Aren has completed his studies and now wants to start his own business. He has undertaken the given steps in the planning process. Rearrange them to create the correct process of planning.
A. He has forecasted the demand of his products, interest rate, price of capital goods, tax rate
B. Aren decides to produce in bulk to reduce cost of production
C. Aren found out that increasing price and reducing quality will reduce his customers, but producing in bulk will increase customers
D. Aren sets an objective to earn 20% profit in the first year of business
E. To achieve the target, Aren can reduce price of product or reduce quality of raw material or produce in bulk to reduce cost of production.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → D, A, E, C, B
D. Aren sets an objective to earn 20% profit in the first year of business — Step 1. Setting objectives is the first step.
A. He has forecasted the demand of his products, interest rate, price of capital goods, tax rate — Step 2. Developing premises. Forecasts about demand, interest rates, prices and tax rates are the assumptions.
E. To achieve the target, Aren can reduce price of product or reduce quality of raw material or produce in bulk to reduce cost of production. — Step 3. Identifying the alternative courses of action.
C. Aren found out that increasing price and reducing quality will reduce his customers, but producing in bulk will increase customers — Step 4. Evaluating the alternatives. He weighs their pros and cons.
B. Aren decides to produce in bulk to reduce cost of production — Step 5. Selecting the best alternative.
NCERT (2026-27 Edition): “Planning Process … (i) Setting Objectives: The first and foremost step is setting objectives. Every organisation must have certain objectives. Objectives may be set for the entire organisation and each department or unit within the organisation. Objectives or goals specify what the organisation wants to achieve. It could mean an increase in sales by 20% which could be objective of the entire organisation. …” “(ii) Developing Premises: Planning is concerned with the future which is uncertain and every planner is using conjecture about what might happen in future.”
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