management information system(2)

2. Planning

 

January-2004 [18]

2.

a)         'Managerial planning seeks to achieve a coordinated structure of operations.' Comment.                                                                                                                                          [6]

b)         'Policies are guideposts for managerial action.' Do you agree with the statement? Support your answer with reasons.                                                                                  [6]

c)         Explain role of procedures and budget for effective planning.                           [6]

ans :-- Budget plays an important role in the planning process. The budget is a tool that helps you to achieve your goals in life. Budgets change throughout the years as needs change. Single people may save regularly for vacations, parents may contribute toward college funds, and empty nesters may concentrate on their upcoming retirement. A good budget lets you know if you are on track to meet your life goals.

Related Searches:

• Cash Flow Budget
• Make Family Budget

1.      Features

o        The budget tracks income and expenses, identifies areas with too much spending, identifies tax deductions, monitors savings and other investments, and helps to manage or eliminate debt. One of the most important features of the budget is being able to identify areas where you can cut spending. You can reallocate that money toward achieving one of your goals.

Function

o        As you make a list of your life goals, calculate how much each one will cost and how you will pay for it. This is where the budget comes into play. By tracking your income and expenses, you quickly know how much disposable income is available. For example, if your goal were to remodel the kitchen, then you would start with researching prices on cabinets, lighting, flooring and appliances. Look at your budget to see how much you can allocate every payday toward the kitchen-remodeling category. You are less likely to spend money on fast food or entertainment with a written plan and a budget. The budget helps you to stay focused on your goals.

Significance

o        A budget helps to achieve financial security so you can enjoy the good things in life. Avoid the debt trap by incorporating a budget during the planning process. If you are already behind on the bills, then use a budget to reduce your debt load. Additionally, note if an investment is not achieving a good rate of return, and use this knowledge to make changes to your plan so you stay on course toward financial wealth. The budget and your life plan coordinate with each other when they are both flexible.

Types

o        There are two types of expenses: fixed and variable. Fixed expenses cost the same amount every month, such as the housing payment and car loan. Categories such as food, entertainment, clothing and utilities are variable expenses. You have control over variable expenses and your greatest savings comes from this part of your budget. For example, if you need to shave $100 a month from your spending, then avoid take-out foods, rent a DVD instead of going to the movies, shop for clothing at thrift stores and cancel the premium channels on cable. Looking at the different categories of your budget helps you to identify potential savings.

 

July-2004 [11]

1.         Give very brief (2-3 lines) answers to the following questions:

b)         Differentiate between Strategy and Policy.                                                          [2]

ans :-- Strategy is the process of specifying an organization's objectives, developing policies and plans to achieve these objectives, and allocating resources to implement the policies and plans to achieve the organization's objectives. On the other hand, a policy is a plan of action to guide decisions and actions. The policy process includes the identification of different alternatives, such as programs or spending priorities, and choosing among them on the basis of the impact they will have. Policies can be understood as political, management, financial, and administrative mechanisms arranged to reach explicit goals. The term “policy” should not be considered as synonymous to the term “strategy”. The difference between policy and strategy can be summarized as follows-

1. Policy is a blueprint of the organizational activities which are repetitive/routine in nature. While strategy is concerned with those organizational decisions which have not been dealt/faced before in same form.
2. Policy formulation is responsibility of top level management. While strategy formulation is basically done by middle level management.
3. Policy deals with routine/daily activities essential for effective and efficient running of an organization. While strategy deals with strategic decisions.
4. Policy is concerned with both thought and actions. While strategy is concerned mostly with action.
5. A policy is what is, or what is not done. While a strategy is the methodology used to achieve a target as prescribed by a policy.

4.

a)         Bring out the essentials of planning process.                                                                   [4]

b)         Discuss role of budget as a tool of planning.                                                                    [5]

 

January-2005 [5]

1.

a)         Give very brief answers to the following questions:

iii)        Name any two forecasting tools widely used in business forecasting.               [2]

b)         Define the following:

v)         SWOT                                                                                                         [1]

c)         Distinguish between

iv)        Strategy and Strategic Policy                                                                                [2]

 

July-2005 [0]

 

January-2006 [8]

1.

a)         Explain the role of SWOT Analysis in planning.                                                             [4]

c)         Discuss various steps of planning process                                                            [4]

ans :-- As planning is one of great importance to an organisation, the entire process of planning should be carried out in a systematic manner. Planning is an intellectual process which an executive carries out before he does any job with the help of other people. It involves the following steps :

1. Determination of the objectives :

The first step in planning is to identify certain objectives. The objectives set must clearly indicate what is to be achieved, where action should take place, who should perform it and when it is to be accomplished. The objectives should be established for the entire organisation and for each and every department. Planning has no utility if it is not related to certain objectives.

2. Collection and forecasting of Information :

Sufficient information must be collected in order to make plans and sub plans. necessary information includes the critical assessment of current status of the organisation together with a forward look at the environment that is anticipated. The collection and forecasting of the information must be done in terms of external and internal environment. The considerations of the external environments must the competitions now and in the future. The assessment of internal environment may consist of the strong and weak point of the organisation. This is an important step of planning process.

3. Development of planning premises :

The next step is the establishment of planning premises. Planning premises are the assumptions and predictions about the future. The assumptions are the basis of planning. Forecasting is important in premising. It helps in making realistic assumptions about sales, costs, prices, products etc in future. This requires a collection of data on present trends and future possibilities.

4. Discovering alternative courses of action :

Usually, there are several alternatives for any plan. The manager should try to find out all the possible alternatives.At the time of developing alternatives he should screen out most viable alternatives. So he has to analyse in detail a limited number of alternatives.

5. Selection of best alternative :

The various alternatives identified are evaluated and compared in terms of their expected costs and benefits. Many quantitative techniques are available to evaluate alternatives. after evaluating the various alternatives the best alternative should be selected for implementation.

6. Formulation of derivative plans :

The next step is to develop detailed sub plans for its implementation. Derivative plans are required to support the overall plans. The derivative plans are developed in the frame work of overall plans.These are drawn up with respect to different areas of activity.

7. Communicating the plan :

It is very important to get the co operation of the subordinates at every stage of its implementation. For this purpose the plans should be communicated and explained to them so that they can get the clear picture of what to be done. An organisation is not benefited from planning process until they are put into action.

8. Follow up measures :

To ensure the plans are proceeding along the right lines, the actual performance is compared with the planned performance. In this way, any short coming can be noted and suitable remedial action can be taken.

 

July-2006[10]

1.

d)         What do you understand by SWOT Analysis?                                                                [4]

ans :-- SWOT analysis (alternately SLOT analysis) is a strategic planning method used to evaluate the Strengths, Weaknesses/Limitations, Opportunities, and Threats involved in a project or in a business venture. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieve that objective. The technique is credited to Albert Humphrey, who led a convention at Stanford University in the 1960s and 1970s using data from Fortune 500 companies.
                                      
Setting the objective should be done after the SWOT analysis has been performed. This would allow achievable goals or objectives to be set for the organization.

·         Strengths: characteristics of the business, or project team that give it an advantage over others

·         Weaknesses (or Limitations): are characteristics that place the team at a disadvantage relative to others

·         Opportunities: external chances to improve performance (e.g. make greater profits) in the environment

·         Threats: external elements in the environment that could cause trouble for the business or project

Identification of SWOTs is essential because subsequent steps in the process of planning for achievement of the selected objective may be derived from the SWOTs.
First, the decision makers have to determine whether the objective is attainable, given the SWOTs. If the objective is NOT attainable a different objective must be selected and the process repeated.
The SWOT analysis is often used in academia to highlight and identify strengths, weaknesses, opportunities and threats. It is particularly helpful in identifying areas for development

2.

a)         ‘Managerial planning is a mere ritual in a fast changing environment.’ Comment.                 [6]

July-2007 [6]

2.

a)         Distinguish between ‘Mission’ and ‘Vision’. How are goals set in Management by objectives?                                                                                                           [6]

January-2008 [12]

2.

b)         What is the relevance of forecasting in business? Name any two forecasting tools widely used in business forecasting.                                                                                    [6]

ans :-- Business Forecasting

Business forecasting is a process used to estimate or predict  future patterns using business data. Some examples of business forecasting include estimating quarterly sales, product demand, customer lifetime value and churn potential, inventory and supply-chain reorder timing, workforce attrition, website traffic, and predicting exposure to fraud and risk. Several powerful estimation functions are commonly used to perform business forecasting: time series analysis, causal models, and regression analysis. Business forecasting supports executives, analysts and end users in decision-making using decision support systems such as business intelligence.

Business Forecasting and Data Mining

Business forecasting can be completed using a process called data mining. The data mining process uses predictive models based on existing and historical data to project potential outcomes of business activities and transactions.
The ultimate goal of data mining is to find hidden predictive information in large amounts of data. The data mining process involves using existing information to gain new insights into business activities by applying predictive models, using analysis techniques such as regression, classification, clustering, and association. Data mining helps organizations leverage data warehouses to forecast future business outcomes.

MicroStrategy Data Mining

MicroStrategy has developed a unique and valuable approach to business forecasting. Data Mining Services enables users to perform estimations using their everyday MicroStrategy reports by abstracting the user from highly specialized statistical formulations. Data Mining Services sifts through volumes of historical data to find the “needle in the haystack”: hidden patterns and key business drivers.

Added Value through Business Forecasting

Business forecasting adds further value by analyzing the information discovered through data mining to estimate how it will impact business in the future. These predictions enable decision makers with access to powerful business forecasts to make highly informed proactive decisions.
Introduction
Sales forecasting is a difficult area of management. Most managers believe they are good at forecasting. However, forecasts made usually turn out to be wrong! Marketers argue about whether sales forecasting is a science or an art. The short answer is that it is a bit of both.
Reasons for undertaking sales forecasts
Businesses are forced to look well ahead in order to plan their investments, launch new products, decide when to close or withdraw products and so on. The sales forecasting process is a critical one for most businesses. Key decisions that are derived from a sales forecast include:
- Employment levels required
- Promotional mix
- Investment in production capacity
Types of forecasting
There are two major types of forecasting, which can be broadly described as macro and micro:
Macro forecasting is concerned with forecasting markets in total. This is about determining the existing level of Market Demand and considering what will happen to market demand in the future.
Micro forecasting is concerned with detailed unit sales forecasts. This is about determining a product’s market share in a particular industry and considering what will happen to that market share in the future.
The selection of which type of forecasting to use depends on several factors:
(1) The degree of accuracy required – if the decisions that are to be made on the basis of the sales forecast have high risks attached to them, then it stands to reason that the forecast should be prepared as accurately as possible. However, this involves more cost
(2) The availability of data and information - in some markets there is a wealth of available sales information (e.g. clothing retail, food retailing, holidays); in others it is hard to find reliable, up-to-date information
(3) The time horizon that the sales forecast is intended to cover. For example, are we forecasting next weeks’ sales, or are we trying to forecast what will happen to the overall size of the market in the next five years?
(4) The position of the products in its life cycle. For example, for products at the “introductory” stage of the product life cycle, less sales data and information may be available than for products at the “maturity” stage when time series can be a useful forecasting method.

7.

b)         Distinguish between “Mission” and “Vision”. How are goals set in Management by objectives?                                                                                                                  [6]

ans :-- A Mission statement is a very important component to an organization’s existence because it clearly defines the fundamental purpose of the organization. This purpose of existence will be the uniting factor for the human resource of the organization that will direct them towards the achievement of the organizational goals.

Every organization (regardless if they are in the same business/industry) should have a unique mission for its existence. No organization should have the same mission statement. Thus, it is a must for the brain thrust of the organization to create its own unique Mission that will serve as the identity of the organization.

Organizational Mission is almost synonymous with organizational objective and goal. Without Mission there’s no defining reason for the employees to rally behind except to earn their salaries. This kind of situation is a threat to the fundamental existence of an organization.

However, if every organization will create a Mission for its existence it will ensures direction and relevant existence for the organization.

This is the importance of having a unique Mission statement for your organization

A vision is a mental picture of the result you want to achieve---a picture so clear and strong it will help make that result real. A vision is not a vague wish or dream or hope. It’s a picture of the real results of real efforts. It comes from the future and informs and energizes the present. Visioning is the most powerful tool I’ve witnessed in over twenty years of helping organizations and individuals get the results they want.
The practice of using visions is mainstream. Some companies use visions to communicate their values and goals. Professional sports teams use visioning exercises to improve performance (there are studies showing that basketball players who practice free throws only by “envisioning” the ball going through the hoop improve their shooting percentage almost as much as those who actually throw the ball). The director of a play might “envision” a perfect production before rehearsals begin.
Here’s why a vision is so powerful:
A vision inspires action. A powerful vision pulls in ideas, people and other resources. It creates the energy and will to make change happen. It inspires individuals and organizations to commit, to persist and to give their best.
A vision is a practical guide for creating plans, setting goals and objectives, making decisions, and coordinating and evaluating the work on any project, large or small.
A vision helps keep organizations and groups focused and together, especially with complex projects and in stressful times.