Class 12 Business Studies Short Notes 2026-27

4.1 MEANING OF PLANNING

Every organisation has to decide, before it acts, what it wants to achieve and how it intends to achieve it. This process of thinking ahead and choosing a course of action in advance is called planning. It is the first of the functions of management, because organising, staffing, directing and controlling can all be carried out only in relation to a plan. A manager who has no plan has no basis for judging whether the work being done is taking the organisation in the right direction.

Planning begins with the setting of objectives. Once the objectives are clear, the manager studies the available alternatives, evaluates them and selects the one most likely to achieve the objectives with the resources at hand. Planning is therefore a mental exercise which calls for foresight, judgement and imagination rather than mere guesswork. Since plans are prepared for a definite period, and time cannot be recovered once it is lost, the time available must be used carefully.

A good plan gives direction to the efforts of employees, reduces the risks arising from an uncertain future, prevents duplication and waste of effort, encourages new ideas, makes decision-making easier and provides the standards against which actual performance is later measured.