Topic 2: Levels of

industrial planning
Introduction
Introduction
 The planning process involves a
sequence of choices and decisions
on alternative development
activities to be undertaken in a
given plan period and designed to
reach specific objectives
 While national planning deals with
the whole economy, industrial
planning is concerned with
designing, evaluating and
charting out a set of activities and
programmes specific to the
establishment of manufacturing
entities within an economy
 Industrial
planning is thus an
integral part of an overall
national development planning
process
 As such industrial planning is
undertaken at different levels,
namely
◦ Product planning
◦ Process planning
◦ Input Mix planning
Product Planning
 Industrial
planning involves the
decision on the final output of a
manufacturing entity
 Product planning is the
specification in terms of the
characteristics of the anticipated
physical output of the
manufacturing process
 Thisstems from the fact that
industrial planning is not for the
sake of establishing
manufacturing entity per se, but
for the production of a particular
product
Process Planning
 Process planning in
manufacturing concerns cases
where there may be more than
one known process to produce a
certain good
 Some situations may call for the
design of a new processing
method because no acceptable
method is available
 Process-engineers are used in
planning manufacturing processes
which will lead to the production
of desired products
Input – Mix Planning
 Toproduce a product there are
instances where different inputs
can be used at different rates of
combination
 Forinstance, one technology may
use two kg of cotton fibres and 2
kg of synthetic fibres to produce
one square meter of specific
quality
 Butat the same time another
production method may combine
two kg of cotton fibres and one
kg of synthetic fibre to yield one
square meter of cloth of the same
quality
 The input mix planning process is very
important as
1) It is very decisive on the utilization
of raw materials. It is at this level
that a planner can exercise his/her
muscles to influence utilization of
locally- available raw materials
2)It is at this point that the most
efficient techniques are chosen to
minimize cost and to
maximize profit in the long run
3)Appropriateness of technology
can be gauged at this level.
(The most appropriate
technology in terms of local raw
material and other input use will
get the upper hand)
Major issues in industrial planning
 Sinceplanning deals with choices,
assigns priorities and assesses
performance, industrial planning
centers on the following major issues
◦ Choice of sectoral priorities
◦ The choice of industries
◦ The Choice Input Mix
◦ The Choice of industrial output
◦ The Choice of techniques of
production
◦ The Choice of industrial location
The choice of sectoral priorities
 Atcertain levels, industrial
planning, being an integral part of
overall planning, will have to deal
with macro – economic issues
pertaining to the economy as a
whole
 Thenational economic planning
mechanism will set sectoral
priorities within the economy
 Industrialplanning will facilitate
the utilization of resources
apportioned to the industrial
sector, and in so doing will enable
a plan to be sectorally
implementable
Choice of Industries
 Sinceresources are scarce and
have competing uses, industrial
planning will have to deal with
choices such as where initial
investment will have to go and
how much will go there
 As the industrial sector covers a
wide spectrum of activities with a
lot of investment opportunities
and investable projects, the
industrial planner will have to
base his/her choices on specific
criteria regarding where to start
and when to shift to where
The Choice of input - mix
 Here a planner will have to make a
choice of input – mix under the
following situations
◦ If there is more than one technique of
production in use to produce a commodity
◦ If some inputs needed are locally available
while others are imported
◦ If some inputs are more expensive than
others (the least cost principle)
The Choice Industrial Output
 Ifthe industrial policy’s objectives
is production of domestic
consumer goods, then the
technology chosen should be that
most ideal for production of such
goods
 In
the case of rural industry, the
consolidation of forward linkages
with the rural population is
important
 It
means that industrial output
should be partly consumed by
the inhabitants of the area where
the industry is located
 Thiswill help people to see the
importance of the industry within
their area
 Unless these measures are taken,
there is a danger of establishing
“enclave industries” – ie industries
which have no meaningful impact
on their area of location
The choice of Techniques of
production
 Thechoice of techniques of
production in industry entails
input uses and labour- capital
intensities
 The main elements which inter
into the calculations before
making a fundamental choice
between various possible
combinations of production
factors for a technology are as
follows:
a) Capital/labour combination may
be considered in a sub-process
which is treated as independent
of other sub-processes.
b) The productivity of any factor of
production depends on the
amount used of it.
 Thus,it is important, before
choosing any combination to
know the precise amounts of both
capital and labour to be used to
produce the desired volume of
production.
c) It is equally important to know
the profit objective
The choice of industrial
location
 Sincemanufacturing industry is a
physical establishment it must be
sited somewhere
 The selection of a site to locate an
industry becomes an issue for
choice because there exist certain
implications are associated with
locating an industry in a particular
area
 These include
◦ Displacement of existing activities at
the site
◦ Disposal of industrial waste
◦ Advantages enjoyed by the area
where the industry is located
(employment, market for raw
materials, supply of products
produced by the industry and others)
 What developing countries really
need on their transformation to
industrialization
 The transformation to the
industrial state includes the
transfer of appropriate
technologies to developing
countries.
 This goes through the following

phases
(a) The transfer of adequate
technology.
Developing countries have, first,
to acquire the capacity to
evaluate and select imported
technologies suitable to our own
requirements
b) The adaptation of processes of
production.
The second step to be taken by
developing countries is to acquire
the necessary experience of
adapting foreign production
processes and product designs to
our local conditions.
c)The development of new
processes.
Gradually, as developing countries
advance in this direction, they can
develop technologies of their own
to meet their specific needs of
economic and social
development..
At this final stage, developing
countries should possess the
creative and innovative talents to
design for entirely new production
processes
Revision question
 Account for the fact that input- mix
industrial planning as one of the levels
of industrial planning is very
important (15 minutes)
 THANK YOU!