Planning and Decision-Making Questions and Answers [With PDF]
Before a business opens a branch, launches a product or hires a team, someone has to decide what to do and how. That is planning, the first function of management, and every plan depends on good decisions. This chapter covers the steps of planning, the types of plans, and the decision-making process. Here are 25 important questions with clear answers and tables, ready for exams, vivas and interviews.
This is Chapter 3 of our Management course. It follows Management Principles and comes before Organizing.
Planning: Meaning and Features
Q1. What is planning?
Planning is deciding in advance what to do, how to do it, when to do it and who will do it. It sets goals for the future and the actions needed to reach them. It bridges the gap between where the organization is now and where it wants to be.
Q2. What are the features of planning?
- Planning is the first function of management. Organizing, staffing, directing and controlling all depend on it.
- It is a mental activity: it needs thinking, foresight and judgement.
- It always looks to the future and involves forecasting.
- It is goal-oriented. Every plan has a purpose.
- It uses information about the past and present.
- It is continuous, and plans are reviewed and updated.
- It is needed at every level of management.
Q3. What is the importance of planning?
- It helps achieve the organization’s goals.
- It supports the growth and expansion of the business.
- It reduces cost and wastage.
- It makes effective use of resources.
- It gives managers a clear course of action and reduces uncertainty.
- It makes the other managerial functions possible.
Q4. What are the limitations of planning?
- Planning depends on assumptions (premises) about the future, which may be wrong.
- It takes time and can delay action.
- It is costly.
- It can create pressure and stress for managers.
- It can reduce initiative if plans are too rigid.
- Plans are hard to change once they are in action.
- It cannot solve problems that come from outside the organization.
Q5. What are the characteristics of a good plan?
- A clearly stated goal
- Realistic and based on facts
- Acceptable to those who will carry it out
- Properly directed toward the objectives
- Coordinated with other plans
- Flexible enough to be changed
Steps and Elements of Planning
Q6. What are the steps of planning?
- Study the future (forecast opportunities and threats).
- Set the objectives.
- Establish the planning premises (assumptions).
- Identify the alternative ways of reaching the objectives.
- Evaluate the alternatives.
- Choose the best alternative.
- Prepare derivative (supporting) plans, such as budgets, for each department.
Q7. What factors should be considered when making a plan?
- The objectives of the organization
- Qualities of employees and working conditions
- How well the previous plan worked
- Current problems and future prospects of the organization
- The position of competitors
- The organization’s financial and other resources
- The economic and political situation of the country
Q8. What are planning premises?
Planning premises are the assumptions or forecasts about the future conditions under which a plan will be carried out, for example expected sales, prices, interest rates or government policy. If the premises are wrong, the plan may fail.
Q9. What is an objective?
An objective is a specific, measurable result that an organization wants to achieve, usually within a time limit. Example: increase sales by 15 percent by December.
Q10. What is the difference between vision, mission and objectives?
| Term | Meaning | Example |
|---|---|---|
| Vision | What the organization wants to become in the long run | To be the most trusted bank in the region |
| Mission | The organization’s basic purpose, or why it exists | To provide safe and easy banking services to every customer |
| Objectives | Specific, measurable targets that move it toward the mission | Open 20 new branches this year |
Types of Plans
Q11. What are the types of plans?
| Basis | Types |
|---|---|
| Nature | Goals and objectives, standing plans, single-use plans |
| Time period | Short-term, mid-term and long-term plans |
| Organization structure | Strategic plans, functional plans, and the master plan |
Q12. What is a standing plan?
A standing plan is made once and used repeatedly for similar situations until circumstances change. Its main forms are:
- Policy: a general guide for decision-making. Example: “We hire only qualified graduates.”
- Procedure: the exact steps to do a task in order. Example: the steps for approving a loan.
- Rule: a specific order that must be followed. Example: “No smoking.”
- Method: the way a single step is done.
Q13. What is a single-use plan?
A plan made for one particular purpose or situation that is not expected to be repeated. Examples: a programme (a launch event for a new product), a project (building a new factory) and a budget (the financial plan for a year).
Q14. What are short-term, mid-term and long-term plans?
| Plan | Period |
|---|---|
| Short-term | One year or less |
| Mid-term | More than one year, up to five years |
| Long-term | More than five years |
The exact periods can differ between textbooks and industries.
Q15. What is a strategic plan?
A long-term plan made by top management that sets the overall direction of the organization and how it will compete, in order to achieve its goals in a competitive market.
Q16. What is a functional plan?
A short-term plan made by middle and lower levels of management to put the strategic plan into action in a particular function, such as marketing, production or finance.
Q17. What is a master plan?
An overall plan that combines the plans of all departments or regions of an organization into one coordinated whole.
Decision-Making
Q18. What is decision-making?
Decision-making is the process of choosing the best option from several alternatives in order to solve a problem or seize an opportunity.
Q19. What is the process of decision-making?
- Identify and define the problem.
- Decide the priorities and criteria.
- Collect data and information.
- Generate alternative solutions.
- Evaluate the alternatives.
- Choose the best alternative.
- Implement the decision and follow up on the results.
Q20. What are programmed and non-programmed decisions?
| Point | Programmed decision | Non-programmed decision |
|---|---|---|
| Problem type | Routine and repeated | New, unusual and complex |
| Method | Set rules and procedures | Judgement and creativity |
| Level | Mostly lower level | Mostly top level |
| Example | Reordering stock when it falls to a set level | Entering a new market |
Q21. What is the difference between planning and decision-making?
- Planning is a complete process of setting goals and deciding how to reach them. Decision-making is choosing among alternatives, which happens at every step of planning.
- Planning looks to the future. A decision can be about a problem that exists today.
- Every plan needs decisions, but not every decision needs a plan.
Q22. What are the elements that help in decision-making?
- Judgement and intuition
- Systematic, logical thinking
- Experience and skill
- Reliable information
- Power and authority to decide
- Organizational capacity to carry the decision out
- The opportunity for others to take part
Q23. What factors should be considered in decision-making?
- The nature of the problem
- Future conditions
- The information available
- The goal of the decision
- The degree of cooperation expected
- The time available
Q24. What problems arise in making and implementing decisions?
- Inaccurate or incomplete information
- Wrong identification of the problem or the alternatives
- Personal bias
- Fear of taking risks (timidity)
- Decisions influenced by emotion
- Too few input variables considered
- Lack of cooperation from those who must carry out the decision
Q25. How can these problems be solved?
- Gather the necessary information.
- Choose suitable alternatives.
- Decide on time.
- Consult the people concerned.
- Tell the decision-makers the facts and consequences.
- Give the help and resources needed to implement.
Quick Revision Points
- Planning is the first function of management: deciding in advance what, how, when and by whom.
- Planning steps: forecast, set objectives, premises, alternatives, evaluate, choose, derivative plans.
- Standing plans (policy, procedure, rule) repeat. Single-use plans (programme, project, budget) do not.
- Strategic plans are long-term and set by top management.
- Mission is the purpose of the organization. Objectives are specific targets.
Test yourself with the chapter quiz below, then continue to Organizing.
