NCERT Solutions Class 12 Business Studies Chapter 4

NCERT Solutions Class 12 Business Studies Chapter 4 – Planning

To get a strong foothold on the topic of Planning, students may refer to Class 12 Business Studies Chapter 4 NCERT Solutions presented by Extramarks. Students of Class 12 can learn and revise essential points, definitions, and Q&A from the study material offered by NCERT Solutions for Class 12 Business Studies Chapter 4. These study materials are prepared by subject experts with years of teaching experience. Henceforth, students may use NCERT solutions for exam preparation.

NCERT Solutions for Class 12 Business Studies Chapter 4 is written in a simple language with point-by-point explanations. Students can access a variety of additional study tools in addition to the NCERT solutions by registering on Extramarks.

Key Topics Covered In NCERT Solutions Class 12 Business Studies Chapter 4

Following are the key topics covered in NCERT Solutions Class 12 Business Studies Chapter 4.

Introduction to Planning
Importance of Planning
Features of Planning
Limitations of Planning
Planning Process
Types of Plans

Students may refer to NCERT Solutions Class 12 Business Studies Chapter 4 provided by Extramarks to help prepare for their forthcoming examinations. The fundamentals of the chapter have been explained to help the students understand the topic in a better way. Here’s the detailed information on each subtopic in NCERT Solutions Class 12 Business Studies Chapter 4- Planning.


Planning refers to a psychological process that includes determining ahead of time on what must be done and how it must be done. As a result, planning and creativity are closely interwoven. 

It is a mental activity in which management determines the objectives to be met and the actions to be carried out in order to achieve them. It is futuristic in character because it requires anticipating, assessing, and forecasting the future.

Planning is described as the process of creating goals and objectives for a given time period, formulating alternatives for the course of action to be pursued, and finally selecting a suitable path of action from a variety of options.

More information in the NCERT Solutions Class 12 business studies Chapter 4 include the highlighted points in the definition:

  1. Time Period:
  • The planning strategy must be tailored to a certain timeframe.
  • It is possible that planning will be useless if it is not done in a timely manner. This is owing to the fact that the corporate environment changes over time, prompting the development of new strategies and activities as changes occur.
  1. Setting Objectives:
  • Planning must be focused on achieving a certain objective.
  • It is necessary to have a definite aim in mind when planning.
  1. An alternative course of action:
  • An alternate course of action must be devised to identify which action will produce the best results with the least amount of money spent and the most effective achievement of objectives.
  1. Deciding a course of action:
  • Cost, time, availability, practicality, and other factors must all be considered while selecting the best alternative course of action.

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Importance of Planning

  • Planning provides direction: Planning offers guidance for action by defining how work will be done in advance. Planning ensures that the goals or objectives are  defined clearly so that they may be used as a guide for selecting what action to take and in which direction to do it. Employees are aware of what the organisation must do and what they must do to attain those goals if goals are well stated.
  • Planning reduces the risk of uncertainty: A manager’s ability to look ahead and foresee changes is enhanced through planning. Planning demonstrates how to deal with changes and unknown situations by determining the activities to be completed in advance. Changes and occurrences cannot be avoided, but they may be foreseen and management solutions devised.
  • Planning reduces overlapping and wasteful activities: The base for coordinating the actions and efforts of departments, several divisions, and individuals is planning. It aids in the avoidance of ambiguity and misunderstanding. Work is carried out efficiently and without interruptions because preparation provides clarity in thinking and action.
  • Planning promotes innovative ideas: New ideas can take the form of tangible plans since planning is the first job of management. It is the most challenging function for management since it directs all future actions that lead to the company’s growth and profitability.
  • Planning facilitates decision making: Planning allows management to see into the future and choose from a variety of options. The management must weigh all options and choose the most realistic one. Setting goals and forecasting future situations are all part of planning, which aids in making sensible decisions.
  • Planning establishes standards for controlling: Setting objectives is an important part of planning. Planning, organising, staffing, directing, and controlling are all aspects of the management process that are concerned with achieving predefined goals. Planning establishes the benchmarks or goals against which actual performance is evaluated. Managers can determine if they were able to achieve their objectives by comparing actual performance to some standard. It is possible to fix any deviations. As a result, we can conclude that planning is a precondition for controlling.

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Features of Planning

The following are the features of Planning as explained in NCERT Solutions Class 12 Business Studies Chapter 4:

  • Planning is all Pervasive: Planning is required in all sorts of companies, at all levels of management, and in all departments. It is not a top-down function; rather, managers at all levels do it. Top-level management generates organisational plans, middle-level management creates departmental plans, and lower-level management creates day-to-day operations plans.
  • Planning is Futuristic: Forecasting and planning are used to prepare for the future. The basic purpose of planning is to ensure that an organisation is prepared to address future events in the most effective way possible. It entails seeing into the future, assessing it, and creating forecasts. As a result, planning is a forward-thinking activity which is  thinking about and planning for the future.
  • Planning is a mental exercise: Because it needs creativity, imagination, and higher-order thinking abilities, as well as solid judgment, planning is a cerebral activity. It’s a mental activity. Instead of guessing or wishful thinking, it needs rational and methodical reasoning.

Students may consider making revision notes while referring to NCERT Solutions Class 12 Business Studies Chapter 4 to get a better grasp of the topics.

Limitations of Planning

The planning process has its own set of limitations that make it difficult to meet all of an organisation’s goals. They are:

  • Rigidity: A company develops a well-defined plan with precise goals that must be met within a certain time range. The future course of action is therefore determined by these plans, which managers may not be able to modify. This kind of rigidity in plans might lead to issues. Managers must be allowed some latitude to adjust to changing circumstances. Following a predefined strategy and maintaining rigidity as circumstances change may not be in the organisation’s best interests.
  • Not able to deal with a Dynamic environment: The business environment is fluid and, as a result, unpredictable. Economic, political, physical, legal, and social issues all have a role in the environment. The organisation must adapt to changes on a regular basis. However, in times of change and uncertainty, planning cannot always precisely predict such changes and hence fails. This might lead to a failure to accomplish goals. The operations of a company must adapt to the changing environment.
  • Extremely expensive: Making plans takes significant time and financial effort. Planning needs considerable effort and study since it is based on future assumptions. It includes scientific calculations, as well as numbers and information that will be utilised to develop a strategy. This comes at a high price. Furthermore, it is possible that the benefits of planning will be insufficient to cover the expenditures incurred.
  • Not ensuring success: Preparation alone may not guarantee success. Managers usually rely on tried-and-true strategies that have previously shown to be successful. However, just because a method has worked in the past does not guarantee that it will work again in the future. Many unexpected developments might occur, leading to the strategy’s failure. Managers usually feel that planning will prevent issues from arising; nevertheless, they overlook the fact that planning is only a basis for projecting the future. It does not offer instant solutions to problems.
  • Time-consuming: Making plans takes time since it necessitates anticipating unforeseen situations. It demands a thorough examination and assessment. As a result of the increased time spent by managers, real actions may be delayed. In addition, while preparing, numerous possibilities may be lost.
  • Reduces creativity: Upper management is in charge of planning. The remainder of the members usually merely follow their plans. As a result, middle management and other decision-makers are forbidden from deviating from plans or acting on their own. As a result, they lose or limit a lot of their initiative and creativity. For the most part, employees do not even attempt to establish plans; instead, they just carry out orders. As a result, planning limits creativity in some ways because people tend to think in similar ways. Nothing is new or groundbreaking.

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Planning Process

The following are the steps  involved in the Planning Process:

  • Setting up Objectives: The first stage in the planning process is to establish objectives and goals. Each organisation or business has a certain goal in mind. Managers must clearly explain these goals so that the best path to achieving them may be chosen. In addition, the plan’s goals must be shared at all levels of the business. It provides guidance to various departments/units so that they may work together to achieve the organisation’s common objectives. Management duties cannot be carried out without a clear understanding of the objectives.
  • Developing the premises: Some assumptions about the future are formed during the planning process. Premises are the terms used to describe these assumptions. Future projections, historical intentions, and existing policies and realities are all part of the assumptions. The implementation of such principles should be adhered to by managers at all levels of the business who are involved in planning. The follow-up action is based on the same assumptions. These assumptions are crucial for the business since they define how future projects will go. As a consequence, adequate grounds for effective planning should be proposed.
  • Identifying the alternatives: After the objectives and assumptions have been defined, the different courses of action that can be taken must be determined. 
  • Evaluating the alternatives: After recognising the numerous routes of action, managers must examine them. This evaluation is based on the alternatives’ value and implications. Managers must consider the advantages and disadvantages of each decision. The advantages and disadvantages of each plan must be weighed against the desired outcome.
  • Selecting the best: Choosing the best option means selecting the most effective approach to achieving the goal. Managers should apply their skills and expertise to evaluate and choose the most profitable, cost-effective, and feasible option. A range of numerous paths, rather than just one, may be taken. The ideal plan, of course, would be the most feasible, lucrative, and with the fewest negative consequences.
  • Implementing: Additional management departments must be involved in the implementation of the options. It comprises planning and directing work in line with the course and policies that have been established. The goal of implementation is to stick to the selected course of action and determine how it will be carried out in order to be effective.
  • Follow-up actions: For analysing the entire operation and implementation of the plans, continuous supervision of the activities is required. Keeping track of the tasks to be performed is a crucial part of the planning process since it ensures that the plan runs smoothly. As a result, thorough follow-up action boosts a plan’s success and, as a result, the attainment of its goals.

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Types of Plans

Types of plans can be classified into two types, single-use plans and standing plans. Refer to Extramarks NCERT Solutions Class 12 Business Studies Chapter 4 for details of the  topic for better understanding.

  • Single-use Plan: A single-use plan is created for a one-time event or project. Such a line of action is unlikely to be repeated in the future, i.e. it is intended for one-time use. The project’s nature may determine the length of this plan. Budgets, programmes, and projects are all part of these plans. They include information such as the names of personnel who are in charge of doing the task and contributing to the single-use plan.
  • Standing Plan: A standing plan is used for tasks that happen on a regular basis over time. Its purpose is to guarantee that an organisation’s internal processes function smoothly. This type of strategy considerably improves the efficiency of ordinary decision-making. It is normally created once and then adjusted as needed to satisfy business requirements. Policies, processes, techniques, and norms are all part of a standing plan.

While NCERT Solutions Class 12 Business Studies Chapter 4 is useful, students may also refer to other study materials such as notes, important questions and past year’s question papers to prepare for their examination. 

NCERT Solutions Class 12 Business Studies Chapter 4 Planning

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By referring to Extramarks NCERT Solutions Class 12 Business Studies Chapter 4, students can easily understand the topic, Planning.

Key Features of NCERT Solutions Class 12 Business Studies Chapter 4

NCERT Solutions Class 12 Business Studies Chapter 4 provides a detailed answer to all questions.  Extramarks is the best option for a variety of reasons:  :

  • It covers all the chapter end questions along with their comprehensive answers explained in detailed with appropriate examples.
  • By laying a foundation and explaining the chapter’s fundamental principles, the answers help in eliminating the student’s doubt questions and confusions.
  • All solutions are mentioned in a detailed and easy to understand manner.
  • Students can score well through these  NCERT Solutions Class 12 Business Studies Chapter 4 provided by Extramarks. 

Q.1 How does planning provide direction?

Ans. Planning defines the goals to be achieved. This gives direction to the managers about the course of action to be followed for achieving these goals. With planning every department knows what is to be done.

Planning starts with the setting of goals and objectives to be achieved. Objectives provide a rationale for undertaking various activities as well as indicate direction of efforts.

Q.2 A company wants to increase its market share from the present 10% to 25% to have a dominant position in the market by the end of the next financial year. Ms Rajni, the sales manager has been asked to prepare a proposal that will outline the options available for achieving this objective.

Her report included the following options ‑entering new markets, expanding the product range offered to customers, using sales promotion techniques such as giving rebates, discounts or increasing the budget for advertising activities. Which step of the planning process has been performed by Ms Rajni?

Ans. The step of planning process which has been performed by Rajni is “identifying alternative course of action.”

There are many ways to act and achieve objectives.

Rajni identified all the possible alternative course of action which is profitable, feasible and with less negative consequences.

Q.3 Why are rules considered to be plans?

Ans. The specific and definite action to be taken with respect to specified situations are called Rules. Rules are based upon procedures. There cannot be exception to rules. Planning is thinking about the futuristic course of action and rules also decide what is to be done and what is not to done. But rules are rigid in nature and non compliance leads to disciplinary action and fines.

Q.4 Rama Stationery Mart has made a decision to make all the payments by e‑transfers only. Identify the type of plan adopted by Rama Stationery Mart.

Ans. Rama Stationery Mart has adopted ‘Policy’.

Policies are general statements that guide thinking or channelise energies towards a particular direction.

They are guides to managerial action and decisions in the implementation of strategy.

Rama Stationery Mart adopted pricing policy to make all the payments by e-transfer only.

Q.5 Can planning work in a changing environment? Give a reason to justify your answer.

Ans. Business environment is dynamic as there are continuous changes in economic, political and legal environment. It becomes difficult to forecast the future changes. Plans may fail, if the changes are frequent.

Q.6 What are the main aspects in the definition of planning?

Ans. Planning means to think in advance thus it is a looking ahead activity which is never done for the past. It involves thinking in advance what and how the work is to be done in future.

Q.7 If planning involves working out details for the future, why does it not ensure success?

Ans. Planning is based on certain external factors on which management may have no control, thus, though imperative, planning does not guarantee success. Planning means to think in advance thus it is a looking ahead activity which is never done for the past. It involves thinking in advance what and how the work is to be done in future. It anticipates opportunities and threats in the environment. Thus, planning involves forecasting.

Q.8 What kind of strategic decisions are taken by business organisations?

Ans. Strategy is a comprehensive plan for achieving an organisation’s objectives. Whenever a strategy is formulated, the business environment needs to be taken into consideration.

Some of the strategic decisions that are taken by business organizations are:

  • Deciding on whether a new product line should be adopted or not.
  • Selecting the new product line
  • Deciding the pricing policy that should be adopted by the company.
  • Deciding promotion policy and methods to be used for a new product line.

Q.9 Planning reduces creativity. Critically comment.(Hint: both the points ‑Planning promotes innovative ideas and planning reduces creativity – will be given).

Ans. Planning is the most challenging activity for the management as it guides all future actions leading to growth and prosperity of the business. It encourages the managers to think creatively and out of the box to generate innovative ideas.

But also planning is an activity which is done by top management, the rest of the members just implement these plans. Middle management and lower level management is not allowed to participate in the planning process. Thus much of the alternative or creativity inherent in them also gets lost or reduced. Thus planning in a way reduces creativity.

Q.10 In an attempt to cope with Reliance Jio’s onslaught in 2018, market leader Bharti Airtel has refreshed its `149 prepaid plan to offer 2 GB of 3G/4G data per day, twice the amount it offered earlier. Name the type of plan is highlighted in the given example. ? State its three dimensions also.

Ans. The type of plan highlighted by Bharti Airtel is “Strategy”.

A strategy is a comprehensive plan for accomplishing an organisation objectives.

The comprehensive plan will include three dimensions:

  • Determining long run objectives
  • Adopting a particular course of action and
  • Allocating resources necessary to achieve the objective

Q.11 State the type of plan and state whether they are Single use or Standing plan:

a. A type of plan which serves as a controlling device as well.(budget)

b. A plan based on research and analysis and is concerned with physical and technical tasks. (Method)

Ans. a)

This is a single-use plan called ‘Budget’.

A budget is a plan which quantifies future facts and figures. Budget represents all items in numbers, it becomes easier to compare actual figures with expected figures and take corrective action subsequently. Thus a budget is also a control device from which deviations can be taken care of.


This is a standing plan called “Method”.

Method provide the prescribed ways or manner in which a task has to be performed considering the objective. It deals with a task comprising one step of a procedure and specifies how this step is to be performed. The method may vary from task to task.

Q.12 Why is it that organisations are not always able to accomplish all their objectives?

Ans. Planning involves predicting the future which is uncertain. If future is not predicted with reasonable accuracy, planning may become useless in the changed environment. Organisations are not always able to accomplish all their limitations as planning also have some of the limitations such as:

  • Time consuming: Planning is time consuming process as it involves a lot of time in identifying, analysing and selecting the alternatives which sometimes lead to delay in decision making.
  • Creates rigidity: Planning involves the determination of a course of action in advance. It may lead to internal inflexibility and procedural rigidity.
  • Involves huge cost: Formulation of plans involves too much cost which is in the form of time spent, money spent etc. but sometimes there is little benefit from planning, and instead it becomes a burden for the institution.
  • May not work in dynamic environment: Business environment is dynamic as there are continuous changes in economic, political and legal environment. It becomes difficult to forecast the future changes.

Q.13 What are the steps taken by management in the planning process?

Ans. Steps involved in the process of planning are as follows:

  • Setting Objectives: Planning starts with the setting of goals and objectives to be achieved. Objectives should be stated in a clear, precise and unambiguous language; otherwise the activities undertaken are bound to be ineffective.
  • Developing Premises: Planning premises are the assumptions about the future. Establishment of planning premises is concerned with taking such steps to avoid obstacles to a great extent. Planning premises may be internal or external.
  • Identifying alternative courses of action: When forecast is available and premises are established, a number of alternative courses of actions may be available. All such alternatives have to be identified.
  • Evaluating alternative courses: Each and every alternative will be evaluated by weighing its pros and cons in the light of resources available and requirements of the organisation. The merits, demerits as well as the consequences of each alternative must be examined before the choice is made.
  • Selecting an alternative: After evaluating all the available alternatives, next step is to select the best course of action which will be most feasible, profitable and with least negative consequences.
  • Implementing the plan: This step is concerned with putting the plan into action, i.e., doing what is required. For putting plans into action the manager has to communicate the plans to all the employees very clearly.
  • Follow-up: After the selected plan is implemented, it is important to appraise its effectiveness. This is done on the basis of feedback or information received from the departments or persons concerned.

Q.14 An auto company C Ltd. is facing a problem of declining market share due to increased competition from other new and existing players in the market. Its competitors are introducing lower priced models for mass consumers who are price sensitive. C Ltd. realized that it needs to take steps immediately to improve its market standing in the future. For quality conscious consumers, C Limited plans to introduce new models with added features and new technological advancements.

The company has formed a team with representatives from all the levels of management. This team will brainstorm and will determine the steps that will be adopted by the organisation for implementing the above strategy. Explain the features of Planning highlighted in the situation given below. (Hint: Planning is pervasive, Planning is futuristic and Planning is a mental exercise).

Ans. The features of Planning are:

Planning is pervasive: Planning is required at all levels of Management. It is not an exclusive function of top management nor of any particular department. For example, the top management undertakes planning for the organisation as a whole. Middle level management does the departmental planning. At the lowest level, day-to-day operational planning is done by supervisors.

Planning is futuristic: Planning must be futuristic in nature. The purpose of planning is to meet future events effectively to the best advantage of an organisation. It is regarded as a forward looking function based on forecasting. Through forecasting future events and conditions are anticipated and plans are drawn accordingly.

Planning is a mental exercise: Planning is basically an intellectual activity of thinking rather than doing because planning determines the action to be taken. However, planning requires logical and systematic thinking rather than guess work.

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NCERT solutions are study materials that help students understand various topics that are covered in the subject. It helps them prepare for their forthcoming examinations. 

2. Does NCERT Solutions Class 12 Business Studies Chapter 4 cover all topics under Planning?

Definitely, Extramarks NCERT Solutions Class 12 Business Studies Chapter 4 covers all topics covered in the chapter Planning. Students will find detailed study notes, case studies , sample question Papers for a comprehensive coverage of the concepts  covered in Chapter 4 Planning.