Forecasting and planning

Kuznetsov. Fundamentals of management

Planning as a management function has a complex structure and is implemented through their sub-functions: forecasting, modeling, and programming.
Forecasting is the method of scientifically grounded foresight of possible future development of the organization, considered in close interaction with its environment. The forecasts are probabilistic in nature, however, if forecasting is done efficiently, the result will be a forecast of the future, which can be used as a basis for planning. Thus, forecasting is the first step of planning. It is intended to provide the following tasks:
- scientific prediction of the future based on trends and patterns of development;
- determining the dynamics of economic phenomena;
- preparation of forecasts showing the possible directions of the future development of the organization;
- define the future end state of the system, its transition States, as well as its behavior in different situations on the way to the specified optimal mode of operation.
The most important condition for prediction — modeling of various situations and States of the system during the planning period. Economic modelling to some extent is intended to serve as the equivalent of experimentation in the natural Sciences.
The task of programming the third sub — function planning — based on the real conditions of functioning of system programming it to move to the new commanded state. This includes the development of algorithm of functioning of the system, the definition
the required resources, the choice of scientific tools and management techniques.
Planning as a management function is the process of defining goals and ways to achieve them. It covers the different levels of the organization and over time is the long, medium and short-term nature.
In the course of long-term planning (15-20 years) defines the General objectives and strategy. The main objective of medium-term planning (typically 5 years) — the choice of means to accomplish goals. These plans define the General personnel policy, the General production strategy, General financial policy, the General marketing strategy.
Short-term (or current) planning (usually a year) broken down by quarters, months has several forms. One of its forms is the process of breaking down of medium-term plans short-term, with more detailed segments. At the same time, usually a year, are drawn up, production plan, financial plan, marketing plan.
Another form of current planning is to develop policy and regulation mechanisms in case of possible situations in the future. So, it is necessary to determine in advance the possible policy of the company in the event of a strike.
The third form of the current planning is budget planning. A budget is a financial plan that serves as a guide and a means of control over future operations. Usually developed several types of budgets or even their groups:
the estimates of income and expenditure;
estimate time, materials;
- estimates of capital expenditure;
cash budget;
- balance estimates.
The budget coordinates the activities of various departments of the organization.
Budgeting from zero (BON) is a method for more effective control of distribution costs. It was developed in 1970 and has spread rapidly. The advantage of BEAUNE lies in the fact that every expense must again be confirmed by every time is the budget, not just meet the level of "last years" regardless of performance, or changes in the external environment. BON connects planning with budgeting process and forces each Manager at each level in detail to confirm all its budgetary requirements.
The core of this system is the "solution package", a package of information about each alternative budget. Manager provides a description of what you can expect from this type of activity with a minimum level of its implementation. In another solution package Manager describes the same task and shows how much you can win in performance, if this budget item will be Received more than the minimum funds. For each article of the budget are provided several levels of funding.
These solution packages are transferred to a higher Manager, who begins work on the selection of such of them, which correspond to his own priorities.
Manager looking to make a big emphasis on a particular activity, selects for him the highest estimated level of funding. If he will go beyond their money before you run out of solution packages, you should eliminate or cut back on some tasks. As soon as the Manager leads packages in accordance with their order of preference, they are transferred to a higher Manager who must compare them with packages of all other subordinate units.
At each level, BON is forcing managers to place costs in some order of preference, and not trying to "build Empire", continuously adding allocations and never trimming any of them. It's not a failsafe system, but in organizations, tending to be bureaucratic and slow development, it leads to reduce the useless and unproductive services, and personnel. So, managers have to decide which operations are most important in achieving the goals and objectives for which they are responsible, and how much can be spent for each area of activity without jeopardizing the task as a whole.
Effective continuous planning for the future execution of any task based on memory of the past execution of the same task (or component tasks). Initially, the plan is based on someone's estimates of the amount of work that needs to be executed, the amount of time required to implement each phase, and means of communication between stages. But ultimately the plan must incorporate the ability to adapt, it is necessary to provide the experiments, downtime, unexpected income and expenses. The schedule is designed in order to help the successful performance of the job.
For example, analysis of the formation of the queue is used for finding the balance between the costs in the case when customers are in the queue for service, i.e. the costs for the provision of this service with a certain level of bandwidth. In this regard, of interest is an example of the construction of the restaurant.* The Manager needs to know how much to put tables. At first glance, it may seem that the more tables the better: more tables means more customers and more money.
If customers arrive with constant intensity and all the tables are always busy, it would be a reasonable assumption. But in fact, the customers arrive in groups. At certain times of the day slows and the Manager pays the cooks and staff downtime. At other times, the work comes alive and formed a queue. Obviously, the waiting client is not served and the restaurant does not receive money. In addition, the customer has to wait too long, you may decide to go somewhere in other place, and may in the future not to come back. Task Manager is determining the optimal number of tables which should be put in order to balance the costs of service and cost expectations.
The purpose of the analysis of the formation of the queue is to minimize the sum of the two types of costs: the costs of waiting customers and the costs of production capacity maintenance.

The maintenance costs increase with increasing bandwidth (needs more cooks and maintenance staff, utilities increase, overhead costs above).
On the other hand, a large bandwidth means that a smaller number of customers waiting in the queue (and therefore not paying). Total costs can be represented in the form of a U-shaped curve that decreases with increasing capacity and service, and starts again to go up after a certain point. Note that this optimal point is not located there (and rarely there), where the lines cost of service and cost expectations.
Planning as an integral part of the control system is expressed in a wide variety of organizational forms. In organizations with centralized control planning also typically centralized. In senior management there is a Central service which reports directly to the President or Vice-President and develops prospective and current plans for enterprises and units in the organization. Enterprises and units do not have scheduled services. This scheme is applied in organisations with a small number of companies with same or close profile. In large decentralized organizations working on long-term planning is concentrated in production departments. Top management defines only the General direction of development and structure of capital investment, total production and profits. The Central planning develops plans and brings to units the restrictions that are imposed by common goals of the organization. The transfer of the center of gravity in the planning division caused by the development of their independence. Coordination and monitoring the work of the planning services departments carried out by the Central service planning.
In each unit a office of the production planning and control, which is engaged in drawing up detailed operational plans and monitors their implementation.
In the last three decades in Western countries the process of adaptation systems planning and management to the external environment. There is a replacement of the principle of making long-term plans from the future to the present, not from past to future. Long-term planning transforms into strategic planning, the essence of which is reflected in the necessity to correlate everyday with thoughts on long-term goals and consequences, and is constructed on a situational basis. Peter Drucker in this regard, wrote: "Long-term planning does not include future decisions. It includes the influence of the future on today's decision".* Basically, the strategic planning process involves four steps: evaluation, selection, execution, and analysis of, the essence of which is reflected in the model of strategic planning.
A strategic plan is like a "bridge to the future" and is used to transition the organization from what it is to what it should be. The process of the four stages is a basic program regardless of the type of organizational strategy which is a comprehensive orientation plans across the organization. Although each of the units can have its own strategic plan. In strategic planning there are three types of strategy: leadership on price, differentiation and focus.
Leadership in prices is a strategy that is directed to the interests of consumers who wish to pay less for services or goods they receive. For organizations following this strategy, characterized by low prices due to low cost and large volumes.
Differentiation is a strategy that is designed for consumers who are willing to pay more, but in return, expect a wider choice and a higher level of quality. The focus strategy is used by organizations to focus on a specific section of the market and attracting consumers with "special needs".
On the basis of strategic planning will develop strategic management and especially the management by objectives (MBO) or management target which is in conflict with direct management or command when subordinates receive clear instructions on how they should act in each situation.

There are also software management, which means that it provides a detailed description of all work to be performed. This included the development of a number of schemes repetitive behaviors.
MBO is a process of joint determination of the members of the organization the objectives for each position and coordination of efforts to achieve them. The model of management by objectives implies that the Manager and his subordinate reach agreement on the objectives for which the subordinate works within a specified period of time. In this case, the Manager for the slave acts as a consultant.
MBO is based on the premise that the clearer the goal is understood, the greater the likelihood of achieving it, and progress can only be measured in relation to the goal.
The process of management by objectives consists of four stages.
1. The scope of powers and duties of all managers of the company;
2. Develop management objectives within the established responsibilities; regulatory goals 4 to 6
3. Are made real plans for achieving goals;
4. Manufactures control, measurement, evaluation and received by each Director of the results.
Thus, if goal setting is the start of any management activities, it is mandatory continuation is the definition of the types of work that are needed to achieve the objectives.
Managers not only plan, but also organize their implementation through the formation of structures, processes and methods by which organized a collaborative and effective work. The important place in activity of managers is to develop systems of indicators, which are measured and evaluated Results of work of each individual employee, divisions, services, and business in General.
However, "evidence in favor of MBO are mostly psychological in nature and relate to items such as goal setting, knowledge of results and participation." In our country in the field of long-term planning and programming most developed of program-target method of planning and control, i.e. a method in which the objectives of the plan are linked to resources through programs.
It is based on the systematic approach, the formation of economic and social development of the organization, their division into sub-goals and identifying the resources required for consistent implementation. This method uses the theory of graphs, i.e. build two graphs — the tree of objectives and tree resources. The calculations identified priority programs.