Plans and Planning ToolsSource: Samuel Certo

Definition of PlanPlan is a specific action proposed to help the organization achieve its objectives.

Dimension of PlansKast and Rosenzweig identify a plan’s four major dimensions

1. Repetitiveness – The repetitiveness dimension of a plan is the extent to which the plan is used over and over again. Some plans are specially designed for one situation that is relatively short term in nature.

2. Time – The time dimension of a plan is the length of time the plan covers.

3. Scope – The scope dimension of a plan is the portion of the total management system at which the plan is aimed. Some plans are designed to cover the entire open management system. Other plans are developed to cover only a portion of the management system.

4. Level – The level dimension of a plan is the level of the organization at which the plan is aimed. Top-level plans are those designed for the organization’s top management, whereas middle- and lower-level plans designed for middle and lower management, respectively.

Types of PlansStanding Plans and Single-use Plans

Standing Plans – are used over and over again because they focus on organizational situations that occur repeatedly. 1. Policy – is a standing plan that furnishes broad

guidelines for taking action consistent with reaching organizational objectives.

2. Procedures – is a standing plan that outlines a series of related actions that must be taken to accomplish a particular task.

3. Rules – is a standing plan that designates specific required action.

Single-use Plans – are used only once, or, at most, several times because they focus on unique or rare situations within the organization. 1. Program – is a single-use plan

designed to carry out a special project within an organization.

2. Budgets – is a single-use financial plan that covers a specified length of time.

Why Plans FailA study by K.A. Ringbakk determined that plans fail when

1. Corporate planning is not integrated into the total management system.

2. There is a lack of understanding of the different steps of planning process.

3. Management at different levels in the organization has not properly engaged in or contributed to planning activities.

4. Responsibility for planning is wrongly vested solely in the planning department.

5. Management expects that plans developed will be realized with little effort.

6. In starting formal planning, too much is attempted at once. 7. Management fails to operate by the plan. 8. Financial projections are confused with planning. 9. Inadequate inputs are used in planning. 10. Management fails to grasp the overall planning process.

Planning AreasInput Planning is the development of proposed action that will furnish sufficient and appropriate organizational resources for reaching established organizational objectives.

The following two sections cover planning in two areas normally associated with the input factor:Plant Facilities Planning and Human Resource Planning

Plant Facilities Planning – involves determining the type of buildings and equipment an organization needs to reach its objectives. A major part of this determination is called Site Selection – deciding where a plant facility should be located.

Many organizations use weighting process to compare site differences among foreign countries. Basically, this process involves the following steps:

1. Deciding on a set of variables critical to obtaining an appropriate site

2. Assigning each of these variables a weight reflecting its relative importance

3. Ranking alternative sites according to how they reflect these different variables

Human Resource Planning – involves reflecting on organizational objectives to determine overall human resource needs; comparing these needs to the existing human resource inventory to determine net human resource needs; and finally, seeking appropriate organization members to meet the net human resource needs.

The following are representative of the kinds of questions personnel planners should try to answer:

1. What types of people does the organization need to reach its objectives?

2. How many of each type are needed? 3. What steps should the organization

take to recruit and select such people? 4. Can present employees be further

trained to fill future needed positions? 5. At what rate are employees being lost

to other organizations?

Planning ToolsPlanning tools are techniques managers can use to help develop plans.

ForecastingForecasting is the process of predicting future environmental happenings that will influence the operation of the organization.

How Forecasting WorksWilliam C. House, in describing the Insert Control Services Company, has developed an excellent illustration of how forecasting works. In general, Insect Control Services forecasts by attempting to do following:

1. Establish relationships between industry sales and national economic and social indicators

2. Determine the impact government restrictions on the use of chemical pesticides will have on the growth of chemical, biological, and electromagnetic energy pest-control markets

3. Evaluate sales growth potential, profitability, resources required, and risks involved in each of its market areas

4. Evaluate the potential for expansion of marketing efforts in geographical areas of the United States as well as in foreign countries

5. Determine the likelihood of technological breakthroughs that would make existing product lines obsolete

Types of Forecasts 1. Economic 2. Technological 3. Social Trends 4. Sales forecasting

Methods of Sales Forecasting 1. Jury of Executive Opinion Method –

of sales forecasting is straightforward. 2. Salesforce Estimation Method – is a

sales forecasting technique that predicts future sales by analysing the opinions of salespeople as a group.

3. Time Series Analysis Method – predicts future sales by analysing the historical relationship between sales and time.

Product Life CycleProduct Life Cycle is the predicted increase based on the last decade of sales should probably be considered overly optimistic. A product life cycle is the five stages through which most products and services pass.

SchedulingScheduling is the process of formulating a detailed listing of activities that must be accomplished to attain an objective, allocating the resources necessary to attain the objective, and setting up the following timetables for completing the objective.

Product Stages 1. Introduction stage – when a product is brand

new, sales are just beginning to build. 2. Growth stage – the product has been in the

marketplace for some time and is becoming more accepted, so product sales continue to climb

3. Maturity stage – competitors enter the market, and although sales are still climbing, they are climbing at a slower rate than they did in the growth stage

4. Saturation stage – when nearly everyone who wanted the product has it.

5. Decline stage – finds the product being replaced by a competing product.

Gantt Charts Gantt Charts a scheduling device

developed by Henry L. Gantt, is essentially a bar graph with time on the horizontal axis and the resource to be scheduled on the vertical axis. It is used for scheduling resources, including management system inputs such as human resources and machines.