PLANNING

Prepared by:

Ganesh Lama

Ishwor Subedi

Roshan Acharya

Sumit Chaudhary

Submitted to:

Mr. Sanjeev Pradhan

Faculty of Management

PLANNING

o Primary function of management

o Deciding in advance; what to do, when to do it, and who to do it

o Bridges the gap between where we are and where we want to go

o Setting goals, identifying activities to be done, choosing various alternatives etc

CHARACTERISTICS OF PLANNING

o Focus on goal

o Primary function

o Pervasive activity

o Future oriented

o Continuous process

o Intellectual work

o Flexible

o Efficiency and economy

o Actionable

LEVELS OF PLANNING

Strategic plan

Tactical plan

Operational plan

STRATEGIC PLAN

Prepared by top level management

Related with plan, policies of organization

Should have to do SWOT analysis

For long term horizon

TACTICAL PLAN

Prepared by middle level management

Sub division of corporate plan

Planed on the basis of priority of work

Play bridge role between strategic and operational plan

Time period 2-3 years

OPERATIONAL PLAN

Prepared by first line management

Consistent with tactical plan

Directed to the day to day work

Concentrated in best utilization of resources

Short term plan( less then one year)

INDIVIDUAL PLAN

Non managerial plan

Prepared by workers

Time period ( daily, weekly, monthly)

STEPS IN PLANNING

1.Analyse environment2.Set objectives

3.Developing planning premises4.Determining alternative courses5.Selection of best alternatives6.Formulation of derivative plan7.Converting plans into budget

8.Implementation9.Review of the planning

1.ANALYSE ENVIRONMENT

o Pre stage of planning

o Consider SWOT of the organization

2.Set objectiveso must be specific, clear and practical

o Should be in SMARTER form

o Should consider organization resources and capabilities

3.DEVELOPING PLANNING

PREMISES

Future assumptions

Should collect reliable information and its correct study

4.DETERMINING ALTERNATIVE

COURSES

A problem has multiple solutions

Have to search and identify the various alternatives using internal and external sources

Evaluate SWOT of each alternative

5.SELECTION OF BEST

ALTERNATIVES

Critical task for a planner

Select on the basis of weighted of the alternatives

6.FORMULATION OF

DERIVATIVE PLAN

Supportive plan should be prepared

should prepared rules, regulations, working procedure, schedules

7.CONVERTING PLANS INTO

BUDGET

Yearly programs is clearly mentioned in monetary form

Budget of each plan should be prepared separately and adequately

Helps to do comparative study after implementing

8.IMPLEMENTATION

Operational part of planning procedure

Should give the instruction to the employee

Should arrange the resources and budget

9.REVIEW OF THE PLANNING

Last step of the planning

Getting feedback or response from implementation

If response is positive, plan is success if not corrective measure should be applied

PITFALLS OF PLANNINGLimitation Of Planning

Too Centralized And Top-Down

Failure To Question Assumption

Failure To Implement

Failure To Anticipate Rivals Action

Having Unrealistic And Too

Many Goals

Failure To Develop

Current Strategic

And Tactical Plans

Ignoring Planning

In Everyday Life

Failure To Encourage Creativity

In Planning

Utilizing

Standardize Plan

For Everyone

Focusing On Short

Range Plans Only

Other Pitfalls

1

2

3

4

5

6

Major Pitfalls

1. Too Centralized and Top-Downo Only goal Orientedo Little knowledge about marketo No direct role of Middle and Lower

Level manager

2. Failure to Question Assumptiono Wrong predictiono Sudden change in premises

3. Failure to Implemento Not put into actiono Negligence

4. Failure to Anticipate Rivals Actiono Competitor actiono Unable to predict rivals plan

Other Pitfalls

5. Having Unrealistic And Too Many Goalso Based on Assumptionso High Expectationo Too Many Goals

6. Failure To Develop Current Strategic And Tactical Plans

o Ignoring the current environmento Being one sided

7.Ignoring Planning In Everyday Life Being limited in theory Avoiding the plan

8. Failure To Encourage Creativity In Planning

Other Efforts Reference of past plan

9.Utilizing Standard Plan For Everyone Same plan for all level Create confusion for lower level

10.Focusing On Short Range Plans Only

Ignoring long run plan Aim to earn more profit at less time

TOOLS OF PLANNINGTechniques Of Planning

1.Environment Scanning

o Collecting environmental informational through evaluating environmental trends

o Identifying internal and external elements that might affect the organization

o Global scanning o Make decision and taking action

2.Forecasting

o Predicting future eventso Developing assumptiono Recognizing future problems and

opportunities and implementing plan into action

Techniques of ForecastingQuantitative Techniqueso Applying a set of mathematical rules to a

series of hard data to predict outcomes (e.g., units to be produced)

Quantitative

oTime series analysis

oRegression models

oEconometric models

oEconomic indicators

oSubstitution effect

Qualitative Techniqueso Using expert judgments and opinions

to predict less than precise outcomes (e.g., direction of the economy)

Qualitative Techniques

Qualitative

oJury of opinion

oSales force composition

oCustomer evaluation

Benchmarkingsearch for the best practices among competitors Analyzing and coping the method

The Benchmarking Processes

•Form a benchmarking team•Collect internal and external data•Analyze data to identify performance gap•implement action to meet the standard of others

BEST

PRACTICES

Analyze data to identify

performance gaps.

Form a benchmarking

planning team.

Gather internal and

external data.

Prepare and implement

action plan.

Steps Of Benchmarking

3.Simulation Exercise

o Model to solve real life problemo Related variable and their inter-

relationship are put into system to find out outcome

o Computer programming is usedo Useful in complex situation

Steps

o Define the system to simulate

o Formulate the model to be used

o Test the modelo Identify and collect the

required datao Run the simulationo Analyze the resulto Rerun the simulationo Validate it

4.Linear Programming

o To solve resource allocation problemso Useful to maximize profit and minimize

costo Helpful to determine the value of

variables affecting outcome

Assumptiono Resource are limitedo Outcome optimum is the goalo Alternative method exist for

combining resourceso A linear relationship exist between

variables

5.Break-Even analysis

oNo loss and no gain conditionoUsed to determine the unit of good to be soldoShows relationship among revenue, cost and profit

i. Formula to calculate break-even point is:BEP=TFC/P-VC

where,TFC=Total Factor CostP=Unit Price of ProductVC=Variable Cost per Unit

70 000

60 000

50 000

40 000

30 000

20 000

10 000

100 200 300

Output (in thousands)

400 500 600

Breakeven

Point

Variable Costs

Fixed Costs

Profit

AreaTotal

Revenue

Loss

Area

Total

Costs

6.PERT(Program Evaluation and Review Technique)

And CPM(Critical Path Method)

oTo schedule complex projectoUses flow chart diagramoInclude cost and time associated with activity

Critical Path: A - B - C - D - G - H - J - K

KJ

HGE

F

10 6 14 53

316

4

5

53

3 5

ID

CBAStart

Process of PERT

1. Identify every significant activity that must be achieved for a project to be completed.

2.Determine the order in which these events must be completed.

3.Diagram the flow of activities from start to finish, identifying each activity and its relationship to all other activities.

5. Compute a time estimate for completing each activity.

6. Using the network diagram that contains time estimates for each activity, determine a schedule for the start and finish dates of each activity and for the entire project.

7. Gantt Charts and Load Charts

Gantt Charts

oShows when task are supposed to be doneoMeasures actual and planed output over period of timeoTime on horizontal axis and task on vertical axis

Copy-edit manuscript

Design sample pages

Draw artwork

Print first pages

Print final pages

Design cover

1 2

Month

Reporting Date

Activity

3 4

Actual progress

Goals

A Gantt Chart

Ling

Antonio

Kim

Maurice

Dave

Rashid

1 2

MonthEditors

3 4 5 6

Work scheduled

A Load Chart

8. Budgeting

oNumerical plans for allocating resources (e.g., revenues, expenses, and capital expenditures)oUsed to improve time, space, and use of material resourcesoAre the most commonly used and most widely applicableplanning technique for organizations

Variable Budget

Takes into account

the costs that vary

with volume

Fixed Budget

Assumes fixed

level of sales

or production

Cash Budget

Forecasts cash on hand

and how much will

be needed

Revenue Budget

Projects future sales

Profit Budget

Combines revenue and expense

budgets of various units to determine

each unit’’s profit contribution

Expense Budget

Lists primary activities

and allocates dollar

amount to each

OR

Types Of Budgets

9.Flow Chart

o Identify the task component and wok simplification

o Arranging event according to occurrenceo Avoids unnecessary events

Advantages

o Encourage analytical thinkingo Motivate to eliminate waste steps

Drawbacks

o Doesn’t include time required for work completion

o Not suitable in complex situation

10.Contemporary Planning Techniques

ScenariooA consistent view of what the future is likely to be

Scenario PlanningoAn attempt not to try to predict the future but to reduce uncertainty

Contingency Planningo Developing scenarios that allow managers to

determine in advance what their actions should be when event actually occur

PLANNING PREMISES

External premises

o Exist outside the organizationo Can be in form of PESTo Beyond the control of organization

Internal premises

o Exist within the organizationo Can be form in goal, program, resources,

policieso Can be controlled in some extend

Controllable premises

Can be easily controlledCan be changed by management

Uncontrollable premises

o Cannot be controlledo Cannot be changed by management

Tangible premises

Measured in quantitative terms

Involves capital investment, unit of production, unit sold, cost per unit, time available

Intangible premises

o Qualitative in measure

o Involves motivation, decision making, leadership, goodwill, managerial attitude etc

IMPROVING PLANNING

1.Decentralised planning2.Role playing

3.Innovation and creativities4.Expert opinion

5.Link to goal; tie to budget6.Comprehensive

7.Prepare both long range and short range plans

8.Prepare contingencies planning and crisis management

1.DECENTRALISED PLANNING

Should take suggestions from every level of the organization

2.ROLE PLAYING

Groups of organization play role as competitor to other

State how they would counter the plans of the organization

3.INNOVATION AND CREATIVITIES

Should be creative and innovative

New plans with creative idea often regards as good technique

4.EXPERT OPINION

should take suggestions, guidance from consultants and experts

5.LINK TO GOAL; TIE TO BUDGET

o Should have specific and understandable objectives

o Operating budget should be allocated separately

6.COMPREHENSIVE

o Should cover each and every aspect of business

7.PREPARE BOTH LONG RANGE AND

SHORT RANGE PLANS

Should have to prepare both long and short term plan

Short run plans should be made to support long term plan

8.PREPARE CONTIGENCIES PLANNING AND CRISIS MANAGEMENT

o should made to handle various crisis and situation

DECISION MAKINGProblem Solving

DECISION MAKING

Subsidiary function of planning

Art of Problem Solving

Process of choosing a best alternative among several alternatives

Continuous process to achieve the pre-determined goal

Essential to solve problems and remove weakness

TYPES OF DECISION MAKING

Programmed and Non-programmed Decisions

Routine and Basic Decisions

Organizational and Personal Decisions

Individual and Group Decisions

Policy and Operational Decisions

DECISION MAKING PROCESS

1.Identification of problem

2.Analysis of problem

3.Development of alternatives

4.Selection of best alternatives

5.Implementation of alternatives

6.Review of Implementation

DECISION MAKING CONDITIONS

1.Certainity

2.Risk

3.Uncertainity

AnyQueries??

Please!!!!