7. Porter’s 5 forces

8. Tools for planning:

Forecasting – predictions of the possible outcomes, helpful in planning, useful in stable environment

Forecasting techniques

1. Quantitative – mathematical rules to a series of past data

• Time series (fits a trend to a mathematical equation)

• Regression models (predicts variable on the basis of another one)

• Econometric models (economics predict future)

• Substitution effect (under what circumstances a new product will replace another one)

2. Qualitative – uses judgement and opinions of knowledgeable individuals to predict outcomes

Benchmarking – the search for the best practices among competitors that lead to their superior performance.

Benchmarking process:

Identify Gather internal/external data  Analyze it  Implem.action plan

(Comparative org.)

(Data collection methods)

Allocating resources:

Budgeting	Scheduling	Break Even Analysis	Linear programming
Numerical plan for allocating resources to specific activities. Helps to force financial discipline Cash budget Revenue budget Profit budget Expense budget Variable budget Fixed budget	Details what activities to be done, how/when to be completed and who is to do each. Gantt chart- scheduling chart that shows actual and planned output over a specific period of time Load chart – modified gentt chart that schedules capacity by entire departments for specific resources PERT network analysis -Useful when hundreds of activities are needed to be coordinated. Depicts the sequence of activities needed to complete a project	A technique for identifying the point at which total revenue is just sufficient to cover total costs Helpful in estimation of the product volume	A mathematical technique that solves resource allocation problems which are limited. Example: “allocate advertising budget” or “select transportation routes”

Contemporary planning techniques

Project – aone time only, set of activities that has a definite beginning and ending point In time.

Scenario – a consistent view of what the future is likely to be.

Planning itself is very flexible and has a rapid response.

Define objectivesIdentify activitiesEstablish sequencesEstimate timeDetermine deadlinecompare with objectives add. resource requirements

ORGANIZING

Organizing – arranging and structuring work to accomplish a organization’s goals.

Org.Structure – the formal arrangement of jobs within an org.

Work specialization – the degree to which org. tasks are divided into separate jobs and with each step completed by a different person. (stitching, lacing)

• Makes efficient use of skills diversity

• Wages are allocated with acc- to specialization

• Increase productivity

Departmentalization- how jobs are grouped together.

• Functional – groups jobs according to a function(engeneeering,accounting,purchase,HR managers)

• Geographical – groups according to geographical region (e.g. allocating sales managers to different regions)

• Product – according to product line (mass transit vs. rail product sector)

• Process – group according to a customer flow

• Customer – groups on the basis of unique customers who have common needs

Chain of command – line of authority extending from upper org. level to lower levels, clarifies who reports to whom.

• Authority – rights to tell people what to do and what to expect from them. (could be line authority and staff authority)

• Responsibility – obligation/expectation to perform

• Unity of command – concept that one boss exists only

Spam of control – the number of employees who can be effectively and efficiently supervised by a manager. (no specific number, but too wide spans may decrease effectiveness)

Width of span is affected by:

• Skills and abilities

• Employee characteristics

• Work characteristics

• Tasks similarity/complexity

• Tasks standardization

• Info system sophistication

• Org. culture strength

• Manager style

Centralization – the degree to which decision making is concentrated at upper levels

Decentralization – when more lower – level employees provide imputs

• But org. structure is always smth in the middle

Formalization – the degree to which jobs are standardized and to which extent the employee behaviour is guided by rules.

(e.g lower formalization jobs provide more flexibility, whereas some rules are two restrictive)