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What is the need and characteristics of budget? Also explain its classification

There are certain characteristics of budgets, these are:-
A budget has to be based on the figures from the past. However it is also required to take into consideration the possibilities of future.

But it is also required to be flexible so that it can be modified if the need arises in future as a result of changing circumstances. It is possible that difficulties may be created for the management by the rigidity in budget.

The employees at different levels within the organization are required to be involved in the preparation of the budget. This helps in ensuring the willing cooperation of the employees when the management is going to implement the budget.

Budget has to be a specific statement. Therefore it should clearly mention the monitor information on quantities. It is very important that the top management of the organization is actively involved in the preparation of the budget.

Need for preparing budgets
Budgeting is considered as essential for the functions of planning and control. There are certain reasons due to which budgets are considered as being essential for the organization.

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What is the process of planning and how can plans be made effective?

In the process of planning, there is an establishment of business objectives and also the allocation of organizational resources in order to achieve these objectives. It is the process of deciding the future course of action that has to be taken by the organization in order to fully utilize the resources available with the organization. In this way, the process of planning can be described as a combination of finding information and decision making that is based on information inputs, outputs as well as a feedback loop.

Steps in the process of planning: there are different steps that are involved in the process of planning. These range from deciding the problem to taking the follow-up action. Therefore the steps that are involved in this process can be described as:-

1. Recognizing the need for action: the first step that is involved in the process of planning requires the awareness regarding business opportunity and also the need to take action. In this regard, the present as well as the opportunities that may arise in the future need to be discovered so that the managers can make plans for them. At the same time, the current economic trends are also required to be considered. An example can be given in this regard of a situation where the government of a country is willing to develop the rural areas as industrial centers, it will be considered by any farsighted organization that units should be established in these areas so that the facilities that may be offered by the government for this purpose can be availed by the organization.

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What are the characteristics of a good plan?

The managers are involved in the process of planning with a view to achieve the goals of the organization. A plan can be considered as a good plan if it is capable of helping the managers in achieving the organizational goals. Therefore, there are certain characteristics that should be a part of any good plan:

1. Clear objective: the first requirement of a good plan is that it should be based on the objectives that have been clearly defined. As mentioned above, the process of planning is used for achieving the goals of the organization. But if these goals have not been defined clearly, it may result in chaos and confusion. Therefore it is very important that the organizational objectives should be defined clearly and they should be accurate, concise and definite.

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What are the Advantages and Limitations of Planning?

Advantages of Planning
Planning is considered as one of the most important features of management. It is a basic function of management. Planning defines the goals of the organization and also the means that can be used to achieve these goals. In this way without planning, there cannot be any proper organization and guidance. As a result of the below mentioned factors, planning is considered as a significant function for all the organizations.

1. Attention on objectives: with the help of planning, the management can clearly define the organizational goals. Therefore the management can only concentrate on the achievement of these goals. In the same way, planning also helps the managers in prioritizing the organizational goals. Therefore, the objectives of the organization that are more important and need to be achieved first of all can receive the attention of the managers while the other objectives can be achieved later on.

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Explain Corporate, Operational and Strategic Planning

Corporate planning:
The process of planning can be adopted at different levels within the organization. In the same way, plans can be formulated for the whole organization or for only a part of the organization. When plans are formulated for the whole of the organization, the process is called corporate planning. The emphasis in case of corporate planning is on the basic goals, policies and the strategies for the whole organization. There are several functional plans that are integrated in corporate planning and in the same way it also provides for any contingencies that may arise in the future. In corporate planning, the resources of the organization are matched with the opportunities and threats provided by the external environment. Generally the process of corporate planning takes place at the highest level of management in the organization. Therefore, corporate planning can be described as the process which includes establishing the organizational goals, organizing the people, work and the systems of the organization in order to achieve these goals and motivating with the help of planning process, measuring the performance and controlling the progress made by these plans.

In this way, corporate planning includes the assumptions of management. It can be said that corporate planning covers the total planning activity.

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Briefly explain the Principles of Planning?

There are several basic principles that have been devised in order to guide the managers when they are engaged in the process of planning. Some of these principles are:-

1. Contribution to objectives: The plans are made for the purpose of achieving the organizational goals. In this way, both the major as well as the derivative plans are made with a view to contribute in the achievement of organizational goals. It can also be said that the process of planning has to be used by the managers as a tool to achieve their goals.

2. Primacy of Planning: according to this principle, the process of planning is the primary function of all the managers. The managers are required to plan all their actions and then they should proceed with other functions. The other functions of the management should be organized in such a way that the objectives decided by planning can be achieved.

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What is the need for Planning?

Planning is considered as the first step in the process of management. With the increasing complexities in the business environment, increasing competition in markets, technological changes and the changes taking place in consumer preferences, the need for proper planning has become all the more important. The following reasons can be mentioned in order to emphasize the need for planning:-

1. Growing Complexities of Business: As a result of the increasing complexities in the business environment, planning has become very important for the modern businesses. Apart from these, significant advancements are being made on the technological front. In the same way, the preferences of the consumers are also changing rapidly. Due to all these reasons, it has become important that not only planning should be done for the present business environment but it should also be done for the future business environment. The outlook of the process of planning is future oriented and therefore it can take into account all the developments that are probable in the future.

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Explain the Six P’s of Planning?

The six P’s of planning are related with the basic requirements of planning. These are:-

1. Purpose: Purpose is the first need in the process of planning. In order to be effective, the process of planning requires that there should be clear understand regarding the purposes for which planning has to be done. In the same way, the reason behind the existence of the organization should also be mentioned. For example the purpose behind the existence of an organization can be to increase profits or to increase its market share. In the same way, the purpose of some organizations is to introduce new products in the market. Therefore, it is very important that the purpose of the organization should be understood clearly.

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