Ch # 9
Planning Tools & Techniques
TECHNIQUES FOR ASSEING THE ENVIORNMENT
Environmental Scanning
n Def: screening of large amounts of information to anticipate and interpret changes in the environment
n Company’s success or failure depends on its knowledge of its environment
Competitor Intelligence
- The process by which organizations gather information about their competitors
- Sources: e.g., research services, Internet, personal contacts, press conferences, etc
- Not involves spying!
Global Scanning
n World markets are dynamic, a company needs to know what might affect their organization
n It’s scope depends on organization’s global activities
Forecasting
n Types of Forecasting:
- Quantitative Forecasting
- Qualitative Forecasting
1. Forecasting
n Trying to predict outcomes
n A skill that can be practiced and improved.
n Environmental scanning establishes the basis of forecasts
n Forecasting techniques fall into two categories
1(a). Quantitative Forecasting
n DEF: Forecasting that applies a set of mathematical rules of past data to predict outcomes
n Techniques are preferred when managers have some sufficient hard data that can be use.
n Time–Series Analysis: For example, predicting next quarter's sales on the basis of 4 years of previous sales data.
n Substitution Effect: Predicting the effect of DVD players on the sale of VHS players.
n Economic Indicators: Using change in GNP to predict discretionary income.
1(b). Qualitative Forecasting
n DEF: Forecasting that uses the judgment and opinions of knowledgeable individuals to predict outcomes.
n USE: Techniques typically are used when data are limited or hard to obtain.
n Types:
-Jury of Opinion: For example, polling the company's human resource managers to predict next years college recruitment needs
-Sales Force Competition: Predicting next year's sales of industrial lasers
n It's important to understand that forecasting techniques are most accurate when the environment is not rapidly changing. The more dynamic the environment, the more likely managers are to forecast ineffectively.
Benchmarking
n DEF: Searching for the best practices of other companies that lead to their superior performance.
n Managers can improve the performance by analyzing and then copying the method of leaders.
n Some companies chose some pretty unusual benchmarking partners!
n Examples:
-IBM studied Las Vegas casinos,
-Many hospitals have benchmarked their admissions processes against Marriott Hotels.
TECHNIQUES FOR ALLOCATING RESOURCES
n Budgeting
n Scheduling
n Breakeven Analysis
n Linear Programming
BUDGETING
Budget
n Def: A numerical plan for allocating or distributing resources to specific activities
n Prepared for revenues, expenses, markdowns and large expenditures
n Types of Budgets:
1. Cash Budgets (caluclates total cash at hand and needed cash)
2. Revenue Budget (amounts cash coming in from production sales)
3. Cost Budget (amount spend on productions)
4. Profit Budget
All these budgets fall into categories of Fixed Budgets (where costs do not change) and Variable Budgets (where costs can vary)
n Importance:
- Financial discipline
- Provides or creates structure in the organization
How to Improve Budgeting:
n Be collaborative & communicate
n Be flexible
n Goals should Drive Budgets; not vice versa (its spelled as, viy-si-ver-sa)
SCHEDULING
Its:
n Allocating resources to activities
n Deciding: the order of completion,
n who is to do what
n estimate time of completion.
Tools of Scheduling
n Gantt Chart
n Load Chart
n PERT Network Analysis
Gantt Chart
n DEF: (developed by H. Gantt), shows actual progress and planned progress over a period of time.
n MANAGER’S CONTROL TOOL: Helps manager keep track of the progress & deviations from the plan
Load Chart
n DEF: A modified from of Gantt Chart that schedules capacity by entire departments or specific resources
n Manager’s tool for planning and capacity utilization
PERT Network Analysis
n PERT = Program Evaluation & Review Technique
n DEF: A flowchart showing the sequence of activities needed to complete a project & time or cost associated with it
Terms of PERT:
- Events: End points that represent the completion of activities
- Activities: Time needed to complete an event
- Slack Time: Amount of time an individual activity can be delayed without delaying the whole project
- Critical Path: The longest sequence of activities in a PERT network
Steps in Developing a PERT Network
n Identify every significant activity to be completed
n Determine the order in which to be completed
n Diagram the flow of activities from start to finish
n Identify each activity and its relationship to all other
n Compute Estimate time for completing each activity:
t(e) = t(o)+4t(m)+t(p)/6
n No delays should occur along the critical path
n Calculate Critical Path by calculating time length of each path in the flowchart.
Breakeven Analysis
Def: A technique for identifying the point at which total revenue is just sufficient to cover total costs.
n Breakeven a simple calculation.
1- Breakeven point (BE)
2- Price of the product being sold (P)
3-Variable cost per unit (VC)
4- Total fixed cost (TFC)
BE= TFC/(P-VC)
This formula tells
(1) Total revenue is equal to the total cost.
(2) The difference between price and variable costs, when multiplied by
The number of unit sold, equals the fixed costs
Example:
Randy’s photocopying service charges $0 Per copy = $0.10
Fixed costs = $27,000
Variable costs = $0.04 per copy
$27,000/ ($0.10-$0.04) = 450,000 copies.
Annual revenues:
$45,000 = (450,000*$0.10)
LINEAR PROGRAMMING
n A mathematical technique that solves resource allocation problems
Headings:
n Project Management
-Project Management Process
-The Role of the Project Manager
n Scenario Planning
-Preparing for the unexpected
Project Management
- Project:
Is a one-time-only set of activities that has a definite beginning and ending time.
- Project Management:
is the task of getting a project's activities done on time, with in budget, and according to the specifications.
Steps involved in Project Management:
1. Define Objectives
2. Identify activities and resources
3. Establish sequences or orders
4. Estimate time for activities
5. Determine Project completion date
6. Compare with objectives
7. Determine additional resource requirements
- The role of Project Manager
Scenario Planning
- Scenario:
is a consistent view of what the future is likely to be. Developing plans based on various possible future scenarios
- Preparing for the unexpected:
-identify potential events
-determine if any of these have early indicators
-identify indicators by setting up information gathering system
-make appropriate responses to deal with these events.
*Note: I tried to put diagrams, made on PowerPoint here, but it failed. WOuld you like to guide me, how I can upload or put/paste diagrams here?
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Credits: GROUP 4
-Ali Haider
-Ahmed Fareed Chisti
-Hamna
-Hassan Mohi-ud-din
-Muhammad Umer Toor
-Mohsin Ali
