(a)OR(b)

Explain 'Objectives' and 'Budget' as type of plans.

Objectives § An objective is the end which the management seeks to achieve. § An objective needs to be expressed in specific/ quantitative terms and is to be achieved within a given time period. § It is set by the top management and focuses on broad general issues. Budget § A budget is plan which states expected results of a given future period in numerical terms. It may be expressed in time, money or physical units. § It is an instrument of both planning and control. § It comes under planning as making a budget involves forecasting. It is also a control device as actual figures can be compared with expected figures and deviations taken care of.Planning leads to rigidity § Plan is drawn with specific targets within a specific time frame § Once the plans are drawn, the managers may not be in a position to change them § Following a pre-decided plan, when circumstances have changed, may not turn out to be in the organisation’s interest • Planning may not work in a dynamic environment The business environment is dynamic. The organization has to constantly adapt itself to changes in environment by making • changes in its plans. 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 etc. Planning cannot foresee everything and, thus, there may be obstacles to effective planning.