PLANNING AND

FORECASTING
Features of Planning
Planning has a number of characteristics:
 Planning is goal-oriented
 Planning is a primary function
 Planning is all-pervasive
 Planning is a mental exercise
 Planning is a continuous process
 Planning involves choice
 Planning is forward looking
 Planning is flexible
 Planning is an integrated process
 Planning includes efficiency and effectiveness
dimensions
Steps in the Planning
Process
 Establishing objectives
 Developing premises
 Evaluating alternatives and selection
 Formulating derivative plans
 Securing cooperation and participation
 Providing for follow-up
Approaches to Planning

 Top-down approach

 Bottom-up approach

 Composite approach

 Team approach
Principles of Planning
 Principle of contribution to objectives

 Principle of primacy of planning

 Principle of pervasiveness of planning

 Principle of flexibility

 Principle of periodicity

 Principle of planning premises

 Principle of limiting factor

Importance of Planning
 Planning provides direction
 Planning provides a unifying framework
 Planning is economical
 Planning reduces the risks of uncertainty
 Planning facilitates decision making
 Planning encourages innovation and creativity
 Planning improves morale
 Planning facilities control
Types of Plans and Planning
• Standing Plan: established routine,
formula, or set of procedures
designed to be used in a reccurring
situation.
• They standardize actions so the
supervisors need to manage is
reduced to seeing that workers
meet standards and dealing with
unexpected events known as
management by exception.
• Potential drawback: Rigidity, must
make them flexible enough to deal
with daily realities.
• These plans must be updated
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regularly.
The Single Use Plan
• A one time plan developed
for a single occasion or
purpose.
• The amount of time you
spend on it depends on its
nature and importance.
• Often its purpose is a
major change of some
sort or budgets.

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Day-by-Day Planning
• Top priority of the first
line supervisor.
• Primary concern is what is
to be done, who will be
doing it, and adjusting
various standing plans.
• Plan before the day begins.
• Establish routines simplify
planning.
• Whenever possible reduce
risks by increasing
predictability.
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Limitations of Planning
 Rigidity
 Costly and time consuming
 Employee resistance
 False sense of security
 Managerial deficiencies
 Planning prevents innovation
 External Limitations
 Difficult to predict
 Projected too far into the future
 Environmental turbulence
 Emergency situations
Effective Planning

Climate
 Top management support

 Participation
 Communication

 Integration

 Monitoring
Operational Planning vs. Strategic Planning
Feature Strategic (Long-range) Operational (Short-range)

Time horizon 5 years or more Under 1 year

Purpose Adapt to external Implement internal goals
environment based on
internal strengths
Activity controlled Total institutional Internal tasks and operations
performance
Decision range Relatively enduring Short-term

Organisational Top management Middle and lower management

level involved
Basis for planning Primarily judgmental Exact data and standards used

Predictability Uncertain Highly certain

Anticipated Within 25 per cent Within 2 or 3 per cent

accuracy
Management Planning and forecasting Control primarily
functions involved dominant
Management Slight; contingency plans Almost complete; single-option
control of required plans used
outcomes
Formal and
Informal Planning
 Forecasting
• Forecasting: Predicting
future needs on the
basis of historical data,
present conditions, and
assured future.
• Forecasting controls
staffing, purchasing, and
production decisions.
• Forecasting is a very
important function!

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Forecasting: Introduction
Essential elements in business forecasting

 Developing the groundwork

 Estimating future business
 Comparing the actual with estimated results
 Refining the forecast process
Relationship Between Planning and Forecasting
 Forecasts offer pertinent information regarding future.
 Forecasting helps in bringing a singleness of purpose
to planning, that cannot exist easily otherwise.
 Forecasting improves the quality of managerial
planning.
 Forecasting helps in minimising the costly planning
errors.
 Forecasting also helps in preparing the organisation
for future crisis and emergencies.
 Forecasting supplies vital information regarding the
weak spots in the organisation thereby paving the way
to appropriate control.
Limitations

1. Rule of thumb forecasts only

2. Unreliable
Thank you