Planning Test - 51

A distinctive competence of a firm refers to a set of activities or capabilities that a company is able to perform better than its competitors and which gives it an advantage over them. In this case, the chocolate manufacturer has a great deal of power over the market thus it is an example of distinctive competence.

Rules are the code of conduct or general instructions in any organisation. It specifies what to do and what not to do. Thus rules maintain descipline in the organisation.

Policy is a general statement of understanding that lays down the limits within which decisions are to be made and assure consistent and unified performance. Policies of an organisation are clear, simple statements of how the organisation tends to conduct its business. They provide set of guiding principles to help the management in decision making.

'Early identification of opportunities does not help an enterprise to exploit opportunities' is false as a good management, decision making and planning can help the management to identify opportunities at an early stage which helps management in tapping or exploiting new opportunities.

Financial planning includes both short-term as well as long-term planning. Short-term planning covers short-term financial plan called budget. Budgets are example of financial planning exercise in greater details. They include detailed plan of action for a period of one year or less.

Objectives are the ends towards which all the activities are directed. Thus planning begins with objectives because all the policies, strategies, procedures etc. are formed to achieve objectives only. Therefore the first step of planning is setting up the objectives.

Planning is the primary function of management and involves thinking in advance regarding what is to be done etc. It involves selection of objectives, policies, procedures and programmes from among alternatives. The main function of business planning is to provide and implement formal and systematic business plan.

Methods are the systematic way of doing routine or repetitive jobs. e.g. method for valuation of stock, method of training etc.

Planning only provides a base for analysing future. Future is uncertain as business environment always keeps on changing. There may be a number of unknown factors that could have not predicted. Thus planning does not give guarantee success.

Budgetary control is the process of determining various actual results with budgeted figures for the enterprise for the future period and standards set then comparing the budgeted figures with the actual performance for calculating variances, if any. First of all, budgets are prepared and then actual results are recorded.