Presented by : Manish Maheswari (140)

Corporate plan is a course of action & planning is the mental exercise/procedure in developing and formulating a course of action. A managerial plan deals with future. It is concern with future action directed towards goal. Managerial planning is the mental process involved in formulation of an intelligent scheme of actions designed to accomplish a specific objective. Planning is more important of future actions because of the added uncertainty of future. Uncertainty adds confusion and confusion needs planning to achieve orders forecasting future events is a game of educated guessing and the extent to which the uncertainty of the future is/ can be reduced is the indicator of effective managerial planning or accuracy of forecasting.

Corporate planning is the process of deciding the overall objective of the company as a whole & selecting the ways and means of achieving these objectives. It defines that what the company ought to be and how it can achieve the desired state. It involves an analyses of the companys environment to identify the opportunities & threats it is likely to face in future and appraisal of its strength and weaknesses. So as to create an appropriate match. This process helps the organization look outwards as well as inwards. It is this concentration on relationships of the company with its environment which distinguish corporate planning from other managerial processes.

The process is systematic in approach integrates the activity of the entire org. , future oriented, continuous and ongoing. It includes organizing, motivating, co-ordinating and controlling. Corporate planning involves commitment of resources for the period that can be clearly looked into. This depends upon the nature of the company business. e.g garment industry. To that extent long range planning becomes a part of corporate planning. Generally long range planning deals with present product in present market while corporate deals with not only in present product and present market but also new products in present and new market

 What

the company ought to be ? How it can achieve the desired state ? Appraisal of its SWOT . Helps in organising, motivating, co-ordinating plan and controlling .

 It

deals with present products in present markets . Long term planning refers to the management processes in an organisation through which the future impact of change is determined and current decisions are made to reach a designed future .
It

may be defined as determining the missions and long term objectives of an organisation and policies necessary for achieving the same .

co. decides a sales growth goal of 25 % per year.( that is by 200 % in 6 years ). Strategies Available
Introduction of new products

Acquisition

of other Companies

Once acquisition is chosen as a strategy acquiring a company becomes objective.

 Strategy

planning It may be defined as determining the mission and long term objective of an org. and the policy is necessary for achieving the same. Mission statement Our Business is service Produce Fabricated steel shapes and forms of construction markets Profit, Growth and Excellence To be a Honest Company putting out dependable standard drugs at low prices

 Capacity
Sales

of a plant depends upon mainly on these factors :

Forecast Technology used Life Cycle of the product Design variations of the product Level of competition Import-Export policies Legal aspects Investment Constraints

A.

Design Capacity : It is basically theoritical concept and takes into consideration the following :

No idle time No break-down Good quality of Raw Material No power failure Efficiency of workers Optimum tool set-up

B.

Effective Capacity : Basically it is the effective capacity of the plant . It means the standard capacity of the plant . Its characteristics are :

Normal capacity of the plant Achievable by the organisation

C. Actual Capacity : It is something about the actual level upon which the firm is operating .

 New

Project stage : Long term capacity planning stage . Expansion stage Capacity balancing stage

Capacity Factors

Sales forecast Technology used and chances of obsolescence o Indigenous v/s Imported o Manual, Semi-auto v/s Automated Life cycle of the product Design variation of the product

Level of competition
o
o

Demand Profitability

Import- Export polocies Legal

o o o o

SSI Cottage Mediom Large scale

Investment Constraints

Design (Theoretical) No ideal time No break- down RM of good quality No power failure Skilled workman used Optimum tool setup

Effective (Standard, Normal) Licensed capacity Installed capacity

Actual (Operating) Actual production Achieved capacity

 Capacity

utilization

= Actual capacity Designed capacity

Industrial

Product Consumer durable Consumer

S A L E S

introduction

growth

maturity/ saturation

decline

Time Span

 New

Project Stage---- long term capacity planning Expansion stage / Diversification stage Capacity balancing requires identifying capacity gaps To meet legal rights for balance sheet u/s 211 company act 1956. For cost Audit report u/s 233b of company act. Cost Estimation

 STCP-

To meet immediate increase or decrease requirements. Strategies for Short Term Capacity Addition

Manufacturing more than requirements during offseason / slack season to create buffer stocks Subcontract Overtime working Hiring of certain facilities / subletting Hiring/Firing of manpower for economization

 It

depends upon :

Design

Secrecy Cost of production (In-house vs Sub-contracting) Spare capacity available Incremental cost of production

 Capacity

balancing Multi-shift work Rationalization of product mix Up gradation of technology Renovation Expansion Diversification

Problems on Capacity Planning

Question

1. M/s Indian furnace ltd wants to expend by adding 1 tonne capacity furnaces production process requires 30 mins of furnace time per 1 tonne load including loading and unloading time. If the plant efficiency is 50 % and furnace is utilized for 80 % due to flow restriction, determine the no of furnace required for processing 16 tonnes of load per 8 hour shift. What will be the the ideal capacity avaliable?

Solution
Required system capacity = 16 tonne/8 hour @ 100 % (n) Taking plant (n) = 16/0.5= 32 tonnes per 8 hrs Output/ furnace = 1 tonne @ 100% (n) per 30 mts = 2 tonns/ hr @ 100 % (n) = 2 x 0.80 = 1.6 tonne/hr = 1.6 x 8 = 12.8 tonne/hr

Hence No. of furnace required = 32/ 12.8 = 2.5 or 3 approx (Ans)

 Question

2. manufacturing process of a component comprises of 5 operation on 5 different machines. calculate the num of machines required for each of their operations for meeting annual production target of 39000 units. Assume 40 working/ week. Process time for each operation are given below after adjusting for labor efficiency and other delays:

Opn
Time/ unit(hrs)

1 2 3 4 5 0.09 0.200 0.157 0.098 0.100 5

 Sollution

Machines required Option 1 = 39000 x 0.95 52 x 40 Option 2 = 39000 x 0.200 52 x 40 Option 3 = 39000 x 0.197 52 x 40 Option 4 = 39000 x 0.098 52 x 40 Option 5 = 39000 x 0.100 52 x 40

= 1.78 or 2 approx = 3.75 or 4 approx = = = 3.69 or 4 approx 1.83 or 2 approx 1.87 or 2 approx

 Question

3. - A cycle unit owner plans to install automatic plating machines so as to produce 320 cycles/day. Each machines will cost the company Rs 50,000 production engineer estimates that he will require 98 hrs to plate 320 cycles using the planned m/c. It is also estimated that there will be 2 % production loss by way of scrap during the plating process. If the operator works on an production(n) of 80%, how many machines will be required to meet the planned capacity on 2 shift basis and the investment required ?

 Solution

Hours req for production of 320 cycle = 98 hrs Scrap = 2 % i;e for 98 cycle actual time required is that of = 100 hrs for 1 cycle actual time required is = 100/(100-2) Gross hours required for 320 cycle = 98 = 100 hrs {100/(100-2)} Total operation hrs req. = 100 /0.8 = 125 hrs No. of hrs available/ (m/c) / days on 2 shifts = 16 No. of m/ c required = 125 /16 = 7.8 or approx 8 Hence Investment req. = 8 x 50000 = 400000 Ans