Modern Management
9th edition
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 Objectives
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A complete definition of a plan
Insights regarding various dimensions of plans
An understanding of various types of plans
Insights into why plans fail
A knowledge of various planning areas within an organization
A definition of forecasting
An ability to see the advantages and disadvantages of various
methods of sales forecasting
A definition of scheduling
An understanding of Gantt charts and PERT
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PLANS: A DEFINITION
Dimensions of Plans
Repetitiveness
Time
Scope
Level
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PLANS: A DEFINITION
Four major dimensions to consider when developing a plan
Figure 9.1
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PLANS: A DEFINITION
Types of Plans
Standing Plans: Policies, Procedures, and Rules
Single-Use Plans: Programs and Budgets
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PLANS: A DEFINITION
Standing plans and single-use plans
Figure 9.2
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PLANS: A DEFINITION
A successful standing plan program with
mutually supportive policies, procedures, and rules
Figure 9.3
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PLANS: A DEFINITION
Why Plans Fail
1. Corporate planning is not integrated into the total management system
2. There is a lack of understanding of the different steps of the planning process
3. Management at different levels has not properly contributed to planning activities
4. Responsibility for planning is wrongly vested solely in the planning department
5. Management expects that plans developed will be realized with little effort
6. In starting formal planning, too much is attempted at once
7. Management fails to operate by the plan
8. Financial projections are confused with planning
9. Inadequate inputs are used in planning
10. Management fails to grasp the overall planning process
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PLANS: A DEFINITION
Planning Areas: Input Planning
Plant Facilities Planning
Site selection
1. Deciding on a set of variables critical to obtaining an appropriate site
2. Assigning each of these variables a weight reflecting its relative importance
3. Ranking alternative sites according to how they reflect these different variables
Human Resource Planning
Questions for personnel planners
1. What types of people does the organization need to reach its objectives?
2. How many of each type are needed?
3. What steps should the organization take to recruit and select such people?
4. Can present employees be further trained to fill future needed positions?
5. At what rate are employees being lost to other organizations?
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PLANS: A DEFINITION
Table 9.1
Major Areas
Profit
Market Location
Competition
Operating costs
Suppliers
Utilities
Wages
Taxes
Investment costs
Land/development
Others
Transportation
Laws
Labor
Unionization
Living conditions
Community relations
Major Areas of Consideration When Selecting a Plant Site
and Sample Exploratory Questions to Be Asked
Sample Questions
Where are our customers in relation to the site?
What competitive situation exists at the site?
Are materials available near the site at reasonable cost?
What are utility rates at the site? Are utilities available in sufficient amounts?
What wage rates are paid by comparable organizations near the site?
What are tax rates on income, sales, property, and so on for the site?
How expensive are land and construction at the site?
Are airlines, railroads, highways, and so on accessible from the site?
What laws related to zoning, pollution, and so on will influence operations if
the site is chosen?
Does an adequate labor supply exist around the site?
What is the degree of unionization in the site area?
Are housing, schools, and so on around the site appropriate?
Does the community support the organization’s moving into the area?
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PLANS: A DEFINITION
Table 9.2
Criteria
Living conditions
Results of Weighting Seven Site Variables for Six Countries
Maximum
Value Assigned Japan
100
70
Accessibility
75
Industrialization
60
Labor availability
35
Economics
35
Community capability & attitude 30
Effect on company reputation
35
Total
370
55
40
30
15
25
25
260
Sites
Chile
40
35
50
10
15
20
20
190
Jamaica Australia Mexico France
45
50
60
60
20
55
10
15
10
10
165
60
35
30
15
15
15
220
70
35
35
25
25
25
275
70
30
35
25
15
15
250
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PLANS: A DEFINITION
The human resource planning process
Figure 9.4
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PLANNING TOOLS
Forecasting
How Forecasting Works
Insect Control Services forecasts by attempting to do the following:
1. Establish relationships
2. Determine the impact government restrictions
3. Evaluate sales growth potential, profitability, resources required, and risks
4. Evaluate the potential for expansion of marketing efforts
5. Determine the likelihood of technological breakthroughs
Types of Forecasts
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PLANNING TOOLS
Forecasting (con’t)
Methods of Sales Forecasting
Jury of Executive Opinion Method
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Experts answer questions about area being forecasted
First summary of all the answers is prepared
Experts get copies of first summary to modify as necessary
Distribute second summary of these modifications to experts
Must justify opinions that deviate significantly from norm
5. Distribute third summary of opinions and justifications to experts
Justification for all answers is now required
6. Generate forecast from opinions and justifications from 5
Salesforce Estimation Method
Time Series Analysis Method
Product Stages: introduction, growth, maturity, saturation, and decline
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PLANNING TOOLS
Time series analysis method
Figure 9.5
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PLANNING TOOLS
Stages of the product life cycle
Figure 9.6
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PLANNING TOOLS
Forecasting (con’t)
Evaluating Sales Forecasting Methods
Scheduling
Gantt Charts
Features
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PLANNING TOOLS
Completed Gantt chart
Figure 9.7
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PLANNING TOOLS
Forecasting (con’t)
Program Evaluation and Review Technique (PERT)
Defining PERT
Activities
Events
Features
Critical Path
Steps in Designing a PERT Network
1. List all the activities/events for project and their sequence
2. Determine time needed to complete each activity/event
3. Design PERT reflecting all information contained in 1 and 2
4. Identify the critical path
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PLANNING TOOLS
PERT network designed for building a house
Figure 9.8
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Chapter Nine
Questions
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