MAM Ltd. used to be the top dog in the market with 75% share. The company follows the policy of selling goods in cash only and set the target of achieving goal of selling rice at 30% profit. In 2018, other companies started selling rice on credit, which was different from what did (selling only for cash) before. But MAM's managers stuck to their old plans that had always worked before. Unfortunately, the world was changing, and these plans didn't fit anymore. This caused MAM's sales to go down. The story teaches us that sometimes sticking too much to old ways and not adapting to changes in the world can cause problems in business.

Which of the following plan is highlighted in the statement?

'The company follows the policy of selling goods in cash only'.

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.