Introduction to Business Planning and Control

Planning

- preparing for the future

- calculating the time and sequence

- detailing the implementation

Level of planning

1. Strategic Planning

2. Management Planning

3. Operational Planning

1. Strategic Planning

- concern of top management

- deals with general issues about an organisation's future

- examples: used to set priorities, focus energy and resources, strengthen operations

- Long time span (5,10 and above years)

- Main purpose will be future direction

- Planning Methods often unstructured and general level of detail

- Evaluating will be difficult

2. Management Planning

- higher level department manager who have to put strategy into practice.

- need to look at more specific issues such as organising production, staff training needs and product design

- Medium time span (1-3 years)

- Main purpose is to decide how to implement strategy

- More Detailed and more structred in term of planning

-Evaluating can be both easy & difficult

- Medium level of certainty

3. Operartional Planning

-Created by low-level management

-Deals with day to day activities

-Examples: work schedules, sales call, delivery dates and stock ordering

-Short time span (daily, weekly, or monthly)

-Main purpose is day to day operations

- Highly detailed and very structured, often programmed

-Evaluating will be easy

Who is involved?

1. Internal stakeholder

• groups within a business or people who work directly within the business.
• such as employee, owners and investor
• employees want to earn high wages and keep their jobs
• owner are interested in maximizing the profit the business makes
• investor are concerned about earning income from their investment.

2. External stakeholder

• Group outside a business or people who are not directly working within the business but are affected from the decisions of the business
• Such as customers and suppliers
• Customers want the business to produce quality products at reasonable prices
• Suppliers want the business to continue to buy their product
• Creditors want to be repaid on time and in full

The need of planning

• it sets the direction and establishes priorities for your organization. It defines your organization’s view of success and prioritizes the activities that will make this view your reality. 
• To get everyone on the same page: you can get operations, sales, and all other departments moving together to achieve the organization’s goals.
• better align all our resources to maximize our strategic success
• To simplify decision-making: Priorities make it easier to say no to distracting initiatives.

 Step in Control

1. Setting up standards of performance

2. Measuring actual performance

3. Comparing actual with planned (standards)

4. Work out corrective actions.

1. Establish standard

Standards are criteria against which results are measured. Standards are usually measured in terms of output. Some of the standards are:

a) Cost standards:

These indicate the financial expenditures involved per unit

b) Productivity:

Productivity can be measured on the basis of units produced per man hour etc.

c) Time standards:

The goal will be set on the basis of time lapse in performing a task.

2. Measuring Performance

The measurement of actual performance must be in the units similar to those of predetermined criterion.

a) Strategic control points

in quality of the product, standards of established quality must be maintained especially in food processing, drug manufacturing, automobiles.

b) Ratio analysis

it describe the relationship of one business variable to another.

c) Personal observation

can be used in certain situation as measuring devices for performance. The informal observation is general a day to day routine type.

3. Comparing actual with planned

Compare the actual peformance against the standards established.

4 phases in the comparison:

1) Receiving the raw data

2) Accumulation and recording of this info

3) Evaluation of completed action to date

4) Reporting the status of accomplishment to higher line authority

4. Work out corrective actions

-Fixation of resposibility for the failures at the right quarters. Recommendation of the best possible steps to correct them.

- objective are to avoid of such failure in the future

- Corrective action must be well-balanced, avoiding over controlling.