Business Studies Part I
Business Studies Part II

Solution of Question Paper

1  mark question solutions

 Q1 How does planning provide direction?

Answer :  Planning provides direction for action by deciding in advance what has to be done, how to do, when to do and who will do. When we try to seek answers to the above questions, which are well planned then directions are automatically highlighted.

 Q2 If planning involves working out details for the future, why does it not ensure success?

Answer : Planning does not guarantee success. The success of an enterprise IS possible only when plans are properly drawn up and Implemented. Any plan needs to be translated into action or It becomes meaningless. Managers have a tendency to rely on previously tried and tested successful plans It is not always true that Just because a plan has worked before It Will work again. This kind of false sense of secunty may actually lead to failure Instead of success

Q3Why are rules considered to be plans?

Answer : Rules are specific statements that inform what is to be done. They do not allow for any flexibility or discretion. It reflects a managerial oecrsion that a certain action must or must not be taken. They are usually the Simplest type of plans because there IS no compromise or change unless a policy decision is taken.

 Q4 What kind of strategic decisions are taken by business organisations?

Answer : Major strategic decisions include whether the organisation Will continue to be in the same line of business or combine new lines of activuy With the existing business or seek to acquire a dominant position In the same market

Q5      Planning reduces creativity as the top management undertakes planning of various activities whereas the middle managers are neither allowed to deviate from plans nor are they permitted to act on their own.

 5 marks case studies

 Q6 Two years ago, Mayank obtained a degree in food technology. For some time, he worked in a company that manufactured bread and biscuits. He was not happy in the company and decided to have his own bread and biscuits manufacturing unit. For this, he decided the objectives and the targets, and formulated an action plan to achieve the same.
One of his objectives was to earn 50% profits on the amount invested in the first year. It was decided that raw materials like flour, sugar, salt, etc. will be purchased on two months credit. He also decided to follow the steps required for marketing the products through his own outlets. He appointed Harsh as the Production Manager who decided the exact manner in which the production activities were to be carried out. Harsh also prepared a statement showing the requirement of workers in the factory throughout the year. Mayank informed Harsh about his are a wise sales target for different products, for the forthcoming quarter. While working on the production table, a penalty of ?150 per day was announced for not wearing the helmet, gloves and apron by the workers.
Quoting lines from the above paragraph, identify and explain the different types of plans discussed. 
Answer:
The different types of plans discussed above are listed below:

  1. Objectives: Objectives are the end results of the activities that an organisation seeks to achieve through its existence. All other activities within the organisation are directed towards achieving these objectives. “One of her objectives was to earn 50% profit on the amount invested in the first year.”
  2. Policy: A policy is a set of general guidelines that help in managerial decision making and action. “It was decided that the raw materials like flour, wheat, sugar, etc. will be purchased on two months credit.”
  3. Method: A method refers to the prescribed ways or manner in which a task has to be performed considering the objective. “..decided the exact manner in which production activities were to be carried out.”
  4. Procedure: A procedure contains a series of specific steps to be performed in a chronological order to carry out the routine activities. “He also decided to follow the steps required for marketing of the products through his own outlets.”
  5. Rule: A rule is a specific statement relating to the general norms in terms of Do’s and Dont’s that guide the behaviour of people. It commands strict obedience and a penalty is likely to be imposed on its violation. “While working on the production table, a penalty of Rs. 150 per day was announced for not wearing helmets, gloves and aprons by the workers.”

 Q7 Wazir Ahmed joins ‘Ashiyana Ltd.’ a company dealing in real estate, as a human resource manager. Through a series of interactions with his team during lunch breaks, he comes to know that quite a few managers at middle and senior levels have recently left the organisation as their promotions were overdue. Therefore, in order to reinstate the confidence of the staff, he lays out a clear cut plan consisting of a set of general guidelines for both time bound and performance related appraisals of the mangers at all levels. Moreover, he develops standardized processes containing a series of steps specified in a chronological order for its implementation.
In context of the above case:

  1. Identify the two different types of plans that Wazir Ahmed proposes to implement in order to reinstate the confidence of the staff by quoting lines from the paragraph.
  2. Distinguish between the two types of plans as identified in part (a).

Answer:

  1. Policy and Procedure are the two different types of plans that Wazir Ahmed proposes to implement in order to reinstate the confidence of the staff.
    Policy: “… he lays out a clear cut plan consisting of a set of general guidelines for both time bound and performance related appraisals of the mangers at all levels.”
    Procedure: “Moreover, he develops standardized processes containing a series of steps specified in a chronological order for its implementation.”
  2. The difference between Policy and Procedure is outlined below:

Basis

Policy

Procedure

Meaning

Policies are general statements that guide managerial decision making.

It is a series of chronological steps which are performed to do a particular activity.

Level of management

It is determined by top level management.

It is determined by lower and middle level management.

Expression

It is a general statement.

It is a specific statement.

Manager’s
Discretion

It provides scope for managerial discretion.

There is no scope for managerial discretion.

Purpose

Policies are framed to achieve the objectives of an organisation. They all guide in implementing the strategy.

A procedure is framed to implement a policy.