Question

'Renew Ltd.' was the pioneer in the Electric Vehicles segment and presently has 70% market share. Keeping in mind the rapidly increasing demand for Electric Vehicles due to the rising environment consciousness among people and lower operating costs, the company set a target to increase its market share to 80% in the current year. However, the incentives provided by the government to encourage manufacturing of Electric Vehicles attracted many new players in the market. As this change in the business environment happened suddenly, the company was not able to accurately assess future trends. As a result, the market share of 'Renew Ltd.' fell from 70% to 55% in the current year. Which limitation of planning has been discussed in the above case?

• A. Planning may not work in a dynamic environment
• B. Planning leads to rigidity
• C. Planning does not guarantee success
• D. Planning involves huge costs

Hint:

Remember: If a case study involves a sudden change in external forces (like government policy or competitors) ruining a plan, the limitation is always the "dynamic environment."

Answer 1

The Correct Option is A

Step 1: Read the case carefully.
Renew Ltd. set a target to increase market share from 70% to 80%. Suddenly, the government introduced incentives for electric vehicle manufacturing, attracting many new competitors. This change was so sudden that Renew could not assess future trends accurately, and its market share fell to 55%.
Step 2: Identify the core problem highlighted in the case.
The company had a plan in place, but an unexpected and sudden change in the external business environment (government incentives bringing new players) made the plan ineffective. The company could not predict or anticipate this rapid change.
Step 3: Recall the limitations of planning.
Common limitations include: Planning may not work in a dynamic environment, Planning leads to rigidity, Planning does not guarantee success, and Planning involves huge costs.
Step 4: Evaluate option (A): Planning may not work in a dynamic environment.
A dynamic environment is one that changes rapidly and unpredictably. In such conditions, a plan made based on current assumptions can quickly become outdated. This is exactly what happened to Renew Ltd., where the environment shifted suddenly and unexpectedly, making their plan fail. This matches perfectly.
Step 5: Evaluate the other options.
Option (B) (Planning leads to rigidity) is about managers sticking too strictly to plans even when minor deviations might be beneficial. The case does not describe this. Option (C) (Planning does not guarantee success) is a general limitation but does not specifically point to the rapid environmental change as the reason. Option (D) (Planning involves huge costs) is about financial expenses of the planning process, not at all relevant here.
Step 6: Conclude.
The case specifically highlights that the sudden, unpredictable change in the business environment rendered the company's plan useless, which is the limitation that planning may not work in a dynamic environment.
\[ \boxed{ \text{(A) Planning may not work in a dynamic environment} } \]