Managers at a New York City import-export company suspected that two employees were robbing it. Corporate Defense Strategies (CDS) of Maywood, New Jersey, advised the firm to plan and install a software program that could secretly log every single stroke of the suspects’ computer keys and send an encrypted e-mail report to CDS. Investigators revealed that the two employees were deleting orders from the corporate books after processing them, pocketing the revenues, and building their own company from within. The programme picked up on their plan to return to the office late one night to steal a large shipment of electronics. Police hid in the rafters of the firm’s warehouse, and when the suspects entered, they were arrested. The pair were charged with embezzling $3 million over two and a half years, a sizable amount of revenue for a $25 million-a-year firm.
The importance of planning highlighted here is:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Planning establishes standards for controlling
Option (1) Planning reduces the risk of uncertainty — Incorrect. Planning reduces uncertainty by forecasting future events, such as a change in demand. The firm’s plan was not a forecast. It was a way of checking what two employees were doing.
Option (2) Planning reduces overlapping and wasteful activities — Incorrect. This benefit comes when planning fits the work of different departments together, so that two people do not do the same job. The passage has no such problem.
Option (3) Planning promotes innovative ideas — Incorrect. This benefit comes from thinking up new ways of running the business. A monitoring program is a control device, not a new idea for the business.
Option (4) Planning establishes standards for controlling — Correct. Planning sets goals in advance, and controlling compares actual work with those goals. CDS advised the firm to plan and install a program that recorded every key the two suspects pressed. The plan fixed what was to be watched, and the reports showed what the employees actually did. Comparing the two exposed the theft. So planning gave the standard against which actual performance was measured.
Note 1: In the original question, both Option (1) and Option (4) were correct as per the NTA Answer Key. The paper printed Option (1) as Planning provides directions and Option (4) as Planning establishes standards for controlling. For the benefit of students and to ensure a single answer, Option (1) has been changed to Planning reduces the risk of uncertainty. Note 2: The case study is taken from the chapter ‘Controlling’, but this question is based on the chapter ‘Planning’. However, since it is a case-study based question, all the questions on this case study are tagged to the chapter the case study is taken from.
NCERT (2026-27 Edition): “Importance of Planning … (vi) Planning establishes standards for controlling: Planning involves setting of goals. The entire managerial process is concerned with accomplishing predetermined goals through planning, organising, staffing, directing and controlling. Planning provides the goals or standards against which actual performance is measured. By comparing actual performance with some standard, managers can know whether they have actually been able to attain the goals. If there is any deviation it can be corrected. Therefore, we can say that planning is a prerequisite for controlling. …” |