Professional Documents
Culture Documents
15
Forecasting
• Forecasts
– Predictions, projections, or estimates of future
situations
• Types of Forecasts
– Event outcome forecasts: Predictions of the
outcome (effects) of highly probable future events
– Event timing forecasts: Predictions of when a
given event will occur
– Time series forecasts: Estimates of future values
in a statistical sequence (e.g., sales forecast)
Forecasting Techniques
• Informed Judgment
– Forecasts relying on intuitive judgments that are
based on how well informed the forecaster is
• Scenario Analysis
– Preparing written descriptions of alternative but
equally likely future situations
• Longitudinal scenarios: Describing how the future
situations will evolve from the present
• Cross-sectional scenarios: Describing future situations
at a given point in time
Forecasting Techniques (cont’d)
• Surveys
– A forecasting technique involving face-to-face
interviews and mail or e-mail questionnaires
– Problems with surveys
• Construction of the survey instrument
• Cost of administration
• Errors in data collection and interpretation
• Trend Analysis
– The hypothetical extension of a past series of
events into the future
Long Range Planning
• Strategy +planning
• Strategy – defined as
– Strategy is a mediating force between the
organization and its environment: consistent
patterns in streams of organizational decisions to
deal with the environment. Mintzberg, 1979, The Structuring of Organizations [P. 251]
– Long range planning ( Drucker 1970, Ansoff 1965) Consists of
• Objectives or goals
• Methods, procedures, means to realize goals
• Apply to most segments of business
• Contain auditing and control mechanisms
Strategic planning
• Strategic planning has been defined as
“a disciplined effort to produce fundamental decisions and
actions that shape and guide what an organization is, what it
does, and why it does it” (Bryson 1995).
• It provides a systematic process for gathering information
about the big picture and using it to establish a long-term
direction and then translate that direction into specific goals,
objectives, and actions. It blends futuristic thinking, objective
analysis, and subjective evaluation of goals and priorities to
chart a future course of action that will ensure the
organization’s vitality and effectiveness in the long run. “
Strategic planning vs management
( Poister and streib 2005)
– Content
– Approach
A. Implementation of Strategies
1. Activating strategies
2. Designing the structure, systems and processes
3. Managing behavioural impementation
4. Managing functional implementation
5. Operationalising strategies
B. Performing Strategic Evaluation & Control
1. Performing strategic Evaluation
2. Exercising Strategic control
3. Reformulating strategies
The Foundation for Planning
• Mission
• Purpose or Goal
• Objectives
• Strategies
Goals
Objectives
Strategies
Vision
• Definition
• “Description of something (an org., corporate culture, a
business, a technology, an activity) in the future”
- Kotter
• “Mental perception of the kind of environment an
individual, or an organisation, aspires to create within a
broed time horizon and the underlying conditions for the
actualisation of this perception”
-El-Namaki
• “Category of intentions that are broad, all-inclusive and
forward thinking”.
-Miller and Dess
• Vision is future aspirations that lead to an inspiration to be
the best in one’s field of activity
Benefits of Vision
• Good visions are inspiring and exhilirating
• Represent a discontinuity, a step function and a jump
ahead so that the company knows what it is to be.
• Good visions help in the creation of a common identity and
a shared sense of purpose
• Good visions are competitive, original and unique. They
make sense in the marketplace as they are practical
• Good visions foster risk-taking and experimentation
• Good visions foster long-term thinking
• Good visions represent integrity, they are truly genuine and
can be used for the benefit of people.
Missions
• Mission is what an org. is and why it exists.
• It answers 3 fundamental questions :
– 1) What is our business?
– 2) What will it be ?
– 3) What should it be?
• Definition : “ Essential purpose of the org., concernig
particularly why it is in existence, the nature of the
business(es) it is in , and the customers it seeks to
serve and satisfy”.
- Thompson
• “ Purpose or reason for the organisation’s existence”
- Hunger & Wheelen
Characteristics of a Mission Statement
• It should be feasible
• It should be precise
• It should be clear
• It should be motivating
• It should be distinctive
• It should indicate major componants of strategy
• It should indicate how objectives are to be
accomplished
Corporate Objectives
• Are the desired future positions or destination
that it wishes to reach
• Are defined as ends which the organisation seeks
to achieve by its existence and operation.
• May be classified into two types :
• External Institutional Objectives – which define the impact
of the organisation on its environment, e.g., to develop a
high degree of customer confidence by sustaining high
standards of excellence in product quality.
• Internal Objectives – which define how much is expected to
be achieved with the resources that the organisation
commands, e.g., to raise the average rate of return on
investment to 15% p.a.
Based on Objectives, types of
Organisations
• Marginal Organisations- usually small firms which are
without any formal objectives defined. Newer estd. firms
which are preoccupied with the problem of survival belong
to this category.
• Appendix Org.- which are owned & controlled by other org.
e.g., a wholly-owned subsidiary or an ancillary firm, which
has external objectives geared to the goals of the parent
organisation, but has no internal objectives of its own.
• Corporations- i.e., independent, estd. Firms which have
fully developed internal objectives but have only a vague
sense of external purpose.
• Institutions- i.e., Org. with fully developed formal
objectives, both external & internal.