THE ROLE OF PLANNING AND FORECASTING IN BUSINESS ORGANIZATION (A CASE STUDY OF EASTERN SHOP NIGERIA LIMITED OGUI ENUGU, ENUGU STATE)

ABSTRACT

The role of planning and forecasting in business organization is a topic chosen from the business administration and management field.

  The research was conducted mainly to examine the positive and negatives effects of not making good use of planning and forecasting in the business administration of an organization. For effective research on this topic THE ROLE OF PLANNING AND FORECASTING IN BUSINESS ORGANIZATION. Both primary and secondary data were used to elicit information from sample studied, the primary source of data were response form the personal interview which secondary source form textbook on business management and administration and periodicals.

Twenty-five people were interviewed as the sample of the staff and management of EASTERN SHOP NIGERIA LTD.

The data analysis was based on oral interview I had with the staff of Eastern Shop (twenty five) the major finding as follows.

Ø  The planning and Forecasting is aids to correct mismanagement in business organization.

Ø  And the planning and forecasting gives go ahead over to any individual organization that is going into business to make judicious use of forecasting and planning as a way of success in any business.

Ø  Poor Forecasting attitude and inadequate planning

Ø  Poor Integration of Forecasting and planning in running of business.

TABLE OF CONTENT

CHAPTER ONE

1.1       Introduction

1.2       Background of the Subject Matter

1.3       Problem Associated with the Subject Matter

1.4       The Problem the Study will be concerned with

1.5       The Importance of Study

1.6       Definition of Importance Term

1.7              Reference

CHAPTER TWO:      LITERATURE REVIEW

2.1       The Origin of the Subject Matter 

2.2       Schools of Thought Within the Subject Area

2.3              The schools of Thought Relevant to

2.4              The Subject Matter

2.5       Difference Methods of Studying the Problem

2.6       Summary

2.7       Reference

CHAPTER THREE:             CONCLUSION

3.1    Data Presentation

3.2       Analysis of the Data

3.3       Recommendation

3.4       Conclusions

3.5       References

CHAPTER ONE

1.1       INTRODUCTION

Andreas Faludi states that “Planning and Forecasting is the Queen Mother function of management (organization) and that if planning and forecasting fail what/who will you direct, control, budget, staff, co-ordinate or organize rather than failure and shame”. Again he state of tension resulting from observing unexpected events. (Toulinin,1960).

Planning and Forecasting present efforts to reduce surprise caused by such events by giving practicable accounts of how they come about.”

WHAT IS PLANNING AND FORECASTING?

Forecasting is preparing of an organizational future objectives and its current material and personnel inventory, the general or departmental manager makes an estimate of the current material and human resources that will be able to do in the future and how many more human and material resources the organization must hire to meet its goals (Needle 1999:178).

Any business organization without element of forecasting in like driving a car blind- folded and being directed by a man looking out through the back window. Furthermore, forecasting is prediction; it is an effort by enterprises to know what the future holds for it. Henry Fayol speaks of prevalence as the essence of management.

According to Fayol “this looking ahead include both assessing the future and making provision for it.

Modern business management has become a complex activity and so there is the need for adequate forecasting, the need for adequate forecasting is apparent from the hey role it plays in planning Koontz et al stated that “as influence in plans of the entire environment outside the enterprises has come to be increasingly recognizes forecasting of the environment has risen in importance”.

The role of forecasting in business organization is so important that it must be adapted by managers. The making of forecasting and their review by manager compel thinking ahead looking to the future and providing for it. Also, the very act of forecasting may disclose areas where necessary control is lacking.

PLANNING:

Andreas Faludi state “Man’s understanding of this world and his ability to act in it depends on his constructing an imaginary in his own mind this applies equally well to the planner’s understanding of himself and his appreciation”. Planning in its simplest meaning is the determination of anything in advance of action. Planning is defined by Koontz O. Donneil as, “deciding in advance what to do who is to do it, when to do it and why it should be done”.

Planning bridges the gap from where we are to where we want to go planning can also be defined as “ a predetermined cause of action that helps to provide purpose and direction for members of an enterprise.

In designing an environment for effective performance of individual working together in groups, the most essential task is to see that purpose and objective and methods of attaining them are clearly understood. Planning is the first function of a manager. It is necessary if anything or activities is to reach the denied goal. Through planning a manager can approach pre-determined objective rationally. All the work of an executive whether he know it or not, is some way connected with the unfolding of a plan. In identifying the role of planning in business organization, Koontz et al State that, “we are in an economic technological social and political era in which planning like other function of managers has become requisite for enterprise survival”.

Planning is unique in that it established the objective necessary for all group efforts.

Planning and Forecasting are important tools of company management and decision- making as they assist in the appraisal of investment project in the analysis measurement and improvement of current marketing strategy and manpower planning and in the identification and development of new products and new market further they promote and facilitate the proper functioning of the many aspects of company’s activities.

Planning and Forecasting are compliment in that for a good result both go together they could be regarded as independent parts that make a specified whole writing also in the concept, Koontz O’ Donneil states that forecasting especially where participated throughout the organization may help to unify and co-ordinate plans. By focusing attention on the future, it assists in bringing a singleness of purpose to planning”.

1.2       BACKGROUND OF THE SUBJECT MATTER

     The popular super market called Eastern Shop was established in May 28, 1960 almost five (5) Months after the independence of this country, this took place at Ogui Road Enugu then Anambra State now Enugu State which is formerly known as the headquarters of Eastern Nigeria.

The supermarket is situated opposite Nnamdi Azikiwe Stadium and around it were other big shops like Bubble’s, ABC Transport etc. the amazing thing concerns this shop is that the manager or the sole proprietor is a family man that had engage in other business and finally settle in opening a big supermarket. He entered into the business with little or no experience in the field of supermarket business.

Originally the name of managing director of the supermarket is Chief M.O. Okoli, Ozo Zulu Agulu 1 of Agulu in Aniocha Local Government Area of (old and new) Anambra State. He is one of the pioneer members of Enugu State association of supermarket this was to enable him to curb some of the problems that he is passing and planning in business. The supermarket has other branches in Lagos, and Onitsha. In the establishment, he employed general operation manager (GOM) who sees to the running of the business. The company also has shop manager who direct the affairs of cashier, store manager and restaurant department and report to the GOM. Eastern shop is made up of five (5) departments/ units.

Ø  Accounting department

Ø  Cashier   department

Ø  Store department

Ø  Restaurant department

Ø  Cold room department

Eastern shop deals mostly on consumer’s goods like cosmetics, wears, candy foods, baby wears and toys. The problem of proper planning and forecasting is among the major problem that limits the more expansion of the business these can be clearly seen from an adage that says “ that business is full of risks”.

Besides, the researchers were able to note the sum of N500 Naira was used as initial capital of the business and today the property of the business is on millions and it have more than twenty people as employees, this simply means that it is no longer small- scale business as the law required. But as a result of inadequate application role of good understanding in the techniques of forecasting and planning integration in business; he cannot make good pricing quality and quantity of product sales.

Since improper planning is as good as not planning at all based on the above promising and manifesting problem, these calls for the researchers to investigate the project topic to help the present situation that is facing the business.

1.3              PROBLEMS ASSOCIATED WITH THE SUBJECT MATTER

It has obviously been proved that “He who fails to plans to fail” And it is also believed that he who fails to put records and recognizance of past event should not predict/ forecast future. If anybody that fails to envisage the future is bound to crash. Planning and forecasting have been integrated to be wonderful tools for effective management. Since planning and forecasting are like touch light used in darkness. We also believed that business dwell in the world of dynamism and unsteady setting, which called for effective use of planning and forecasting. It can also be seen as an eye at every business that wants to grow in a competitive environment.

Even the Bible says, “Where there is no vision, people perish” in this context vision, which sight in modern business management, is planning and forecasting. Moreover Hosea 4:6 said “my people perish for lack of knowledge” likewise many business collapses because of inadequate knowledge of planning of forecasting. It is because of these present problems and eminent problems which many business are encountering and also will encounter in future that make the researchers to bring out the topic title planning and Forecasting in Business Organization” from the light of the above, it is approved that for a society to progress is to embrace planning forecasting.

Peter Drunker said that “Planning and forecasting, which is aspect of management is doing not knowing” therefore, we should know that planning must he practicalized not nursing or desire in the heart. It is a thing of paramount importance to see that problems or courses of liquidation of many business is as a result of lack of adequate planning and forecasting.

Moreover, this project necessitate a result that few people and some organization that recognized the roles of planning and forecasting they so it any how, without knowing that planning is “QUEEN MOTHER” of all the management and if it fails what/how then will you direct organize control staff and budget it to and so on. This issue of poor attitude and low understanding of the role or meaning and importance of twin brothers planning and forecasting makes business not to grow well, talk more of progressing. And if any one will progress at all without planning it will be by trying and error or miracle working or simply put just by chance or luck but planning of business is a well program oriented profit venture or business.

In attempt to plan as may think they do only half bake planning which is as good as not planning at all in which most of their planning   has

Found wanting because it lacks the basic elements of planning as regards as follow.

a)          Futuristic in outlook that is planning some future problem of business at today’s doorsteps beside that future can never be predicted with hundred percent efficiency. This is why provision has to be made to accommodate future uncertainties.

b)          Most people in their planning lacks action, all planning need to imitate action since mere stating of the expected income and expenditure during fiscal year calls for action to make sure that the objectives are realized.

c)          Most of these planning fails to identify manpower that will the active action since every-body in an organization cannot take action and also to identify at what point or time the action are to be taken.

The most disturbing and annoying issue that manifest in this lack of planning and forecasting in business, that makes the researchers to write on planning and forecasting as this topic is the NATURE LESS in mode of their planning. Since most organization fails to adopt generalized approved nature of planning by all management according to WILLIAM NEWMAN 1963. He said that the essential nature of planning could be highlighted by the four major aspects of planning.

1.   Contribution to purpose and objective primacy of planning, perverseness of planning and efficiency of plans. People fail to understand the needs of appreciate planning process; this also, magnified needs of this project topic. All planning process must obey rules of goal setting, strategy formulation, recognition of some elements. Beside

Some people that tries to apply the process fails to update with the modifies process by an author Nwachukwu C.C. who in his book called management theory and practice says that it is done an six step process which is shown in the diagram below:

               PLANNING PROCESS

       All these challenges put together, makes the researcher to found it duly worthy to write on this topic, to revive and resurrects a dead and sick business organization by the power of wonderful role of inseparable twin brothers which is planning and forecasting, since planning and forecasting is queen mother of all management function and if it fails what or who and how will one (business manager) direct, control budget staff and so on and so fort. It is nothing rather than to co-ordinate failure and shame.

Management today, betides in management by objectives (MBO). This project will also have its objective to draw the problem nearer home and to expose the thought obviously.

1.4   THE PROBLEMS THE STUDY WILL BE

CONCERNED WITH

      The problems planning and forecasting encounter in an organization affects its productivity. Over the years, business organization has tried a lot to eradicate these problems that sometime engulf managerial progress in Eastern problems are stated thus:

1.                To know how planning and forecasting in Eastern Shop Ltd. Carryout tasks.

2.                To know both the internal and external affairs of the company.

3.                Whether the problems are caused as a result of poor motivation.

4.                What other variable could explain why the problems have not been eradicated?

5.                To know whether the working environment is conducive for planning and forecasting.

These problems also attached itself with the research questions and we will use the same opportunity to discuss the research questions.

RESEARCH QUESTION:

Ø  Why is planning and forecasting needed in an organization?

Ø   What impact can it create in progress of business?

Ø  Does planning and forecasting has any theoretical backups and background?

Ø  Can we really do without planning and for casting?

Ø  What makes planning and forecasting organic function of management?

Ø  Is information an effective tool for planning and forecasting in business organization?

On the reason why, is planning and forecasting needed in an organization, both charitable and none-profit organization had fail, because of inadequate planning and forecasting.

Planning having initiate in selection of man-power, bridge or links up past, presents and future together for effective returns, by bringing in future at door step of managers. Planning being the primary of all business function has fried, to house all functions because if it fails as house other thing will fail and so with the aids of proper planning business organization are bound to succeed.

In today’s business some people jumps into business world without minding the rate of planning and forecasting, due to the believe that says “with money all thing are possible” and also believe that they are man enough to handle anything, which is very wrong, and also an abuse to the business concept. They fail to realize that success cometh not by assumption, but by real planning and forecasting.

These questions were also raised to scrap out issues that manager is born not made and since proper planning and forecasting has brought increase in productivity that is immeasurable and quantifiable in today’s business.

What input can (planning and forecasting) creates in progress to business? This impact of planning and forecasting creates more progress in business, because there is a quote that says, “ Those who fails to plan, plan to fail”. And plan in its strict sense means being organized to co-ordinate things no matter the face of circumstances.

Having know these, the important of planning and forecasting will not be far fetched or traced, since plan makes managers to have objective goals or resources to arrest them which can be of (M4) man, material, money and machine or (M5) man, material, money, machine and method, and these erupt the modern strategy of (MBO) management by objective and being objective means seeing things from the generalized means seeing thing from the generalized and accepted phase not with personal subjective phase.

Does planning and forecasting have any theoretical backup or background? Theories provide explanation which are responses to scales of tension resulting from observing unexpected event (Toulmin, 1960) they represent efforts to reduce surprise caused by such events by giving plausible accounts of how they have come about.  Meanwhile, does planning and forecasting has any theoretical backup yes, of course, it has, According to Hargreanves 1983:3 and 7 says “Before planning will be completed you will need to prepare details in forecasting of sales, profit, production, finance and man-power, due to the face that they will help to validate your plan.

Another pronounce professional, Jack Mitovurie States that “forecasting is an essential aid for management decision in such critical area as estimating, the profitability of new produce, the cost and likely effectiveness of promotion possible effect of price change and the need for additional resources of salesman, advertising or administration.

According to Koontz and Donnel (1980) define planning as deciding in advance what to do, how to do it, who is to do it and why it should be done. (Management Heinemam Oxford London 1973: 60).

Again, Henry Fayol says that planning and forecasting is “ looking ahead includes both assessing the future and making provision for it.”

Lastly but not the least that are going to mention is Peter Deunker in practical management 1995. P 4

It says “He that love his wife loves planning and he that hate planning embrace embarrassment; he that fails to plan, plans to fail.

To prove it worthy, it is justifiable to have scientific management theory backup for much laudable pronunciation in management. Can we really do without planning and forecasting? The answer will be yes due to if man will still be alive after his heart has stop breathing.

But if not, so business organization cannot do without embracing the role of planning and forecasting.

Again, as a clock cannot work without battery in it, and if man can not live without food it will be impossible for us to operate without planning and forecasting and of this is impossible, it is simple means that planning and forecasting is indispensable to business organization.

What makes planning and forecasting the organic function of management is that it was found to be a master planner and breadwinner of the family (organization, it also found to be microchendra) (power house) in business life.

To answer these question, clear, Andrew Faludi states, means of understanding of this world and his ability to act in it depends on his constructing an imagery in his own mind. This applies equally well that the planners understand himself and his operation.

Finally, is information an effective fool for planning and forecasting? Yes of course. Since planning aids to bringing future at the doorstep of an organization, this shows that planning is to manage future. According to Peter Drunker, he says that “To manager future is to manage business and do manage business is to manage information, planning and forecasting making use of information as a tool for effective planning and forecasting of provides that information as life wire of a business planning and forecasting.

These information, as a means of communication keeps business planning and forecasting in a brace with ever dynamic changes in business world for business to be standard it must follow the trends of changes in information to put up with fashion that even vogue.

1.1              THE IMPORTANCE OF THE STUDY

       If this course or project does not its salt it could not have been approved and the researcher, project supervisor believed that some people will benefit from this project topic when it is properly done.

Having know that planning is organic function of management; it bring much good to business in various arrived and get to arrive will benefit from these topic, if well utilized especially in areas of pricing, quality, man-power, money, capital control and so on.

This study is meant to examine the problems of planning and forecasting in a business organization. It will examine the role, which manager’s tries to implement by using planning and forecasting to achieve effective and efficient management of the organization and society at large. The research will also find solution to some of the problems manager’s encounter by implementing planning and forecasting in their day- to- day activities. However, the importance of the research to management of any organization both profit and non-profit organizations students both graduate and undergraduate will not be over emphasized. Family will also benefit from it, since management is alone by all and planning is first born and major aspect of management.

Government agency, and parastatals will also benefit from this topic by applying knowledge of planning and forecasting in service of civil servant. Politicians of these 5^th republic and others to come well benefit from it by planning their political manifesto ideology.

Generally, everybody or anybody and all that want to survive in these ever dynamic business world must learnt to plan and forecast in these perilous or risk evil days of ours.

1.2              DEFINITION OF IMPORTANT TERMS

MANAGEMENT:-  This is the application of human and material resources in achieving the objective of an organization effectively and efficiently through planning and forecasting.

ANAGER: -   This is a person that makes use of the material and human resources of an organization in achieving their objectives.

PLANNING :-  It is the act or process of making plan.  Planning is a major component of the management process, which is concerned with defining ends, means and conduct at every level of organizational life.

FORECASTING:-  To say what one think will happen in the future base on  information that he has now.

ORGANIZATION:- It is a system of behaviour designed to enable humans and their machines accomplished goals. Organization is also defined as the sum total of the ways in which it divides the labour distinct takes and then achieves co-ordination between them.

BUSINESS:-  This is any economic activity oriented towards producing goods and services at a profit for the satisfaction of mankind.