• Planning Reduces Creativity: 

While top management plans and middle management executes the plan, they are not allowed to deviate from it, limiting their creativity.

• Planning is expensive: 

Creating a strategy necessitates a considerable financial investment. Detailed tactics involve scientific computations to determine data. The expenditures of preparation may not always outweigh the advantages achieved.

• Planning takes time: 

While designing a strategy, there are numerous aspects to consider, making it a time-consuming process.

• Planning does not guarantee success: 

Only carefully planned and executed strategies may lead to a company’s success. Managers tend to implement previously successful ideas. Sometimes, what worked in one situation may not work in another.

Planning Process:

Planning process is an advanced level topic involving seven steps. These seven steps are covered with multiple case studies in our study notes. Students can get access to the complete study guide including  Class 12 Business Studies Chapter 4 Notes by registering on Extramarks website.

Below we have summarised the steps involved in the planning process.

 Setting Objectives:

• Define the objectives that the organisation aims to achieve.

• Set goals for the organisation and particular departments, units, and employees. Define how all divisions will contribute to the overarching goals by clearly stating the organisation’s objectives.

• Goals must be conveyed to each unit and staff at all levels to be aware of how their actions contribute to the attainment of the objectives.

• Managers must participate in goal-setting and contribute ideas.

• Setting sales objectives, releasing a new product, or expanding into new markets are just a few examples.

2. Developing Premises:

• Managers must make certain assumptions while establishing organisational plans. Since planning is a future-oriented activity and the future is uNCERTain.

• Premises are the foundation for making plans since they are based on assumptions about the future.

• The same assumption should be recognisable to all planning managers, and they must all agree on it.

• Both internal and external elements influence planning.

External: 

In a bad economy, even a well-run company may not be able to survive long. If customers lose their jobs or take other jobs that are barely adequate to support them, they will spend less on sports, recreation, gifts, luxury goods, and new cars. Overly high credit card interest rates can prevent customers from spending. However, you cannot control the economy. However, understanding how it operates can assist you in identifying risks and opportunities. As a result, the company must keep a continual eye on the outside world.

Internal: 

Employees have an essential role in a company’s internal environment. Employees must be skilled at what they do, whether writing code or selling to strangers. Managers must be capable of overseeing both lower-level employees and other parts of the workplace. Even if everyone is skilled and talented, internal politics and disagreements can devastate a successful firm. Suppliers, consumers, and other internal considerations are also considered.

For example, forecasting is a method of accumulating data to provide predictions. An organisation uses a variety of projections for various aims, such as policy changes, new markets, product demand, and so on.

Forecast accuracy is necessary for effective strategies.

3. Identifying alternative courses of action:

• Following the definition of the objectives, assumptions are created, and several courses of action are considered.
• Managers must consider all options for achieving the organisation’s goals.
• The path of action may be standard or innovative. An innovative course can be accomplished by incorporating more people and exchanging their thoughts.
• For example, an intelligent establishment is planned based on your idea, such as a café startup. It needs to be in a populated region with schools, universities, or offices nearby to make it a viable business.

4. Evaluating alternative courses of action:

• The next step is to evaluate the advantages and disadvantages of each potential course of action.
• Each plan’s positive and negative qualities must be evaluated in light of the objectives to be achieved.
• The risk-return trade-off, for example, is crucial in financial decisions. The higher the return, the higher the risk. To evaluate such proposals, detailed computations of earnings, taxes, earnings per share, and dividends are followed by a judgement.

5. Selecting the Best Alternative:

• The optimal plan is chosen and implemented from all of the possibilities.
• The best approach is both practical and profitable while also having the fewest downsides.
• Because most plans do not allow for a mathematical examination, the manager’s skill, judgement, and intuition are crucial in identifying the best viable choice.
• Rather than selecting the best choice, a combination of plans may be chosen.

6. Implementing the plan

• The best plan is implemented at this step.
• Managers begin planning and assembling resources to carry out the plans.
• For example, more labour and machinery will be required if the output is raised. This phase would also necessitate the hire of additional labour and the purchase of new machinery.

7. Follow-up action

• It comprises keeping track of the plans that have been put into action and ensuring that the tasks are completed on time.
• To fulfil organisational goals, continuous monitoring is essential to identify deviations from plans, and corrective action is required.

Types of Plan:

A plan is a commitment to follow a particular path to attain specific objectives. Plans can be Classified into various categories based on their intended usage and the length of the planning period.

The two sorts of plans accessible are single-use plans and standing plans. The definitions might be a bit tricky so you can use Extramarks Class 12 Business Studies Chapter 4 Notes for comparative features on these two types of plans.

1. Single-Use Plan:

• A single-use plan is an instruction set intended to solve a single-time issue. It was designed with a particular purpose for a one-time endeavour or event.

• A plan like this is created to meet the needs of a particular situation.

• The duration of a single usage plan varies depending on the project type. For example, A single event plan may last one day, but a single project may last one week or months.

• Single-use designs can’t be reused because they’re no longer applicable after achieving their aim. Examples include budgets, programmes, project reports, and other papers.

2. Standing Plans

• Standing plans are used for tasks that occur regularly over time.
• It is created once and retains its value over time as adjustments and enhancements are made.
• It is designed once and then adjusted as needed to meet the needs of the business.
• The standing plans include policies, processes, methodologies, and norms.

Based on the goals that the plan wishes to achieve, it can be Classified into the following categories.

1. Objectives:

• Management’s objectives are the intended outcomes it intends to achieve through its efforts.

• They may be meant to indicate management’s desired future stance. The first and most crucial step in the planning process is establishing organisational objectives.

• Objectives must be defined in explicit terms, i.e., quantifiable and documented in the form of a written declaration of intended results to be reached within a specific time frame.

• For instance, a 20% return on investment, a 10% increase in sales aim, etc. The goals should be practical and attainable.

2. Strategy:

• Long-term decisions that determine an organisation’s direction and scope are defined as a strategy.

• An organisation’s plans for dealing with various conditions, dangers, and opportunities are known as contingency plans.

• The process of an organisation’s managers generating a new business strategy is known as internal strategy, whereas developing strategies in response to competitors’ strategies are known as external strategy.

• Selecting an advertising media, distribution networks, and so on are examples. Developing a strategy is divided into three stages – Corporate level, business level and Functional level.

3. Policy:

• Policies are broad pronouncements that steer people’s ideas or efforts in one direction or another. It is used to lay the groundwork for interpreting strategy.
• There are policies (major and minor policies )for all levels and departments of an organisation.
• Policies provide the parameters within which management can function.
• They are adaptable since they can be changed as needed.
• For instance, selling items for cash exclusively, purchasing from a single source, etc.

4. Procedure:

• Procedures are step-by-step instructions that outline how to execute a task.
• They describe the sequence in which tasks should be accomplished.
• In general, the steps to follow are implementing a policy and meeting defined objectives.
• Take, for example, a company’s hiring process.

5. Rule:

• Rules indicate what should and should not be done in the given situations.
• Organisational discipline is ensured by rigorous rules and does not allow for flexibility.
• For example: ‘Smoking is strictly prohibited in the office’.

6. Method:

• Methods are the defined ways of doing a task while keeping the aim in mind.
• Selecting the best solution saves time, money, and effort while increasing productivity.
• Adaptable approaches are used.
• For example, An organisation may utilise various training methods to train its employees, such as apprenticeship training, induction programmes, and so on.

7. Programme:

• A programme could contain a comprehensive description of project objectives, rules, methods, regulations, tasks, and the physical and human resources required to carry out any course of action.

8. Budget:

• A budget is a numerical representation of projected outcomes at a particular time.
• A sales budget, a production budget, a research and development budget, a master budget, a cash budget, and so on are examples of budgets.

In the above article we have covered the key characteristics of Planning and students are advised to register on Extramarks website for getting further information available in our  Class 12 Business Studies Chapter 4 Notes.

Class 12 Business Studies Chapter 4 Notes – Exercise & Solutions

Our study notes and solutions are designed to help students understand the concepts and create a solid foundation. If learners want to continue their education in this field after high school, they must study and practise questions and answers given in various course materials to pass the tests. The advanced level questions will also assist students in developing problem-solving skills, helping them easily face Higher Order Thinking Skills (HOTS) problems on the CBSE board exam.

Refer below link for getting access to full set of solved questions and answers for Class 12 Business Studies Chapter 4 

Our study notes include well-structured solutions, a variety of practice questions, and in-depth explanations, all created by experts to assist students in topping their examinations. By using these chapter notes and questions and answer solutions, students will be able to increase their overall learning and better comprehend the disciplines. 

Extramarks is known to provide a lot of reliable course materials for all subjects from Class 1 to Class 12. Students can refer to below study materials to help them with their study preparation:

• NCERT Solutions
• CBSE Syllabus
• CBSE Extra Questions
• CBSE Revision Notes
• CBSE Notes
• Important Questions
• CBSE Previous Year Question Papers
• CBSE Sample Papers 

Key Features of NCERT Solutions Class 12 Business Studies Chapter 4 Notes

With Class 12 Business Studies Chapter 4 Notes, students will be able to learn more effectively. Students may not be able to grasp the subject entirely by studying from NCERT textbooks. As a result, Extramarks has created a set of Chapter Notes for Class 12 Business Studies that will assist them in fully comprehending the subject and preparing for the examinations.

Some of the critical features of Class 12 Business Studies Chapter 4 Notes developed by Extramarks are as below:

• At Extramarks, theCBSE Revision Notes and CBSE Class 12 Business Studies Chapter 4 Notes have been developed exclusively for students by subject experts with decades of experience.
• Every topic in the chapter is thoroughly explained in these Notes. All of the Notes are written in plain, straightforward language.
• Students can use the Extramarks website to get Notes, Solutions, Question Papers, and other study materials.
• Extramarks also provide expert assistance with any doubt questions or concerns.

Extramarks help students prepare for exams and encourage them to study more and do well on tests. You may visit the website for more instructional content suitable for students of different classes and courses from Std 1 to Std 12.