Introduction to planning and its instruments

Summary

Planning is the first stage of the administrative process, which opens the way to the other stages, it is in this stage when the orientation and focus of the company's activities are established, its study has been carried out almost at the same time as the Marketing itself, since it includes the establishment of the variables of what is going to be offered and to whom, its importance lies mainly in the fact that this is the basis for the structure of the organization, that is, the why and for what it is established, to obtain effective results at this stage, there are various tools to carry out successful planning, as well as the techniques necessary for the company to achieve the objectives that it establishes.

Introduction

Planning is the first step in the administrative process, which includes the 4 main activities that a manager performs: planning, organization, direction and control. At this point the objectives are defined, as well as the actions necessary to achieve them. For this, it is necessary to be aware of the impact of the variables that surround the company.

This process involves making decisions that will set the course of action necessary to reach the established objectives. The structure of the organization must be defined that is in accordance with the strategies to be implemented, the resources necessary to carry out its activities, as well as the indicators and controls to be used in the production of the final products of the company, whether they are goods or services, which is why it constitutes the most important element of the administrative process, since without it the other stages of the process could not be carried out.

Therefore, a planning is seen as a set of procedures that have the purpose of designing, controlling and evaluating its effectiveness. Through this procedure, the external and internal environment of the company can be analyzed, and based on various policies they will be guided towards the achievement of the set goals, it is worth mentioning that the company must take into account that its activities must be in accordance with the environment administrative, financial, productive, cultural, technological and social.

In a few words, planning aims to direct the organization based on the study of the environment, as well as the strategies, policies and activities that have been set to achieve the expected results, for this it needs one or more tools or instruments which will be exposed in the present work.

In order to understand the focus of the article, the term planning will first be defined:

"It includes the process of making decisions about the operation of the company and foreseeing, as far as possible, about its operation" (H. Murcia, 1974)

However, there are various concepts defined by different authors, from their point of view they define planning as follows:

For George R. Terry:

"It is the selection and relation of facts, as well as the formulation and use of assumptions regarding the future in the visualization and formulation of the proposed activities that are believed to be necessary to achieve the desired results"

For Munch and García:

"It is the determination of the objectives and the choice of action resources to achieve them, based on the investigation and elaboration of a detailed scheme that will be carried out in the future".

For Montana and Charnov:

"It is describing how to choose a destination, evaluate goals, alternatives and decide a specific path."

"It is the determination of the objectives and choices of the courses of action to achieve them based on the investigation and elaboration of a detailed scheme that will be carried out in the future"

For Harold Koonts and Heinz Weihrich:

“It is the selection of missions, objectives, strategies, policies, programs and procedures to achieve them; decision making; selection of a course of action among various opinions ”.

In an organization, the planning part consists of a visualization of the future of the organization, as well as the design of the action plan.

That is why this step of the administrative process involves the question and resolution of basic questions such as: what to do, how to do it, when it should be done and who should carry it out. More specifically, the why and what for the structuring of the organization is established.

This process involves decision-making because they must be chosen from a wide set of options, the alternative that best suits the company.

The concept of planning the economy was first introduced by Count de Saint-Simon based on the works of Taylor and Fayol. The first records of institutional planning were established at the end of the 19th century, however it was not until the beginning of the 20th century that planning was used at some social and economic levels, at the same time that it was introduced into the scientific literature giving rise to the fact that the principles of the organization will be studied, as well as the work.

At the beginning, planning was used only in the military field, however its study as a theory began at the beginning of the 20th century due to the economic inconveniences of the time.

Around the thirties, during the event known as the great depression, John M. Keynes, established that planning was an important factor in the evolution of the economy of a country, proposed the use of various formulas to overcome the inconveniences of capitalist countries in the West.

From the 50's until today, planning has been the nucleus on which most of the administrative theory revolves, since it is also observed that at present the problems related to the administrative, business and economic developments found in the texts recognize that the main drawback of these is planning.

Importance of planning

Planning is considered the basis with which the organization's activities begin, however its importance lies in other points such as that this step represents a foundation of the administrative process, at this point the pertinent investigations must be carried out to guide the company on the basis of adequate, a preparation is formulated so that the company is strengthened in the face of the inconveniences it encounters, establishes the necessary internal environment so that it is in accordance with the activities that it will carry out to achieve its objectives.

It is also important because at this stage an improvement should be oriented towards the future, an analysis of the environment that surrounds it is carried out in such a way that its opportunities are used to the maximum, it tries to work effectively in its processes to achieve success, seeks to lay the foundations to apply adequate control, at this stage the manager can analyze the courses of action for effective decision making, it is considered a basis for the management stage to be carried out in the correct way and in the same way Way projects the resources that are allocated to the structure of the organization, as well as the time.

Planning principles

In order to carry out adequate planning, it is necessary to establish certain principles as a basis, these are:

Quantification and objectivity

Planning must be based on truthful information, as well as on the use of precision and reasoning, completely eliminating subjectivity and unfounded data.

The objectives to be pursued must be achievable to the extent of the organization's resources, so that abuse of the ambition of unattainable goals must be avoided as much as possible.

The planning must allow the incorporation of changes to the structure, so that it is dynamic and can give rise to solve those unforeseen events not considered, thus creating a safety cushion for the company.

The goals, objectives, processes and procedures carried out by in the planning stage must encompass the organization as a whole, always seeking a balance.

Of the change of strategies

Planning by periods must be subject to updates that imply the improvement of the internal and external environment of the organization, so it is important to be aware of innovations and their application to the company.

Types of planning

Planning can be divided into three main aspects, these are:

Strategic planning

It is the process that is projected in the medium and long term, in which decisions are made to establish the mission, vision, values, objectives and strategies of the company, as well as the necessary resources, the policies that will be the basis for systematically direct these resources, taking into account the organization as part of a whole. It represents an auxiliary to face future problems. It is worth mentioning that the tools of strategic planning are:

View

It is established by the highest command of the company, it must be projected in the long term and, it is where it is established what is wanted to achieve with the development of the organization, it must attract great personalities, as well as it must call people to want to be part of it.

Mission

Corresponds to the purpose, path and the necessary guidance to be able to fulfill the vision phrase, it must answer four main questions, these are: who are you? What business are you in? Who are your main customers? And finally, what makes you unique and different?

It consists of establishing the rules, as well as the framework of behavior of the people within the company, the values of the organization are also established.

The establishment of the objectives must take into account that they must be specific, measurable, realistic and concrete within a certain period of time.

Tactical planning

Based on strategic planning, it is developed in the short and medium term and its responsibility falls on the mid-level managers of the organization. It includes only the areas to which the commanders belong. It is based on the management of resources and effectiveness. It transforms the objectives of strategic planning into specific ones, that is, it encourages the area to operate in such a way that it carries out its part of the strategic plan.

Operational planning

It consists of assigning in advance those activities to be carried out by the members of an operational area. It is based on strategic and tactical planning, is carried out by the leaders of the lowest levels, uses precision in a fundamental way and is projected in the short term

Planning instruments

There are various instruments that managers use to carry out effective and successful planning; however, it is necessary to establish that each of them strives to analyze different aspects related to the organization, since it is the planning job to carry out an analysis on the environment, so that you can find some opportunities and also design your own scenarios, you must also do a thorough analysis of the competitors, to determine which are the competitors and the actions that will affect the organization, it is important that you evaluate the scenario you will have In order to project a scenario of the future of the company, some of the tools that managers use to carry out said analyzes are presented below:

Forecasts.

It consists of the elaboration and development of assumptions or premises related to the future, which serves as a tool in the decision-making of the planning stage for managers.

In turn, these can be subdivided into categories such as:

Sales forecasts.

Preparation of a projection of what the company could sell in the future so that the monetary resources necessary for its operation can be determined.

Income forecasts.

It is prepared by companies in order to determine their future income from all sources.

Technology forecasts.

It includes carrying out a projection of those technologies that the organization may need, as well as their economic effect on the organization.

There are two techniques to determine a forecast, the first is of a quantitative type that includes the application of a series of mathematical formulas to a set of data to calculate future estimates, and the other technique corresponds to the qualitative ones, which is more subjective when taking as base opinion and experience.

Linear programming.

It is considered a quantitative tool, which involves various procedures to make calculations about the possible combinations of the different resources and activities that the organization develops in order to determine the optimal one, it is used when a specific objective is established and it is subject to a group of various restrictions.

It is a tool that is based on the study of the environment that includes an investigation about the strategies and courses of action of competing companies, to implement them in their own.

Budgets consist of planning the distribution of resources to be efficiently assigned to the activities to which they correspond, these can be income, expenses, capital expenditures, profits, expenses as well as they can also be related to the purchase of equipment. In turn, these have two approaches:

Incremental budgets:

Which consists of applying resources to an area based on previous exercises.

Zero-Base Budgets:

They are applied when you do not have data from previous assignments, or simply start from scratch.

Programming.

It involves making a detailed planning of the different tasks that need to be performed, as well as the order in which they must be done, the person who must carry them out and the period of time they require. Within these tools you can use instruments such as:

Gantt chart

It is a graphical representation in the form of bars that is used to make comparisons of historical productions, as well as their evolution over time.

Load Chart

It is based on the Gantt chart, but on the vertical axis the areas, departments, or even resources are listed.

Breakeven

It is used to determine the point at which the total income is adequate to cover the total costs.

Theory of tails

It consists of balancing the cost generated by having a waiting line with the cost of the service required to attend that line.

Probability theory

It involves the use of statistical methods to evaluate previously established patterns in order to reduce risk in the future.

Results matrix

It is used to determine a probable value from among different alternatives, according to the different possible solutions that each entails, its use requires a wide set of alternatives, the occurrence of various events and that there is a group of consequences associated with each alternative and finally its association with each event.

Games theory

This tool was designed to project the result of the selection of an alternative of an organization, with respect to its competitors, it aims to project the reaction of the competition to the actions of the company in question corresponding to: alterations to prices, promotions, as well Like new product launches, it provides a baseline for developing a competitive behavior analysis.

Planning techniques

Among the different planning techniques we can mention:

The intuition

It consists of giving credit to the experience, as well as to the good judgment of the managers, this is not an obsolete technique since even today it is used for those situations that cannot be predicted, however this technique is in constant improvement.

Turnover

It corresponds to the confidence given to what is sold, and also consists of the intuition to decide with respect to investments, and new markets, but taking into account the volume of sales, its use is due to the ease of using it.

It consists of decision making based on an analysis of an annual profit plan, in other words, it is based on predicting the future of an organization based on its growth.

Contribution margin

It corresponds to a technique based on the total contribution relative to the marginal resources and the total profits. In the same way, some strategies can be determined to increase profit based on a sales volume based on the combination of products.

Return on investment

It involves the use of financial decisions regarding capital investment, includes an analysis of the market, industries and the economy, as well as consideration of internal information.

conclusion

Planning represents a fundamental stage in the administrative process, since in this stage the reasons for being of the company are established, that is, when the foundations of the organization's structure are established, its adequate performance will translate into the results of the decision-making that is carried out in the same, since it will be the basis for the direction, organization and control of the company, the objectives established at this stage will be the basis for determining the courses of action, as well as The activities of the organization, to achieve the desired results, the reason for being the company is also defined so that it is always its framework of action.