| A detailed description of a new or existing business, | | | | procedure might be looked upon as a sequence of |
| including the company's product or service, marketing | | | | rules. Rule may be a part of procedure. |
| plan, financial statements and projections and | | | | Programs: Programs are a complex of goals, policies, |
| management principles, require a plan to be | | | | procedures, rules, task assignments, steps to be taken, |
| implemented. A document that spells out a company's | | | | resources to be employed and other elements |
| expected course of action for a specified period | | | | necessary to carry out a given course of action; |
| usually includes a detailed listing and analysis of risks | | | | further supported by budgets. |
| and uncertainties. For the small business, it should | | | | Budgets: Budget is a statement of expected results |
| examine the proposed products, the market, the | | | | expressed in numerical terms. Financial operating |
| industry, the management policies, the marketing | | | | budget is often called a "profit plan". This budget can |
| policies, production needs and financial needs. | | | | be expressed in financial terms, in terms of labor- |
| Frequently, it is used as a prospectus for potential | | | | hours, units of product or machine hours or in any |
| investors and lenders. | | | | other numerically measurable term. |
| Think of it as a production line. What's go in the start | | | | Steps in Planning: Being aware of opportunities, a |
| are raw materials and unfinished assemblies. Here, the | | | | manager should take a preliminary look at possible |
| raw materials include: | | | | future opportunities and see them clearly and |
| -Talent and initiative from employees | | | | completely know where they stand in light of their |
| -Capital -Market position | | | | strengths and weaknesses, understand what problems |
| -The company's creditworthiness | | | | they wish to solve, and why and know what they |
| -The firm's earning capacity | | | | expect to gain. Planning requires a realistic diagnosis of |
| -Assessment of changes in the marketplace. | | | | the opportunity situation. |
| It should have four major aspects: | | | | Establishing objectives: This is to be done for the long |
| - Its contribution to purpose and objectives | | | | term as well as for the short term. Objectives specify |
| - Its primacy among the manager's tasks | | | | the expected results and indicate the end points of |
| - Its pervasiveness | | | | what is to be done, where the primary emphasis is to |
| - The efficiency of resulting plans. | | | | be placed and what is to be accomplished by the |
| The Contribution of Planning to Purpose and | | | | network of strategies, policies, procedures, rules, |
| Objectives: Every plan and all its supporting plans | | | | budgets and programs. Objectives form a hierarchy. |
| should contribute to the accomplishment of the | | | | Developing premises: There are assumptions about |
| purpose and objectives of the enterprise. | | | | the environment in which the plan is to be carried out. It |
| The Primacy of Planning Manager must plan in such a | | | | is important for all managers involved in planning to |
| way that it leads to proper organizing, staffing, leading | | | | agree on the premises. Forecasting is important in |
| and controlling which support the accomplishment of | | | | premising: what kind of markets will there be? What |
| enterprise objectives. Planning and controlling are | | | | volume of sales? What prices? What products? What |
| inseparable. Any attempt to control without a plan is | | | | technical developments? What costs? What wage |
| meaningless, since there is no way for people to tell | | | | rates? What tax rates and policies? What new plans? |
| whether they are going where they want to go. Plans | | | | How will expansion be financed? What are the |
| thus furnish the standards of control. | | | | long-term trends? Because the future is so complex, it |
| The Pervasiveness of Planning: Planning is a function | | | | would not be profitable or realistic to make assumption |
| of all managers, which vary with each manager's | | | | about every detail of the future environment of a plan. |
| authority and with the nature of the policies and plans | | | | Determining alternative courses: The more common |
| assigned by superiors. If managers are not allowed to | | | | problem is not finding alternatives but reducing the |
| a certain degree of discretion and planning | | | | number of alternatives so that the most promising may |
| responsibility, they are not truly managers. | | | | be analyzed. The planner must usually make a |
| The Efficiency of Plans: The effectiveness of plan | | | | preliminary examination to discover the most fruitful |
| refers to its contribution to the purpose and objectives. | | | | possibilities. |
| Plan is efficient if it achieves its purpose at a | | | | Evaluating alternative courses: From the various |
| reasonable cost, when cost is measured not only in | | | | alternatives available proper evaluation should be done |
| terms of time or money or production but also in the | | | | which may involve ash flow. |
| degree of individual and group satisfaction. | | | | Selecting a course: The best alternative should be |
| Procedures: Procedures are plans that establish a | | | | selected. |
| required method of handling future activities. They are | | | | Numbering plans by budgeting Final step is giving them |
| chronological sequences of required actions. They are | | | | meaning by converting them into budgets. The overall |
| guides to action rather than to thinking and they detail | | | | budgets of an enterprise represent the sum total of |
| the exact manner in which certain activities must be | | | | income and expenses, with resultant profit or surplus |
| accomplished. | | | | and the budgets of major balance sheet items such |
| Rules: Rules are unlike procedures in that they guide | | | | as cash and capital expenditures. |
| action without specifying a time sequence. In fact, a | | | | |