Functions of Technology

Management

Planning and Forecasting

Preview
Planning can make a difference between the
success or failure of an organization.
Strategic planning has become more
important to the engineering manager
because technology, competition, and
ongoing changes have made the business
environment less stable and less predictable.
Strategic planning provides a road map to
help your business get from where you are
now to where you want to be.
Chapter Objectives
Explain the importance of planning
Identify missions
Explain the roles of goals and objectives
Identify strategies
Define different types of forecasting
Describe the Delhi Method
Define different approaches to forecasting
Discuss some strategies for managing
technology
Nature of Planning
Importance of Planning
Planning provides method for identifying
objectives and designing a sequence of
programs and activities to achieve
objectives.
Amos and Sarchet define planning as
deciding in advance what to do, how to do
it, when to do it, and who is to do it.
Planning involves
◦ defining the organization’s goals
◦ establishing the overall strategy for
achieving these goals
◦ developing a set of procedures to integrate
and coordinate actions
Planning is concerned with both ends (what
is to be done) and means (how it is to be
done)
Purpose of Planning
establishes coordinated effort that gives
direction to managers and non-managers.
reduces uncertainty by forcing managers to
look ahead and anticipate change, consider
the impact of change and develop
appropriate responses.
reduces overlapping and wasteful activities
establishes goals or standards that are used
in controlling.
The Planning/Decision Making Process
Types of Planning
Breadth Time Frame Frequency of Use

Strategic Single use

- apply to whole
organization Long-term - one time plan
-establishes organizations - designed for
overall goals - time frame of more specific purpose or
- mostly done at higher than 3 years unique situation
management level

Operational Standing
- how overall goals are met Short-term
- regularly
- mostly middle and lower
-less than 3 years prepared plan -
management level is
annual plans etc.
involved
-covers short term period
even day to day actions
Planning in the Hierarchy of
Organizations
Strategic
Planning Top
Executives

Middle level
Managers

Operational
Planning First-level
Managers
The Foundation for Planning
A successful enterprise needs to develop
effective strategies for achieving its mission,
and strategic planning is the organized
process for selecting these strategies.
Customer focus/ customer driven
A clear vision of the basic purpose or
mission for which it exists is essential to the
long-term success of any enterprise.
Strategic planning suggests ways (strategies)
to identify and to move toward desired future
states.
determines where the organization is going
over the next year or more, how it is going to
get there, and how it will know if it got there
or not.
consists of the process of developing and
implementing plans to reach goals and
objectives.
Strategic planning is a disciplined effort to
produce fundamental decisions and actions
that shape and guide what an organization is,
what it does, and why it does it, with a focus
on the future, both internally and externally.
A vision statement describes in graphic terms where
the goal setters want to position themselves in the
future.
“Where do I see my business going?”

A mission statement resembles a vision statement,

but has a more immediate business focus with a time
horizon.
“Why does my business exist?”
◦ The mission statement sets forth what the company
is attempting to do and is usually what the public
sees.
Vision and Mission –
Kathmandu University

Vision
To become a world class university devoted to
bringing knowledge and technology to the
service of mankind.
Mission
To provide quality education for leadership.
Internal
◦ Strengths
◦ Weaknesses

External
◦ Opportunities
◦ Threats
Gap analysis is a technique used to analyze/assess where
you currently are with respect to where you would like to be
in the future.
SWOT analysis evaluates a company
against its peers, while GAP analysis is an
internal evaluation to identify
performance deficiencies.
SWOT analysis is done for long-term
planning while GAP analysis is often done
to reach short term goals.
SWOT analysis is often a comprehensive
study evaluating many aspects and many
competitors. GAP analysis can be very
simple targeted towards fine-tuning one
process.
Goals give purpose and direction to
accomplish the mission of an organization.
The goal statement answers
◦ What do we do?
◦ Why do we do it?
◦ For whom do we do it?
The objectives further clarify the goal and
answer
◦ How do we go about it?
Strategies are statements about the way
objectives are to be achieved.
Official goals are typically found in a company's
mission or vision statement, and communicate the
general purpose of the organization.
◦ These types of goals are often qualitative, which
means they're subjective and harder to measure.
Operative goals describe the steps the
organization will take to achieve its purpose.
◦ Operative goals also tend to be measured
quantitatively, which means they are based on
metrics.
Operational goals define the business processes
needed to achieve operative goals.
EXAMPLE

◦ Official Goal
 ‘To provide our clients with excellent service by
improving the quality of your living space and that of
your pet'.
◦ Operative Goal
 'To gain additional market share and opportunities in
the local market.'
◦ Operational Goal
 'To hire a digital and social marketing team to increase
brand recognition in the local market'.
According to Peter Drucker, managers must pursue
clear objectives in the following eight key result
areas:
1. Marketing (Market Share): company $sales/total $sales
of everyone in market
2. Innovation: want more sales in new products
3. Productivity: more goods+services per input
4. Physical and Financial Resources: goals for resources
5. Manager Performance and Development: availability of
managers in required quality and quantity
6. Worker Performance and Attitude: respect for
individual employee
7. Profitability: so as to measure enterprise success
8. Social Responsibility: effect on the environment

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Management by Objectives
(MBO)
Translating broad organizational goals and
objective into specific individual objectives
Superior and subordinate should have common
understanding of goals and objectives
◦ They meet to establish objectives for the
subordinate’s attention over six month or a year
S.M.A.R.T Objectives
( Specific, Measurable, Attainable, Realistic/Relevant, Time-Bound)
Evaluation of subordinate’s success at the end

33
Forecasting
Essential preliminary to effective planning
Planning provides the strategies, given
certain forecasts, and forecasting estimates
the results, given the plan.
Planning is what the organization out to do,
and forecasting relates to what happens if the
firm tries to implement given strategies in a
possible environment.
Engineering manager must be concerned
with both future markets and future
technology, and must therefore
understand both sales and technological
forecasting.
Why Forecasting?
New facility planning
Production planning
Work force scheduling
Long Range Forecasts
Design new products
Determine capacity for new product
Long range supply of materials
Short Range Forecasts
Amount of inventory for next month
Amount of product to produce next week
How much raw material delivered next
week
Workers schedule next week
Forecasting Methods

Qualitative Methods Quantitative Methods

Jury of Executive Opinion Simple Moving

Average

Delphi Method Weighted Moving Average

Sales Force Composite Exponential Smoothing

Users’ Expectation Regression Models

Qualitative Methods
Jury of Executive Opinion
Senior managers draw upon their
collective wisdom to map out future
events.
Managers from sales, marketing research,
accounting, production & advertising
assemble to discuss their opinions on
what will happen to sales in future.
The Delphi Method
Drawing upon the group’s expertise by
getting individual submissions, without
the drawback of face to face meetings.
Used to make long-range projections by
group of experts.
Gather, evaluate, and summarize expert
opinions as the basis for a forecast.
Sales Force Composite
A sales forecasting technique that predicts
future sales by analyzing the opinions of
salespeople as a group.
Salespeople continually interact with
customers, and from this interaction they
usually develop a knack for predicting
future sales.
Users’ Expectation
Ask the customers to project their needs
for the future period.
Applicable to situations in which
potential purchasers are well defined and
limited in number, such as industrial
markets.
Forecast survey of a limited and well-
defined group of buyers.
Qualitative Methods
Simple Moving Average

2005 2006 2007 2008 2009

1100 1300 1200 1600 1300

F2009= 1600+1200+1300+1100
4
Weighted Moving Average

F2009= 0.4xA2008+0.3xA2007+0.2xA2006+0.1xA2006
F2009= 0.4x1600+0.3x1200+0.2x1300+0.1x1100
F2009=1370
Exponential Smoothing
In this technique, the forecast value for the next period Fn+1
is taken as the sum of (1) the forecasted value Fn for the
current period, plus (2) some fraction α of the difference
between the actual (An) and forecasted (Fn) values for the
current period:
Regression Models
Simple Regression

Multiple Regression
Technological Forecasting
It is essential that planning be done
according to the best estimate of the
technology that will be available in the
future.
The feasibility of technological
forecasting is based on three premises:
1.technological events and capabilities
grow in very organized manner;
2.technology responds to needs,
opportunities, and the provision of
resources; and
3.new technology can be anticipated by
understanding the process of innovation.
According to Marvin Cetron, a
technological forecast is a prediction,
based on confidence that certain technical
developments can occur within a specified
time with a given level of resource
allocation.
Two types of technological forecasting:
◦ Normative
◦ Exploratory
In normative technological forecasting,
one works from the future to the present.
A desired future goal is selected, and a
process designed to achieve this goal is
developed.
An exploratory technological forecasting
begins with current state of technology
and extrapolates into the future.
◦ Delphi method
Technology S-curve for Technological
Forecasting
Example
The efficiency of the incandescent lamp (measured in lumens
per watt) was improved from Edison’s original carbon
filament by the development of today’s tungsten filament in
1910 by General Electric Research Laboratories, but the
continuing improvement in lighting efficiency has come from
the invention and improvement of the fluorescent lamp, and
later, the mercury and sodium vapor lamps.
Similarly, improvement of the cost per bit of memory storage
(the inverse of performance) over time has shifted to a new
and more efficient curve each time a denser integrated circuit
with more memory capacity was developed. The technology
forecaster might have predicted in advance that this process
would continue, making new applications requiring extensive
computer memory storage more and more practical.
`
Strategies for Managing Technology
Invention
and Innovation
Managing Technological Change
Invention and Innovation
◦ Technological innovation - the introduction into
the marketplace of new products, processes, and
services based on new technology.
◦ Without innovation, inventions create little
benefit.
◦ Many different ideas must be considered and
developed enough for careful evaluation to
produce one successful, profitable new product.
◦ Producing the first successful product is often not
enough; innovation must continue to keep the
product line competitive.
◦ Competitiveness of an enterprise depends on
two distinct thrusts, each having two
characteristics: (1) doing new and better things
(invention and innovation), and (2) doing
things in new and better ways (quality and
productivity).
Managing Technological Change
◦ Top management in technological enterprises
must constantly be aware of the technologies
underlying their business and the potential for
change.
◦ A few companies (General Electric, for example)
have maintained leadership or have at least been
vigorous early followers as technology changed,
and they have prospered because they have
succeeded in integrating technology strategy into
business strategy.
◦ One of the most compelling examples of how the
advent of new technology can quickly alter the
way we do business is the birth of the Internet.
With the rise of this new technology came
opportunity and convenience that no company or
person could afford to ignore.
◦ To remain competitive, every company
experienced a need to establish an entire new
group within their structure to develop and
maintain a website, and to provide an interface
between their organization and the rest of the
world.