Read the following passage and answer the question.
Sonam started a telecom company in New Delhi. He wanted to connect with 90% of the people in India within a year. He believed that the need for internet services would increase a lot in the next 5 years. To make his ambitious plan work, he had to decide whether to buy an existing telecom business, team up with others, or compete on his own, dealing with strong competition. To make the right choice, he looked at proposals from different companies. He compared things like how much money they make, their taxes, and the dividends they pay. He also looked at their future plans, knowing that these could change if the country’s economic policies shift.
Sonam knew that the future plans of these companies could change if the country’s economic policies shift.
Which limitation of planning does this point to?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Planning may not work in a dynamic environment
Option (1) Planning leads to rigidity — Incorrect. Rigidity means managers stay tied to a fixed plan and cannot change it when circumstances change. The line is about the cause of change.
Option (2) Planning may not work in a dynamic environment — Correct. The business environment keeps changing. If economic policies are modified, future trends are hard to assess, so plans may need to change.
Option (3) Planning involves huge costs — Incorrect. This limitation is about the time and money spent on making plans. The line says nothing about cost.
Option (4) Planning reduces creativity — Incorrect. This happens when only top management plans and others just carry out orders. Economic policy has no link with it.
NCERT (2026-27 Edition): “(ii) Planning may not work in a dynamic environment: The business environment is dynamic, nothing is constant. The environment consists of a number of dimensions, economic, political, physical, legal and social dimensions. The organisation has to constantly adapt itself to changes. It becomes difficult to accurately assess future trends in the environment if economic policies are modified or political conditions in the country are not stable or there is a natural calamity. Competition in the market can also upset financial plans, sales targets may have to be revised and, accordingly, cash budgets also need to be modified since they are based on sales figures. Planning cannot foresee everything and thus, there may be obstacles to effective planning.” |