Types of Plans Part 2: Procedure, Method, Rule, Programme & Budget (Class 12)

In Part 1 of this series, we covered single-use vs standing plans, along with objectives, strategy and policy. This post completes the classification of plans from Chapter 4 of CBSE Class 12 Business Studies by covering procedure, method, rule, programme and budget — and closes with a quick exam-prep guide to help you tell these plan types apart under exam pressure.

Procedure: The Routine Steps

Procedures are routine steps on how to carry out activities. They detail the exact manner in which any work is to be performed, specified in chronological order. For example, there may be a specific procedure for requisitioning supplies before production begins.

Procedures are generally meant for insiders to follow, and the sequence of steps is designed to enforce a policy and attain pre-determined objectives. Policies and procedures are closely interlinked — procedures are essentially the steps carried out within a broader policy framework.

Method: The Prescribed Manner of Performing a Task

Methods provide the prescribed ways or manner in which a task has to be performed, considering the objective at hand. A method deals with one specific step of a procedure and specifies exactly how that step is to be performed. The method chosen may vary from task to task — selecting the proper method saves time, money and effort, and increases overall efficiency.

For example, when imparting training to employees at different levels, different methods are appropriate: for higher-level management, orientation programmes, lectures and seminars work well, while at the supervisory level, on-the-job training and work-oriented methods are more suitable.

Rule: The Simplest Type of Plan

Rules are specific statements that inform exactly what is to be done. They do not allow for any flexibility or discretion, reflecting a managerial decision that a certain action must or must not be taken. Rules are usually the simplest type of plan, because there is no compromise or change unless a policy decision is specifically taken to alter them. For example, “no smoking in the factory premises” is a rule with zero room for individual interpretation.

Programme: The Detailed Project Blueprint

Programmes are detailed statements about a project that outline the objectives, policies, procedures, rules, tasks, and human and physical resources required, along with the budget needed to implement any particular course of action. Programmes include the entire gamut of activities as well as how the project contributes to the organisation’s overall policy and business plan. The minutest details are worked out here — procedures, rules and budgets — all within the broader policy framework.

Budget: A Plan Expressed in Numbers

A budget is a statement of expected results expressed in numerical terms — essentially a plan that quantifies future facts and figures. For example, a sales budget may forecast the sales of different products in each area for a particular month, or show the number of workers required in a factory at peak production times.

Since a budget represents all items in numbers, it becomes easier to compare actual figures against expected figures and take corrective action where needed. This is why a budget is also considered a control device, in addition to being a planning instrument. A common example is the cash budget — a statement showing estimated cash inflows (generally from cash sales) and cash outflows (costs and expenses of operations) over a given period. The net cash position is determined as: Cash inflows − Cash outflows = Surplus or Deficiency.

Quick Comparison: Standing Plans at a Glance

How to Distinguish These Types of Plans in Exams

CBSE case-based questions often describe a business scenario and ask you to identify the type of plan involved. A useful approach:

• If it quantifies numbers (sales, cash, workers) → it’s a budget.

• If it’s a detailed, one-time project blueprint with a full set of resources and rules → it’s a programme.

• If it’s a fixed statement allowing zero flexibility (e.g., “payments only via e-transfer”) → it’s a rule.

• If it explains the exact manner of performing one task (e.g., a training technique) → it’s a method.

• If it lists sequential steps to follow → it’s a procedure.

• If it’s a broad guiding statement open to managerial discretion → it’s a policy.

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Test Your Knowledge

Q1.A "Procedure" is defined as a plan that specifies the:

Broad strategic vision of the company over twenty yearsTotal estimated revenue and expenditure expressed in numerical termsUnconditional prohibition of a specific employee behavior without discretionChronological sequence of routine steps to be performed to execute a particular recurring task

Q2.Which type of plan is the simplest and strictest, allowing absolutely no managerial discretion or flexibility (e.g., "No Smoking in the Factory Premises")?

RulePolicyStrategyObjective

Q3.A "Budget" is distinguished from other types of plans because it is a:

General verbal statement of corporate philosophyStatement of expected results expressed in quantitative, numerical terms for a defined future periodCode of conduct for sales representatives in retail showroomsInformal agreement between workers during union tea breaks