Which of the following explains the limitation ‘Planning involves huge costs’?
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → There are incidental expenses on boardroom meetings and discussions with professional experts.
Option (1) There are incidental expenses on boardroom meetings and discussions with professional experts. — Correct. Meetings and expert advice cost money. These incidental costs add to the large cost of making a plan.
Option (2) Plans decide the future course of action, and managers may not be in a position to change it. — Incorrect. This explains rigidity. A fixed plan cannot easily be changed.
Option (3) Competition in the market can upset financial plans, and sales targets may have to be revised. — Incorrect. This explains that planning may not work in a dynamic environment. Changes in the market upset plans.
Option (4) Sometimes plans take so much time to draw up that little time is left for their implementation. — Incorrect. This explains that planning is a time-consuming process. Little time is left to put the plan into action.
NCERT (2026-27 Edition): “(i) Planning leads to rigidity: In an organisation, a well-defined plan is drawn up with specific goals to be achieved within a specific time frame. These plans then decide the future course of action and managers may not be in a position to change it. This kind of rigidity in plans may create difficulty. Managers need to be given some flexibility to be able to cope with the changed circumstances. Following a pre-decided plan, when circumstances have changed, may not turn out to be in the organisations interest.” “(ii) Planning may not work in a dynamic environment: The business environment is dynamic, nothing is constant. The environment consists of a number of dimensions, economic, political, physical, legal and social dimensions. The organisation has to constantly adapt itself to changes. It becomes difficult to accurately assess future trends in the environment if economic policies are modified or political conditions in the country are not stable or there is a natural calamity. Competition in the market can also upset financial plans, sales targets may have to be revised and, accordingly, cash budgets also need to be modified since they are based on sales figures. Planning cannot foresee everything and thus, there may be obstacles to effective planning.” “(iv) Planning involves huge costs: When plans are drawn up huge costs are involved in their formulation. These may be in terms of time and money for example, checking accuracy of facts may involve lot of time. Detailed plans require scientific calculations to ascertain facts and figures. The costs incurred sometimes may not justify the benefits derived from the plans. There are a number of incidental costs as well, like expenses on boardroom meetings, discussions with professional experts and preliminary investigations to find out the viability of the plan.” “(v) Planning is a time-consuming process: Sometimes plans to be drawn up take so much of time that there is not much time left for their implementation.” |