Planning Tools and Techniques: With Duane Weaver

Chapter 8
Planning Tools and Techniques

with Duane Weaver
Chapter 8, Stephen P. Robbins, Mary Coulter, and

Nancy Langton, Management, Eighth Canadian
Edition.
Copyright © 2005 Pearson Education Canada Inc. 1
OUTLINE
• Environment Assessment Techniques
– Environmental Scanning
– Forecasting
– Benchmarking
– Budgeting
– Scheduling
– Breakeven Analysis
– Linear Programming
• Contemporary Planning
– Project Management
– Scenario
Planning
Edition.
Assessing the Environment
• Environmental Scanning
– The screening of large amounts of information to
anticipate and interpret changes in the environment
– Competitor Intelligence
• The process of gathering information about competitors—who
they are, what they are doing, and how their actions will affect
the organization
– Is not spying but rather careful attention to readily accessible
information from employees, customers, suppliers, the Internet,
and competitors themselves
• Stephen
Chapter 8, May involve reverse Mary
P. Robbins, engineering
Coulter,ofand
competing products to
discover
Nancy Langton, technical innovations
Management, Eighth Canadian
Edition.
(cont’d)
• Environmental Scanning
(cont’d)
– Global Scanning
• Screening a broad scope of
information on global forces that
might affect the organization
• Has value to firms with significant
global interests
• Draws information from sources that
provide global perspectives on
worldwide issues and opportunities
Edition.
(cont’d)
• Forecasting
– The part of organizational planning that involves creating
predictions of outcomes based on information gathered by
environmental scanning
• Facilitates managerial decision making
• Is most accurate in stable environments
– Quantitative forecasting
• Applying a set of mathematical rules to a series of hard data to predict
outcomes (e.g., units to be produced)
– Qualitative forecasting
• Using expert judgments and opinions to
predict less than precise outcomes
Chapter 8, Stephen P. Robbins,
(e.g., direction Mary Coulter, and
of the economy)
Edition.
Making Forecasting More
Effective
• Use simple forecasting methods
• Compare each forecast with its corresponding “no
change” forecast
• Don’t rely on a single forecasting method
• Don’t assume that the turning points in a trend can be
accurately identified
• Shorten the time period covered by a forecast
• Remember that forecasting is a developed managerial
skill that supports decision making
Edition.
Benchmarking
• The search for the best practices among competitors
and noncompetitors that lead to their superior
performance
• By analyzing and copying these practices, firms can
improve their performance

Edition.
Exhibit 8.2 Steps in Benchmarking
Form a benchmarking
planning team.
Prepare and implement BEST Gather internal and

action plan. PRACTICES external data.
Analyze data to identify

performance gaps.

Source: Based on Y.K. Shetty, “Aiming High: Competitive
Edition.
Benchmarking for Superior Performance,” Long Range Planning.
February 1993, p. 42.
Allocating Resources
• Types of Resources
– The assets of the organization
• Financial
• Physical
• Human
• Intangible
• Structural/cultural

Edition.
Exhibit 8.3 Techniques for Allocating
Resources
Budgeting Scheduling Breakeven Analysis Linear Programming
Creating a numerical Detailing what's to Determining the Using a

plan for allocating be done, in what point where revenue mathematical
resources to order, by whom, and costs of a technique to solve
specific activities and when project will match resource allocation
Revenue Expense Profit Cash Gantt Load PERT

Edition.
Exhibit 8.4 Types of Budgets
Revenue Budget
Projects future sales
Cash Budget Expense Budget
Forecasts cash on hand Lists primary activities
and how much will and allocates dollar
be needed amount to each
Variable Budget Fixed Budget

Takes into account OR Assumes fixed
the costs that vary level of sales
with volume or production
Profit Budget
Combines revenue and expense
budgets of various units to determine
each unit’ ’s profit contribution

Source: Based on R.S. Russell and B.W. Taylor III. Production and Operations
Edition.
Management (Upper Saddle River, NJ: Prentice Hall, 1995), p. 287.

Tips for Managers: Improving
Budgeting
• Be flexible.
• Understand that goals should drive budgets—
budgets should not determine goals.
• Coordinate budgeting throughout the organization.
• Use budgeting/planning software when
appropriate.
• Remember that budgets are tools.
•Chapter
Remember8, Stephen P. Robbins, Mary Coulter, and
that profits result from smart
management, not because you budgeted for them.
Edition.
Exhibit 8.5 A Gantt Chart
Activity Month
1 2 3 4
Copy-edit manuscript
Design sample pages
Draw artwork
Print first pages
Print final pages
Design cover
Actual progress
Goals Reporting Date

Edition.
Exhibit 8.6 A Load Chart
Editors Month
1 2 3 4 5 6
Ling
Antonio
Kim
Maurice
Dave
Rashid
Work scheduled

Edition.
Allocating Resources: Analysis
• Program Evaluation and Review Technique (PERT)

– A flow chart diagram that depicts the sequence of
activities needed to complete a project and the time or
costs associated with each activity
• Events: endpoints for completion
• Activities: time required for each activity
• Slack time: the time that a completed activity waits for another
activity to finish so that the next activity, which depends on
the completion of both activities, can start
• Stephen
Chapter 8, Critical path: the pathMary
P. Robbins, (ordering) ofand
Coulter, activities that allows all
tasksManagement,
Nancy Langton, to be completed withCanadian
Eighth the least slack time
Edition.
Let’s Make Lemonade
•Inputs?
•Outputs?
•Resources?
•Gantt Chart
•How to find Gaps?

Edition.
Allocating Resources: Analysis
(cont’d)
• Break-even Analysis
– Is used to determine the point at which all fixed costs
have been recovered and profitability begins
• Fixed costs (FC)
• Variable costs (VC)
• Total Fixed Costs (TFC)
• Price (P)
• The Break-even Formula:
Total Fixed Costs
Break-even:
Unit Price
Nancy Langton, Management, - Unit Variable Costs
Eighth Canadian
Edition.
Exhibit 8.10 Break-even Analysis
Total Profit
Revenue Area
70 000
60 000
Revenue/Cost ($)
50 000 Loss
Area
40 000 Variable Costs
Breakeven Total
30 000 Point Costs
20 000
Fixed Costs
10 000
Chapter 8, Stephen P.100 200 300

Robbins, 400Coulter,
Mary 500 600and
Output (in
Nancy Langton, Management, thousands)
Eighth Canadian
Edition.
Contemporary Planning Techniques
• Project
– A one-time-only set of activities that has a
definite beginning and ending point time
• Project Management
– The task of getting a project’s activities done on
time, within budget, and according to
specifications
• Define project goals
• Identify all required activities, materials, and labour
• Determine the sequence of completion
Edition.
Exhibit 8.13 Project Planning
Process
Identify Determine Determine

Estimate Compare
Define activities Establish project additional
time for with
objectives and sequences completion resource
activities objectives
resources date requirements

Source: Based on R.S. Russell and B.W. Taylor III, Production and Operations
Edition.
Management (Upper Saddle River, NJ: Prentice Hall, 1995), p. 287.

Linear Programming
A method of solving limited resource

allocation between two variables where the
goal is optimization such that the change in
one variable is accompanied by an exactly
proportional change in the other.

Edition.
Contemporary Planning Techniques
(cont’d)
• Scenario
– A consistent view of what the future is likely to be
• Scenario Planning
– An attempt not to try to predict the future but to reduce
uncertainty by playing out potential situations under
different specified conditions
• Contingency Planning
– Developing scenarios that allow managers to determine in
advance what their actions should be should a considered
event actually occur
Edition.
Tips for Managers: 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.
Edition.
Break Time

Edition.

Planning Tools and Techniques: With Duane Weaver

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Chapter 8

Planning Tools and Techniques

Chapter 8, Stephen P. Robbins, Mary Coulter, and

Chapter 8, Stephen P. Robbins, Mary Coulter, and

Prepare and implement BEST Gather internal and

Analyze data to identify

Chapter 8, Stephen P. Robbins, Mary Coulter, and

Chapter 8, Stephen P. Robbins, Mary Coulter, and

Budgeting Scheduling Breakeven Analysis Linear Programming

Creating a numerical Detailing what's to Determining the Using a

Revenue Expense Profit Cash Gantt Load PERT

Chapter 8, Stephen P. Robbins, Mary Coulter, and

Variable Budget Fixed Budget

Chapter 8, Stephen P. Robbins, Mary Coulter, and

Copyright © 2005 Pearson Education Canada Inc. 11

Chapter 8, Stephen P. Robbins, Mary Coulter, and

Chapter 8, Stephen P. Robbins, Mary Coulter, and

• Program Evaluation and Review Technique (PERT)

Chapter 8, Stephen P. Robbins, Mary Coulter, and

Chapter 8, Stephen P.100 200 300

Identify Determine Determine

Chapter 8, Stephen P. Robbins, Mary Coulter, and

Copyright © 2005 Pearson Education Canada Inc. 20

A method of solving limited resource

Chapter 8, Stephen P. Robbins, Mary Coulter, and

• Identify potential unexpected events.

Chapter 8, Stephen P. Robbins, Mary Coulter, and

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