This document discusses various planning techniques and tools that can be used in decision making. It describes techniques for assessing the environment like environmental scanning, forecasting and benchmarking. It also covers techniques for allocating resources such as budgeting and scheduling. Specific tools discussed include PERT analysis, affinity diagrams, tree diagrams, interrelationship diagrams, matrix diagrams, prioritization matrices, process decision program charts and activity network diagrams. The document emphasizes applying the appropriate planning techniques and tools to formulate decisions from alternatives in decision making.

1. PLANNING
TECHNIQUES AND
TOOLS AND THEIR
APPLICATIONS
DECISION-MAKING

2. OBJECTIVES
At the end of the discussion, you should be able to:
1. Apply appropriate planning techniques and tools in decision-making
2. Formulate a decision from several alternatives.

3. THREE CATEGORIES OF PLANNING AND TECHNIQUES:
 TECHNIQUES FOR ASSESSING THE ENVIRONMENT
 TECHNIQUES FOR ALLOCATING RESOURCES
 CONTEMPORARY PLANNING

4. 1. TECHNIQUES FOR ASSESSING THE
ENVIRONMENT
Many larger accounting firms have set-up eternal analysis departments to study
the wider environment in which they and their client operate.

5. THREE TECHNIQUES THAT WOULD HELP THE
MANAGER
1. ENVIRONMENTAL SCANNING
2. FORECASTING
3. BENCHMARKING

6. 1. ENVIRONMENTAL SCANNING
- used to screen large amount of information to anticipate and interpret changes in the
environment.
1.1 COMPETITIVE INTELLIGENCE
- process by which the organization gather information about their competitors and get answer
to questions. Who are they? What are they doing? How will they affect us?
1.2 GLOBAL SCANNING
- world markets are complex and dynamic. Managers must focus on how he should update the
business.

7. 2. FORECASTING
Predicts the future events effectively.
2.1 QUANTITATIVE FORECASTING
- set of mathematical rules to a series of past data to predict outcomes.
2.1 QUALITATIVE FORECASTING
- uses judgment and opinions of knowledgeable individuals to predict outcomes.

8. CPRF (COLLABORATIVE PLANNING, FORECASTING AND
REPLENISHMENT)
- provides framework for the flow of information, goods and
services between retailers and manufacturers.
S

9. EFFECTIVENESS OF FORECASTING
QUANTITATIVE
 TIME SERIES ANALYSIS (DURATION TO COMPLETE)
 REGRESSION MODELS (PREDICTING A VARIABLE BY ASSUMING ANOTHER VARIABLE)
 ECONOMETRIC MODELS (SALES CHANGE DUE TO TAXATION)
 ECONOMIC INDICATORS (USING FACTOR TO PREDICT E.G. GDP)
 SUBSTITUTION EFFECT (DVD VS PEN DRIVER)
QUALITATIVE
 JURY OF OPTION (RECRUITING)
 SALES FORCE COMPOSITION (PREDICTING NET YEAR SALES)
 CUSTOMER EVALUATION (SURVEYING DEALERS)

10. 3. BENCHMARKING
- the search for the best practices among competitors and non-competitors that lead to
their superior performance.

11. 2. TECHNIQUES FOR ALLOCATING RESOURCES
- managers must focus on the resource allocation before execution of work.
• EXAMPLES : FINANCIAL (EQUITY, DEBTS)
HUMAN (SKILLED LABORS)
PHYSICAL (RAW MATERIALS, EQUIPMENT)
INTANGIBLE (BRAND NAMES, REPUTATION)

12. 1. BUDGETING
 Numerical plans for allocating resources to specific activities.
 Used to improve time, space and use of material resources.

13. IMPORTANCE OF BUDGETING
• ORGANIZATIONAL SUCCESS
Effective budgeting system is a key to organizational success.
• EFFECTIVE BUDGETING SYSTEM
- is a great way to successfully attain the business goals and objectives that have been
quantified and clearly stated.
METHODS TO IMPROVE BUDGETING:
 collaborate and communicate
 be flexible
 goals should drive budgets
 use budgeting/planning when appropriate

14. TYPES OF BUDGETS
FIXED OR STATIC BUDGET – it refers to an estimate of pre-determined incomes and
expenditures, which once prepared does not change with the variations in the activity
levels achieved.
TYPES OF FIXED OR STATIC BUDGET
 REVENUE BUDGET – it is forecast of company’s sales revenues and expenditures,
including capital related expenditure.
 EXPENSE BUDGET – it is forecast of all the elements of a business operating expenses,
such as salaries, rent, depreciation, and others.

15. FLEXIBLE OR VARIABLE BUDGET – it is a financial plan created for different activity level. it
can be freely adjusted on the basis of output produced
TYPES OF FLEXIBLE OR VARIABLE BUDGET
 CASH BUDGET – is an estimate of the cash flow of an individual or company over a
specific period of time to determine whether cash is being spent productively. “forecast
cash on hand and how much will be needed”.
 PROFIT BUDGET – “combines revenue and expense budgets of various units to determine
each unit’s profit contribution.

16. 2. SCHEDULING
- plans that allocate resources by detailing what activities have to be done. The order in
which they are to be completed and who is going to do and when they are to be
completed.

17. 2.1 PERT ANALYSIS
 a flow chart diagram that depicts the sequence of activities needed to complete a
project and the time or costs associated with each activity.
TO UNDERSTAND THIS, ONE MUST KNOW THE FOLLOWING TERMS:
 EVENTS: Endpoint for completion
 ACTIVITIES: Time required for each activity
 SLACK TIME: Time an individual activity can be delayed.
 CRITICAL PATH: Most time consuming sequence of events

18. STEPS IN PERT ANALYSIS
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.
4. Compute a time estimate for completing each activity.
5. Determine a schedule for the start and finish dates of each activity and for the entire
project.

19. SEVEN MANAGENT AND PLANNING TOOLS

20. 1. AFFINITY DIAGRAM
- an affinity diagram is a tool used for organizing a large amount of disorganized
information into groups based on their natural relationships and affinity (similarity of
characteristics). It is often used for solving problems with issues that seem to be very
complex and difficult to manage. An affinity diagram is a type of brainstorming technique
that allows you to generate, organize, and consolidate information concerning complex
processes, issues, or problems.

22. 2. TREE DIAGRAM
- a tree diagram (also referred to as a systematic diagram) is a systematic method
used to outline all the details needed to complete a given objective or process. It is used
to break down broad categories or complex processes into minute details allowing you to
examine the finer details. The tree diagram is an orderly structure similar to an
organization chart or family tree diagram. It helps in understanding a process by
graphically breaking down complex processes to smaller levels of detail. 2/4 of this
technique encourages you to direct your thinking from generalities to specifics.

24. 3. AN INTERRELATIONSHIP DIAGRAM
- an interrelationship diagram (also referred to as a relations diagram) identifies
and displays all the interrelated cause and effect relationships among different concepts or
ideas. Basically, it establishes links between ideas or concepts, and shows that they can be
logically linked with more than one other idea or concept at a time. The process of
creating an interrelationship diagram allows you to systematically identify and analyze the
cause-and-effect relationships that exist among all critical issues. This process helps you
understand the natural links between different aspects of a complex issue so you can
better develop an effective solution. This technique encourages you to think in multiple
directions (lateral thinking) rather than just thinking linearly.

26. 4. MATRIX DIAGRAM
- a matrix diagram is a tool that shows the connection or correlation between
ideas or variables in a table format. It enables you to analyze relatively complex issues by
revealing interactions and dependencies between different elements or variables. The
matrix diagram graphically establishes relationship between two or more sets of items in
such a way as to provide logical connecting points between each item. The diagram
displays the strength of relationships using a grid of rows and columns. A relationship is
indicated at each intersection of rows and columns as either present or absent. Thus,
allowing you to identify the presence and strengths of relationships between two or more
items.

28. 5. PRIORITIZATION MATRICES
- is a tool that sorts and ranks various options into an order of importance using
weighted criteria. This technique helps identify which problems are the most important to
work on solving first. A prioritization matrix graphically displays options and criteria in row
and column format. Weights are assigned to each criteria. The matrix allows you to identify
an item’s relative importance by deriving a numerical value for its priority. This allows you
to select and prioritize some options over others.

30. 6. PROCESS DECISION PROGRAM CHART (PDPC)
- a process decision program chart (pdpc) is a tool for identifying and
documenting the steps required to complete a process. It is intended to help you prepare
contingency plans by mapping out every conceivable event that can occur when moving
from a 3/4 problem to possible solutions. This technique allows you to systematically
identify what might go wrong with a plan. Therefore, you can create appropriate
contingency plans to limit risks.

32. 7. ACTIVITY NETWORK DIAGRAM
• - activity network diagram (also referred to as an arrow diagram) is a tool used to map
activities and tasks for a project in sequential order. Basically, it graphically depicts a
project timeline. This tool displays interdependent relationships between activities, tasks,
and groups as they all impact a project. Boxes and arrows are used to depict these
activities.

35. All managers and workers/employees in organizations
make decisions or make choices that affect their jobs and
organization they work for. This focuses on how they make
decisions by going through the eight steps of the decision-
making process suggested by Robbins and Coulter (2009).

36. DECISION-MAKING
- is a process which begins with problem identification and ends with the evaluation of
implemented solutions. It is the process of identifying a set of feasible alternatives and
choosing a course of action from them.
- is a part of planning
- is an intermediate-sized set of activities that begins with an identifying problem and
ends with choice making or decision giving.

37. TYPES OF DECISIONS
1. STRUCTURED OR PROGRAMMED DECISION
– a decision that is repetitive and can be handled using a routine approach. Such
repetitive decision applies to resolving structured problems which are straightforward,
familiar, and easily defined. For example, a restaurant customer complains about the dirty
utensils the waiter has given him. This is not an unusual situation, and, therefore,
standardized solutions to such a problem may be readily available.

38. 2. UNSTRUCTURED OR NON-PROGRAMMED DECISIONS
– applied to the resolution of problems that are new or unusual, and for which
information is incomplete. Such non-programmed decisions are described to be unique,
nonrecurring and need custom-made decisions. For example, a hotel manager is asked to
make a decision regarding the building of a new hotel branch in another city to meet the
demands of business there. This is an unstructured problem and, therefore, needs
unstructured and non-programmed decisions to resolve it.

39. TYPES OF DECISION-MAKING CONDITIONS
1. CERTAINTY CONDITIONS
– ideal conditions in deciding problems; these are situations in which a manager
can make precise decisions because the results of all alternatives are known. For example,
bank interests are made known to clients so it is easier for business managers to decide on
the problem of where to deposit their company’s funds. The bank which offers the highest
interest rate, therefore, is the obvious choice of the manager when asked to make a
decision.

40. 2. RISK OR UNCERTAINTY CONDITIONS
– a more common condition in deciding problems. Risk or uncertainty conditions
compel the decision-maker to do estimates regarding the possible occurrence of certain
outcomes that may affect his or her chosen solution to a problem. Historical data from his
or her own experiences and other secondary information may be used as bases for
decisions to be made by the decision-maker under such risk conditions. For example, a
manager is asked to invest some of their company funds in the money market offered by a
financial institution. Risk factors must be considered, because of the uncertainty conditions
involved, before making a decision – whether to invest or not in the said money market.

41. THE DECISION-MAKING PROCESS ACCORDING TO
ROBBINS AND COULTER
STEP 1: IDENTIFY THE PROBLEM. The problem may be defined as a puzzling circumstances
or a discrepancy between an existing and a desired condition.
STEP 2: IDENTIFY THE DECISION CRITERIA. These are important and relevant to resolving
the identified problem.
STEP 3: ALLOCATE WEIGHTS TO THE CRITERIA. This is done in order to give the decision
maker the correct priority in making the decision.
STEP 4: DEVELOP ALTERNATIVES. This step requires the decision maker to list down
possible alternatives that could help resolve the identified problem.

42. STEP 5: ANALYZE THE ALTERNATIVES. Alternatives must be carefully evaluated by the
decision maker using the criteria identified in step 2.
STEP 6: SELECT AN ALTERNATIVE. This is the process of choosing the best alternative or
the one which has the highest total points in step 5.
STEP 7: IMPLEMENT THE CHOSEN ALTERNATIVE. This step puts the decision into action.
changes in the environment must be observed and assessed, especially in cases of long-
term decisions, to see if the chosen alternative is still the best one.
STEP 8: EVALUATE DECISION EFFECTIVENESS. This is the last step and involves the
evaluation of the outcome or result of the decision to see if the problem was resolved. If
the problem still exists, the manager has to assess what went wrong and, if needed, repeat
a step or the whole process.

43. 15 WAYS TO IMPROVE YOUR DECISION-MAKING
SKILLS
1. Make a plan
2. Be assertive
3. Ask an expert
4. Keep it in perspective
5. Set deadlines
6. Limit choices
7. Weigh your options

44. 8. Exercise
9. Get some rest
10. Meet new friends
11. Try experiments
12. Learn and improve
13. Take a break
14. Work through a list
15. Practice

45. RELATION BETWEEN PLANNING AND DECISION-
MAKING
Planning and decision-making are the most important managerial functions, and
there are many relations between them. Planning is thinking of doing. Decision-making
is a part of planning. Planning is the process of selecting a future course of action, where
decision-making means selecting a course of action.
Planning and decision-making, organizing, leading and controlling are all
interrelated. Planning and decision making is the most important step of all managerial
functions.

47. Remember For All Decision-Making Processes: Clear Goals Are Vital