Category: Commerce Notes PPT

A promissory note is a type of negotiable tool which contains a written promise of full payment. These are duly signed and stamped by its drawers, declaring to pay a certain sum of money to the holder at a specific date or on-demand. Used by debtors to borrow from creditors, promissory notes may not be accepted by a creditor after being drawn by a debtor. They have the following features.

• Written notes promising to repay a creditor.

• Must be signed by drawer or promisor.

• The date of payment is predetermined.

• Agreed upon by both promisor and promisee for payment of an agreed sum of money.

• The legal currency of the relevant country is used for settlement.

It Involves the Following Two Parties:

1. Drawer/Maker: This is the debtor who promises to pay a specific sum to its creditor.

2. Drawee: This is the creditor who is promised a certain sum of money on a specific date.

What is a Bill of Exchange?

A bill of exchange is also a negotiable tool, which is a written note legally bound, and duly stamped and signed by its drawer. It instructs payment of a certain sum of money to the holder of this instrument on demand, or within a specific time frame. Requiring to be accepted by a debtor to be valid, these are usually the payment for goods and services. It has these features mentioned below.

• It must be appropriately dated.

• Contains an order of payment.

• The signature of the drawer/maker is mandatory.

• Bill must be accepted by a drawee.

• Order of payment and its amount should be defined.

• It must be delivered to the relevant payee.

• It involves the following three parties:

1. Drawer: An issuer of this instrument who receives the payment.

2. Drawee: An individual who has to pay the relevant amount.

3. Payee: This is an individual who receives payment, and in most circumstances, is the same as the drawer.

How are Promissory Notes Different from Bills of Exchange?

While promissory notes, bill of exchange, and cheque have some similarities among themselves, these are distinctly different from each other. Despite being financial instruments with a written promise for payment, these have different features and purposes, which every commerce student must understand.

Every distinguishing feature about a bill of exchange vs promissory note is listed below in detail.

While this table above describes fundamental differences between promissory notes and bills of exchange, students should also learn their differences to that of a cheque – another financial instrument.

Similar to the difference between promissory notes and bill of exchange, there are numerous crucial topics in the standard 10 + 2 curricula for commerce students. Subsequently, offers detailed study materials on all these topics written by expert teachers to help students in their studies. Additionally, students can also attend live classes offered by to clear any doubt they might have.

Key Differences between Promissory Note and Bill of Exchange

As you know now, there are several differences between bills of exchange and promissory notes. Here are some of the most notable differences between them:

• A bill of exchange is a negotiable instrument that is issued when the debtor is ordered to pay the due amount to the creditor within a certain length of time. A promissory note, on the other hand, is a written agreement between the drawer and the drawee in which the drawer agrees to pay a specific sum within a given time frame.

• Drawer, drawee, and payee are the parties engaged in a Bill of Exchange. Drawer and payee/drawee are the persons involved in a promissory note.

• In the event of a bill of exchange, the debtor must accept it in order for it to be considered valid. There is no requirement for the drawee’s acceptance in the event of a promissory note.

• A notice is sent to all parties concerned if the Bill of Exchange is not respected. In the event of a promissory note, no notice of dishonor is sent to the promissory note’s “maker.”

• There is no asset held as security in the case of a bill of exchange. In some situations, such as with promissory notes, an asset can be held as collateral for a loan.

In business, bills of exchange and promissory notes are just as significant as cheques. However, these concepts, which are essential for commercial transactions and financing reasons, are rarely discussed. When a debtor acquires items on credit, bills of exchange are one of the most important negotiable documents. The creditor sends a bill of exchange to the debtor, instructing him to pay the amount within the specified time frame.

The promissory note is similar, but it is issued by the debtor and states that he will pay the requisite amount within a certain time frame. These principles will help you understand business from a practical standpoint, and you will be able to use them in your own business or employment.

The purpose of a partnership is not limited to a single project or to a single goal. The object of partnership is oriented towards the running of the business for the purpose of a long-term enterprise and for making a profit in the enterprise. Joint ventures, on the other hand, are strategized to accomplish a specified goal. In a JV, each party contributes their share to the agreed-upon task.

A joint venture is a contractual arrangement between the two or more entities which aims to undertake a specific task. A partnership whereas, involves an agreement between the two or more parties where they together agree to share the profits as well as share any loss which might have incurred in a single venture.

What is a Joint Venture and Partnership?

Joint Venture

A joint venture (JV) is a type of business arrangement where two or more parties agree to put together their resources for the purpose of accomplishing a specific task. This is a task for a new project or any other business activity which might be a goal for them. In JV type of business, the partners are responsible for all the profits. 

Partnership

A partnership is a formal arrangement between two or more parties who manage and operate the business and they share their own profits in profit sharing ratio. Partners may distribute the losses and profits equally or in a distinct ratio. Some partnership business restricts the liability of the partners to limited liability.

Points of Difference Between Joint Venture and Partnership

1. Who is in the Business?

A partnership is made up of persons, two or more, who is legally recognized for the purpose of operating this business. 

A joint venture, on the other hand, can be individuals or even entities who can come together to form a business organization. 

2. The Purpose of the Business Style

Both the partnerships and joint ventures are different in their style. A partnership’s purpose is not restricted to a single project or goal, rather, partnerships are formed for earning long-term profit. 

Joint ventures are designed to accomplish only a specific goal, which might be a single project.

3. How are Both Structured?

Partnerships are formed with a partnership agreement or a contract between the individuals who make up the partnership. 

Joint ventures, not necessarily have an agreement in the first place. Even, if there is an agreement, it is only for a short-term and it is a very specific contract.

4. How Long Does the Business Exist?

Partnerships are designed to last for eternity while in business. They can run to an infinite term. 

In contrast to this, the joint ventures are meant only for a short-term project lifetime. 

5. How Big is the Size and Scope of the business?

Joint ventures are limited in scope and their accomplishment is also limited. Partnerships, in contrast, can be huge in terms of both scope and size. 

6. Who Remains Accountable?

When a partnership goes wrong and causes a moral hazard, only the party who has committed the wrong faces with fault. 

In the case of a joint venture, both the parties are seen at fault in the case of a moral hazard or criminal wrongdoing. Accountability increases greatly which makes the joint ventures riskier in the short-term. 

Education opens up a world of possibilities for individuals by empowering them with knowledge. It is the cultivation of learning in various ways. One of the most common ways to obtain an education is by going to a formal school and learning from teachers, but it is not limited to that. Education in the bigger picture is the process of encouraging discovery and innovation. From the time we are born, humans keep learning, sometimes consciously and many times subconsciously. Education is an all-encompassing field of acquiring knowledge, values, skills, habits, and beliefs.

()

Introduction of Education in India

The importance of education in India has been seen right from ancient times. Human education in India can be traced back to ancient times when the Gurukul system existed. In this Guru-Shishya (teacher-disciple) system, those who wanted to study would go to teachers and request to be accepted as a disciple. If accepted, the disciple had to stay at the teacher’s place, and apart from learning, he also had to help in other household chores. This system fostered a strong tie between the Guru and Shishya, and it also taught the disciple how to run a household. Teachers of that era taught all the subjects in open classrooms, under the sun. Languages like Sanskrit and holy scripture, as well as metaphysics and mathematics, were part of the learning process. Learning was based more on understanding their surroundings and nature, not just memorizing verses or shlokas

This education system got an impetus and flourished with universities like Nalanda, Ujjain, Takshashila, and Vikramshila. 

Education and Development in India

Lord Thomas Babington Macauly brought the modern form of education and the English language to India in the 1830s. The development of education in India was marked by classroom confinement, and modern subjects like science and maths were part of this curriculum. Subjects like metaphysics and philosophy were deemed unnecessary at that time. 

The first education board, the Board of High School and Intermediate Education, was set up in Uttar Pradesh in India in 1921. This board’s jurisdiction included Rajputana, Gwalior, and central India. In 1929 another board for high school was established in Rajputana. Few other boards came up in different states but eventually in 1952 a central board called CBSE (Central Board of Secondary Education) was set up, which included all the schools in Delhi and a few other regions. All the schools affiliated with the CBSE board followed the curriculum, examination system, and textbooks prescribed by the board. In 1958, the ICSE board came into existence. As of today’s date, there are thousands of schools in India that follow the CBSE syllabus. This syllabus is also followed in a few other countries like Zimbabwe, Kuwait, and Afghanistan.

Importance of Education in Modern India

India is now witnessing the era of science and technology. Education in India has now reorganized itself to emphasize how essential technology is in our everyday life. Students are being trained in these spheres as per the need of the time.

Recently virtual international K-12 education in India has been launched. It is in collaboration with iNaCa (International connections academy). K-12 is affiliated with the state board, CBSE, and CISCE (Council for the Indian school certificate examinations). This education aims to let students learn at their own pace with engaging multimedia tools like enhanced videos, game-based learning, social learning, etc. K-12 (K is for kindergarten and 12 is for class 12) focus is to infuse innovation and creativity in children which it strives to achieve by:

• Breaking away from the standard testing methodology and encouraging students to find answers to questions by themselves through observation and judgment.

• Having technology-driven learning where blended teaching (virtual and in-person) happens, improves the primary education standards in India.

• Designing syllabus and curriculum which would prepare students for the workplace of the future.

Status of Current Education in India

()

As per the Census done in 2011, the current status of literacy and other parameters in the Indian education system is as follows.

• The overall literacy rate is 74% with males’ literacy at 82.1% and females’ at 65.5%.

• The most literate state in India is Kerala, and the other top rankers are Delhi, Maharashtra, and Tamil Nadu.

• The gender gap in literacy rates has narrowed down since 1991.

• From 2001 to 2011, the male literacy rate has increased by 6%, and female literacy has grown by 12%.

• World literacy, as per UNESCO in 2015, stands at 86.3% and India needs to catch-up with it. The image below represents public education spendings in different countries in the years 2007 and 2016.

()

More about Education in India

Let’s get an insight into some ways to make the educational system better. 

In order to create a homeostatic environment, it is crucial that students, teachers, institutions and management work together. Teachers should serve as guides for students and their parents should work in a collaboration to bring better results. If institutions are successful at that, they must be promoted and likewise, if they fail to do so, they must be held accountable for the same. Strategies must be evolved so as to enforce better management, proper usage of resources, increased communication and defined consequences.

In modern society, technology is all the rage. Technological competence is a very necessary skill, especially so in the future. Students must be exposed to upcoming changes in the field and give them the platform to work on them. This will also help students in their other respective fields, like creating scientific simulations, economic awareness, literary knowledge, other resources etc. It also helps them be globally aware of the socio-economic crisis and motivate students to work on them. Information technology in itself is a popular profession with ever-growing employment opportunities. Hence technology is important for the well-rounded development of the subjects. 

There is a constant need to revisit the curriculum and revive it as per the needs of the present. Society is constantly changing these days, with new inventions and discoveries almost every day. Hence, it is important that we must check what goes on to the next working generation. They must be well informed on these changes. There must be ways to control the outpouring of information and methods should be formatted as to how to appropriately pass them on. In general, current affairs must be incorporated into their daily modules as consciousness of societal conventions is just as vital for making students functional members of society.

Consistent, well-planned and uniform assessments, both academic and non-academic are integral in the course of development. This is a good way to identify weak and strong areas, interests etc. They can help in filling possible mental gaps and rectifying shortcomings. Healthy competition should also be introduced to keep students motivated for their purpose. However, this competition should be put in check to ensure that it doesn’t affect a student’s mental health, otherwise, it often ends up doing more harm than good. Stress-free and fair tests can rather boost self-confidence and serve as a tool to instill transparency in the entire system.

Every child has different needs and while some policies and strategies can be standardized, it is also important to personalize the learning experience. Students should be provided with the options to opt for training courses that are set according to their preference, in presence of a mentor. It helps to build their interest in studies and promotes improvement in their chosen field. A proficient educational institution will be flexible and accommodating to changing circumstances of the students. Government must also work with the schools to provide them with the necessary tools to establish this. 

It is equally important to provide teachers with the appropriate training. There is no shortage of dedicated employees who will be willing to work on actually bettering the system. The problem is that they have little or no customized training with respect to the changing methods and curriculum. They must be provided with proper infrastructure and be equipped with proper tools and resources. Doing the same in rural areas is also important. They should be trained in skill-based and vocational subjects so that students have the option to take up those professions after completing their education. Improving the roots is the first step of revamping the system.

The term Entrepreneur refers to businessmen and the term entrepreneurship refers to a process. When a businessman converts his ideas into a successful company, the process is called entrepreneurship. His hard work, his risk, how he runs the business, and then converts it into a successful enterprise- all come under this umbrella term of entrepreneurship. According to Professor Parekh and Manohar Nadkarni “entrepreneurship refers to the general trend of setting up new enterprises in a society”. According to Professor Roy and Mehta “can be described as a creative and innovative response to the environment”.

Importance of Entrepreneurship

i. Basis of Economic Development of the Country- Development of any country depends on entrepreneurship, it depends on the businessmen of a country, how successful or not the country is. The more the businessmen in a country understand these simple words, the more successful the business will be, the more the country will develop. That’s why a successful business shows how developed the country is.

ii. It Helps in Establishing New Enterprises- Entrepreneurship also motivates others, so that others can start their own business or their new enterprises. For example, if you are a successful businessman, then you can also help others to become successful through your experience and they are motivated to start a business.

iii. Contribution in Development and Expansion of Existing Enterprises- Today’s entrepreneurs help old businessmen to expand their business. The old businessmen who do not know about today’s system, tell them to expand their business, because of which the country’s economic system is good.

iv. Helps in Developing New Products and Techniques-  With the help of businessmen, new products come in the market, new technology will not come in the market until they invent by their production, and the consumer will not get to use anything new. So it is only because of the businessmen that we are able to use new products today.

v. Opportunity to Get Full Human Potential- Whenever a business starts, whatever people work there, this businessman ensures that the people who are working in his company give their hundred percent. He wants his workers to give their hundred percent and they also have the skills to get their work done completely by the workers as they also motivate them.

vi. Creation of Employment Opportunity- The more businesses, and enterprises will be successful, the more profitable companies will become, and the more employment they can provide. The larger the company or enterprises, the more will be the requirement of workers. In order to produce resources, to handle staff, all these things will be fulfilled by hiring employees. This, in turn, creates new employment opportunities.

vii. Promotes Capital Formation- When the business earns a good profit, it earns a lot of money, then the money will go to the government through tax. When the company will earn a good profit, then people will get a lot of money in the form of salary, then somewhere through the income of the employers, the money will go to the government, in this way the government is getting tax from the individual people also. Tax is also being received from the company, due to which the economy of the country will be good, in this way the benefit of everyone is through the enterprises.

viii. Balances Economic Development- Both the urban sector and the rural sector will be balanced economically due to entrepreneurship. It means that enterprises help in reducing the gap between the rich and the poor. Entrepreneurs start the business by going to the rural sectors, they provide jobs to the people of the rural areas and help in the development of that area.

ix. Helps in the Execution of Government Policies and Plans- Entrepreneurship helps the government as well. The government creates new rules and helps entrepreneurs in promoting those rules and regulations. For example, businessmen follow the GST rules imposed, and in a way, they are promoting it. Entrepreneurship helps in implementing government planning and rules in this way.

x. Helps in Social Change- The more entrepreneurship will be successful, the more it will help to develop the society, the more donations will be made, the standard of living will improve and employment opportunities will also increase when entrepreneurship is at a good level.

Process of Entrepreneurship

i. Self-Discovering- The first step of entrepreneurship is only through self-discovering, it is most important to identify your strengths and your weaknesses. With self-discovering, a person identifies what he is good at, what business he should start, and on which path he will succeed in the future. When you plan to start a business, you must study the profiles of those who are successful in that field of business. If it connects with your calling, take tips from their success stories, and start your own business.

ii. Identifying Opportunity – Now you know your strength, now you have to find out where you will be getting the opportunity. For example, you will have to assess the trends of demand and supply in the near future. If you are interested in something that has significant imports in the future, it is going to grow a lot and there are very few people who can supply it, then you can earn a lot of profit by investing your efforts, money and time in that business, and you are likely to be very successful.

iii. Generating and Evaluating Ideas- In this step, whatever opportunity you have identified, you will have to generate ideas like how to do it, what to do, how to start it, and so on. After that, if you have thought of 10 options, now you will decide which two or three ideas are right, and choose the best from among them. This is called evolving ideas.

iv. Planning- Now comes the time to do the planning, to make strategies, and to do the research. Now that an idea has been identified by you, it is required to implement that idea and plan. In this, you become specific about what the necessary plan of action is, and proceed with the same. 

v. Raising Startup Capital- If you have the funds for investing in your business, you may opt to begin a startup, but if you do not have funds, you will need to raise capital investment. You can raise the capital with the help of investors or any sponsorships.

vi. Startup – In this step, you will start your final startup, after designing the plan of action and other strategies.

vii. Growth – After starting the business, it is your responsibility to make your business grow. You can expand your business by hiring skilled employees, implementing creative ideas, enhancing the marketing strategies, raising more funds, utilizing the profits in buying new machinery, etc.

A contract is a contract only when it satisfies all its validity. A contract will not be qualified to be a legal contract if it does not pass specific factors. 

India is a country that is much observant of legal factors, it is a country of laws, thus holding a valid and legal contract can only further your chances of getting represented.  There are some essential points that are to be considered before holding a contract. 

In this context, we will be discussing the essentials of a valid contract. 

What is a Contract?

In a business, a contract or agreement plays a significant role in smooth functioning between two parties. In simple terms, the contract is a written agreement between two parties, which contains certain obligations and is enforced by the law. Violation of the contract or law can attract legal action by any of the parties, including cancellation of the entire contract. Any individual entering into a written agreement should be knowledgeable enough with the essentials of a contract.

 

Definition of Contract

The Indian Contract Act 1872 states the term contract is like an agreement that creates an obligation between parties. According to the act, the contract is “an agreement enforceable by law.”

The act also lists the essentials of a valid contract directly or through various judgments of the Indian judiciary.

Essentials Elements of a Valid Contract

()

According to the Indian Contract Act 1872, “Agreements are also contracts made by the consent of parties, competent to contract to consider with a lawful object and are not hereby expressly declared to be void”. Therefore, the contract or the agreement must carry essential aspects to maintain the normal phase of duties by both parties.

Example:

A and B underwent the contract, where A will purchase 10 bags of cement for Rs 1, 00,000. B promises to supply the same in the given period and the quality mentioned. A promise to pay the sum as per the mentioned method in the contract. In this case, both parties have to perform the act as per the agreement signed.

To explain the essentials of a valid contract, we bring you with the list unfolded by the Indian Contract Act 1872-

Offer and Acceptance

Generally, the written contract only unfolds when the other party accepts the offer by one party and is definite in all sense. The offer or agreement must be clear and complete in all sense. Both parties should communicate to ensure there is no lapse in the contract act. Both the offer and acceptance must be “consensus ad idem”, meaning, both parties must comply with the same thing.

Intention to Create a Legal Relationship

To bind, both parties should have a specific intention that can create a legal relationship, resulting in an agreement. Agreements in social or household nature are not contracts because parties do not intend to build legal relationships.

The Intent of Legal Obligations

One of the essential elements of a valid offer is that both parties subject to a contract must be clear with the intentions of creating a legal relationship. This also means that agreements that are not enforceable by the law like agreements between relatives are enforceable in the court of law.

Possibility of Performance of Agreement

In this case, suppose two people decide to undergo an agreement where person A agrees to bring person B’s dead relative back to life, this will not fall under the legal contract act because bringing back the deceased person alive is an impossible task. Thus, the agreement does not stand valid.

Legal Formalities

In this agreement, if there is any uncertainty and both parties are not capable of finding the right path, then it is deemed void. As a part of the essentials of a valid consideration, the terms and conditions of the contract should be concrete. Any contract, which is uncertain in any sense, can be termed as void. The terms mentioned in the agreement should be capable of performing specific thoughts.

Consideration

Consideration means the moral value given for the performance of the promise. It should not be only limited to money, but there should be some value to what has been agreed upon. One of the essentials of valid consideration is that it should not be adequate, but should carry some value.

Some Pointers Under Consideration are:

• Consideration is wholly according to the desire of the promisor, which means the review must come from the promisor. Consideration can be either:

• Past Consideration

• Present Consideration

• Future Consideration

• Consideration can be tangible, like the performance of the service like teaching and labor.

These are the essentials of a valid contract, which needs to be fulfilled by the contract act of India. Before getting into any agreement, it is essential to know what action has led.

All businesses that work collectively with human resource, technological resource, and natural resources, etc. towards a common objective need planning to function smoothly. It is, therefore, the first and essential most steps which businesses need for improved productivity and performance.

Planning is the fundamental function of management. It is the general outline of the activities that are needed to be done in the future to achieve the goals. It means visualizing in advance and sketching out the future course of action. Planning is the process of setting goals for the future and choosing the means in the present to achieve those goals. We will study about the features of planning in our next section.

Features of Planning

Defining objectives is the crucial most thing that companies must do so that employees of all levels have a direction where they can proceed. Having an objective makes the task simpler for managers and employees working together as the tasks and deadlines are defined. Hence, the manager will keep checking on employees and the progress of assigned tasks.

Therefore, the features of a good plan involve objectives as an essential feature so that this process is carried successfully.

Out of all other management functions like organising, staffing, directing, and controlling, planning is the initial most steps. Without proper planning, all other functions of management can’t be attained.

For example, an organisation ABC industries need to produce 100 units of air conditioner by the end of this month. Here, they must plan and decide objectives and tasks to proceed further. Then, tasks and requirements are organised; staffing is coordinated to declare which employees will work on which level and team, etc. Without a plan, the company will not be able to work with the other functions and fail in attaining the goal.

Planning is pervasive and applies to all levels of management, and all should work in sync to produce the best output. For example, top-level management thinks from the company’s perspective and declares the ultimate goal that a company should meet within a decided time. Middle-level management focuses on department-wise goals that they must meet. And low-level management deals with daily execution of work. 

Planning is mandatory in every organization and every level of management. However, the scope of planning is varied.

Top-level management frame plans for the entire organization as one. 

Middle-level management thinks from the department perspective and involves departmental planning.

Lower-level management frame plans for the daily operations.

One of the features of planning is that it is aimed for upcoming events and activities. These are planned ahead of time so that people can work in a coordinated environment towards its success. With adequate planning, one can achieve the goals decided for the future. 

Planning is a continuous process and is created for a definite period after which new plans are needed. After the end of a period, new plans are created as per situation and business demand. 

For instance, due to a pandemic situation in the country, there is a rise in demand for hand sanitizer and hand wash liquids. In such a case, a company that used to produce 1 lakh units of hand sanitizer bottles in a month will have to change their plan so that they can produce more considering the rising demand.

Decision making is one of the essential features of planning as they tell the feasibility and success of a plan. Choosing the appropriate option amongst the available alternatives decides if this plan will help in achieving a goal or not. If there is no alternative available for an action, then decision making isn’t needed.

Mental exercise is one of the characteristics of planning as individuals need to think critically and form a plan which can produce the best output. Hence, an effective plan is the result of good critical thinking and logical reasoning.

Despite the several advantages of planning as a function of management, it may have specific limitations in the business environment.

Planning always comes first as it lays down the foundation for all other functions of management. Other functions such as organizing, staffing, directing, and controlling are performed within the boundary of the plan. Without a proper plan execution of other functions of the management is impossible. Planning is the fundamental function of management and it is also referred to as “Primacy of Planning”.

When a plan is made, we often focus on two things, one is the specific goals that need to be achieved and the second is the activities involved to achieve this specific goal. These specific activities become objectives to achieve goals and these objectives are measurable. Without objectives, planning could not be made. In the absence of planning, employees will not have a proper direction of work and goals cannot be reached. 

Planning means looking forward and paving the way to meet future events effectively. Planning is regarded as a futuristic function based on forecasting. On the basis of forecasting, future conditions and events are predicted and plans are prepared.

Planning is an on-the-go process and plans can be made for a certain period of time.

Plans may be prepared for all time periods like a day, week, month, quarter, or year.

At the end of a certain period, new plans are framed and revised on a regular basis, based on the feedback of the previous plans, new needs, and future conditions.

Decision-making is the process of choosing the best alternative. Without alternatives, there is no need for planning as there is only one option. On deep analysis of every alternative, choosing the best one can be made. Therefore there is a need for planning.

Planning involves thinking and it is separate from the activities of the organization. It is based on logical thinking, facts, foresight, vision, intelligent imagination, and sound judgment.

Limitations of Planning 

Planning leads to rigidity in the process as all the employees of the organisation have to adhere to the plan even if they have alternatives to perform better. This rigidity in the process may affect the overall productivity of an organisation. 

It is difficult for organisations to keep adhering to the plan as one is unaware of the future situations they may come across. Market fluctuations, natural calamities, etc. are a few examples of dynamic changes that may affect a business. In such a scenario, it becomes difficult to stick to a plan and organisations have to form new strategies to cope with the new situation. 

Sometimes, the planning process may consume more time and money and may not prove to be that beneficial. Acquiring expert suggestion, verifying facts and data, and spending on boardroom meetings, etc. may cost significant money. In such a case, planning the processes may not be a feasible option. 

The planning process can be time-consuming and may sometimes result in delaying other processes. Delay in other processes of organising, staffing, directing, etc. may result negatively for the organisation as they miss achieving the planned target on time. 

The low-level management and employees follow up on the plans and steps decided by the top-level management, and this eliminates any room for creativity in the process. They aren’t allowed to add or suggest any innovation which may impact the overall performance of an organisation.

Even with several beneficial features of planning in business studies, it may not work as well as existing projections. The success of a firm hugely depends upon the well-drafting of plans and its implementation in the real world. But, in many cases, businesses fail to make the right plan as per the changing business market. Managers tend to stick to a tried and tested plan which may not work well considering the changing market scenario. Besides, there is no guarantee if a particular plan will work out for a company or not.

With such limitations of planning, businesses must try to form an effective plan which caters to the changing need of enterprises and market. Students can get a more in-depth idea about this concept by visiting ’s website.

The plans cannot be flexible and it has to be followed throughout the organization.

The rigidity of plans may be both internal and external.

Internal rigidity is related to plans, policies, programs, rules, and methods, etc.

External rigidity is related to political, industrial, technological, legal and economic changes, etc.

The business environment keeps on changing on a daily basis.

It is difficult for an organization to predict future trends, the taste of customers, natural calamity, competitors’ policies, and the effects of changing components of the environment.

The organization should constantly adapt to changes and it is very difficult to forecast the future accurately.

The dynamic environment in a specific situation may lead to the failure of plans.

Most of the plans are made by the top-level management and the members from middle and lower levels of management should only follow the plans framed.

They cannot deviate or alter the plans made by their higher officials.

Under this situation, employees have to only follow orders which kills the creative thinking of employees.

Planning can be too costly because it requires a lot of time and money. Like expenses on boardroom meetings, discussions with professionals, and primary investigations to find out the feasibility of the plan.

Checking the accuracy of facts and scientific calculations involves lots of time.

The enterprise’s success is only possible when the plans are properly executed.

Plans become meaningless if they are not put into action.

Managers may rely on previously tested successful plans.

Every successful plan in the past may not be successful in the future, and cannot be adapted in every situation.