1. 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.

2. OUTLINE Environment Assessment Techniques Contemporary Planning
Environmental Scanning
Forecasting
Benchmarking
Budgeting
Scheduling
Breakeven Analysis
Linear Programming
Contemporary Planning
Project Management
Scenario Planning
Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition.
Copyright © 2005 Pearson Education Canada Inc.

3. 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
May involve reverse engineering of competing products to discover technical innovations
Environmental scanning is the screening of large amounts of information to anticipate and interpret changes in the environment. It’s used by both large and small organizations, and research has shown that companies with advanced environmental scanning systems increased their profits and revenue growth.
Competitor intelligence: fastest growing environmental scanning activity that seeks to identify who competitors are, what they are doing, and how their actions will affect the organization.
Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition.
Copyright © 2005 Pearson Education Canada Inc.

4. Assessing the Environment (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
Another type of environmental scanning is global scanning in which managers assess the changes and trends in the global environment through the gathering of vital global information.
Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition.
Copyright © 2005 Pearson Education Canada Inc.

5. Assessing the Environment (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 (e.g., direction of the economy)
Environmental scanning provides the foundation for developing forecasts, which are predictions of outcomes.
Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition.
Copyright © 2005 Pearson Education Canada Inc.

6. 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
Forecasting effectiveness.
a. Forecasting techniques are most accurate when the environment is not rapidly changing.
b. Some suggestions for improving forecasting effectiveness are as follows:
1) Use simple forecasting techniques.
2) Compare every forecast with “no change.”
3) Don’t rely on a single forecasting method.
4) Don’t assume that you can accurately identify turning points in a trend.
5) Shorten the length of the forecasts.
Forecasting is a managerial skill and can be practised and improved.
Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition.
Copyright © 2005 Pearson Education Canada Inc.

7. 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
Benchmarking is the search for the best practices among competitors or noncompetitors that lead to their superior performance.
Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition.
Copyright © 2005 Pearson Education Canada Inc.

8. Exhibit 8.2 Steps in Benchmarking
BEST
PRACTICES
Analyze data to identify
performance gaps.
Form a benchmarking
planning team.
Gather internal and
external data.
Prepare and implement
action plan.
The benchmarking process typically follows four steps (see Exhibit 8.2).
a. A benchmarking planning team is formed. The team’s initial task is to identify what is to be benchmarked, identify comparative organizations, and determine data collection methods.
b. The team collects internal and external data.
c. The data are analyzed to identify performance gaps and to determine the cause of the difference.
d. An action plan is prepared and implemented.
Source: Based on Y.K. Shetty, “Aiming High: Competitive Benchmarking for Superior Performance,” Long Range Planning. February 1993, p. 42.
Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition.
Copyright © 2005 Pearson Education Canada Inc.

9. Allocating Resources Types of Resources The assets of the organization
Financial
Physical
Human
Intangible
Structural/cultural
Managers need to figure out ways to allocate the resources listed on this slide.
Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition.
Copyright © 2005 Pearson Education Canada Inc.

10. Exhibit 8.3 Techniques for Allocating Resources
Scheduling
Detailing what's to
be done, in what
order, by whom,
and when
Breakeven Analysis
Determining the
point where revenue
and costs of a
project will match
Linear Programming
Using a
mathematical
technique to solve
resource allocation
Budgeting
Creating a numerical
plan for allocating
resources to
specific activities
Revenue
Expense
Profit
Cash
Gantt
Load
PERT
How are resources allocated effectively and efficiently so that organizational goals are met? Managers can choose from a number of techniques for allocating resources (many of which are covered in courses on accounting, finance, human resources, and operations management). Exhibit 8.3 summarizes the differences among four techniques covered in the text: budgeting, scheduling, breakeven analysis, and linear programming.
Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition.
Copyright © 2005 Pearson Education Canada Inc.

11. Exhibit 8.4 Types of Budgets
Variable Budget
Takes into account
the costs that vary
with volume
Fixed Budget
Assumes fixed
level of sales
or production
Cash Budget
Forecasts cash on hand
and how much will
be needed
Revenue Budget
Projects future sales
Profit Budget
Combines revenue and expense
budgets of various units to determine
each unit ’
’s profit contribution
Expense Budget
Lists primary activities
and allocates dollar
amount to each OR
Exhibit 8.4 describes the different types of budgets that managers might use.
Source: Based on R.S. Russell and B.W. Taylor III. Production and Operations Management (Upper Saddle River, NJ: Prentice Hall, 1995), p. 287.
Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition.
Copyright © 2005 Pearson Education Canada Inc.

12. 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.
Remember that profits result from smart management, not because you budgeted for them.
Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition.
Copyright © 2005 Pearson Education Canada Inc.

13. Exhibit 8.5 A Gantt Chart Copy-edit manuscript Design sample pages
Draw artwork
Print first pages
Print final pages
Design cover 1 2
Month
Reporting Date
Activity 3 4
Actual progress
Goals
Exhibit 8.5 depicts a simplified Gantt chart for book production developed by a manager in a publishing company. Time is expressed in months across the top of the chart. The major work activities are listed down the left side.
Where a box sits within a time frame reflects its planned sequence. The shading represents actual progress.
The chart also serves as a control tool because the manager can see deviations from the plan.
In this example, both the design of the cover and the printing of first pages are running behind schedule. Cover design is about three weeks behind, and printing first pages is about two weeks behind schedule. Given this information, the manager might need to take some action to either make up for the two lost weeks or to ensure that no further delays will occur. At this point, the manager can expect that the book will be published at least two weeks later than planned if no action is taken.
Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition.
Copyright © 2005 Pearson Education Canada Inc.

14. Exhibit 8.6 A Load Chart Ling Antonio Kim Maurice Dave Rashid 1 2
Month
Editors 3 4 5 6
Work scheduled
Exhibit 8.6 shows a load chart for six production editors at the same publishing company.
Each editor supervises the production and design of several books. By reviewing a load chart, the executive editor, who supervises the six production editors, can see who is free to take on a new book. If everyone is fully scheduled, the executive editor might decide not to accept any new projects, to accept new projects and delay others, to have the editors work overtime, or to employ more production editors.
In this exhibit, only Antonio and Maurice are completely scheduled for the next six months. The other editors have some unassigned time and might be able to accept new projects or be available to help other editors who get behind.
Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition.
Copyright © 2005 Pearson Education Canada Inc.

15. 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
Critical path: the path (ordering) of activities that allows all tasks to be completed with the least slack time
3. PERT (program evaluation and review technique) network analysis is a technique for scheduling complicated projects comprising many activities, some of which are interdependent.
a. A PERT network is a flowchart-like diagram that depicts the sequence of activities needed to complete a project and the time or costs associated with each activity.
Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition.
Copyright © 2005 Pearson Education Canada Inc.

16. Let’s Make Lemonade Inputs? Outputs? Resources? Gantt Chart
How to find Gaps?
Most PERT projects are complicated and include numerous activities. Such complicated computations can be done with specialized PERT software.
However, let’s work through a simple example. Assume that you’re the superintendent at a construction company and have been assigned to oversee the construction of an office building. Because time really is money in your business, you must determine how long it will take to get the building completed. You’ve determined the specific activities and events. Exhibit 8.8 outlines the major events in the construction project and your estimate of the expected time to complete each.
Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition.
Copyright © 2005 Pearson Education Canada Inc.

17. 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:
Break-even analysis is a technique for identifying the point at which total revenue is just sufficient to cover total costs. A visual representation of break-even is shown in Exhibit 8.10.
Costs
Variable
Unit -
Price
Fixed
Total
Break-even :
Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition.
Copyright © 2005 Pearson Education Canada Inc.

18. Exhibit 8.10 Break-even Analysis
70 000
60 000
50 000
40 000
30 000
20 000
10 000
100
200
300
Output (in thousands)
400
500
600
Breakeven
Point
Variable Costs
Fixed Costs
Profit
Area
Total
Revenue
Loss
Costs
Revenue/Cost ($)
Assume that Pierre’s Photocopying Service charges $0.10 per photocopy. If fixed costs are $ a year and variable costs are $0.04 per copy, Pierre can compute his break-even point as follows: $ ÷ ($0.10 – $0.04) = copies, or when annual revenues are $ ( copies x $0.10). This relationship is shown graphically in Exhibit 8.10.
Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition.
Copyright © 2005 Pearson Education Canada Inc.

19. 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
Two planning techniques that are appropriate for planning in an environment that’s both dynamic and complex are project management and scenario planning.
Project Management.
A project is a one-time-only set of activities that has a definite beginning and ending point in time. Project management is the task of getting a project’s activities done on time, within budget, and according to specifications.
Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition.
Copyright © 2005 Pearson Education Canada Inc.

20. Exhibit 8.13 Project Planning Process
Define
objectives
Identify
activities
and
resources
Establish
sequences
Estimate
time for
Determine
project
completion
date
Compare
with
additional
resource
requirements
1. Project management process.
In a typical project, work is done by a project team whose members are assigned from their respective work areas to the project and who report to a project manager.
2. The role of the project manager.
a. The only real influence project managers have is their communication skills and their power of persuasion.
b. Team members seldom work on just one project; they’re usually assigned to two or three at any given time.
Source: Based on R.S. Russell and B.W. Taylor III, Production and Operations Management (Upper Saddle River, NJ: Prentice Hall, 1995), p. 287.
Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition.
Copyright © 2005 Pearson Education Canada Inc.

21. 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.
Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition.
Copyright © 2005 Pearson Education Canada Inc.

22. 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
A scenario is a consistent view of what the future is likely to be.
1. Developing scenarios also can be described as contingency planning.
2. The intent of scenario planning is not to try to predict the future but to reduce uncertainty by playing out potential situations under different specified conditions.
3. Scenario planning is difficult to use when forecasting random events.
4. The Tips for Managers on page 228 lists some suggestions for preparing for unexpected events.
Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition.
Copyright © 2005 Pearson Education Canada Inc.

23. 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.
Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition.
Copyright © 2005 Pearson Education Canada Inc.

24. Break Time
Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition.
Copyright © 2005 Pearson Education Canada Inc.