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Chapter 4 Planning and Forecasting - Coggle Diagram
Chapter 4 Planning and Forecasting
Learning Objectives
Management Functions
Planning/ Decision-Making Process
Nature of Planning
Deciding in advance what to do, how to do it, when to do it, and who is to do it.
-Amos & Sarchet -
The Foundation of Planning
Goals and Objectives
Mission/Vision
Strategies
All Customer Driven
Planning: Mission Statement
First step in planning process
The mission statement answers the following questions:
-Who we are?
-Who are the customers?
-What we do? and
-How we do it?
This statement is usually one paragraph or less in length, is easy to understand, and describes the function of the organization.
Mission
A mission statement
Vision
-A statement of how someone wants the future to be or believes it will be; it is used to set direction for an organization.
-A vision statement describes in graphic terms where the goal-setters want to position themselves in the future.
Vision Example
Planning: Goal and Objectives
Gives purpose and direction
More detailed goal statement
How do we go about it?
To (action verb)
Consistent with Mission/Vision
Planning: Develop Objectives
Specific
Measurable
Attainable
Realistic
Time-limited
Characteristics of Objectives
Goals and Objectives
Drucker’s Objectives for Organizational Survival Market Share
Innovation
Productivity
Physical and Financial Resources
Manager Performance and Development
Worker Performance and Attitude
Profitability
Social Responsibility
Management by Objectives
-
Commonly Referred to as MBO
-Corollary MBWA (Management by Walking Around)
Translates broad organizational goals into specific individual objectives.
Common understanding of overall organization and group goals.
Mutual agreement on the subordinate’s attention and superior’s support.
Execution
Review and evaluation
Strategic Planning
Strategies:
Grand plans to attain longer-range objectives
Strategic Planning:
Identify where the organization is
Identify where does it want to be in the future
Define a strategy to get there
-Suggests ways (
strategies
) to identify and to move toward desired future states
-Consists of the process of developing and implementing
plans
to reach
goals
and
objectives
-Not a business plan
-Not an operational plan
SWOT ANALYSIS
Internal
Strengths
Weaknesses
External
Opportunities
Threats
Some Planning Concepts
Responsibility for planning
-Planning is a continuing responsibility of every manager.
-Higher the manger, more time and further into future.
Planning Premises (assumptions)
-The anticipated environment in which plans are expected to operate, including assumptions and known conditions.
-Contingency plan
Planning Horizon
Logical planning encompasses a future period of time necessary to fulfill the commitment involved in decisions made today ($ and time).
Commitment principle-
Policies
:
Guides for decision making that permit implementation of upper management objectives, with room for interpretation and discretion by subordinates.
Procedure
:
A prescribed sequence of activities to accomplish a desired purpose.
Forecasting
-Essential preliminary to effective planning
-Engineering manager must be concerned with both future markets and future technology
-Sales (Market) Estimates
-Technological Forecasting
New facility planning
Production planning
Work force scheduling
Long Range Forecasts
Design new products
Determine capacity for new facility
Long range supply of materials
Short Range Forecasts
Amount of inventory for next month
Amount of product to produce next week
How much raw material delivered next week
Workers schedule next week
Forecasting: Qualitative Methods
Judgment Methods:
Jury of executive opinion
Sales force composite
Users’ expectation
Delphi method
Counting Methods:
Market Testing
Market Survey
Delphi Method
Delphi Method
Delphi coordinator develops objective of forecast
Determine number of participants
Select and contact participants
Develop first questionnaire (opinions & forecasts) and submit
Coordinator analyzes responses
Develop second questionnaire based on results of first
Analyze responses
Rounds continue until consensus reached or experts’ opinions cease to change
-Eliminates effects of interactions between members
-Experts do not need to know who other experts are
-Reaches consensus
Forecasting: Quantitative Methods
Time Series Methods
Moving Average
Weighted Moving Average
Exponential Smoothing
Association or Causal Method
Simple Regression
Multiple Regression
Simple Moving Average
Exponential Smoothing
Exponential Smoothing
Advantages:
Simple in concept
Powerful because of its weighting process.
Disadvantages:
Exponential smoothing will lag as the trend increases or decreases over time.
Exponential smoothing will fail to account for the dynamic changes.
Simple Regression Model
Multiple Regression Model
Technological Forecasting
Prediction that certain technical development can occur within a specified time period with a given level of resource allocation
Normative technological forecasting:
After a desired future goal is selected, a process is developed backward, from future to present, to achieve a goal.
Exploratory technological forecasting:
It begins with the present state of technology and extrapolates into the future assuming some expected rate of technical progress.
Technology S-curve
Strategies for Managing Technology
Doing new and better things
Invention
Innovation
Doing things in new and better ways
Quality
Productivity
Entrepreneurship
Entrepreneurship
A person who organizes and manages a business undertaking, assuming the risk for the sake of profit.
Intrapreneurship
Continuing entrepreneurial activities to create new products and new business.
Government Regulation
-Environment concerns
-Safety
Managing Technological Changes
Internet
-Marketing (B2C)
-Purchasing, Supply Chain Management (B2B)
-Design, Manufacturing
-Customer Service
Information Age
