Planning tools and techniques

This presentation discusses about planning tools and techniques in Principles of Management

1. PLANNING TOOLS AND
TECHNIQUES
R.Arun Kumar, AP/Mech, RIT

2. There are three categories of planning tools and techniques:
Techniques for assessing the environment
Techniques for allocating resources
Contemporary planning
R.Arun Kumar, AP/Mech, RIT

3. Techniques for assessing the environment:
Many larger accounting firms have setup external analysis
departments to study the wider environment in which they
and their clients operate.
Three techniques helps managers to do that:
1. Environmental scanning
2. Forecasting
3. Benchmarking
R.Arun Kumar, AP/Mech, RIT

4. Techniques for assessing the environment:
1. Environmental scanning:
Managers used to screen large amount of information to anticipate
and interpret changes in the environment.
R.Arun Kumar, AP/Mech, RIT

5. Techniques for assessing the environment:
1. Environmental scanning:
Analyzing what is the need of customers and the market survival
strategy of the competitors.

R.Arun Kumar, AP/Mech, RIT

6. Techniques for assessing the environment:
1. Environmental scanning:
1.1 Competitive Intelligence:
Process by which the organizations gather information about their
competitors and get answers to questions Who they are? What
they are doing? How will they affect us?

R.Arun Kumar, AP/Mech, RIT

7. Techniques for assessing the environment:
1. Environmental scanning:
1.2 Global Scanning:
World markets are complex and dynamic.
Managers must focus how he should update the business.
R.Arun Kumar, AP/Mech, RIT

8. Techniques for assessing the environment:
2. Forecasting:
Predict the future events effectively.
1.Quantitative forecasting
2.Qualitative forecasting
R.Arun Kumar, AP/Mech, RIT

9. Techniques for assessing the environment:
2. Forecasting:
2.1 Quantitative forecasting:
Set of mathematical rules to a series of past data to predict
outcomes.
R.Arun Kumar, AP/Mech, RIT

10. Techniques for assessing the environment:
2. Forecasting:
2.2 Qualitative forecasting:
Uses judgment and opinions of knowledgeable individuals to
predict outcomes.
R.Arun Kumar, AP/Mech, RIT

11. Techniques for assessing the environment:
2. Forecasting:
CPRF (Collaborative Planning, Forecasting and
Replenishment)
Provides frame work for the flow of information, goods and services
between retailers and manufacturers.
R.Arun Kumar, AP/Mech, RIT

12. Techniques for assessing the environment:
Effectiveness of forecasting:
Helps the managers in decision making.
R.Arun Kumar, AP/Mech, RIT

13. Techniques for assessing the environment:
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 a factor to predict. e.g. GDP)
Substitution effect (DVD vs Pen drive)
Qualitative
Jury of opinion (Recruiting)
Sales force composition (Predicting next year sales)
Customer evaluation (Surveying dealers.)
R.Arun Kumar, AP/Mech, RIT

14. Techniques for assessing the environment:
3. Benchmarking:
The search for the best practices among competitors and non-
competitors that lead to their superior performance.

R.Arun Kumar, AP/Mech, RIT

15. Techniques for assessing the environment:
Steps in Benchmarking:

R.Arun Kumar, AP/Mech, RIT

16. Techniques for allocating resources:
Managers must focus on the resource allocation before the
execution of a work.
Examples:
Financial (equity, debts)
Human (skilled labors)
Physical (raw materials, equipment)
Intangible (brand names, reputation)
R.Arun Kumar, AP/Mech, RIT

17. Techniques for allocating resources:
Managers must focus on the resource allocation before the
execution of a work.
1. Budgeting:
Numerical plans for allocating resources to specific activities.
Used to improve time, space and use of material resources.
e.g. revenues, expenses and capital expenditures.
R.Arun Kumar, AP/Mech, RIT

18. Techniques for allocating resources:
1. Budgeting:
Types of budgets:
R.Arun Kumar, AP/Mech, RIT

19. Techniques for allocating resources:
1. Budgeting:
Methods to improve budgeting:
Collaborate and communicate.
Be flexible.
Goals should drive budgets—budgets should not determine goals.
Use budgeting/planning software when appropriate.
R.Arun Kumar, AP/Mech, RIT

20. Techniques for allocating resources:
2. Scheduling:
Plans that allocate resources by detailing what activities have to
be done, the order in which they are to be completed, who is to do
each, and when they are to be completed.

R.Arun Kumar, AP/Mech, RIT

21. Techniques for allocating resources:
2. Scheduling:
2.1 Gantt Charts:
R.Arun Kumar, AP/Mech, RIT

22. Techniques for allocating resources:
2. Scheduling:
2.2 Load Charts:
R.Arun Kumar, AP/Mech, RIT

23. Techniques for allocating resources:
2. Scheduling:
2.3 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:
1.Events: endpoints for completion.
2.Activities: time required for each activity.
3.Slack time: Time an individual activity can be delayed.
4.Critical path: Most time consuming sequence of events.

R.Arun Kumar, AP/Mech, RIT

24. Techniques for allocating resources:
2. Scheduling:
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 he entire project.
R.Arun Kumar, AP/Mech, RIT

25. Techniques for allocating resources:
2. Scheduling:
E.g.: Construction of an office building:

R.Arun Kumar, AP/Mech, RIT

26. Techniques for allocating resources:
2. Scheduling:
E.g.: Construction of an office building:

Critical Path: A - B - C - D - G - H - J - K
R.Arun Kumar, AP/Mech, RIT

27. Techniques for allocating resources:
3. Break – Even Analysis:
Used to determine the point at which all fixed costs have been
recovered and profitability begins.


Costs Variable Unit -Price Unit
Costs Fixed Total
:Breakeven
R.Arun Kumar, AP/Mech, RIT

28. Techniques for allocating resources:
4. Linear Programming:
Helps in selecting which is the most suitable or optimistic
method to find the solution.
R.Arun Kumar, AP/Mech, RIT

29. Techniques for allocating resources:
4. Linear Programming:
Department
No. of hours required
for one potpourri bag
No. of hours required
for one scented candle
Monthly production
capacity
Manufacturing 2 hours 4 hours 1,200 hours
Assembly 2 hours 2 hours 900 hours
Profit per unit Rs.10 Rs.18
R.Arun Kumar, AP/Mech, RIT

30. Contemporary Planning Techniques:
Much suited for dynamic and complex situation.

R.Arun Kumar, AP/Mech, RIT

31. Contemporary Planning Techniques:
1. Project Management:
The task of getting a project’s activities done on time, within
budget, and according to specifications.
Project is defined as one-time-only set of activities that has a
definite beginning and ending point time.
R.Arun Kumar, AP/Mech, RIT

32. Contemporary Planning Techniques:
2. Scenario Planning:
Scenario Planning
An attempt not try to predict the future but to reduce uncertainty
by playing out potential situations under different specified conditions.
Scenario
A consistent view of what the future is likely to be.
R.Arun Kumar, AP/Mech, RIT

33. Contemporary Planning Techniques:
2. Scenario Planning:
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.

R.Arun Kumar, AP/Mech, RIT