4.1.2 Forecasting and planning

Planning as a management function has a complex structure and is implemented through its subfunctions: forecasting , modeling and programming.

Forecasting is a method of reasonable prediction of possible directions for the future development of an organization, which is considered in close interaction with its environment. Forecasts are probabilistic in nature, but if the prediction is performed qualitatively, the result will be a forecast of the future, which can be used as a basis for planning. Thus, forecasting is the first stage of planning. It is designed to provide the following tasks:

• scientific prediction of the future based on the identification of trends and patterns of development;
• determination of the dynamics of economic phenomena;
• making forecasts showing possible directions for the future development of the organization:
• determining in perspective the final state of the system, its transitional states, and also the behavior in various situations on the way to a given optimal functioning mode.

The most important prediction condition is the modeling of various transitional situations and the state of the system during the planned period. Economic modeling to a certain extent is intended to be the equivalent of experimentation in the natural sciences.

The programming task is the third planning subfunction, based on the actual operating conditions of the system, to program its transition to a new specified state. This includes the development of an algorithm for the functioning of the system, the definition of the required resources, the choice of scientific tools and management methods.

Planning as a management function is the process of determining goals and ways to achieve them. It covers various levels of an organization and in time is of long-term, medium-term and short-term nature.

In the course of long-term planning (15-20 years), they determine the general goals of the company and the strategy ^* .

The main objective of the medium-term planning (usually for 5 years) is the choice of means for accomplishing the intended goals. These plans define a common personnel policy, a common production strategy ^* , a common financial policy, a common marketing strategy.

Short-term, or current, planning (usually for a year) with details for quarters and months has several forms. One of its forms is the process of splitting medium-term plans into short-term, with more detailed segments. At the same time, the production and financial plans for marketing are usually drawn up for a year.

Another form of current planning is the development of policies and regulatory mechanisms in the event of possible future situations. So, it is necessary to determine in advance the possible policy of the company in the event of a strike.

The third form of current planning is budget planning. The budget is a financial plan that serves as a guide and means of control over future operations. Usually, several types of budgets or even their groups are developed:

• estimates of income and expenses;
• estimated costs of time, materials;
• capital expenditure estimates;
• cash budget;
• balance sheet.

The budget coordinates the activities of the various divisions of the organization.

Budgeting from scratch (BON) is a method to more effectively control the distribution of costs. It was developed in 1970 and quickly became widespread. Predominantly BON is that any expense must be reaffirmed when a budget is drawn up, and not simply carried out at the level of "recent years" regardless of performance or changes in the external environment. BON connects planning with the budgeting process and forces each manager at each level to confirm in detail all his budget requirements.

The core of this system is a package of decisions, a package of information about each alternative budget. The manager ^* provides a description of what can be expected from this type of activity with a minimum level of its implementation. In another solution package, the manager ^* describes the same task and shows how much you can choose in performance, if this budget item receives more than the minimum funds. For each article of the budget is given several levels of funding. These solution packages are handed over to a higher level manager, who begins work on selecting one of them that matches his own priorities.

A manager who wants to focus more on a particular type of activity chooses a higher expected level of funding for him. If he goes beyond the limits of his money before the solution packages run out, then some tasks should be eliminated or cut down. As soon as the manager brings the packages in accordance with their order of preference, they are transferred to the higher-level manager, who must compare them with the packages of all the other subordinate units.

At each level, BON forces managers to allocate costs in a certain order of preference, rather than trying to “build empires,” continuously adding allocations and never cutting back on any of them. This is not a trouble-free system, but in organizations that are bureaucratic and slow to develop, it forces them to reduce useless and unproductive services and personnel. Thus, managers are forced to decide which operations are most important in achieving the objectives of the tasks for which they are responsible, and how much can be spent on each area of ​​activity without endangering the task as a whole.

Effective continuous planning of the future performance of any task is based on the memory of the past performance of the same task (or its component tasks). Initially, the plan is based on someone's estimates of the amount of work that needs to be done, the amount of time it takes to complete each stage, and the means of communication between the stages. But ultimately, the ability to adapt should be built into the plan, it should include experiments, downtime, unanticipated income and expenses. Schedule plan is designed to help the successful execution of tasks.

For example, the queuing analysis is used to find a balance between the costs when customers are in the service queue, that is, the cost of providing this service with a certain level of throughput. In this connection, of interest is an example of a restaurant under construction [32]. The manager needs to know how many tables to put. At first glance it may seem that the more tables, the better: a larger number of tables means more customers and money. If customers arrive at a constant rate and all the tables are always busy, this would be a reasonable assumption. But in reality, customers stay in groups. At certain times of the day, the work is slowed down, and the manager pays the cooks and service personnel the downtime. At other times, work is livened up and queues are formed. Obviously, the waiting customer is not served, and the restaurant does not receive money. In addition, a client who has to wait too long may decide to go somewhere else and may not return in the future. The task of the manager is to determine the optimal number of tables, which must be set in order to balance the costs of maintenance and costs of waiting.

The purpose of the analysis of the formation of the queue is to minimize the amount of two types of costs: the costs of waiting for customers and the costs of production facilities service.

In fig. 3. 3. shows how the problem can be solved by analyzing the formation of the queue. Maintenance costs increase as capacity increases (more chefs and attendants are required, utilities increase, overhead costs are higher).

Fig. 3. 3. Analysis of queue formation

On the other hand, more bandwidth means fewer customers waiting in line (and therefore not paying). The total costs can be represented as a U-curve, which decreases as the production capacity of the service increases, and begins to go up again after a certain point. Note that this optimal point is not proposed there (and rarely there) where the service lines and waiting costs intersect.

Planning as an integral part of the management system is expressed in a wide variety of organizational forms. In organizations with centralized management, planning is usually also centralized. With top management there is a central service, which reports directly to the president or vice-president and is engaged in the development of long-term and current plans for enterprises and divisions of the organization. Enterprises and divisions do not have planned services. This scheme is used in organizations with a small number of enterprises of the same or similar profile. In large decentralized organizations, long-term planning work is concentrated in production units. Top management determines only the general direction of development: the location and structure of capital investments, the total volume of production and profits. The central planning service develops the form of plans and communicates to the units the restrictions imposed by the overall objectives of the organization. The relocation of the center of gravity in the planning to the units is caused by the development of their independence. Coordination and control over the work of the planned services of the units is carried out by the central planning service. In each unit there is a bureau of production planning and control, which is engaged in the preparation of legal operational plans and monitors their implementation.

In the past three decades, western countries have been adapting planning and management systems to the external environment. There is a replacement of the principle of drawing up long-term plans - from the future to the present, and not from the past to the future . Long-term planning turns into strategic planning ^* , the essence of which is reflected in the need to correlate everyday action with considerations regarding long-term goals and consequences and is built on a situational basis. Peter Drucker wrote in this connection: "Long-term planning does not include future decisions. It includes the influence of the future on today's decision" [39]. Basically, the strategic planning process includes four ethanes: assessment, selection, execution, and analysis, the essence of which is reflected in the strategic planning model (Fig. 3. 4).

Fig. 3. 4. Strategic planning process

The strategic plan is like a bridge to the future and is used to move the organization because of what it is, to what it should become. This four-stage process is a basic program, regardless of the type of organization strategy, which is a comprehensive orientation of the plans of all organizational units. Although each of the units may have its own strategic plan. In strategic planning ^{* there} are three types of strategy ^* : price leadership, differentiation, and focus.

Leadership in prices is a strategy aimed at the interests of consumers who are willing to pay less for the services or goods they receive. Organizations that follow this strategy are characterized by low prices due to low costs and large volumes.

Differentiation is a strategy designed for consumers who want to pay more, but instead expect more choice and a higher level of quality.

The focus strategy is used by organizations to concentrate on a specific market segment and attract consumers with special requests.

Strategic management is developed on the basis of strategic planning, and above all management by objectives (IBO) or target management, which conflicts with direct or team management, when subordinates receive clear instructions on how they should act in each specific situation. Program management is also distinguished, which means that a detailed description of all the work to be done is given. This implies the development of a certain number of patterns of repetitive behavior.

The IBO is a process by which members define their goals for each position and coordinate efforts to achieve them. The goal management model implies that the manager and his subordinate reach agreement on the goals for which the subordinate works for a given period of time. In this case, the manager in relation to the subordinate acts as a consultant. The IBO is based on the premise that the more clearly a goal is understood, the more likely it is to achieve it, and progress can be measured only in relation to the goal.

The process of management by objectives consists of four stages:

1. The terms of reference and responsibilities of all managers are determined.
2. The development of management objectives within the framework of assigned responsibilities is determined; standard number of goals - from 4 to 6.
3. Made real plans to achieve their goals.
4. Monitoring, measurement, performance evaluation and managers of each manager of the results are made.

Thus, if goal-setting is the beginning of any management activity, then its mandatory achievement is the definition of the types of work that are needed to achieve goals.

Managers ^* not only draw up plans, but also organize their implementation by forming the structures, processes and methods by which joint and effective work is organized. An important place in the activities of managers is the development of a system of indicators by which the results of the labor of each individual employee, department, service and enterprise as a whole are measured and evaluated.

At the same time, “evidence in favor of the IBO is mainly psychological in nature and concerns such elements as goal setting, knowledge of results and participation” []. In our country, in the field of long-term planning and programming, the program-target method of planning and management, that is, the method by which the goals of the plan are indicated with resources using programs, has received the greatest development. It is based on the application of a systematic approach, the formation of the goals of the economic and social development of an organization, their division into sub-goals and the identification of resources necessary for coordinated implementation. This method uses the apparatus of graph theory, that is, the construction of two graphs - the goal tree and the resource tree. As a result of the calculations, priority programs are identified. The process of developing a prospective plan using the program-target method is shown in Fig. 3.5.