Rahul started a business of preparing and supplying sweets through home delivery at a place that is used both for production and as a showroom for sale in New Delhi. He made a plan forecasting the sales of different types of sweets in various areas of New Delhi for each month of the year to earn a profit of 15% on capital employed. He set a sales target of ₹1000000 in the current year with an 8% increase every year. He set the criteria of selecting suppliers from whom he would make purchases of raw material. The planning paid off and the business was able to achieve its targets.

'He set the criteria of selecting suppliers from whom he would make purchases of raw material' which is the policy of the company.

Which type of plan is indicated in this line?

Standing use plan

The correct answer is option 2- Standing use plan.

A standing plan is used for activities that occur regularly over a period of time. It is designed to ensure that internal operations of an organisation run smoothly. Such a plan greatly enhances efficiency in routine decision-making. It is usually developed once but is modified from time to time to meet business needs as required. Standing plans include policies, procedures, methods and rules.

Policies are general statements that guide thinking or channelise energies towards a particular direction. Policies provide a basis for interpreting strategy which is usually stated in general terms They are guides to managerial action and decisions in the implementation of strategy.