Q.Which function of management decides what to do and how to do?
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🔒 Start your 14-day free trial to unlock the full solution →Concept understanding — Planning Direction Setting
Planning Direction Setting — A First Look
Think of a group of friends deciding to go on a road trip. Someone has to say, "We're heading to Rishikesh, not Goa." That single decision — choosing the destination — is the most important one. Without it, you can't decide how much fuel to buy, which route to take, or what to pack. In an organisation, planning direction setting is that same act of choosing the destination before anyone starts driving.
The Everyday Intuition
You've done this yourself. Before you start studying for an exam, you decide which subject to tackle first. Before you save money, you decide what you're saving for — a phone, a trip, or a gift. That choice of target is direction setting. It's the moment you stop saying "I'll do something" and start saying "I'll do this specific thing."
In business, this is not casual. It is the formal, deliberate process of deciding where the organisation wants to go over a period of time — typically 3 to 5 years or more. It answers the question: What do we want to become?
The Precise Meaning
Planning direction setting is the first step in the planning process. It involves:
- Setting objectives — clear, measurable goals the organisation aims to achieve
- Defining the mission — the organisation's basic purpose, its reason for existing
- Formulating the vision — a long-term picture of what the organisation aspires to be
These three elements — objectives, mission, and vision — together give the organisation a sense of direction. Without them, every department would pull in a different direction, resources would be wasted, and no one would know whether they were succeeding or failing.
Direction setting is not optional. It is the foundation on which all other plans — policies, procedures, budgets, strategies — are built. If the direction is wrong, even the best execution leads nowhere useful.
Why It Matters
Consider a company that manufactures shoes. If its direction is "become the most affordable shoe brand in India," every decision follows: use cheaper materials, cut marketing costs, target price-sensitive customers. If its direction is "become the most durable shoe for trekkers," the decisions are completely different: invest in premium materials, hire expert designers, charge higher prices.
The same company, same resources, but two entirely different futures — all because of the direction chosen.
Direction setting matters because it:
- Provides unity of purpose — everyone in the organisation knows what they are working toward
- Guides decision-making — when faced with choices, managers ask: "Does this help us reach our objective?"
- Enables evaluation — you can only measure success if you know what success looks like
- Reduces uncertainty — a clear direction gives stability even when the external environment changes
What the NCERT Textbook Says
The NCERT textbook for Business Studies (Class 12) introduces planning direction setting as the first step in the planning process. It states that planning begins with setting objectives — the desired outcomes that the organisation wants to achieve. These objectives must be:
- Specific — not vague, but clearly stated
- Measurable — so progress can be tracked
- Achievable — realistic given the resources …
Planning is the management function that decides objectives and the method of achieving them, ahead of action.
Among the functions of management, Planning is the first and most fundamental — it involves deciding in advance what to do, how to do it, when to do it, and who will do it. It bridges the gap between where an organisation is and where it wants to be, by setting objectives and developing a course of action (a plan) to reach them.
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Showing the 12 most recent of 70 on this concept.
- CBSE 2026Set 66/1/11 markMCQQ.Identify the incorrect statement with respect to the importance of planning function of management : (A) Planning provides directions by stating in advance how work is to be done. (B) Planning eliminates uncertainty by looking ahead and anticipating changes. (C) Planning facilitates decision making by making a choice among various alternative courses of action. (D) Planning promotes innovative ideas as new ideas can take the shape of concrete plans.
›Reveal solutionSolution
Planning helps reduce uncertainty by anticipating changes, but it cannot eliminate uncertainty entirely, making the statement that it eliminates uncertainty incorrect.
Planning is the foundational function of management, serving as the primary step before organizing, staffing, directing, and controlling. It involves thinking in advance about what is to be done, when it is to be done, how it is to be done, and by whom it is to be done. Essentially, planning bridges the gap between where we are today and where we want to be in the future. Its importance stems from the dynamic and often unpredictable nature of the business environment, making foresight and strategic preparation crucial for organizational success.
Let us examine the given statements regarding the importance of planning:
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Statement (A): Planning provides directions by stating in advance how work is to be done.
This statement is correct. Planning establishes clear objectives and outlines the specific steps and methods required to achieve them. By defining the 'what' and 'how' of operations, planning gives a sense of direction to employees and departments, ensuring everyone is working towards common goals. Without a plan, efforts can become disjointed and inefficient, much like a ship without a rudder.
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Statement (B): Planning eliminates uncertainty by looking ahead and anticipating changes.
This statement is incorrect. While planning is indeed a powerful tool for looking ahead and anticipating potential changes and challenges, it cannot eliminate uncertainty. The future is inherently unpredictable, influenced by numerous external factors such as economic shifts, technological advancements, government policies, and competitive actions, many of which are beyond an organization's control. Planning helps management cope with uncertainty by developing strategies to mitigate risks, prepare for contingencies, and adapt to unforeseen circumstances. It reduces the impact of uncertainty, but it does not make the future certain.
ImportantPlanning helps reduce uncertainty and manage risks by anticipating future events and preparing for them, but it cannot eliminate uncertainty because the future is inherently unpredictable.
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Statement (C): Planning facilitates decision making by making a choice among various alternative courses of action. …
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- CBSE 2026Set 66/1/11 markMCQQ.Identify the feature of planning which states that the purpose of planning is to meet future events effectively to the best advantage of an organisation : (A) Planning involves decision making (B) Planning is futuristic (C) Planning is a mental exercise (D) Planning focuses on achieving objectives
›Reveal solutionSolution
The feature that planning aims to meet future events effectively for the organisation’s advantage is Planning is futuristic — it’s about preparing for what lies ahead, not just reacting.
The question asks you to pick the one feature of planning that directly captures the idea of “meeting future events effectively to the best advantage of an organisation.” Let’s break down what each option really means, and why only one fits perfectly.
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Planning involves decision making — This is true: planning requires choosing among alternatives. But it doesn’t specifically talk about the future or about advantage. Decision-making is a tool used in planning, not the purpose itself.
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Planning is futuristic — This is the core. Planning is always about the future — setting goals, anticipating changes, and preparing actions to handle what’s coming. The phrase “meet future events effectively to the best advantage” is almost a textbook definition of this feature. It’s not just about looking ahead; it’s about doing so to benefit the organisation.
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Planning is a mental exercise — This refers to the fact that planning involves thinking, analysis, and imagination — it’s not physical. But again, this describes how planning is done, not why it’s done (which is to handle the future advantageously). …
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- CBSE 2026Set MARCH1 markMCQQ.____________ is deciding in advance what to do and how to do.(a) Organising(b) Directing(c) Planning(d) Controlling
›Reveal solutionSolution
The correct option is (c) Planning. Planning is deciding in advance what to do, how to do it, when to do it and who is to do it.
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- CBSE 2026Set MARCH1 markQ.____________ are specific statements that inform what is to be done.
›Reveal solutionSolution
Objectives are the specific statements that state clearly what is to be achieved. They are the end points of planning and set the direction for the whole organisation.
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- CBSE 2026Set ANNUAL1 markMCQQ.Which function of management is called the foundation of other managerial functions? A) Organisation B) Directing C) Planning D) Controlling
›Reveal solutionSolution
Planning is the base on which the other managerial functions rest, so the correct option is C) Planning.
This RBSE Rajasthan Class-12 Business Studies MCQ tests the 'primacy of planning'. Management has five functions, but they do not operate independently — organising, staffing, directing and controlling all work to achieve the goals and action-plans that planning sets first. A manager must know WHAT is to be achieved before deciding how to organise resources, whom to staff, how to direct and what standards to control against.
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- CBSE 2026Set ANNUAL1 markMCQQ.A good plan is:(a) Expensive(b) Time Consuming(c) Flexible(d) Rigid(a) Expensive(b) Time Consuming(c) Flexible(d) Rigid
›Reveal solutionSolution
A good plan must be flexible, so that it can be adapted to changing business conditions.
Planning is a forward-looking exercise, made in the present for an uncertain future. Because the business environment (demand, competition, technology, government policy) keeps changing, a plan drawn up today may need correction tomorrow. A "good" plan is therefore judged by qualities such as:
- Flexibility — it should permit changes/corrections to be built in as situations change, without having to be scrapped entirely.
- Clarity and simplicity — it should be easily understood by those who implement it.
- Practicability/feasibility — it should be achievable with the resources at hand. …
- CBSE 2025Set 66/2/11 markMCQQ.Given below are two statements, Assertion (A) and Reason (R) : Assertion (A) : Planning involves looking ahead and preparing for the future. Reason (R) : The purpose of planning is to meet future events effectively to the best advantage of an organization. Choose the correct alternative from the alternatives given below : (A) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A). (B) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A). (C) Assertion (A) is true, but Reason (R) is false. (D) Assertion (A) is false, but Reason (R) is true.
›Reveal solutionSolution
Both statements correctly describe planning—(A) captures its forward-looking nature, (R) explains its purpose—and (R) directly explains why we look ahead in (A). The answer is (A).
Planning sits at the heart of management because organizations operate in time. Every decision today ripples into tomorrow, and the essence of planning is to shape that tomorrow deliberately rather than stumble into it. The assertion and reason here test whether you understand not just what planning is, but why it takes the form it does.
Why these statements connect
Assertion (A) says planning "involves looking ahead and preparing for the future." This is definitionally true—planning is inherently forward-oriented. You cannot plan for yesterday.
Reason (R) says the purpose of planning is "to meet future events effectively to the best advantage of an organization." This is also true, and crucially, it answers the question: why do we look ahead? We look ahead because we want to position the organization to handle what's coming in the most advantageous way. The reason explains the assertion.
Evaluating the relationship
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Is Assertion (A) true?
Yes. Planning is prospective by nature. It involves forecasting, setting objectives, and designing actions for future execution. No controversy here.
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Is Reason (R) true?
Yes. The entire rationale for planning is to anticipate change, uncertainty, and opportunity so the organization can respond optimally. This is why firms don't just react—they plan.
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Does (R) explain (A)?
This is the key question. Does the purpose of planning (meeting future events effectively) explain why planning involves looking ahead?
Absolutely. If the purpose is to handle future events well, then looking ahead is not optional—it's the mechanism. You prepare for the future because you want to meet it effectively. The reason directly justifies the assertion. …
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- CBSE 2025Set MARCH1 markMCQQ.The first step in planning is ________.(a) Selecting an alternative(b) Setting objectives(c) Developing premises(d) Implementing the plan
›Reveal solutionSolution
The first step in the planning process is (b) Setting objectives — deciding the goals the organisation and each department want to reach.
The planning process taught in Kerala Plus Two Commerce follows an ordered sequence of steps:
- Setting objectives — the very first step; objectives specify what is to be achieved, where action is required and by when.
- Developing premises — making assumptions about the future environment.
- Identifying alternative courses of action.
- Evaluating alternatives.
- Selecting an alternative.
- Implementing the plan.
- Follow-up action. …
- CBSE 2025Set ANNUAL1 markMCQQ.Planning is (A) Goal-oriented (B) Objective-oriented (C) Mental process (D) All of these
›Reveal solutionSolution
Planning is goal-oriented, objective-oriented and a mental process — all of these.
Planning is deciding in advance what to do, how to do it and when to do it. It is goal- and objective-oriented because it is directed at achieving set aims, and it is a mental or intellectual process because it involves thinking, forecasting and decision-making before any action. Since ea …
- CBSE 2025Set ANNUAL1 markMCQQ.Planning is (A) Necessary (B) Unnecessary (C) Wastage of time (D) Wastage of money
›Reveal solutionSolution
Planning is a necessary function because it sets objectives and decides the course of action in advance, giving direction to every other function of management.
Planning means deciding in advance what to do, how to do it, when to do it and who is to do it. It bridges the gap between where we are and where we want to reach.
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- CBSE 2025Set ANNUAL1 markMCQQ.The planning is ............ step of management. (A) First (B) Medium (C) Last (D) Optional
›Reveal solutionSolution
Planning is the first (primary) function of management; all other functions follow from it, which is why it is said that 'planning is the primary function of management'.
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- CBSE 2025Set ANNUAL1 markMCQQ."A plan is a trap to capture the future." This statement is of (A) Newman (B) Hurley (C) Allen (D) Terry
›Reveal solutionSolution
The quotation 'A plan is a trap laid down to capture the future' is credited to Louis A. Allen, highlighting that planning prepares in advance for what is to come.
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