Tools for planning, Planning premises, Pitfalls / Limitations of plannig

Tools for Planning

The main duty of management is planning. It focuses on the next step to take. We are aware that there are many outside factors that can alter the future. As a result, various quantitative tools are utilized to improve planning's efficiency and efficacy.

• Forecasting
  • Forecasting is the method or set of approaches that aid in identifying potential issues and opportunities in the future and in putting plans into action. Future occurrences that could have a big impact on the corporate organization are predicted. Managers make this future-related assumption when planning. Sales and revenue forecasting, technology forecasting, environmental forecasting, resource forecasting, etc. are all examples of forecasting.
• Network Techniques
  • In this method, the project's time and expense are planned for and managed. It makes use of CPM and PERT (Program Evolution & Review Technique) (Critical Path Method). The CPM path is the longest because the project is finished quickly. PERT's goal is to create a network of activities and their relationships in order to identify crucial time windows that have an impact on the entire project.
• Flow Chart
  • A flow chart is used to specify the task component and work simplification in plain terms. The primary goal of a flowchart is to cut out unnecessary stages and activities. Using a flowchart, decisions are made. Additionally, it promotes analytical thinking and compels managers of all ranks to take into account all pertinent connections in a given undertaking. The time needed for each step to do the work is not indicated because several activities were taking place at once.
• Gantt Chart
  • It is one of the crucial planning tools. The Gantt chart emphasizes activities and the amount of time needed to finish them. A graphic scheduling method used in manufacturing tasks is the gantt chart. It has two dimensions: a horizontal one and a vertical one that displays the timeline. The Gantt chart displays the due dates for activities and contrasts them with the actual progress made on each activity.
• Break-Even Analysis
  • The level of activity at which revenue and expense are equal is the critical point. Cost-volume-profit analysis is another name for break-even analysis. A management has to know the product's unit pricing, the variable cost per unit, and the total fixed cost in order to calculate the break-even point. Fixed and variable costs can be separated from the total cost.
    • Break-even point formula,
    • FC/S-VC BEP
    • where,
    • Break Even Point (BEP)
    • Fixed cost = VC
    • Revenue from sales
• Linear Programming
  • A mathematical approach called linear programming is used to combine finite resources and activities in the best possible way. To characterize the systems as linear relationships between the variables, mathematical equations are used. It is highly helpful for maximizing revenue and reducing expenses.
• Simulation
  • Real-world problems can be solved using this concept. Computer programming is used to find solutions to these practical issues. To determine a collection of outputs with the combination of a separate variable, computer programming is utilized. A combination is changed repeatedly until the desired result is attained. The large organization that needs a lot of resources can benefit from these tools and techniques.

Planning Premises

The assumption and forecasts of future change in an environment are planning premises. It provides information about the past, present, and future. The planning premises serve as the foundation for successful planning. It might be both internal and outward, material or immaterial.

• Internal Premises and External Premises
  • Internal Premises are associated with activities taking place within the company. In contrast to external premises, which are related to the outside environment, internal premises include sales projections, capital investments in the plant and machinery, management competence, plans and programs, etc. The organization's performance is influenced by sociocultural, technological, political, and economic variables. The management has no power to change it.
• Tangible Premises and Intangible Premises
  • Typically, the term "tangible" refers to something that can be easily seen or recognized. Therefore, observable, recognisable basis for the organization. Time available, sold units, capital expenditure, cost per unit, and so on. Similar to immaterial foundations that are difficult for us to see. They include managerial attitude, staff morale, and motivation.

Pitfalls/ Limitation of Planning

Planning does, however, have its foundations, methods, and phases. It has some inherent problems.

• Lack of Control
  • lack of managerial oversight and ignorance of external environmental issues. Organizational plans are impacted by changes in government, natural disasters, unexpected strikes, etc.
• Expensive Process
  • Processing planning is expensive. Because it takes more time and money to gather data, estimate the future, and conduct alternative evaluations, there must be more costs. Strong and effective planning that is simple for other employees to understand and apply calls for further assistance from a variety of experts, professionals, engineers, and methodologies. Therefore, organizations must manage the additional expenditure for these processes.
• Inflexibility
  • The manager will probably uphold rigorous adherence to the set plan. Planning limits a person's initiative, desire for innovation, and desire for freedom. It rigorously follows established policies and procedures.
• Based on Certain Assumptions
  • Planning decisions are based on a set of presumptions. They are created in a way that advances the objectives of the organization. The science of forecasting is not exact. The overall organizational structure of is impacted when the premises change.
• Delay in Action
  • The future path of action is planning. It is the practice of thinking things out before acting. It is quite difficult to plan and make decisions for the future. Managers or academics need to be aware of this potential issue. As a result, it will probably put off taking action. Many managers might not have enough time to complete such a job.
• Incomplete Information
  • Managers might not be able to gather the necessary data needed for planning while gathering data for the next course of action. It's possible that the data won't be accessible in time. It is challenging to gather all the necessary resources and information at once for it. Plans must be created by managers with incomplete knowledge and information.
• Difficult to Implement
  • To progress with plans, additional data and understanding are required. Plans occasionally only exist on paper as files or confidential documents. These situations might not actually occur. It is untouchable in some circumstances. Managing the crisis may keep managers too busy to find time to follow their planned courses.
• Unwillingness to Change
  • The working plans are modifiable. Every time a change is requested, it retaliates. Because it is new to them, yet they gradually come to realize that it is more flexible than the previous plan, employee resistance to change causes plans to fail. Therefore, according to company personnel, the current strategy is preferable to the suggested plan.
• Difficult to Implement at Unit Level
  • It is challenging to implement at the unit level since each operating activity cannot be meticulously planned. Some insignificant acts are off limits for the paper. It might not represent the big picture. Therefore, creating a functionally detailed strategy is exceedingly challenging.

Reference

Poudyal, Dr.Santosh Raj. Principles of management. Bhotahity,Kathmandu: Asmita Book publishers & Distributors(P)Ltd, 2011.