Transcript of "Plans and planning tools (principles of management)"
Source: Samuel Certo
Definition of Plan
Plan is a specific action proposed to help the
organization achieve its objectives.
Dimension of Plans
Kast 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
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 Plans
Standing 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
1. Program – is a single-use plan designed
to carry out a special project within an
2. Budgets – is a single-use financial plan
that covers a specified length of time.
Why Plans Fail
A study by K.A. Ringbakk determined that plans fail when
1. Corporate planning is not integrated into the total management
2. There is a lack of understanding of the different steps of planning
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
5. Management expects that plans developed will be realized with
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.
Input Planning is the development of proposed
action that will furnish sufficient and appropriate
organizational resources for reaching established
The following two sections cover
planning in two areas normally
associated with the input factor:
Plant Facilities Planning and Human Resource
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
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 tools are techniques managers can use to
help develop plans.
Forecasting is the process of predicting future
environmental happenings that will influence the
operation of the organization.
How Forecasting Works
William 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
1. Establish relationships between industry
sales and national economic and social
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
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
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 Cycle
Product 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
Scheduling 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.
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
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 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
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