Managing a Business/MS 91 IGNOU


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1. a) What is corporate planning and what are the benefits of corporate planning?


STEP  1  ---Assess  the  previous  period's  plans.
STEP  2--Analyze / review  customers / constituents satisfactions.
-Assess  the  internal  organization  situation [SWOT ]
-Assess  the  external   environment  [ PEST ]
[political - economic-social-teconology ]
STEP  4 -set  strategic  directions  for  the  company
-determine / identify  SWOT  for  each  units
*marketing *sales
*manufacturing *supply  chain
etc  etc
STEP  6 -determine  the  requirements  for  performance  levels.
STEP  7 -identify   and  evaluate  objectives/   strategies
-choose  strategies/objectives/goals   for  the  next  period.
STEP  9 -create  corporate  plan
STEP  10
-development  of  operating  plan/ for  units
*marketing *sales  *manufacturing *supply  chain *finance
etc  etc
STEP  11
-development  of  budget / for  units
*marketing *sales  *manufacturing *supply  chain *finance
etc  etc
STEP  12 -development  of  implementation plan.
STEP  13 -monitoring  system   for  the  corporate  plan.
STEP  14 -contingency  plans .
STEP  15 -Rewards ./ incentives  for  achievements.
Step 16—budgeting-P/L .,BALANCE SHEET/cash flow

•   The business benefits of planning
-Planning gives: Planning helps• Certainty • Shape thoughts• Confidence • Think through• Route map scenarios• Evidence to others of • Co-ordinate activities our thoughts • Identify SWOT • Examine risks • Communicate ideas
-A plan is more than a forecast• Forecasts are predictions - they concern events and trends over which the business has little or no control• Plans are about what the business intends to do• But forecasts (especially sales forecasts) are essential in planning
-Top down or bottom up planning?
Top down planning Bottom up planning• Decisions taken at the top • Involves all levels of• Lower level managers managers and others have little input • Ensures all are involved and• Plans are passed down all issues considered the line for • Functional managers able to implementation suggest and evaluate plans• Planers are able to focus • A danger of having too on strategic issues but narrow a perspective can be divorced from the without seeing the “big detail picture”
-Key planning questions• Where are we now?• How did we get here ?• Where would we like to be?• How do we get there?• Are we on course to achieve our targets?

-The planning process• Analyse the external environment• Analyse the internal environment• Define the business and mission• Set corporate objectives• Formulate strategies• Make tactical plans• Build in procedures for monitoring and controlling’

-The planning cycle
Where are we now?• The purpose of situational analysis is to determine which opportunities to pursue• PEST / PESTEL analysis - identify and analyse trends in the environment• Competitor analysis – understand and, if possible, predict the behaviour of competitors• Audit of internal resources• SWOT analysis: build on strengths ,resolve weaknesses, exploit opportunities, confront threats
Situational analysis• Analysing the present situation is the prelude to devising objectives and strategies for the future• We need to understand where we are and where we have come from before planning the future• But we must always be careful to avoid paralysis by analysis• This describes a situation in which no decisions are made because of the disproportionate amount of effort that goes into the analysis phase

Where are we going?• Vision – Non-specific directional and motivational guidance for the entire business – What will the business be like  

1.   Planning Reduces Uncertainty
o   Effective corporate planning reduces uncertainty by anticipating risk. It uses historical data to study trends and it forecasts the future based on that information. Although it is not possible to predict the future with certainty, corporate planning allows management to prepare for unforeseeable events and circumstances and to design contingency plans.
Planning Allocates Resources
o   Corporate planning is an organized, methodical way of achieving business goals. Planning can allocate resources efficiently, thus reducing waste, decreasing costs and improving profitability. Examples of organizational or corporate resources include time, equipment, money, human resources (people), infrastructure, knowledge (about systems, procedures and functionality) and information (current trends, internal and external data).
Planning Reduces Ambiguity
o   Corporate planning defines organizational units, such as accounting, purchasing and sales; organizational locations, such as places where a company operates; key functions of the business, such as product development and business planning; entity types, such as data about equipment, places and people managed; and information systems, such as supporting programs and software. This decreases ambiguity, establishes clear boundaries and decision-making frameworks, clarifies opportunities and threats, determines cost-effective business methods, provides a well-defined vision for the future, confirms the values of the organization and fosters an organized outline for decision-making.
Planning Helps in Measuring Success
o   Corporate planning forces a company to set well-defined objectives and systems to measure success. Goals are aligned with objectives in a clear, time-defined manner and resources are allocated accordingly. A well-defined corporate planning strategy ensures effective management of strategic objectives and establishes clear monitoring systems to measure the progress of outcomes. Quantitative-based key performance indicators (KPI) are established so a corporation can gauge progress. Managers can use KPIs to spot problems and then they can take corrective action, saving time and money. An example of a KPI in the retail sector is the average amount earned per sale. For telemarketers, a KPI is the number of telephone calls made.
Choice of best method
•   The process of corporate planning, as with any other mode of planning, involves evaluating various available alternate routes and then fixing on the one that is the most feasible and viable. The management examines all the scenarios and then zeros on the method that is most advantageous. The intent is to find the option that maximizes the company's sales and profits and minimizes costs, risks and losses.
Analysis of environments
•   A well-formulated corporate plan enables the organization to understand the environments in which it is presently operating. The management conducts internal scans such as SWOT (strengths, weaknesses, opportunities and threats) and external scans as PEST (political, economic, social and technological) to gauge the same.
The corporate planning helps the organization to achieve its vision and mission faster. The management motivates its employees into being more productive, and produces at cheaper rates or produces more at the same rates. The marketing and distribution channels of the products are also augmented.
Integration process
•   A major plus of corporate planning is that the organization is able to integrate and correlate all its strategic functions. Several functional departments exist in every organization such as, the IT, finance, marketing, HR, production and systems. A corporate plan lets all the departments know what is expected of them. All the departments then combine their efforts and work toward achieving organizational ends and objectives.

b) Identify the reasons attributed to the failure of corporate planning and the pre-requisites for its success.
Identify the reasons attributed to the failure of corporate planning

Here are 10 reasons why plans fail. Avoid these traps and you’ll be closer to your goal of implementing a strategic plan that actually achieves results and improves your business.
1. Having a plan simply for plans sake. Some organizations go through the motions of developing a plan simply because common sense says every good organization must have a plan. Don’t do this. Just like most everything in life, you get out of a plan what you put in. If you’re going to take the time to do it, do it right.
2. Not understanding the environment or focusing on results.Planning teams must pay attention to changes in the business environment, set meaningful priorities, and understand the need to pursue results.
3. Partial commitment. Business owners/CEOs/presidents must be fully committed and fully understand how a strategic plan can improve their enterprise. Without this knowledge, it’s tough to stay committed to the process.
4. Not having the right people involved. Those charged with executing the plan should be involved from the onset. Those involved in creating the plan will be committed to seeing it through execution.
5. Writing the plan and putting it on the shelf. This is as bad as not writing a plan at all. If a plan is to be an effective management tool, it must be used and reviewed continually. Unlike Twinkies or a fine vino, strategic plans don’t have a good shelf life.
6. Unwillingness or inability to change. Your company and your strategic plan must be nimble and able to adapt as market conditions change.
7. Having the wrong people in leadership positions. Management must be willing to make the tough decisions to ensure the right individuals are in the right leadership positions. The “right” individuals include those who will advocate for and champion the strategic plan and keep the company on track
8. Ignoring marketplace reality, facts, and assumptions. Don’t bury your head in the sand when it comes to marketplace realities, and don’t discount potential problems because they have not had an immediate impact on your business yet. Plan in advance and you’ll be ready when the tide comes in.
9. No accountability or follow through. Be tough once the plan is developed and resources are committed and ensure there are consequences for not delivering on the strategy.
10. Unrealistic goals or lack of focus and resources. Strategic plans must be focused and include a manageable number of goals, objectives, and programs. Fewer and focused is better than numerous and nebulous. Also be prepared to assign adequate resources to accomplish those goals and objectives outlined in the plan.
By avoiding these pitfalls, you can create an effective planning process, build a realistic business direction for the future, and greatly improve the chances for successful implementation of your strategy.

Identify the pre-requisites for the success  of corporate planning

The six include:
1. Create and cultivate a planning culture that values rational, systematic planning. Too often managers focus only on day-to-day management and forget about the long-term direction of the business. This short-sighted approach can lead to an anti-planning culture.
2. In the planning process involve people who have a stake in the future of the business/organization. Planning should be a team effort and not the role solely of planning staff or a "planner".
3. Focus on current and future customer needs. Businesses are rewarded for satisfying customer wants and needs so keep the customer at the center of planning activities.
4. Reward those who implement a plan. Results come from action and planning only serves to direct action. The doers are more important than the planners.
5. Document the plan, but change plans as frequently as seems needed. Make sure the plan is a "dynamic" document. Plans can be changed as deficiencies are discovered in the plan. Regular planning is appropriate and desirable, but events create change that must be incorporated into plans.
6. A plan is not intended to solve problems, rather a plan is intended to help reach goals and to help anticipate and minimize problems associated with striving for goals. A great plan won't necessarily lead to success. Remember success is a function of plans, intentions, effort, actions and responses of the environment.
Prerequisites for Successful Planning
1. Fixation of Objectives and Targets :
To plan is to act with a purpose. It involves a predetermined end. So before a country would embark on a plan it must nave before it certain clear objectives. These objectives act as the polestar in guiding the ship of the planning authority in its journey towards economic growth. Then it should fix priorities and targets to realize the predetermined objectives.
The resources at the disposal of an underdeveloped country are limited. These physical and human resources are to be utilized for the satisfaction of most urgent needs. Hence the various objectives should be assigned their due priorities. These priorities should be realistic. Besides, they should be consistent and compatible with one another and also flexible.
Thereafter specific targets maybe fixed for different sectors of the economy. These targets may include quantitative production schedules such as so many million tonnes of food, steel, or so many kilometers of road and so on. Such targets are fixed not only for the public sector, but also for the private sector
2. Statistical Information :
For the fixation of priorities and targets it is absolutely essential that there should be adequate and reliable statisti¬cal information regarding the entire economy. Economic development is essentially a quantitative concept. Planning in the underdeveloped coun¬tries is severely handicapped by the absence of adequate satisfaction. There must be a comprehensive statistical survey to elicit information about the existing and potential resources and also about the mode of operation of the economy in the past. This would enable the authorities to fix goals, targets and priorities and make projections for the future.
Statistical data relating to the various sectors of the economy would give an idea about plan performance. Periodic appraisal and evaluation is possible only when adequate statistical information is available. So in every planned economy there is the necessity of a strong and competent statistical organisation to collect and coordinate statistical data and infor¬mation. Reliable statistical information constitutes the sine qua non of sound economic planning.
3. Certain Measure of Control :
For the fulfillment of planned objectives a certain degree of control is essential. In fact controls are an inherent part of a planned economy. An economy would cease to be a planned one in the absence of any control. But it is not necessary that all the sectors of the economy should be controlled, or they should be controlled uniformly. Usually only the strategic and important sectors are controlled. Besides, the degree of controls would be influenced by various circumstances. The success of economic planning depends upon the adoption and implementation of a suitable scheme of controls.
4. Maintaining a Balanced Economic Structure :
Economic plan¬ning should be so implemented as not to lead to any lop-sided develop¬ment in the economy. So there should be proper balance in the economy to achieve consistent economic growth. This will secure realism in the planning process. Thus there should be balances between the public and private sectors, between the production and consumption goods sectors, between labour-intensive and capital-intensive techniques of production and also between .Different regions of a country. To achieve these balances the state should carry on agricultural and industrial development and exercise certain controls over the economy.
Lewis warns, us, "In planning the growth of the economy, it is im¬portant to get the right balance between commodities and services, since the services sector is too large, the demand for commodities will exceed the supply and inflation and balance of payments deficit will follow. This is checked by projecting separately the demand for commodities and the supply of commodities."
5. Strong, Competent and Incorrupt Administration :
According to W. Arthur Lewis, a competent and incorrupt administrative staff is the most vital prerequisite for successful planning. Planning is a gigantic task. The job of formulation and execution of a plan is done through the administrative and technical personnel. Developmental planning can have no basis in the absence of a competent administrative machinery.
The administrative personnel must be strong enough to enforce the various measures. The administrative state should also be incorrupt. Actually in an underdeveloped country the scope of corruption is very great. With loose morals, an administrator is likely to tall a prey to corruption. But a corrupt administrative machinery will fail to implement the plans with, zeal and devotion. Besides, it would seriously corrode people's faith in planning.
People would not be inspired to undergo hardships and sacrifices. Actually in many countries today bribery, corruption, and administration have turned people hostile to the philosophy of planning. While emphasizing on an honest and devoted administrative machinery, Lewis notes: "in the absence of such an administration it is often. much better than governments should be laissez-faire that they should pretend to plan."
6. An Educational Base :
A competent administration forms the backbone of successful planning. Such an administrative structure can be built only on the foundation of an educational base. A huge administrative personnel, consisting of civil administrators, engineers, technicians, economists, agricultural experts, accountants, etc., is necessary for the formulation and implementation of plans. This is possible only when a sufficiently strong education base is built up to provide general and technical education. Through proper education the abilities, values and attitudes of people can be changed to fulfill the planned objectives.
7. Reasonable Equality of Income :
In the process of economic development, due to certain reasons inequalities of income and wealth grow. But successful planning presupposes a reasonable degree of econo¬mic equality. As Oscar Lange remarked, "successful planning for econo¬mic development must imply the abolition or least the such concentration of private economic power as would block the realization the plan." Concentration of economic power also leads to the concentration of political power. The masses arc exploited. People lose their interest and enthusiasm for the planned system.
Popular apathy and indifference doesn’t augur well for the success of planning. If vigorously implemented, planning must reduce economic inequalities in the long run. Still a determined and conscious effort is necessary to achieve a more equitable distribution. the planned system. Popular apathy and indifference does not augur well for the success of planning. It vigorously implemented, planning must reduce economic inequalities in the long run. Still a determined and conscious effort is necessary to achieve a more equitable distribution.

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Leo Lingham


In Managing a business, I can cover all aspects of running a business--business planning, business development, business auditing, business communication, operation management, human resources management , training, etc.


18 years of working management experience covering such areas
as business planning, business development, strategic planning,
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