Management Chapter 8

1. Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition.
Copyright © 2005 Pearson Education Canada Inc. 1
Chapter 8
Planning Tools and Techniques
with Duane Weaver

2. Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition.
Copyright © 2005 Pearson Education Canada Inc. 2
OUTLINE
• Environment Assessment Techniques
– Environmental Scanning
– Forecasting
– Benchmarking
– Budgeting
– Scheduling
– Breakeven Analysis
– Linear Programming
• Contemporary Planning
– Project Management
– Scenario Planning

3. Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition.
Copyright © 2005 Pearson Education Canada Inc. 3
Assessing the Environment
• Environmental Scanning
– The screening of large amounts of information to
anticipate and interpret changes in the environment
– Competitor Intelligence
• The process of gathering information about competitors—who
they are, what they are doing, and how their actions will affect
the organization
– Is not spying but rather careful attention to readily accessible
information from employees, customers, suppliers, the Internet,
and competitors themselves
• May involve reverse engineering of competing products to
discover technical innovations

4. Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition.
Copyright © 2005 Pearson Education Canada Inc. 4
Assessing the Environment
(cont’d)
• Environmental Scanning
(cont’d)
– Global Scanning
• Screening a broad scope of
information on global forces that
might affect the organization
• Has value to firms with significant
global interests
• Draws information from sources that
provide global perspectives on
worldwide issues and opportunities

5. Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition.
Copyright © 2005 Pearson Education Canada Inc. 5
Assessing the Environment
(cont’d)
• Forecasting
– The part of organizational planning that involves creating
predictions of outcomes based on information gathered by
environmental scanning
• Facilitates managerial decision making
• Is most accurate in stable environments
– Quantitative forecasting
• Applying a set of mathematical rules to a series of hard data to predict
outcomes (e.g., units to be produced)
– Qualitative forecasting
• Using expert judgments and opinions to
predict less than precise outcomes
(e.g., direction of the economy)

6. Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition.
Copyright © 2005 Pearson Education Canada Inc. 6
Making Forecasting More
Effective
• Use simple forecasting methods
• Compare each forecast with its corresponding “no
change” forecast
• Don’t rely on a single forecasting method
• Don’t assume that the turning points in a trend can be
accurately identified
• Shorten the time period covered by a forecast
• Remember that forecasting is a developed managerial
skill that supports decision making

7. Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition.
Copyright © 2005 Pearson Education Canada Inc. 7
Benchmarking
• The search for the best practices among competitors
and noncompetitors that lead to their superior
performance
• By analyzing and copying these practices, firms can
improve their performance

8. Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition.
Copyright © 2005 Pearson Education Canada Inc. 8
Exhibit 8.2 Steps in Benchmarking
Source: Based on Y.K. Shetty, “Aiming High: Competitive Benchmarking
for Superior Performance,” Long Range Planning. February 1993, p. 42.
BEST
PRACTICES
Analyze data to identify
performance gaps.
Form a benchmarking
planning team.
Gather internal and
external data.
Prepare and implement
action plan.

9. Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition.
Copyright © 2005 Pearson Education Canada Inc. 9
Allocating Resources
• Types of Resources
– The assets of the organization
• Financial
• Physical
• Human
• Intangible
• Structural/cultural

10. Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition.
Copyright © 2005 Pearson Education Canada Inc. 10
Exhibit 8.3 Techniques for Allocating
Resources
Scheduling
Detailing what's to
be done, in what
order, by whom,
and when
Breakeven Analysis
Determining the
point where revenue
and costs of a
project will match
Linear Programming
Using a
mathematical
technique to solve
resource allocation
Budgeting
Creating a numerical
plan for allocating
resources to
specific activities
Revenue Expense Profit Cash Gantt Load PERT

11. Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition.
Copyright © 2005 Pearson Education Canada Inc. 11
Exhibit 8.4 Types of Budgets
Source: Based on R.S. Russell and B.W. Taylor III. Production and Operations
Management (Upper Saddle River, NJ: Prentice Hall, 1995), p. 287.
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

12. Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition.
Copyright © 2005 Pearson Education Canada Inc. 12
Tips for Managers: Improving
Budgeting
• Be flexible.
• Understand that goals should drive budgets—
budgets should not determine goals.
• Coordinate budgeting throughout the organization.
• Use budgeting/planning software when appropriate.
• Remember that budgets are tools.
• Remember that profits result from smart
management, not because you budgeted for them.

13. Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition.
Copyright © 2005 Pearson Education Canada Inc. 13
Exhibit 8.5 A Gantt Chart
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

14. Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition.
Copyright © 2005 Pearson Education Canada Inc. 14
Exhibit 8.6 A Load Chart
Ling
Antonio
Kim
Maurice
Dave
Rashid
1 2
Month
Editors
3 4 5 6
Work scheduled

15. Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition.
Copyright © 2005 Pearson Education Canada Inc. 15
Allocating Resources: Analysis
• Program Evaluation and Review Technique (PERT)
– A flow chart diagram that depicts the sequence of
activities needed to complete a project and the time or
costs associated with each activity
• Events: endpoints for completion
• Activities: time required for each activity
• Slack time: the time that a completed activity waits for another
activity to finish so that the next activity, which depends on the
completion of both activities, can start
• Critical path: the path (ordering) of activities that allows all
tasks to be completed with the least slack time

16. Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition.
Copyright © 2005 Pearson Education Canada Inc. 16
Let’s Make Lemonade
•Inputs?
•Outputs?
•Resources?
•Gantt Chart
•How to find Gaps?

17. Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition.
Copyright © 2005 Pearson Education Canada Inc. 17
Allocating Resources: Analysis
(cont’d)
• Break-even Analysis
– Is used to determine the point at which all fixed costs
have been recovered and profitability begins
• Fixed costs (FC)
• Variable costs (VC)
• Total Fixed Costs (TFC)
• Price (P)
• The Break-even Formula:
Costs
Variable
Unit
-
Price
Unit
Costs
Fixed
Total
Break-even:

18. Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition.
Copyright © 2005 Pearson Education Canada Inc. 18
Exhibit 8.10 Break-even Analysis
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
Area
Total
Revenue
Loss
Area
Total
Costs
Revenue/Cost
($)

19. Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition.
Copyright © 2005 Pearson Education Canada Inc. 19
Contemporary Planning Techniques
• Project
– A one-time-only set of activities that has a
definite beginning and ending point time
• Project Management
– The task of getting a project’s activities done on
time, within budget, and according to
specifications
• Define project goals
• Identify all required activities, materials, and labour
• Determine the sequence of completion

20. Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition.
Copyright © 2005 Pearson Education Canada Inc. 20
Exhibit 8.13 Project Planning
Process
Source: Based on R.S. Russell and B.W. Taylor III, Production and Operations
Management (Upper Saddle River, NJ: Prentice Hall, 1995), p. 287.
Define
objectives
Identify
activities
and
resources
Establish
sequences
Estimate
time for
activities
Determine
project
completion
date
Compare
with
objectives
Determine
additional
resource
requirements

21. Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition.
Copyright © 2005 Pearson Education Canada Inc. 21
Linear Programming
A method of solving limited resource
allocation between two variables where the
goal is optimization such that the change in
one variable is accompanied by an exactly
proportional change in the other.

22. Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition.
Copyright © 2005 Pearson Education Canada Inc. 22
Contemporary Planning Techniques
(cont’d)
• Scenario
– A consistent view of what the future is likely to be
• Scenario Planning
– An attempt not to try to predict the future but to reduce
uncertainty by playing out potential situations under
different specified conditions
• Contingency Planning
– Developing scenarios that allow managers to determine in
advance what their actions should be should a considered
event actually occur

23. Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition.
Copyright © 2005 Pearson Education Canada Inc. 23
Tips for Managers: Preparing for
Unexpected Events
• Identify potential unexpected events.
• Determine if any of these events would have
early indicators.
• Set up an information gathering system to
identify early indicators.
• Have appropriate responses (plans) in place if
these unexpected events occur.

24. Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition.
Copyright © 2005 Pearson Education Canada Inc. 24
Break Time