Q.After studying Entrepreneurship in Class XII, Neel completed a baking course and started a bakery, 'Cakes and Bakes'. He set a target of earning a modest 10% return on investment in the first year. As he was supplying healthy bakery products, the demand kept increasing. 'Cakes and Bakes' became a famous bakery in a year. He now wanted to develop a plan to define the direction and scope of 'Cakes and Bakes' for the long run. He made a marketing plan to decide if he could charge higher price to improve his return on investment, how to advertise the products, etc. Quoting lines from the above paragraph, identify and explain two types of plans discussed in the above case.
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🔒 Start your 14-day free trial to unlock the full solution →Concept understanding — Standing Plan Types
Standing Plans: The Rulebook That Keeps an Organisation Running
Think about your school. Every morning, the assembly happens at the same time. The uniform code is fixed. The exam schedule follows a pattern year after year. Nobody rewrites these rules from scratch every Monday — they are already in place, guiding how things work.
That is exactly what a standing plan is in management. It is a pre-designed, long-term plan that provides guidelines for decisions and actions that happen repeatedly. Once created, it stands ready to be used again and again, without needing fresh approval each time.
Why Standing Plans Exist
Managers cannot make a new decision every time a routine situation arises. If a company had to decide afresh each month how to handle a late employee, or what to do when a customer complains, chaos would follow. Standing plans remove that uncertainty. They create consistency, efficiency, and fairness — everyone knows what to expect, and managers can focus on unusual problems instead of repeating the same small decisions.
Standing plans are the backbone of routine management. They convert repetitive decisions into predictable rules, saving time and reducing confusion.
The Four Main Types of Standing Plans
The NCERT textbook identifies four key types. Each serves a different purpose, but together they form a complete framework for routine operations.
1. Policy — The Broad Guideline
A policy is a general statement that sets the boundaries for decision-making. It tells employees what is allowed or expected, but not how to do it.
- Example: "We follow a 'no questions asked' return policy for 30 days."
- Example: "Promotions are based on merit and seniority."
Policies are flexible. They give managers room to interpret the situation, as long as they stay within the stated boundary. A policy does not say "give every customer a refund" — it says "we accept returns within 30 days," leaving the manager to decide if a torn product qualifies.
2. Procedure — The Step-by-Step Sequence
A procedure is more detailed than a policy. It specifies the exact sequence of steps to be followed in a particular situation. It answers how something must be done.
- Example: The procedure for applying for leave — fill form A, get it signed by the reporting manager, submit to HR, wait for email confirmation.
- Example: The procedure for handling a cash shortage at the end of the day — count the drawer, report to supervisor, fill discrepancy form.
Procedures leave little room for judgment. They are designed for tasks that must be done the same way every time to avoid errors or delays.
3. Method — The Specific Way to Do One Task
A method is even narrower than a procedure. It focuses on how a single, specific task is to be performed. While a procedure covers a whole process (like "onboarding a new employee"), a method covers one step within that process (like "how to fill the employee ID card").
- Example: The method for folding a shirt in a retail store — fold sleeves behind, then fold in thirds.
- Example: The method for answering a phone call — "Good morning, XYZ Company, how may I help you?"
Methods are about efficiency and standardisation. They ensure that every employee does the same task in the most efficient way, reducing waste and variation.
4. Rule — The Hard Boundary
A rule is the strictest type of standing plan. It tells employees exactly what is allowed and what is not, with no room for discretion. Rules are "do this" or "do not do that" statements.
- Example: "No smoking on the premises."
- Example: "All visitors must sign in at the reception."
Rules are non-negotiable. If a policy says "employees may take breaks," a rule says "breaks must not exceed 15 minutes." Rules exist for safety, discipline, and legal compliance. …
This case asks us to identify two types of plans, quoting the relevant lines. In the CBSE Class 12 Business Studies chapter on Planning, the types of plans include objectives, strategy, policy, procedure, method, rule, budget and programme.
First, Neel 'set a target of earning a modest 10% return on investment in the first year.' A specific, measurable end to be achieved within a stated time is an Objective — objectives are the ends towards which all activities are directed. …
The case highlights two types of plans: an Objective — Neel's target of a 10% return on investment in the first year — and a Strategy — his long-run plan defining the direction and scope of the bakery, including pricing and advertising.
In the CBSE Class 12 Business Studies chapter on Planning, a 'plan' is not a single thing — it comes in several types, ranging from the broad ends a business wants to reach down to the specific rules and methods it follows. This case on Neel's bakery, 'Cakes and Bakes', clearly illustrates two of them: an objective and a strategy. The task is to match each quoted line to the correct type.
1. Objective
The line 'He set a target of earning a modest 10% return on investment in the first year' points to an objective. Objectives are the ends towards which all activities of an organisation are directed. They are specific, measurable and set for a definite time period. Neel's 10% return-on-investment target is exactly this: a concrete, measurable end to be achieved within the first year. Objectives are the starting point of planning, because every other plan is made to help achieve them.
An objective states what is to be achieved. It is specific and measurable, and it is the basis on which the success of the business is later judged.
2. Strategy …
Showing the 12 most recent of 37 on this concept.
- CBSE 2026Set MARCH1 markMCQQ.Which of the following is an element of planning?(a) (A) Continuous process(b) (B) Controlling(c) (C) Directing(d) (D) Rules
›Reveal solutionSolution
Rules are an element (a type of standing plan) of planning.
In this GSEB Class-12 Commerce planning question, plans include objectives, policies, procedures, rules, budgets, programmes and strategies. A rule is a rigid statement of what must or must not be done, so it is a genuine element of planning.
…
- CBSE 2026Set MARCH1 markQ.State types of budget.
›Reveal solutionSolution
Types of budget: sales, production, purchase, cash and capital budgets.
In this GSEB Class-12 Commerce planning question, a budget is a plan stated in quantitative/financial terms for a future period. Common types include:
- Sales budget.
- Production budget. …
- CBSE 2026Set MARCH1 markMCQQ.Use of mobile phones are restricted in school campus. What type of plan is this?(a) Policies(b) Rules(c) Procedures(d) Projects
›Reveal solutionSolution
The correct option is (b) Rules, because the statement lays down a specific do/don't with no discretion allowed.
In the Planning chapter, single-use and standing plans are distinguished. Rules are a type of standing plan.
- A rule is a specific statement relating to the general behaviour of members; it tells them what must or must not be done in a given situation and allows no discretion or flexibility.
- "Use of mobile phones is restricted in the school campus" simply forbids an action, with no room for individual judgement — a classic rule. …
- CBSE 2026Set ANNUAL1 markQ.Fill in the blank: ________ are rigid instructions.
›Reveal solutionSolution
Rules are rigid instructions.
A rule is a type of standing plan that lays down a specific, required action or prohibition (e.g. 'No Smoking'). Rules allow no discretion and must be obeyed strictly, with a penalty for violation. B …
- CBSE 2026Set ANNUAL1 markMCQQ.“Offering 33% jobs to women”. The type of plan described here is ________. (A) Objective (B) Method (C) Policy (D) Rule
›Reveal solutionSolution
"Offering 33% jobs to women" is a Policy — a general response that guides decision-making within defined limits, not a single objective, a step-by-step method, or a rigid rule.
Types of plans — quick distinction
Type Meaning Does "33% jobs to women" fit? Objective The end result to be achieved No — this is a guideline for how hiring decisions are made, not the end goal itself Method The prescribed way of performing a specific task No — it does not prescribe how to recruit, only a target proportion Policy A general statement that guides/channels thinking and action in decision-making, allowing some discretion Yes — "reserve 33% of jobs for women" is a standing guideline managers must follow when making recruitment decisions, leaving room for judgement on how exactly to implement it - CBSE 2026Set ANNUAL1 markMCQQ.The type of plan which specifies statements that inform what is to be done and allows no change is known as ................(a) Strategy(b) Policy(c) Rule(d) Programme
›Reveal solutionSolution
The plan being described is a Rule.
Among single-use and standing plans:
- Strategy is a broad, comprehensive plan for achieving organisational objectives in a competitive environment — it allows judgement.
- Policy is a general guideline for decision-making that channels thinking but still leaves some room for interpretation.
- Rule is an explicit statement that tells an employee what to do and what not to do in a specific situation — there is no scope for flexibility or discretion; it must be followed exactly as stated. …
- CBSE 2025Set 66/2/11 markMCQQ.Kavi works as a Marketing Manager in stationery mart. It deals in various types of stationery items for many schools across the country. When new session starts in schools, Kavi forecasts the sales of different stationery products for each school for every month. All items are represented in numbers so that it becomes easier for him to compare the actual sales with expected sales. The type of plan discussed above is : (A) Strategy (B) Policy (C) Programme (D) Budget
›Reveal solutionSolution
Kavi's activity of forecasting sales in numerical terms and comparing them with actual sales is a classic example of a Budget.
In the realm of management, planning is a fundamental function that involves deciding in advance what to do, how to do it, when to do it, and who is to do it. Plans can be broadly categorised into single-use plans and standing plans. Single-use plans are developed for a one-time event or project and are discarded once the objective is achieved, while standing plans are used repeatedly over a period of time. Kavi's scenario describes a specific type of single-use plan.
Kavi, as a Marketing Manager, is engaged in forecasting sales for different stationery products for each school on a monthly basis. The crucial detail here is that "All items are represented in numbers so that it becomes easier for him to compare the actual sales with expected sales." This numerical representation and the subsequent comparison are the defining characteristics of a budget.
A Budget is a statement of expected results expressed in numerical terms. It is a plan that quantifies future facts and figures, such as sales, production, or cash. For instance, a sales budget forecasts the quantity and value of sales for a specific period, a production budget outlines the number of units to be produced, and a cash budget projects cash inflows and outflows. Budgets serve as both a planning tool, by setting targets, and a control tool, by allowing managers to compare actual performance against these numerical targets.
ImportantA budget is essentially a plan expressed in quantitative terms, detailing expected results for a future period. It is a powerful tool for both planning and control.
In Kavi's case, he is creating a sales forecast, which is a numerical plan for expected sales. By representing items in numbers, he is setting quantitative targets for sales. The subsequent comparison of "actual sales with expected sales" is the control aspect inherent in budgeting. This allows him to assess performance, identify deviations, and take corrective actions if necessary. This entire process aligns perfectly with the definition and function of a budget.
Let's briefly consider why the other options are not the best fit: …
- CBSE 2025Set 66/4/11 markMCQQ.Read the following statements carefully : Statement I : A rule reflects a managerial decision that a certain action must or must not be taken. Statement II : A rule allows flexibility or discretion. In the light of the given statements, choose the correct alternative from the following : (A) Both Statement I and Statement II are true. (B) Both Statement I and Statement II are false. (C) Statement I is true and Statement II is false. (D) Statement I is false and Statement II is true.
›Reveal solutionSolution
A rule is a rigid, non-discretionary directive. Statement I correctly defines a rule; Statement II incorrectly claims rules allow flexibility. So Statement I is true, Statement II is false.
The question tests your understanding of the nature of rules in management and organisational behaviour. A rule is the most rigid form of standing plan — it prescribes a specific, mandatory action with zero room for judgment. Think of it as a "must" or "must not" command, like "No smoking in the building" or "All invoices must be approved by the finance head."
Statement II says a rule allows flexibility or discretion — that is actually the defining feature of a policy (which gives broad guidelines and lets managers use judgment) or a procedure (which has a sequence but may allow some variation). A rule, by contrast, is absolute. If you allow discretion, it ceases to be a rule.
Let’s break it down step by step.
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What is a rule?
In management, a rule is a specific, compulsory directive that tells employees exactly what they must or must not do. It leaves no scope for interpretation. For example, "Helmets must be worn in the factory" is a rule — there is no "maybe" or "it depends." This matches Statement I perfectly.
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Does a rule allow flexibility?
No. Flexibility and discretion are the opposites of a rule. If a manager can decide whether to apply the rule or modify it based on the situation, then it is not a rule — it is a policy or a guideline. Statement II directly contradicts the definition of a rule. …
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- CBSE 2025Set MARCH1 markQ.__________ is a statement of expected results expressed in numerical terms.
›Reveal solutionSolution
The blank is filled by 'Budget'.
…
- CBSE 2025Set ANNUAL1 markMCQQ.Budget refers to (A) planned target of performance (B) use of handling future activities (C) systematic action (D) statement of expected results expressed in numerical terms
›Reveal solutionSolution
A budget is a type of single-use plan that expresses expected results (such as sales, expenses, production or cash) in measurable, numerical form for a defined future period.
A budget is the numerical expression of a plan. Because it states expected results in figures (rupees, units, hours, etc.), it can later be used as a standard for controlling.
- (A) 'planned target of performance' is partial — a budget is more than just a target.
- (B) 'use of handling future activities' is vague. …
- CBSE 2025Set ANNUAL1 markQ."Neel Ltd. has made wearing protective gear compulsory for workers while working in a factory". Identify the type of plan mentioned in the above instance.
›Reveal solutionSolution
A compulsory, no-discretion instruction like this is an example of a Rule, a type of plan.
Among the types of plans, a Rule is the simplest: it is a specific statement that states exactly what to do or not do in a given situation — it does not allow for any deviation or discretion in its application, and breach of a rule usually invites a penalty. Making the wearing of protective gear compulsory for factory workers is exactly this kind of plan …
- CBSE 2025Set ANNUAL1 markMCQQ.Shine Limited aims to increase sales of their product to 10,000 units. The production manager of the company suggest that before making any plan a statement of expected result in numerical terms should be prepared. Identify the type of plan in this case.(a) Objective(b) Budget(c) Strategy(d) Policy
›Reveal solutionSolution
This is a Budget — one of the standard elements of planning, distinct from an
objective, strategy, or policy.
Planning uses several distinct types of plans, each serving a different purpose:
- Objective: the end result the organisation wants to achieve (e.g., "increase sales to 10,000 units") — this is the goal itself, not the numerical plan to track it.
- Strategy: a comprehensive plan for how the organisation will respond to competitors and the environment to achieve its objectives.
- Policy: a general guideline for decision-making within the organisation.
- Budget: a statement of expected results expressed in numerical terms — e.g., sales budget, production budget, cash budget. It quantifies a plan so progress against it can be measured precisely. …
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