The planning tools are techniques managers can use to help develop plans.
2 of the most important tools are:
Forecasting is the process of predicting future environmental happenings that will influence the operation of the organization.
Although sophisticated forecasting techniques have been developed only rather recently, the concept of forecasting can be traced at least as far back as Fayol.
The importance of forecasting lies in its ability to help managers understand the future makeup of the organizational environment, which, in turn, helps them formulate more effective plans.
HOW FORECASTING WORKS:
e.g: William C. House in describing the Insect Control Services Company, has developed an excellent illustration of how forecasting works.
In general, Insect Control Services forecasts by attempting to do the following:
- Establish relationships between Industry Sales and National Economic and Social Indicators.
- Determine the impact government restrictions on the use of chemical pesticides Will have on the growth of Chemical, biological and electromagnetic energy pest control markets.
- Evaluate Sales Growth Potential, profitability, resources required, and risks involved in each of its market areas (Commercial, industrial, institutional, governmental and residential)
- Evaluate the potential for expansion of marketing efforts in geographical areas of the country and abroad.
- Determine the likelihood of technological breakthroughs that would make existing product lines obsolete.
TYPES OF FORECASTS:
Various types of forecasts includes:
Economical, Technological, Social Trends, Sales Forecasting etc.,
Although a company’s complete forecasting process should, and usually does, include all these types of forecasting, sales forecasting is considered the key forecast for a company.
A Sales forecast is a prediction of how high or low sales of the organization’s products and/or services will be over the period of time in reference.
It is the Key forecast for organizations because it serves as the fundamental guideline for planning.
Only after the sales forecast has been completed can managers decide, for example, if more salespeople should be hired, if more money for plant expansion must be borrowed, or if layoffs and cutbacks in certain areas are necessary.
Managers must continually monitor forecasting methods to improve them and to reformulate plans based on inaccurate forecasts.
Scheduling is the process of formulating a detailed listing of activities that must be accomplished to attain an objective, allocating the resources necessary to attain the objective, and setting up and following timetables for completing the objective.
Scheduling is an integral part of every organizational plan.
Two popular scheduling techniques are Gantt Charts and PERT – Program Evaluation and Review Technique.