Read the following passage and answer the question.

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 limitations is highlighted in the above passage?

Both options 1 and 2

The correct answer is option 3- Both option 1 and 2.

1. Planning does not guarantee success (Option 1): The passage notes: "...managers stuck to their old plans that had always worked before." A common pitfall in management is relying on a false sense of security that a plan which brought success in the past will automatically guarantee success in the future. Past success does not guarantee future results if market conditions change.

2. Planning may not work in a dynamic environment (Option 2): The passage explicitly states: "Unfortunately, the world was changing, and these plans didn't fit anymore." Business environments are dynamic—competitors changed their strategies by offering credit terms. Because MAM Ltd.'s managers refused to adapt their cash-only plan to these environmental shifts, their sales declined.