Introduction
Business planning allows the organization to take an important part in shaping its future, allowing it to undertake activities and participate in them to control its destiny.
This planning has achieved that the organizations have better strategies, using a systematic approach allowing to set a concrete course of action, establishing principles that will guide them; considering planning as an administrative function that allows the setting of objectives, goals, policies, procedures and programs to carry out the planned action. This planning can be considered of a general type oriented to the achievement of institutional objectives within the company, allowing to decide on the resources that will be used and the policies that will allow an excellent development within a company, with an excellent business administration, this thanks to a true planning.
Objectives of business planning
Business planning has different objectives, to improve the organization's ability to adapt to changes in the environment. Change the behavior of employees through their participation in the development and growth of the organization. The objective of business strategy, sometimes also called strategic business management, is the deliberate search for an action plan that develops the competitive advantage of a company and accentuates it so that it can grow and expand its market by reducing competition. The strategy articulates all the potentialities of the company, so that the coordinated and complementary action of all its components contributes to the achievement of defined and achievable objectives. Ideally,Strategic analysis should look for the systematic relationships between the choices made by top management and the financial results obtained by the company.
Business planning policies
Policies are statements or general interpretations that guide the thinking of managers to make decisions about a project within a company. Its purpose is to ensure that the decisions do not exceed the proposed limits, in other words that it has a limit of authenticity on each goal that is proposed, exceeding particular expectations as well as expectations of each of the people that make up the association or the company.
One of the policies is to be a discreet person who speaks at the right time with concise thoughts and words. For their part, the strategies refer to the direction in which human and material resources will be channeled in order to increase the possibility of meeting the chosen objectives. And above all take care of the interests of others or individuals.
The principle of strategies and policies is that the clearer the understanding of these two and their implementation in practice, the more consistent and effective will be the structure of a company's plans.
Business planning rules
They are plans, since they establish courses of action, which are formed in a simple way, but with the intention that the planning process results in the order of interesting ideas within a company and thus training professional people.
A rule dictates whether or not a specific and defined action is taken with respect to a situation. Rules are often confused with policies, as they also include guidelines for action and thought, but leave no room for decisions.
A rule may or may not be part of a procedure. As an example, the following rules can be mentioned:
Smoking is prohibited in production areas. (This rule is not part of any procedure).
The rules within a business planning are based on each entrepreneur having enough knowledge to guarantee the productive development in a company.
On the other hand, both rules and procedures restrict the area of decisions in their application, since they indicate what can or cannot be done, and how it should be done, limiting actions to specific tasks.
Business planning procedures
Procedures are plans that establish a required method to manage the future activities of a company. They are guides to action rather than thought, detailing the exact way in which certain activities should be carried out. They are chronological sequences of required actions.
The procedure indicates the order in which a goal within a business project must be carried out, it does not indicate the way in which it must be carried out, this is done by the methods that go into the business planning procedure.
Procedures are essential to properly plan a business project because:
- They determine the logical order that activities should follow. They promote efficiency and specialization. They delimit responsibilities, avoid duplication. They determine how activities should be executed, and also when and by whom they should be carried out. • They are applicable in activities that occur repeatedly.
Business planning programs
The programs are based on previously designed training objectives, established from each information obtained. The courses are grouped to form these training programs, whose contents or topics that are addressed within a company, arise from the detected needs, and can be designed for their application, according to the positions, work areas or organizational levels.
Training programs include:
- The presentation of the program, where the coverage, stages and characteristics of a project are applied Strategic planning of training in the organization Analysis of the situation of training in the company (SWOT analysis) Training objectives Programming of the training courses, including the scheduling of events according to the detected needs, the scope of the events and participants, the instructors, the person responsible for operational coordination, costs and budgets.
Budgets within business planning
The budget emerges as a modern approach and control tool by reflecting the behavior of economic indicators and by virtue of its relationships with the different administrative, accounting and financial aspects of the company, since organizations are part of an economic environment in which uncertainty, therefore they must plan their activities if they intend to sustain themselves in the competitive market, since the greater the uncertainty, the greater the risks to assume.
Classification of budgets:
Flexible or Variable:
They are made for different levels of activity and can be adapted to circumstances that arise at any time. They show the size-adjusted revenue, cost and expenses of manufacturing or commercial operations. They have wide application in the field of cost budgeting, manufacturing, administrative, and sales overhead.
Short term:
Short-term budgets are planned to meet the one-year cycle of operations.
Long-term:
In this field are located the development plans of the state and large companies. The general guidelines of each plan are usually based on economic considerations, such as job creation, infrastructure creation, fight against inflation, dissemination of social security services, promotion of savings, strengthening of the capital market, capitalization of the financial system or as has happened recently, mutual opening of international markets.
Business planning strategies
Strategies are defined as the adjustment that a company makes between its internal skills and resources with the opportunities and risks created by its external factors. The strategy formulation scheme setting stage consists of five techniques that are used in any sequence: the SWOT matrix, the PEEA matrix, the BCG matrix, the IE matrix, and the main strategy matrix. These tools are based on information that proceeds to the reporting stage to correlate external opportunities and threats with internal strengths and weaknesses. Adjusting critical success factors, both external and internal, is the key to creating alternative possible strategies effectively.
Process within business planning
A process is a systematic way of doing things. Management is spoken of as a process to underline the fact that all managers, whatever their personal aptitudes or abilities, perform certain interrelated activities in order to achieve the goals that the company desires. Planning implies that managers think ahead of their goals and actions, and that they base their actions on some method, plan or logic, and not on hunches. The plans present the objectives of the company and establish the ideal procedures to achieve them. In addition, the plans are the guide for the company to obtain and commit the resources that are required to achieve the objectives and when these are not satisfactory, corrective measures can be taken.
The first step in planning is choosing your business goals. Once these are defined, programs are established to achieve the goals in a systematic way. It is for this reason that those who are in charge of the planning process are those who have the responsibility of directing the organizations, they must try to anticipate future changes in the environment and design flexible plans and structures that allow adaptation, innovation and face any unforeseen situation to planning.
Decision making as a central task of the business organization
Decision making has to be part of managerial work. Managerial work can be defined as that which consists of promoting, adopting, or making business decisions. When someone runs a company, they are in charge of making decisions; that is, to solve the problems that appear, to determine the course of action to follow, to solve, take, adopt or choose a path among other possible ones, to undertake, promote and initiate actions of various kinds; he or she is expected to choose effectively and efficiently a course of action among the possibilities that your company has.
The first stage is the identification of the problem or the diagnosis. There is a problem when there is a discrepancy between what you want and what you have. Decision-making must be clear and precise, the person who makes the decision within a company must take risks, which will have positive as well as negative risks.
Tactical planning and business strategic planning
Tactical planning consists of formulating medium-term plans that highlight the current operations of the various functional areas of the company.
The typical planning period for medium-term plans is two to five years. However, the length of the period may vary; for example, in stable sectors such as the public services branch, it may be shorter (three or four years). Medium-term planning is made up of two different, but related parts:
- The projection or forecast of the current activities of the organizations regarding the planning period. Development and planning of new programs, as well as business operations for the future.
Strategic planning is long-term planning that focuses on the organization as a whole. Managers ask themselves what to do in the long term to achieve organizational goals. The long term is usually defined as a period that extends approximately five years into the future. Therefore, managers in strategic planning will be trying to determine what their organization will need to do to be successful at a point five and seven years into the future. The essence of strategic planning consists of the systematic identification of opportunities and threats that arise in the future,which combined with other important data provide the basis for a company to make better decisions today to take advantage of the opportunities that arise in the future.
Gantt Charts: Business Planning and Control Techniques
Gantt charts are a very useful visual aid in determining workloads and scheduling. They owe their name to Henry Gantt, who developed them in the late 19th century. The graphs show the use of resources, for example work centers and labor.
Gantt charts show the loads and downtime of various departments, machines or facilities. They display the relative workloads on the system, so the administrator knows what settings are appropriate. For example, when a work center is overloaded, employees can be transferred from another center with little load to increase the workforce. If the waiting jobs are processed at different job centers, some jobs from the overloaded centers will transfer to the lightly loaded centers. It is also common to transfer versatile equipment from one center to another.
PERT and CPM: Business planning and control techniques
Admitting that the execution of a project or elaboration can be subdivided into planning, programming and control, and speaking in a classical way, we can consider the PERT techniques (Program Evaluation and Review Technique), in Spanish Program Review and Evaluation Technique. The CPM (Critical Path Method) in Spanish Critical Path Method, which are the most common for a first assignment. In general, these techniques are useful for a wide variety of projects that include:
- Research and development of new products and processes Construction of plants, buildings, and roads Design of large and complex equipment Design and installation of new systems Design and control of epidemics, and multiple other applications in which proper planning is required.
In projects like these, administrators must program, coordinate the various tasks or activities to be developed, which are not necessarily sequential, and even in this case these activities are carried out by all the members of the company, it is mutual because each one contributes their own knowledge and strategies.
Developed in 1957 by JE Kelly. From Remington Rand, and M. r. Walker, from Dupont, to help schedule maintenance projects in chemical plants, the critical path method (CPM) is an important project planning and control technique. The program review and evaluation technique (PERT) was developed around the same time as the CPM by the Navy Special Projects Office, in cooperation with the Business Consulting firm Booz, Allen & Hamilton, in order to plan and control the nuclear submarine..
CPM / PERT is used in a wide variety of organizations, but it tends to be used in a narrow range of applications. Project planning and control dominates the other applications, while production planning and control, and maintenance planning and control represent the other uses of PERT / CPM.
Differences between PERT and CPM methods
The main difference between the methods is the way in which time estimates are made.
PERT
- Probabilistic. It considers that the time variable is an unknown variable of which only estimates are available. The expected time of completion of a project is the sum of all the expected times of the activities on the critical path. Assuming that the distributions of the times of the activities are independent, (a strongly questionable assumption), the variance of the project is the sum of the variances of the activities in the critical path. It considers three estimates of times: the most probable, optimistic time, pessimistic time.
CPM
- Deterministic. Since it considers that the times of the activities are known and can be varied by changing the level of resources used, as the project progresses, these estimates are used to control and monitor progress. If there is a delay in the project Efforts are made to get the project back on schedule by changing the allocation of resources Considers that the activities are continuous and interdependent, follow a chronological order and offers parameters of the opportune moment of the start of the project Activity: It considers normal and accelerated times of a certain activity, according to the amount of resources applied to it.
