Planning involves selecting missions and objectives and the actions to achieve them, it requires decision making, that is, choosing from among alternative future courses of action.
Purposes of Planning:
1. Planning establishes coordinated effort. It gives direction to managers and nonmanagers alike. Without planning, departments and individuals might be working at cross-purposes, preventing the organization from moving efficiently towards its goals.
2. Planning reduces uncertainty by forcing managers to look ahead, anticipate change, consider the impact of change, and develop appropriate responses.
3. Planning reduces overlapping and wasteful activities.
4. In planning, we develop the goals and identify any significant deviations, and take any necessary corrective action. Without planning, there would be no way to control.
TYPES OF PLANS:
1. Purposes or Missions: The basic function or task of an enterprise or any part of it.
2. Objectives or Goals: The ends toward which activity is aimed.
3. Strategies: The determination of the basic long-term objective of an enterprise and the adoption of courses of action and allocation of resources necessary to achieve these goals.
4. Policies: Policies also are plans in that they are general statements or understandings that guide or channel thinking in decision-making. Not all policies are “statements”; they are often merely implied from the actions of managers.
5. Procedures: Procedures are plans that establish a required method of handling future activities.
6. Rules: Rules spell out specific required actions or nonactions, allowing no discretion. They are usually the simplest type of plan.
7. Programs: Programs are a complex of goals, policies, procedures, rules, task assignments, steps to be taken, resources to be employed, and other elements necessary to carry out a given course of action.
8. Budgets: A budget is a statement of expected results expressed in numerical terms.
CONTIGENCY FACTORS IN PLANNING:
Three contingency factors affect planning.
1. Level in the organization.
2. Degree of environmental uncertainty.
3. Length of future commitments.
TECHNIQUES FOR ASSESING
1. Environmental Scanning: Screening of large amounts of information to anticipate and interpret changes in the environment. Extensive environmental scanning is likely to reveal issues and concerns that could affect an organization’s current or planned activities.
2. Forecast: Predictions of outcomes.
a) Quantitative forecasting applies a set of mathematical rules to a series of past data to predict outcomes. These techniques are preferred when managers have sufficient hard data that can be used.
b) Qualitative forecasting, in contrast, uses the judgment and opinions of knowledgeable individuals to predict outcomes.
3. Benchmarking
TECHNIQUES FOR ALLOCATING RESOURCES
Resources: The asset of the organization including financial, physical, human, intangible and structure/culture.
1. BUDGETING: Types of Budget
· Cash Budget: Forecast cash on hand and how much will be needed.
· Revenue Budget: Project future sales.
· Expense Budget: Lists primary activities and allocates dollar amount to each.
· Profit Budget: Combines revenue and expense budgets of various units to determine each unit’s profit contribution.
· Variable Budget: Takes into account the costs that vary with volume.
· Fixed Budget: Assumes fixed level of sales or production.
2. SCHEDULING:
Detailing what activities have to be done, the order in which they are to be completed, who is to do each, and when they are to be completed.
· Gantt Chart: A scheduling chart developed by Henry Gantt that shows actual and planned output over a period of time.
· Load Chart: A modified Gantt chart that schedules capacity by entire departments or specific.
· Pert Network: A flowchart like diagram showing the sequence of activities needed to complete a project and the time or costs associated with each.
· Breakeven Analysis: A technique for identifying the point at which total revenue is just sufficient to cover total costs.
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