CBSE Business Studies Revision Notes Chapter-4 Planning 

Planning: - Planning refers to deciding in advance what to do and how to do.

Features of Planning are as follows:

1. Planning focuses on achieving objectives: Planning has no meaning unless it contributes to the achievement of organisational goals.
2. Planning is pervasive: Planning is required at all levels of management as well as in all departments of the organisation.
3. Planning is continuous: Planning is not a single time activity. It is required regular and ongoing basis.
4. Planning is futuristic: Plans are prepared for the future and not for the past.
5. Planning is a mental exercise: Planning involves thinking rather than doing. 
6. Planning involves decision making: Planning helps in decision making because it involves selection of the best alternative of various alternative. 
7. Planning is a primary function of management: Planning is a primary function. It provides basis for all other functions of management.

Planning process are as follows:

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1. Setting objectives: The first and foremost step is setting objectives. Objectives or goals specify what the organisation wants to achieve.
2. Developing premises: Planning is concerned with the future which is uncertain. Manager is required to make certain assumptions about the future. These assumptions are called premises.
3. Identifying alternatives courses of action: There may be many ways to achieve objectives and all the alternatives courses of action should be identified. 
4. Evaluating alternative courses: After making the list of various alternatives, the manager starts evaluating the pros and cons of each alternative.
5. Selecting an alternative: The next step is to select the best alternative. The ideal plan would be the most feasible with less negative consequences.
6. Implementing the plan: The step is concerned with putting the plan into action. i.e. doing what is required.   
7. Follow up action: To see whether plans are being performed according to schedule. 

Importance of planning are followed as:

1. Planning provides directions: Planning provides the directions to the efforts of employees. Planning makes clear what employees have to do, how to do etc.
2. Planning reduces the risks of uncertainty: Planning helps the manager to face the uncertainty because planners try to foresee the future by making some assumptions. The plans are made to over come uncertainties. 
3. Planning reduces over lapping and wasteful activities: Planning evaluates useless and superfluous activities and helps in avoiding confusion and misunderstanding.
4. Planning promote innovative ideas: Planning requires high thinking and it is an intellectual process. so, it makes the manager innovative and creative. 
5. Planning facilitates decision making: Planning helps to make a choice from amongst various alternative courses of action.
6. Planning establishes standards for controlling: Planning provides the goals or standards against which actual performance is measured. By comparing actual performance with some standard. 

Limitations of planning are as follows:

1. Planning leads to rigidity: Once plans are made; the manager may not be in a position to change them.
2. Planning may not work in a dynamic environment: Business environment is very dynamic as there are continuous changes. It becomes very difficult to forecast these future changes.
3. Planning reduces creativity: Planning is usually done by top level management. As such, middle or lower level managers are not allowed to deviate from the plans. Therefore, their creativity is hampered. 
4. Planning involves huge costs: Planning process involves lot of cost because it is in an intellectual process and companies need to hire the professional experts to carry on this process.
5. Planning is a time-consuming process: Sometimes plans to be drawn up take so much of time that there is not much time left for their implementation.
6. Planning does not guarantee success: There is no guarantee of success of a well-drawn plan. Proper implementation of plan is also necessary.

Types of plan

Single Use Plan: It is developed for a one-time event or project. It is used for non-recurring situations.

   Single-use plans includes:

2. Programme: Programmes are detailed statements about a project which outlines the objectives, policies, procedures and rules.
3. Budget: A Budget is a statement of expected results expressed in numerical terms.

2. Standing plan:  It is used for activities that occur regularly over a period of time. It is recurring in nature.

Standing plans includes:

1. Procedure: Procedures are required steps established in advance to handle future conditions.
2. Policy: Policy are general statements that guide thinking or channelize energies towards a particular direction.
3. Methods: Methods provide the prescribed ways or manner in which a task has to be performed considering the objectives.
4. Rule: Rules are specific statements that inform what is to be done. They do not allow for any flexibility. 

These plans are not classified as single-use or standing plans

1. Objectives: are the end towards which the activities are directed. They are the end result of every activity. e.g. increase in sale by 10%.

ii. Strategy: A strategy is a comprehensive plan to achieve the organisational objectives.

Business Environment Class 12

 

Business Environment

Business Environment

Meaning of Business Environment

The term ‘business environment’ means the sum total of all individuals, institutions and other forces that are outside the control of a business enterprise but that may affect its performance.

Features of Business Environment

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1. Sum total of all forces: Business environment is a sum total of all the forces external to business firms.
2. Specific and general forces: Business environment consists of both specific forces such as investors, customers, competitors and suppliers which affect individual firm directly and general forces such as social, political, legal and technological conditions which have impact on all business enterprises and thus may affect an individual firm only indirectly.
3. Interrelated: All the elements of business environment are closely interrelated to each other.
4. Dynamic: Business environment is dynamic because it keeps on changing. For e.g. customers' tastes, government policies, competitors' moves and technology keep on changing. 
5. Uncertain: Business environment is uncertain because it is difficult to predict changes taking place in it. 
6. Complex: It is complex in nature as it is relatively easier to understand in parts but difficult to comprehend in its totality because it consists of numerous interrelated and dynamic forces. 
7. Relative: Business environment is a relative concept because it differs from region to region and country to country. For e.g. in India there will be more demand for dosa and in US there will be more demand for pizza.

Importance of Understanding Business Environment

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1. It enables the firm to identify opportunities and getting the first mover advantage instead of losing them to its competitors. For e.g. Maruti Udyog in small car market, Volvo in luxury buses etc. 
2. It helps the firm to identify threats and early warning signals which are likely to hinder a firm’s performance and take timely actions. For e.g. if an Indian firm finds that a foreign multinational is entering India, it should act as a warning signal and the Indian firm should prepare itself. 
3. It helps in tapping useful resources: Understanding of business environment helps in obtaining and assembling resources as per the demand in the market. For e.g. with demand for flat screen coloured televisions, producers are collecting resources needed to produce flat screen coloured televisions and not the resources needed for black and white televisions.
4. It helps in coping with rapid changes: Business environment is dynamic and it keeps on changing. Understanding of business environment helps in adapting to the changes taking place.
5. It helps in assisting in planning and policy formulation: Business environment is a source of both opportunities and threats. Therefore, proper understanding of business environment helps in making plans and deciding future courses of action.
6. It helps in improving performance of an enterprise: Continuous monitoring of the environment and adopting suitable business practices helps in improving the performance of an organisation.

Dimensions of Business Environment

Following are the main dimensions/components of Business Environment:

1.  Economic Environment: It includes interest rates, inflation rates, changes in disposable income of people, stock market indices, value of rupee etc.
2. Social Environment: It includes the social forces like customs and traditions, values, social trends, society’s expectations from business, etc.
3. Technological Environment: It includes forces relating to scientific improvements and innovations which provide new ways of producing goods and services and new methods and techniques of operating business.
4. Political Environment: It includes political conditions such as general stability and peace in the country and specific attitudes that elected government representatives hold towards business.
5. Legal Environment: It includes various legislations passed by the Government administrative orders issued by government authorities, court judgments as well as the decisions rendered by various commissions and government agencies.

DEMONETISATION: 

On November 8, 2016, the Government of India made an announcement to demonetize two largest denomination notes Rs 500 and Rs 1000 with immediate effect. 

Aim of demonetisation was to curb corruption, use of money for illegal activities and accumulation of black money. 

Features of Demonetisation:

1. It is a measure of tax administration. Those who were holding black money had to declare their wealth and pay penalties. 
2. It is a means of indicating that government will no longer tolerate tax evasion. 
3. It has led to increase in digital transactions. 
4. It has tendency to increase savings because people will deposit their cash in bank rather than keeping at home

NEW INDUSTRIAL POLICY OF 1991

Three Major Components of New Industrial Policy of 1991

1. Liberalisation - removing unnecessary controls and restrictions on businesses and industries. 
2. Privatisation - increasing the role of private sector and reducing the role of public sector 
3. Globalisation - integrating economies of different nations with the world economy

Impact of Government Policy Changes on Business and Industry

1. Increasing competition: Due to liberalisation and entry of foreign firms, competition for Indian firms has increased.
2. More demanding customers: Customers are becoming more demanding as they are more aware and have a wider choice.
3. Rapidly changing technological environment: To face the challenges of rising competition and satisfying demanding customers, firms need new and better technology.
4. Necessity for change: The firms can’t stick to old practices and policies. They need to continuously modify their operations to survive in the market.
5. Need for developing human resource: There is a need to develop human resources because the new market conditions require people with higher competence and greater commitment. 
6. Market orientation: Firms need to shift from production orientation (sell whatever has been produced) to market orientation (produce according to customers’ needs).
7. Loss of budgetary support: Government’s budgetary support to the public sector has declined over the years. Now in order to survive, public sector enterprises need to be more efficient and independent.

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Mind Map

 Class 12 Business Studies Revision Notes Chapter 2 - Principles of Management 

Meaning of Principles of Management

Principles of management are broad and general guidelines for the managerial decision making and action.

Features of Principles of Management

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1. Universal Applicability: The principles of management are applicable to all types and sizes of organizations. 

2. General Guidelines: The principles are guidelines to action but do not provide readymade solutions to all managerial problems as the real business situations are very complex.

3. Formed by practice and experimentation: The principles of management are formed by the management experts through observation and tested through repeated experimentation.

4. Flexible: The principles of management are not rigid. They are flexible and can be modified by the manager as per the given situation so as to achieve the desired goals.

5. Mainly Behavioural: The principles of management aim at influencing behaviour of human beings in a desired manner.

6. Cause and effect relationships: The principles of management seek to establish relationship between cause and effect so that they can be used in similar situations.

7. Contingent: The application of principles of management is contingent or dependent upon the prevailing situation at a particular point of time.

Significance of Principles of Management

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1. Provide managers with useful insights into real world: Principles of management help to provide managers with useful understanding of real-world situations, enable them to learn from past and solving problems quickly.

2. Optimum utilisation of resources: They ensure optimum utilisation of resources and effective administration as the principles focuses on scientific work and reduces personal biases. 

3. Scientific Decisions: They facilitate scientific decision making as they emphasize on logical thinking rather than blind faith.

4. Helps in meeting changing environmental requirements: They help to meet the changing requirements of the environment to the best advantage of an organisation.

5. Social Responsibility: Principles of management also guide managers in fulfilling social responsibility of an organisation.

6. Basis for management training, education and research: Principles of management help in increasing knowledge which is used as the basis for management training, education and research.

FAYOL’S PRINCIPLES OF GENERAL MANAGEMENT

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1. Division of work: The work of an organisation should be divided into smaller jobs, called tasks. These tasks are then assigned to different individuals as per their ability, qualifications and experience. It leads to specialization, speed, efficiency and accuracy of work.

 

2. Discipline: It refers to the respect and obedience for rules and regulations of an organisation. 

It is necessary for the systematic working of the organisation. It requires good superiors at all levels, clear and fair agreements and judicious application of penalties.

 

3. Authority and Responsibility: There should always be a balance between the authority given and responsibility given to an employee. 

 

This is because if authority is more than responsibility, the employees are likely to misuse it whereas if authority is less than responsibility, he/she will be unable to do the desired work.

 

4. Unity of command: An employee should receive order from only one superior at a time. 

 

5. Unity of Direction:  Each group of similar activities having the same objective must have one head and one plan. 

 

6. Subordination of Individual Interest to General Interest: In all the situations, the interests of an organisation should take priority over the interests of any one individual employee.

 

7. Remuneration of employees: The overall pay and compensation should be fair to both employees and the organization. 

The employees should be paid fair wages, which should give them at least a reasonable standard of living. At the same time, it should be within the paying capacity of the company i.e. remuneration should be just and equitable.

8. Centralisation and Decentralisation: The concentration of decision-making authority is called centralisation whereas its dispersal among more than one person is known as decentralization. 

There should be effective centralisation instead of complete centralisation or complete decentralisation.

9. Scalar Chain: All communication should pass from top to bottom and everyone should follow this official line of authority. 

 Gang Plank is exception to scalar chain and is used in the cases of emergencies. In gang plank, employees working at same level can communicate with each other.

10. Order: There should be proper arrangement of materials and people in an organisation. 

Fayol has suggested social order (proper arrangement of people) and material order (proper arrangement of materials).

11. Equity: There should be no discrimination towards workers on any basis such as caste, creed, gender etc. 

12. Stability of Personnel: The employees should be kept at their post for a minimum fixed time period. They should not be frequently transferred or changed from their job posts. 

13. Initiative: Managers should encourage employees to give their suggestions in decision making process. Good suggestions given by the employees should be rewarded. 

14. Espirit De Corps: The management should promote a team spirit among employees. A manager should replace 'I' with ‘We’ in all his conversations with workers.

SCIENTIFIC MANAGEMENT
Scientific Management:
Scientific Management means knowing exactly what you want your employees to do and seeing that they do it in the best and cheapest way.
Fredrick Winslow Taylor is known as the ‘Father of Scientific Management’.

PRINCIPLES OF SCIENTIFIC MANAGEMENT

TAYLOR’S SCIENTIFIC MANAGEMENT:

Principles of Scientific Management: 

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1. Science, not rule of thumb: Work should be done in a planned and systematical manner and not on the basis of intuition or rule of thumb.

Taylor believed that there was only one best method to maximise efficiency which can be developed through study and analysis.

2. Harmony, not discord: There should be harmony between the management and workers. 

Management should share the gains with the workers and at the same time workers should work hard to increase the output of organisation. 

To reduce conflicts, complete mental revolution (change in thinking) on the part of workers and management is needed.

3. Cooperation, not individualism: There should be cooperation between workers and the management. Management should encourage the workers to give suggestions and the workers should avoid making unreasonable demands or going on strikes.

4. Development of everyone to his/her greatest efficiency: In order to increase efficiency, workers should be scientifically selected and the work should be assigned as per their capabilities. Further, they should be given training to increase their skills.

 

Techniques of Scientific Management

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Techniques of Scientific Management given by Taylor are as follows:

1. Functional foremanship: Taylor suggested functional foremanship through eight persons. Each worker will have to take order from eight foremen/supervisors. Taylor stressed on separating planning function from the execution function. Four foremen will be under planning in charge and other four will be under production in charge.

Under Planning in charge:

• Instruction card clerk- preparing instructions for workers

• Route clerk- specifying route of production

• Time & cost clerk- preparing time & cost sheet

• Disciplinarian- ensuring discipline

 Under Production in charge:

• Speed boss- timely and accurate completion of work.

• Gang boss- keeping tools and machines ready for work by workers.

• Repairs boss- ensuring proper working condition of tools and machines.

• Inspector- checking quality of work.

2. Standardisation & Simplification of work:

Standardisation means setting standards. 

Simplification means removing unnecessary types, sizes, varieties etc.

3. Method Study: Finding out one best way of doing the job.

4. Motion Study: Study of movements of employees and reducing/eliminating unnecessary movements.

5. Time Study: Determining the standard time to perform a job.

6. Fatigue Study: Determining duration and frequency of rest intervals.

7. Differential Piece Wage System: To differentiate between efficient and inefficient workers, Taylor has suggested a higher wage rate for efficient workers.