FORECASTING: A CRITICAL ELEMENT OF PLANNING

INTRODUCTION:
Forecasting means predicting the information which is helpful to
plan the theme.
Planning is required for development of every organization and it is
more efficient to the management of organization.
The objective is to give the required assessment for
planning the management facilities up to the mark of the customer
requirements and achieve the goal of organization.

DEFINITION OF PLANNING:
“Planning involves deciding in advance what to do,
when to do it, how to do it and who is to do it and how the results are to be
evaluated”.
MEANING OF PLANNING:
Determination of a course of action for achieving
the goals and it is systematic thinking about the ways and means for the
accomplishment of predetermined objectives.
Planning bridges the gap between where we are and where we want to be .It
is pre-requisite to doing anything.
Planning is classified into two types as follows:
PLANNING

SYSTEMATIC PLANNING PROPER PLANNING

Systematic planning is necessary for Proper planning is must to ensure
any business activity, otherwise effective utilization of human and
events happen in a haphazard non-human resources to achieve
manner. the desired goals.
STEPS IN PLANNING:
The description of steps as follows:

ESTABLISHING OBJECTIVES:

 Planning process is to identify the goals/objective of the organization.

 Objective specify the end result and indicate the following things:
 What is to be achieved
 Where action should takes place
 Who is to perform it
 How it is to be undertaken
 When it is to be accomplished.
 Planning has no utility if it is not related to certain objectives.

FORECASTING AND COLLECTING INFORMATION:

 Sufficient information must be collected in order to make the plans and

sub-plans.
 The collection and forecasting of information should be done in terms of
external and internal environment.
 External environment: The assessment of external environment
should include consideration of competition now and in the future.
 Internal environment: The assessment of internal environment may
consider the strong and weak points of the organization.
 Collection of information and making forecasts serve as an important
basis of planning.
PLANNING PREMISES:

 Assumptions denote the expected environment in the future and are

known as “planning premises”.
 It concerns the behaviour of external and internal environment of
management.
 It helps in making realistic assumptions about sales, costs, prices,
products, technological developments etc in the future.
 The assumptions along with future forecasts provide a basis for the
plans.
 It is useful when there is any conflicts occurs in the planning process.

DEVELOPING ALTERNATIVES:

 Planner must try to find out all the possible alternatives.

 At the time of finding or developing alternatives, the planner should try
to screen out the most unviable alternatives.
 It is also possible that the assumptions need revision in the light of the
changed circumstances.

EVALUATION OF ALTERNATIVES:

 Once alternative action plans have been determined they must be

evaluated with reference to consideration cost, long-range objectives,
limited resources, expected pay-back, risk and many intangible factors to
select the satisfactory course of action.
 Many quantitative techniques are available to evaluate alternatives.
 The manager may take the help of these techniques to reach the most
objective result.
 The best possible alternative may be chosen by the manager after
detailed analysis.
SELECTION OF ALTERNATIVES:

 Based on the cost, resources, prices, products and technical

developments we have to select the alternatives.
 Selection of alternatives must be feasible to the organization.
 Manager is responsible for the selection of alternatives.

FORMULATION OF PLANS AND SUB-PLANS:

 In the planning process , the final step is formulating the feasible plans
and developing the sub-plans for it.
 The hierarchy of plans must be both integrated and flexible to meet the
changing internal and external environments.
 The sub-plans are required to support the basic or overall plans and
developed with in the framework of the basic overall plan.

APPRAISAL AND FEEDBACK:

 Planning process is more important for the process of developing the

organization.
 Proper planning plays the major role in the organization development.

CONCLUSION:

Planning is the determination of a course of action to achieve the

desired result. It gives the information to bring together all the resources
required to implement the course of action. All the inputs such as material and
human are assigned tasks basing on the overall objectives of the enterprise.