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

Tools for planning

Planning is the primary function of management. It focuses on the future course of action. We know that future is uncertain and may be affected by many external variables. So, for these, many quantitative tools are used to enhance the efficiency & effectiveness of planning.

Forecasting : Forecasting is the process or techniques which help to recognize future problems and opportunities and implement plan into action. It predicates future events that may significantly affect the business organization. It is an assumption about future that managers use in planning. Forecasting consists of sales and revenue forecasting, technological forecasting, environment forecasting, resources forecasting, etc.

Network Techniques: In this technique, it is used to plan and control time and cost of the project. It uses PERT (Program Evolution & Review Technique) and CPM (Critical Path Method). CPM is the longest path because in this path project is completed in the short time .The purpose of PERT is to develop a network of activities and their interrelationship to highlight critical time intervals that affect the whole project.

Flow chart: In simple language, a flow chart is used to identify the task component and work simplification. Flowchart main motive is to eliminate wasted steps and activities. Decision is taken with the help of flow chart. It also encourages analytical thinking and forces managers of all level to consider all relevant links in a particular endeavor. Several activities taken place at once so it does not indicate the time require for each step to complete the work.

Gantt chart: It is the important tools for planning. Gantt chart focuses on activities and time to complete them. Gantt chart is a graphic scheduling technique used in production activities. It has two dimension one horizontal and another is vertical dimension that shows the time frame. Gantt chart shows when tasks are to be performed and compares that with the actual progress of each activity.

Break-even Analysis: It is the point in which the level of activity in which cost becomes equal to revenue. Break-even Analysis is also known as cost- volume-profit analysis. To compute the break-even point, a manager needs to know the unit price of the product, the variable cost per unit & the total fixed cost. The total cost can be divided into fixed & variable cost.

Formula of Break-even point,

BEP= FC/S-VC

where,

BEP=Break Even Point

VC=Fixed cost

S=sales Revenue

Linear Programming: Linear Programming is a mathematical tool used for an optimum combination of scarce resources and activities . Mathematical equations are employed to describe the systems in the form of linear relation between variables. It is very useful for maximizing profit and minimizing cost.

Simulation : It is the model to solve real life problem . Those real-life problems are solved by computer programming. Computer programming is used to find out a set of output with the combination of a different variable. Change in combination are made until an optimum output is obtained. This tools and technique are useful for the large organization that requires large resources.

Planning Premises

Planning premises is the assumption and predictions about future change in an environment. It supplies the fact and information about future. The successful planning is based upon the planning premises. It may be internal and external or tangible or intangible.

Internal Premises and External premises: Internal Premises are related to the events occurring within the organization. Internal premises consist of sales forecast, capital investment in the plant and machinery, the competence of management, policies and program and so on, whereas in other hand external premises are relate with the external environment. External premises are related with socio-cultural and technical forces, politics, economics in which the organization rates. It is beyond the control of the management.

Tangible premises and intangible premises: Normally tangible means easily seen or recognized. So, tangible premises which we can easily see or recognized in the organization. They are time available, units sold, capital investment, cost per unit, etc. Similarly, intangible premises which we cannot see easily. They are motivation, employee’s morale, managerial attitude etc.

Pitfalls/ Limitation of planning

Although, planning has its premises, tools and techniques, steps, etc. It have some pitfalls in themselves.

Lack of control-Less control and little knowledge of the managers of the external environmental factors. Change in governance and natural calamities, sudden strike etc affect organization plans.

Expensive process-Planning is costly to process. It needs extra cost because it requires extra effort and resources to collect information, forecast future, and alternative evaluation. Planning should be strong and good which should be easily understood by other employees and can be easily implemented and for these, it requires extra services from the different experts, professionals, engineers and techniques. So, organization have to manage the extra budget for these process.

Inflexibility-Manager is likely to maintain strict compliance with the predetermined plan. Planning restricts the individual’s initiatives, desires for creativity and freedom. It strictly adheres to predetermined policies and programs.

Based on certain assumptions-Planning are made on the basis of certain assumptions. They are made in the way to achieve the organizational goals. Forecasting is not an exact science. When premises do not remain the same, the overall organization plan of the is affected by it.

Delay in action- Planning is the future course of action. It is the process of think before doing anything. Thinking and deciding for future action is very difficult. Managers or professors should be aware of the future problem. Therefore, it will likely to delay in action. Many managers may not have the sufficient time for such project also.

Incomplete information-While collecting information for the future course of action, managers may not be able to collect the required information needed for planning. The information may not be available in time. It is difficult to collect all the resources, information at a time period for it. Managers have to formulate plans on the basis of partial knowledge and information.

Difficult to implement- Plans need more information and knowledge to be in process. In some of the case, plans remain only on paper as a secret document or files. Those types of cases may be far from realities. In certain case, it remains untouchables. Managers may be too busy in struggling with the crisis to find time for going along planned courses.

Unwillingness to change-The working plans is changeable. It resists the change whenever it is requested to change. While there is the process of change, unwillingness of employee results failure the plans because it is new for them but slowly they know that is more flexible than the previous plan. So, employees of the organization think that present plan is the better than the proposed plan.

Difficult to implement at unit level-It is difficult to implement at unit level because every operating activity cannot be planned in detail. Some minor activities cannot be mentioned in the paper. It may not reflect the broad plans. So, preparing detailed plan at the functional level is very difficult.

Reference

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