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Chapter 9

Planning Tools and Techniques

Planning tools and techniques

Robbins, Bergman, Stagg, Coulter: Management 4e © 2006 Pearson Education Australia Robbins, Bergman, Stagg, Coulter: Management 4e © 2006 Pearson Education Australia

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Assessing the environment

Assessing the environment (cont’d)

Environmental scanning

Environmental scanning (cont’d)

The screening of large amounts of information to anticipate and interpret change in the environment. Competitor Intelligence

Global Scanning

Screening a broad scope of information on global forces that might affect the organisation. Has value to firms with significant global interests. Draws information from sources that provide global perspectives on world-wide issues and opportunities.

The process of gathering information about competitors— who they are?; what are they doing?
Is not spying but rather careful attention to readily accessible

information from employees, customers, suppliers, the Internet, and competitors themselves.

May involved reverse engineering of competing products to discover technical innovations.

Robbins, Bergman, Stagg, Coulter: Management 4e © 2006 Pearson Education Australia

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Robbins, Bergman, Stagg, Coulter: Management 4e © 2006 Pearson Education Australia

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Coulter: Management 4e © 2006 Pearson Education Australia 5. Stagg.Assessing the environment (cont’d) Assessing the environment (cont’d) Forecasting Types of forecasting The part of organisational planning that involves creating predictions of outcomes based on information gathered by environmental scanning. Coulter: Management 4e © 2006 Pearson Education Australia 6 Forecasting techniques Making forecasting more effective 1. Quantitative • • • • • Time series analysis Regression models Econometric models Economic indicators Substitution effect Use simple forecasting methods.g. Collaborative planning. Robbins. Is most accurate in stable environments.. Remember that forecasting is a developed managerial skill that supports decision making. direction of the economy). Coulter: Management 4e © 2006 Pearson Education Australia 3.g. 7 8 2 . Coulter: Management 4e © 2006 Pearson Education Australia 5 Robbins. Stagg. units to be produced). and replenishment (CPFR) software A standardized way for organisations to use the Internet to exchange data. Bergman. Bergman. forecasting. Qualitative forecasting Facilitates managerial decision making. 6. Stagg. 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. Using expert judgments and opinions to predict less than precise outcomes (e. Robbins. 2. 4. Qualitative • Jury of opinion • Salesforce composition • Customer evaluation Robbins. Quantitative forecasting Applying a set of mathematical rules to a series of hard data to predict outcomes (e. Compare each forecast with its corresponding “no change” forecast.. Bergman. Stagg. Bergman.

” Long Range Planning. equipment. skills. Identify what is to be benchmarked. and policies Source: Based on Y. Stagg. Bergman. work systems. culture. working relationships. Coulter: Management 4e © 2006 Pearson Education Australia 12 3 . and raw materials Human: experiences. Form a benchmarking team. Analyse data to identify performance gaps and the cause of differences. Coulter: Management 4e © 2006 Pearson Education Australia Figure 9. Bergman. By analysing and copying these practices. 2. reputation. Bergman. February 1993. Shetty. firms can improve their performance. trademarks.1 11 Robbins. and databases Structural/cultural: history. and retained earnings Physical: buildings. Stagg. Collect internal and external data on work methods. Robbins. p. Coulter: Management 4e © 2006 Pearson Education Australia 10 Steps in benchmarking Allocating resources Types of resources The assets of the organisation Financial: debt. Robbins. Stagg. select comparison organisations. 42. Coulter: Management 4e © 2006 Pearson Education Australia 9 Robbins.K. and competencies Intangible: brand names. Bergman. patents. knowledge. trust. copyrights. 3. “Aiming High: Competitive Benchmarking for Superior Performance. and determine data collection methods. Stagg.Benchmarking The benchmarking process 1. equity. Prepare and implement an action plan to meet or exceed the standards of others. 4. The search for the best practices among competitors and non-competitors that lead to their superior performance.

Bergman. Stagg. 1995). Coulter: Management 4e © 2006 Pearson Education Australia Allocating resources: scheduling Schedules Plans that allocate resources by detailing what activities have to be done. Russell and B. Stagg. Represent the coordination of various activities.W. Source: Based on R. Coulter: Management 4e © 2006 Pearson Education Australia Figure 9. Production and Operations Management (Upper Saddle River. NJ: Prentice Hall. space.S. p. and when they are to be completed. Coulter: Management 4e © 2006 Pearson Education Australia 16 4 .3 14 Suggestions for improving budgeting Be flexible. Bergman. Use budgeting/planning software when appropriate. 287. Bergman. 15 Robbins. not because you budgeted for them. Stagg. Bergman. Robbins. the order in which they are to be completed. Goals should drive budgets—budgets should not determine goals. Stagg. and use of material resources. Coordinate budgeting throughout the organisation. Coulter: Management 4e © 2006 Pearson Education Australia 13 Robbins.Allocating resources: budgeting Types of budgets Budgets Numerical plans for allocating resources to specific activities Used to improve time. who is to do each. Are the most commonly used and most widely applicable planning technique for organisations. Robbins. Taylor III. Remember that budgets are tools. Remember that profits result from smart management.

Stagg.Allocating resources: charting A Gantt Chart Gantt Chart A bar graph with time on the horizontal axis and activities to be accomplished on the vertical axis. which depends on the completion of both activities. Bergman. Bergman. Events: endpoints for completion. Stagg. Activities: time required for each activity. Critical path: the path (ordering) of activities that allows all tasks to be completed with the least slack time. Coulter: Management 4e © 2006 Pearson Education Australia Figure 9. Bergman. Coulter: Management 4e © 2006 Pearson Education Australia 17 Robbins.6 19 Robbins. can start. Stagg. Bergman. Coulter: Management 4e © 2006 Pearson Education Australia Figure 9. Allows managers to plan and control capacity utilization. Stagg. Robbins. Slack time: the time that a completed activity waits for another activity to finish so that the next activity. Robbins. Coulter: Management 4e © 2006 Pearson Education Australia 20 5 . Load Chart A modified Gantt chart that lists entire departments or specific resources on the vertical axis. Shows the expected and actual progress of various tasks.5 18 A Load Chart 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.

Coulter: Management 4e © 2006 Pearson Education Australia Total Fixed Costs Unit Price . Coulter: Management 4e © 2006 Pearson Education Australia Figure 9. 3. A PERT network for constructing an office building Robbins. identifying each activity and its relationship to all other activities. Compute a time estimate for completing each activity. Identify every significant activity that must be achieved for a project to be completed.8 23 Robbins. 5. Bergman. Bergman. Determine the order in which these events must be completed.Steps in developing a PERT network 1.J . Stagg. Coulter: Management 4e © 2006 Pearson Education Australia Table 9.H .D . determine a schedule for the start and finish dates of each activity and for the entire project. Fixed cost (FC) Variable costs (VC) Total Fixed Costs (TFC) Price (P) Critical Path: A . Using the network diagram that contains time estimates for each activity. Bergman. Stagg. Coulter: Management 4e © 2006 Pearson Education Australia 6 . Stagg. Diagram the flow of activities from start to finish. 4. 2.K The break-even formula: Breakeven : Robbins.Unit Variable Costs 24 Figure 9.B .2 22 A PERT network for constructing an office building Allocating resources: analysis (cont’d) Breakeven analysis Is used to determine the point at which all fixed costs have been recovered and profitability begins.C . Bergman.G . Stagg.7 21 Robbins.

Robbins. Stagg. Coulter: Management 4e © 2006 Pearson Education Australia 26 Production data for cinnamon-scented products Graphical solution to linear programming problem Robbins. Bergman. Bergman.3 27 Robbins. Coulter: Management 4e © 2006 Pearson Education Australia Table 9.Breakeven analysis Allocating resources: analysis (cont’d) Linear programming A technique that seeks to solve resource allocation problems using the proportional relationships between two variables. Bergman. Coulter: Management 4e © 2006 Pearson Education Australia Figure 9.9 25 Robbins. Stagg. Stagg. Coulter: Management 4e © 2006 Pearson Education Australia Figure 9. Bergman.10 28 7 . Stagg.

Determine if any of these events would have early indicators.S. 287. NJ: Prentice Hall. Russell and B.11 30 Contemporary planning techniques Preparing for unexpected events Identify potential unexpected events. Coulter: Management 4e © 2006 Pearson Education Australia 32 8 . materials. Coulter: Management 4e © 2006 Pearson Education Australia Figure 9. Scenario A consistent view of what the future is likely to be. Bergman.Contemporary planning techniques Project planning process Project A one-time-only set of activities that has a definite beginning and ending point time. within budget. and labor Determine the sequence of completion Source: Based on R. Coulter: Management 4e © 2006 Pearson Education Australia 31 Robbins. Bergman. p. Project management The task of getting a project’s activities done on time. Taylor III. and according to specifications. Contingency planning Developing scenarios that allow managers determine in advance what their actions should be should a considered event actually occur. Stagg. Define project goals Identify all required activities. 1995). Bergman.W. Coulter: Management 4e © 2006 Pearson Education Australia 29 Robbins. Bergman. Stagg. Have appropriate responses (plans) in place if these unexpected events occur. Stagg. Set up an information gathering system to identify early indicators. Robbins. Stagg. Production and Operations Management (Upper Saddle River. Scenario planning An attempt not try to predict the future but to reduce uncertainty by playing out potential situations under different specified conditions. Robbins.