Question:
Nikhil owned a paper manufacturing business. His business had been facing losses for the last two years. Nikhil’s son, Ravi, who had just completed his studies, had joined his father’s business. Ravi was interested in sustainability and thus suggested his father that they should start making eco-friendly paper products. Nikhil agreed and asked Ravi to prepare a proper plan for the same. He also asked Ravi to set a target of earning profit of 10% on sales in the first year itself. Ravi, then began collecting information about the market demand, consumer preferences, availability of raw materials, competition, etc.
Based on this information, he made certain assumptions about the future, such as expected demand for eco-friendly paper products, its price, etc. The step of the planning process performed by Ravi was :
Nikhil owned a paper manufacturing business. His business had been facing losses for the last two years. Nikhil’s son, Ravi, who had just completed his studies, had joined his father’s business. Ravi was interested in sustainability and thus suggested his father that they should start making eco-friendly paper products. Nikhil agreed and asked Ravi to prepare a proper plan for the same. He also asked Ravi to set a target of earning profit of 10% on sales in the first year itself. Ravi, then began collecting information about the market demand, consumer preferences, availability of raw materials, competition, etc.
Based on this information, he made certain assumptions about the future, such as expected demand for eco-friendly paper products, its price, etc. The step of the planning process performed by Ravi was :
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Ravi studied the market and then made assumptions about the future demand and price. Such assumptions are the planning premises.
Updated On: Oct 26, 2026
- Identifying alternative courses of action
- Developing premises
- Setting objectives
- Implementing the plan
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The Correct Option is B
Solution and Explanation
Step 1: Understanding the case:
Ravi collected information about market demand, preferences, raw material, competition and so on.
Based on that, he made assumptions about the future, such as expected demand and price of the eco-friendly paper.
Step 2: Recall the steps of the planning process:
The steps are: setting objectives, developing premises, identifying alternative courses of action, evaluating alternatives, selecting an alternative, implementing the plan and follow-up.
Premises are the assumptions made about the future conditions in which the plan will work.
Step 3: Why option (B) is correct:
The case says Ravi "made certain assumptions about the future". This is the meaning of developing premises.
Collecting information on demand and price is done to form these assumptions.
Step 4: Why option (A) is wrong:
Identifying alternative courses of action means listing the different ways of reaching the goal.
The case does not show Ravi listing such alternatives.
Step 5: Why option (C) is wrong:
Setting objectives is the first step. Nikhil asked Ravi to set a target of 10 per cent profit, but the action which Ravi himself performed afterwards was making assumptions.
So (C) is not the step asked.
Step 6: Why option (D) is wrong:
Implementing the plan means putting the chosen plan into action. The plan has not even been decided in the case, so (D) is wrong.
Final Answer:
Ravi made assumptions about future demand and price, so the step is developing premises. The correct option is (B).
Ravi collected information about market demand, preferences, raw material, competition and so on.
Based on that, he made assumptions about the future, such as expected demand and price of the eco-friendly paper.
Step 2: Recall the steps of the planning process:
The steps are: setting objectives, developing premises, identifying alternative courses of action, evaluating alternatives, selecting an alternative, implementing the plan and follow-up.
Premises are the assumptions made about the future conditions in which the plan will work.
Step 3: Why option (B) is correct:
The case says Ravi "made certain assumptions about the future". This is the meaning of developing premises.
Collecting information on demand and price is done to form these assumptions.
Step 4: Why option (A) is wrong:
Identifying alternative courses of action means listing the different ways of reaching the goal.
The case does not show Ravi listing such alternatives.
Step 5: Why option (C) is wrong:
Setting objectives is the first step. Nikhil asked Ravi to set a target of 10 per cent profit, but the action which Ravi himself performed afterwards was making assumptions.
So (C) is not the step asked.
Step 6: Why option (D) is wrong:
Implementing the plan means putting the chosen plan into action. The plan has not even been decided in the case, so (D) is wrong.
Final Answer:
Ravi made assumptions about future demand and price, so the step is developing premises. The correct option is (B).
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