A STUDY OF ROLE IN FORECASTING AND PLANNING IN BUSINESS

ORGANISATION.

PROJECT REPORT

Submitted to the University of Madras in Partial Fulfillment of the requirements for the
award of degree of BACHELOR of BUSINESS ADMINISTRARTION (BBA)

By

RICHARD.J 411801931

VJAYAKRISHNAN.H 411801950

VIGNESH.G.P 411801949

Under the Guidance of

[Link] , M.B.A., [Link]., [Link]., Ph.d

DEPARTMENT OF BUSINESS ADMINISTRATION

AGURCHAND MANMULL JAIN COLLEGE, SHIFT - ll MEENAMBAKKAM

CHENNAI – 114

MARCH - 2021

CONTENTS

1
ACKNOWLEDGENT

ABSTRACT

CHAPTER NO TITLE [Link]

1. INTRODUCTION
1.1 INTRODUCTION TO
INNOVATION
1.2 INTRODUCTION TO
TECHNOLOGY
1.3 STRATEGIES TO
INCREASE BUSINESS USING
HACKING
1.4 WORK FORCE
GLOBALIZATION
1.5 SUPPLY CHAIN OF
COMPANY PERCEPTION
1.6 ENHANCMENT THE
DESIRIABLITY OF THE JOB
2. MAIN THEME OF THE
STUDY
2.1 REVIEW OF THE
LITERATURE
2.2 RESEARCH
METHADOLOGY
2.3 DATA ANALYSIS AND
INTERPRETATION
3. RESULT AND CONCLUSION

3.1 FINDINGS
3.2 SUGGESTIONS
3.3 CONCLUSION
BIBLIOGRAPHY

ANNEXURE

2
 CHAPTER ONE

INTRODUCTION

Every business organization hopes to grow in its activities in order to record high profit

margin. According to Thompson and Strickland (1987), noted those organization activities or

planning and forecasting “is the blue print of all the important entrepreneurial competitive

and functional area of actions that are to be taken in pursuing organizational objectives and

positioning the organization for sustained success”. It reflects the organizational best opinion

as to how it can most profitably apply its skills and resources to the market place. This is only

available by adopting varied but effective strategies aimed at reaching the ultimate consumer.

One of the most vital and widely adopted strategies utilized by managers of modern business

is to adopt an appropriate and efficient method of planning and forecasting. Kotler and

Armstrong (1989) defined planning as the intended plan of action to which an organization

wants to undergo. The set of firms and individuals that take title or assist in transferring title,

of a good or services as it moves from the producer to the final consumer”.

The recognition of these strategies reflects the complexity and sophistication of modern

business; planning and forecasting are not only reflected on the manufacturing sector but also

in the services sector. This is as a result of enlarging the scope of business operation.

According to Fayol, “Modern business management has become a complex activity and so

there is the need for adequate planning, the need for adequate forecasting is apparent from the

role it plays in planning”. Speaking further, 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”. These therefore, is a clear indication

that plan supersedes every other managerial functions in the organization.

3
To buttress this point, learner (2000) ascertain that planning and forecasting are important

tools of company management and decision- making as since they assist in the appraisal of

investment project in the analysis measurement and improvement of current marketing

strategy and manpower. Looking critically, planning identified the necessary allocation of the

available human and non-human resources whereas, the forecasting aid in the development

of new products and new market further they promote and facilitate the proper functioning of

the many aspects of company’s activities. To compliment this, Koontz O’ 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 STATEMENT OF PROBLEM

A look at our industries today, despite a dwindling performance compare to expectation,

organizations are no longer seen to be focus, evidence of efficient and effective planning and

forecasting are no longer there in our organization. This justified the statement that he who

fails to plans, plan to fail and hence poor forecasting foresight.

Furthermore, anybody or business that optimistically fails to envisage the future is likely to

crash young. Planning and forecasting have been put together to be wonderful tools for

effective and efficient management functions. Since planning and forecasting are like touch

light used in darkness for a success movement. It is also the believed that anybody or

business dwell in the world of modern 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 such as Nigeria.

4
The HOLY book says, “Where there is no vision, people perish” in this context vision, which

sight in modern business management system as, 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 the future. 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” this study is aimed at addressing the following

problems:

(i) Lack of appropriate planning and forecasting structures that has seen to be a

lead factor in new product failure.

(ii) The frequency use of routes and schedules that is not cost effective in planning

and forecasting by organization.

(iii) The total refusal of organizations to adopt appropriate and effective method of

planning and forecasting in order to achieve the statement goals and objectives.

1.3 OBJECTIVE OF THE STUDY

This research work is intended among other things:

i. To investigate the influences or impact of planning and forecasting in an

organization.

ii. To identify various planning and forecasting method and construct effective and

efficient planning and forecasting use procedure by organization.

5
 iii. To recommend to the organization to adopt the right planning and forecasting

technique through proper awareness and consultation

1.4 RESEARCH QUESTIONS

This research work is intended among other things to answer the following questions:

iv. To what extend does planning and forecasting influences or the success of

organization?

v. What are the various planning and forecasting methods or techniques to construct

an effective and efficient planning and forecasting in an organization?

vi. What are the best methods and techniques to recommend to the organization to

adopt?

1.5 RESEARCH HYPOTHESIS

Ho1: Planning and Forecasting have no significant impact on business

organization

Ho2: Planning and Forecasting have no significant impact on the profitability of

business organization

1.6 The Importance of the Study

6
This study recognized that planning is organic function of management and therefore, it bring

much good and beauty to business in various arrived and get to arrive will benefit from these

topic, the study shall 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 this ever dynamic business

world must learn to plan and forecast in these perilous or risk evil days of ours.

1.7 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.

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Manager: -   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 available

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.

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 CHAPER TWO
LITERATURE REVIEW

2.1 Conceptual Literature

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:

Organization objective

Identification of opportunities

Selection of alternative course of action

Alt. 1 Alt. 2 Alt. 3 Alt. 44 Alt. 5

Formation of specific target

Implementation 9

Feed back
Definition of planning :

According ot koontz and O’donnell,” Planning is deciding in advance What to do , how to do

it, when to do it, and who is to do it.”

Four critical management processes:

(a) Translating the vision/mission (clarifying, strategy setting and gaining consensus)

(b) Communicating and linking (communicating/educating, setting business goals, linking

with the objectives of the various parts/departments of the organisation)

(c) Business Planning (by all parts of the organisation, setting targets, aligning strategic

initiatives, allocating resources, establishing ‘milestones’)

(d) Feedback and learning (articulating the shared vision/mission, supplying strategic

feedback, facilitating strategy review and learning)

2.2 PLANNING AND PLANNING PROCESS

Four important steps to perform business planning

(1) set targets for long term objectives to be achieved in the following four perspectives:

 customers (to achieve our vision/mission, how should we appear to our customers)

 internal business processes (what business processes must we excel at)

 learning and growth (how to sustain the ability to change and improve)

 financial (to succeed, how should we appear to our shareholders/financiers)

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 The four perspectives together build consensus around the organization’s vision and

strategy and translate these into operational terms which will guide operational planning

by all parts of the organization into meaningful and interrelated action.

(2) identify the strategic initiatives required

This also requires a communication and linking process, during which management

ensures communication of their strategies up and down the organization and link it to

departmental and individual objectives.

(3) allocate the required resources for those initiatives

Managers at all organization levels can now use the (ambitious) goals set for the four

perspectives under point (1) above, as the basis to allocate resources and set priorities.

(4) establish milestones to mark progress in achieving strategic goals

Milestones are tangible expressions of managers’ beliefs about when and to what

degree their budgeted activities can and will affect the required changes in the four

perspectives of point (1) above. That way, milestones are also specific short term

targets to make progress in the chosen strategies.

Together, the four steps mentioned above will link strategy to actions and activities. For

appropriate effect/impact evaluation, these links must also be monitored in order to achieve

the objectives that underlie the chosen strategies.

Traditional financial measures are now complemented with criteria from three other

important perspectives which make it possible to track financial results and at the same

time monitor the progress which is made in building operationally required organizational

capacities and capabilities as well as acquiring the non-financial assets which have been

strategically identified as requirements for future growth to achieve objectives.

11
 2.2.1 Characteristics of Business Planning

 Provision of focus and quantification including strategic objectives

 Clear relationship and linking of Strategic and Operational planning with Monitoring &
Evaluation.
 Provision of shared understanding/learning for all parts of the organization

VARIOUS PLANNING ACTIVITIES

Shown as a framework which facilitates learning and shared understanding

STRATEGIC
Environment Develop Strategy Preferred
PLANNING
and own internal Objectives discussions
(long term) Strategies

Organisation and Strategies

BUSINESS
Environmental Develop Agree consequences and
PLANNING
Assumptions & Scenarios* Business Plan Objectives for [Link]
(medium term)

* includes
organizational change plans
Output, Required resources

OPERATIONAL Departmental Planning, Budgets etc.

PLANNING (annual)

MONITORING Performance Annual

assessment
& EVALUATION
Target

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 2.2.3 Importance of Planning

Planning is the first and most important function of the management. It is needed at every level

of the management. In the absence of planning all the business activities of the organization will

become meaningless. The importance of planning has increased all the more in view of the

increasing size of organizations in the absence of planning, it may not be impossible but certainly

difficult to guess the uncertain events of future.

1. Planning facilitates Decision making: Decision making means the process of taking decision.

Under it, a variety of alternatives are discovered and the best alternative is chosen. But it is

important to determine the objectives before the discovery of alternatives. Objectives are

determined under the process of planning. So, it can be said that planning facilitates decision

making.

2. Planning reduce risk of Uncertainty: planning is always done for future and future is uncertain.

With the help of planning possible changes in future are anticipated and various activities are

planned in the best possible way.

3. Planning reduces overlapping and wasteful activities: Under planning, future activities are

planned in order to achieve objectives. the problems of when, where ,what and almost decided.

This puts an end to disorder. In such situation coordination is established among different

activities and departments. It puts an end ot overlapping and wasteful activities.

4. Planning provides Direction: Under the process of planning the objectives of the organization

are defined in simple and clear words. The outcome of this is that all the employee’s important

role in the attainment of the objectives of the organization.

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5 Planning establishes Standards for controlling: By determining the objectives the objectives of

the organisation through planning all the people working in the organization and all the

departments are informed about when, what and how to do things. Standards are laid down about

their work, time and cost. Under controlling ,at the time of completing the work, the actual work

done is compared with the standard work and deviations are found out and if the work has been

done as desired the person concerned is held responsible.

2.2.6 Types of plans

Planning is a process and plan is its outcome. Plan is a sort of commitment to accomplish all the

activities needed for the attainment of special results, from this point of view there are many

plans. The following study will help in understanding different kinds of plans.

1. Objectives: objectives are those end points for the attainment of which all the activities are

Undertaken.

Following are the examples of objectives:

 To improve the communication system to hold regular staff meeting and publish a
newsletter.
 To cross the 20,0 00 crore mark in turnover of soaps.

 To make available the employment to 100 people every year.

 To reduce quality rejects to 3%

2. Strategies: Strategies refer to those plans which are prepared in view of the move of the

competitors and whose objective is to make possible the optimum utilization of resources.

3. Policies; Policies are those general statements which are decided for the guidance of the

employees while taking decision. Their purpose is laying down a limit within which a particular

14
work can be done or decision taken. Objectives decide what is to be achieved and the policies tell

us how it can be achieved.

4. Procedures: Procedures are those plans which determine the sequence of any work

performance. For example, the recovery of money from the debtors can be done in the following

order:

(a) Writing letters, (b) connecting on telephone, (c) Meeting personally,(d0 taking legal

action.

This is the procedure of collecting money from all the debtors. There is a difference between

policies and procedures.. There can be two policies of the organization regarding the recovery of

money from the debtors. (A) Tight collection policy, and (B) Lenient collection policy. Under

the first policy an effort is made to recover money from debtors is by treating him harshly. Under

the second policy the debtors will be given enough time for the payment of money while treating

him leniently.

5. Methods: Methods is that plan which determines how different activities of the procedure are

completed. Methods are not related to all steps but only to one step of the procedure. it is more

detailed than procedure . There may be many methods to do a particular work. After extensive

study, a method has to be selected from which a worker feels minimum fatigue, increase in

productivity and there is reduction in costs.

6. Rules: Rules till us what is to be done and what is not to be done in particular situation. In the

absence of rules there is no need to take any decision. Whatever is said in the rules has to be

followed without any thinking. For example, the rule “No smoking in the factory “is applicable

15
to everybody and it must be observed. Provision for punishment in case of non-observing of the

rule can also be made.

7 Budget: Budgets describe the desired results in numerical terms. A budget is that planning

which provides detailers about estimated money, material time and other resources for the

achievement of predetermined objectives of various departments. For example, the sales

department’s budget gives estimated figures about the type of material that will be purchased, its

quantity, the time of purchase and the amount to be spent on it. Similarly, budget of other

departments are also prepared.

8. Programmers: a programme means a single-use comprehensive plan laying down the what,

how who and when of accomplishing a specific job. Through program me the managers are

informed in advance about various needs so that there is no problem in future. The programmers

can be different types-production programme, Training programme, sales promotion programme

management developing programme.

2.3 FORECASTING AS A PART OF THE MANAGEMENT PROCESS

Integrating Forecasting into Management Functions There can certainly be no more important

activity in the business organization than the effective development of sales forecasts and

application of these forecasts to the organization’s various functional needs. Closs, Oaks, &

Wisdo (1989) argued that a sales forecast must incorporate

1) The correct use of forecasting techniques,

2) Forecasting systems that effectively interact with the corporate management information
system, and

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3) Recognition of the impact of forecasting management philosophy upon ultimate accuracy. A

substantial gap still exists between applications and what is both desirable and obtainable. An

examination of the forecasting and marketing literature suggests that a structure is needed

for handling the issues that the practitioner must address (Makridakis & Wheelwright, 1977).

Various functional areas or departments may need on-going information on forecasts and

forecasting accuracy, even though they are not allowed to make changes to forecasts. The

departments that are most often allowed to review forecasts are marketing, finance, production,

sales, and planning. Having access to the sales forecast information as well as the ability to

disseminate the information is important (Mentzer & Schroeter, 1994).

Behavioral and organizational issues exist when integrating the forecasting system into a

company. An important aspect of the behavior issue involves the interface between the preparer

of forecasts and the users of forecasts. A need exists for a clear definition of tasks and priorities

with regard to forecasting applications as well as a need for respect and understanding of each

other's position (Makridakis & Wheelwright, 1977). An important aspect of the organizational

issue involves differences among the needs of each department that uses the forecast (Makridakis

& Wheelwright, 1977).

Because the sales forecast is the bonding tool that draws together the different line and support

functions, all of the components of the organization must use the same forecast and assumptions.

A business organization is an integrated group of activities, which requires coordination and

common goals to result in profit for the company (Lawless, 1990).

Forecasting demand is like forecasting weather. Sometimes the forecast or prediction fails

completely and sometimes it’s near the predicted value but still not the exact value. Often

17
scientists call forecasting as an educated guess, but even then forecasting helps us to plan our

trips and journeys and most importantly we as farmers make use of forecasting to plant, harvest

and take precautionary measures.

Forecasting in business forms the basis for budgeting and planning for capacity, sales,

production, inventory, manpower, purchasing and more. Forecasting allows the manager to

anticipate the future so then can plan accordingly.

There are two major uses for forecasts. One is to help the Operations Manager plan the system

and the other one is to help him plan the use of the system. These are important concepts

different distinct but at the same time closely lined.

Planning the system refers to planning long term plans about the type of products or services to

offer, what facilities and equipment to have, where to locate and so on and so forth. Planning the

use of the system relates to short range and intermediate range planning which means planning

inventory workforce resources, planning of purchasing and production activities, budgeting and

scheduling.

2.3.1 Forecast in the Business Environment

Business Forecasting is more than just predicting demand. Forecasting is also used to predict

profits, revenues, costs, productivity changes, prices and availability of energy and raw

materials, interest rates, movements of key economic indicators (GNP, inflation and government

loans) and prices of stocks and bonds.

Forecasting is not an exact science. Even with the availability of computers, and algorithms, it’s

unable to make an exact prediction it requires Experience, Managerial Judgment and Technical

18
expertise. General Responsibility lies with the Marketing workforce but to this day not a single

marketing forecast has been created without the valuable contribution of the Operations side.

FORECAST:

•A statement about the future value of a variable of interest such as resource requirements,

capacity planning, SCM and product or service demand.

Forecasts affect decisions and activities throughout an organization

1. Accounting, finance
2. Human resources
3. Marketing
4. MIS
5. Operations
6. Product / service design

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 Applications of Forecasts
Accounting Cost/profit estimates
Finance Cash flow and funding
Human Resources Hiring/recruiting/training
Marketing Pricing, promotion, strategy
MIS IT/IS systems, services
Operations Schedules, MRP, workloads
Product/service design New products and services

Demand Management
Demand Management

Independent Demand:
Finished Goods/Services

A Dependent Demand: Raw Materials, Component parts, Sub-

assemblies, etc.

B(4 C(2

D(2 E(1
D(3 F(2

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Independent Demand: What a firm can do to manage it?

1. Either be Active or Passive meaning?

2. Can take an active role to influence demand
3. Can take a passive role and simply respond to demand

Components of Demand
•Average demand for a period of time
•Trend
•Seasonal element
•Cyclical elements
•Random variation
•Autocorrelation

Finding Components of Demand

Web-Based Forecasting: CPFR Defined

•Collaborative Planning, Forecasting, and Replenishment (CPFR) a Web-based tool used to

coordinate demand forecasting, production and purchase planning, and inventory
replenishment between supply chain trading partners. You will learn about this in your later
part of the semester.

•Used to integrate the multi-tier or n-Tier supply chain, including manufacturers, distributors
and retailers.

•CPFR’s objective is to exchange selected internal information to provide for a reliable, longer
term future views of demand in the supply chain.

•CPFR uses a cyclic and iterative approach to derive consensus forecasts.

Web-Based Forecasting:
21
Steps in CPFR
1. Creation of a front-end partnership agreement
2. Joint business planning
3. Development of demand forecasts
4. Sharing forecasts
5. Inventory replenishment

•Assumes causal system ( That same system that existed in the past will exist in future, where
as in reality unplanned events happen like tax rate increase, introduction of a competitors
product or service or natural disasters)

•Forecasts rarely perfect because of RANDOMNESS (having no specific pattern). Allowances

should be made for inaccuracies.

•Forecasts more accurate for groups vs. individuals naturally because forecasting errors in a
group tend to cancel out forecasting errors for individuals.

•Forecast accuracy decreases as time horizon increases indicating it is safe to make short range
forecasts instead of long term forecasts. If you can recall we had talked about Flexible and
Agile Corporations in the past.

2.4 REQUIREMENTS OF A GOOD FORECAST

•Timely. The forecast should be timely. Indicating that forecasting horizon should provide

enough time to implement possible changes. Capacity cannot be expanded instantly it requires

some time to plan, coordinate and increase the required resources.

•Reliable. Forecasts should be reliable meaning that it should work consistently. A forecast

22
that is partially correct will succeed at sometime and sometime fail making the end users

question the purpose and intent of forecasting.

•Accuracy. Forecasts should be accurate. In fact it should carry the degree of accuracy, so the

users are aware of the limitations of the forecast. This will also help the end users to plan for

possible errors and provide a basis for comparing the forecast with other alternative forecasts.

•Meaningful Forecast should be expressed in meaningful units. Financial Planners will use

Rupees to show how much capital would be required; Mechanical Project Schedulers would

require Forecasts to carry the type of machines and crafts of technicians required.

•Written/Documented. The forecasts should be presented in writing. A documented forecast

always provides a chance to measure the variance between estimate and actual result at a later

stage.

•Simple to understand and use meaning that Forecasts should not be dependant upon usage

of sophisticated computer techniques or task specific highly qualified technical personnel. A

failure or limitation on the part of this can lead to an incorrect decision and less acceptance

amongst end users

2.4.1 Steps in the Forecasting Process

•Determine the purpose of the forecast meaning what is the purpose and when will it be

required. This will provide the level of detail for resources required man, machine, time and

capital.

•Establish a time horizon. We already know that as time increases the accuracy of the

Forecast decreases

•Select a forecasting technique whether qualitative or quantitative

•Gather and analyze the appropriate data. It goes without saying that before a forecast can

be delivered data is required. The closer the real life data more realistic would be the forecast.

This may be the time when you would like to identify the important assumptions and

23
suppositions.

•Prepare the forecast.

•Monitor the forecast. A forecast has to be closely monitored to determine whether it is

fulfilling its basic purpose. This helps in re-examining the method, assumptions and validity of

the data and preparing a revised forecast.

2.5 FUNDAMENTAL TYPES OF FORECASTS

•Qualitative Techniques which use subjective inputs and no numerical data. It relies solely on

soft information like human factors, personal opinion, hunches. Thus Qualitative Forecasts are

often biased and tilted towards what the management wants to predict.

•Quantitative Forecast involves the extension of the historical data. It sometimes make use of

forecasting technique that uses explanatory variables to predict future demands. Quantitative

techniques are favored where quality attributes cant be quantified.

Finer Classification of Forecasts

•Judgmental - uses subjective inputs meaning that a judgmental forecast rely on analysis of

subjective inputs obtained from various sources, such as consumer surveys, the sales staff,

managers and executives, and panels of experts. These insights are not available publicly.

•Time series - uses historical data assuming the future will be like the past and depend on

developing relationships between variables that can be expressed to predict future values. Some

time series forecast try to smoothen out random variations in historical data. There are some

time series forecast which identify specific patterns and then may even extrapolate those

patterns into the future.

•Associative models - uses explanatory variables to predict the future for example demand for a

small car may be dependant upon increase in price of petrol or CNG. The analysis in this case

would employ a mathematical model that would relate the predicted variable with the predictor

variable or variables.

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Judgmental Forecasts Characteristics

•Judgmental Forecasts rely solely on judgment and opinion to make forecasts.

•In the absence of enough time, it is easy to use qualitative type of forecast.

•In case of changing external environment economic and political conditions, organizations

may use judgmental forecasts.

•When introducing new products, services, new features, new packaging, judgmental forecasts

are used in preference over quantitative techniques.

A. Judgmental Forecasts

•Executive opinions normally consist of a group of senior level managers from different

interfaces, used for long range planning and new product development. Advantage being the

collective pool of information from all divisions and departments, disadvantage being that one

person will dominate other interfaces, which can lead to erroneous forecasts.

•Sales force opinions have the advantage of being in direct contact with customers. The sales

force can detect the customers’ change of plan, However it suffers from the fact that it can not

differentiate between what the customer can do and will do. Current data of sales can often lead

to over pessimistic and overly optimistic forecasts, which then results in incorrect sales

projections.

•Consumer surveys are based on sample taken from potential customers. These type of

surveys require skill to develop, administer and interpret the results. Often fall

25
victim of the consumers irrational behavior of buying.

•Outside opinion which is a mix of consumer and potential customers. This kind of opinion is

now a days readily available through internet, telephonic surveys and newspapers. Its biggest

limitation is a fixed format which often fails to quantify the exact demand forecast.

•Delphi method: Managers and staff complete a series of questionnaires, each developed from

the previous one, to achieve a consensus forecast. Commonly used for Technological

forecasting, when to introduce a new technology. It’s a long term one time activity and has the

same issues like expert opinion type of judgmental forecast.

B. Time Series Analysis

•Time series forecasting models try to predict the future based on past data
•We as Managers can pick models based on:
1. Time horizon to forecast
2. Data availability
3. Accuracy required
4. Size of forecasting budget
5. Availability of qualified personnel

26
•Simple to use
•Virtually no cost
•Quick and easy to prepare
•Data analysis is nonexistent
•Easily understandable

Drawbacks
•Cannot provide high accuracy
•Can be a standard for accuracy

•Trend - long-term upward or downward movement in data often relates to population shifts,

changing incomes, and cultural changes.

•Seasonality - short-term fairly regular variations in data related to factors like weather, festive

holidays and vacations. Mostly experienced by supermarkets, restaurants, theatres, theme

parks.

•Cycle – wavelike variations of more than one year’s duration these occurs because of political,

economic and even agricultural conditions

•Irregular variations - caused by unusual circumstances such as severe weathers, earthquakes,

worker strikes, or major change in product or service. They do not capture or reflect the true

behavior of a variable and can distort the overall picture. These should be identified and

removed from the data.

•Random variations - caused by chance and are in reality are the residual variations that remain

after the other behaviors have been identified and accounted for.

Forecast Variations

27
 C. Techniques for Averaging

•Moving average

•Weighted moving average

•Exponential smoothing

•Moving average – A technique that averages a number of recent actual values, updated as new

values become available.

•Weighted moving average – More recent values in a series are given more weight in

computing the forecast.

 Simple Moving Average Formula

•The simple moving average model assumes an average is a good estimator of future behavior

•The formula for the simple moving average is:

At-1 + At-2 + At-3 + ... + At-n

Ft =
n

Ft = Forecast for the coming period

N = Number of periods to be averaged

At-1 = Actual occurrence in the past period for up to “n” periods

28
 D. Associative Forecasting

1. Predictor variables - used to predict values of variable interest

2. Regression - technique for fitting a line to a set of points
3. Least squares line - minimizes sum of squared deviations around the line

Forecast Accuracy
• Error - difference between actual value and predicted value
• Mean Absolute Deviation (MAD)
 Average absolute error
• Mean Squared Error (MSE)
• Average of squared error
• Mean Absolute Percent Error (MAPE)
• Average absolute percent error

29
 CHAPTER THREE
RESEARCH METHODOLOGY

3.0 INTRODUCTION

This chapter is designed to ensure a proper inquiry, collection, measurement and interpretation of

method of data analysis that is capable of finding the necessary measures of the impact and role

of planning and forecasting on the success of a business organization. This chapter describe the

framework of the research, research design, population, sampling techniques and sample size,

method and sources of data collection, tool of data analysis etc.

3.1 RESEARCH DESIGN

Research design simply refers to the process of determining the structure and design of a

research. It is logical rather than been a logistical problem. According to Avwokeni, (2004:94)

research design is a plan of action on how the research questions of a study will be answer or a

plan of action on how the proposed hypothesis will be verified. Research design ensure that the

evidence obtained enable us to answer the initial question in a research as unambiguously as

possible (De Vaus, 2009:9, 11). It can be likened to a type of building an architect intends to

build in terms of design, colour, shape rather than the work plan. There are basically four (4)

type of research design, which are;

1. Survey research design

2. Experimental research design
3. Descriptive research design
4. Historical research design

30
However, for the purpose of this study, the survey research design is adopted. A survey research

design uses both quantitative and qualitative method. The researcher choice of this type of

research resign is based on the fact that this method is good in obtaining data and because it is

the simplest, least cost alternative (Neumann, 2003). The survey research design is also prefer

because it gives a picture of a situation on population, by providing a complete observation of

the whole population under study or part of the population. A survey of the entire population is

referred to as consensus while a survey of part of the population is called a sample survey.

3.2 Population of the study

Population can be defined as any group of people, object or event which are similar in one or

more ways and which forms the subject of the study (Festing, 2006). For the purpose of this

study the subject, consist of business organization in the formal and the informal sector. These

organizations formed the target population frame

3.2.1 SAMPLING TECHNIQUE AND SIZE

Sampling technique refers to a process that involves different way of choosing sample (Barreiro

et al, 2001:4). A sample on the other hand deals with a representation of the population or

universe under study (Bartlett et al, 2001:43). Sampling refers to a process of collecting

information from a sample

3.2.2 SAMPLING PLAN

A sampling plan is the hypotheses test regarding an object that has been submitted for an

appraisal and subsequent acceptance or rejection (CQE, 2012:85). This stage determines the

form and quality of data that will be received. This is the action stage in the whole process of

sampling, sample size of 54 businesses is considered. The statistical method or formula for

31
determining sample size is adopted and these samples are to be selected using a simple random

sampling technique i.e. a probability sampling technique. For the purpose of this research, the

following elements of the population is regarded as eligible for inclusion in the sample

3.2.3 SAMPLING TECHNIQUE

The method or technique of sampling for the purpose of this study is the probability simple

random sampling technique. A simple random sampling is a type of sampling technique in which

each element of the sample have the probability of been chosen (based on chance). A simple

random sampling will be used to select samples from the target population of the selected

commercial banks by assigning values to them e.g. A, b, c, d,1, 2 etc. and made a selection of

sample through a ballot or a random sampling table without replacement.

3.3 SAMPLE SIZE

A sample size is the smaller group of sample chosen from the population that you actually

measured (Reaves 1992:8, Glen D. 1992). For a population that is unknown and infinite and

consist of a continuous variable Cochran 1997 and Bartlett et al, et al 2001:44 provide a

simplified formular for determining sample;

t 2 × s2
n o=
d2

Where t 2 = value for selected alpha level of 0.0025 at each tail

s2 = estimate of the standard deviation in the population put at 1.167

d 2 = acceptable margin of error for mean been estimated = ±3 ±4 ±7

32
 n0 = sample size (output)

based on 95% confidence level

t = 1-α/2 where α is the level of risk at 5%

ttab = 1.96 at each tail

1.96 2 × 1.1672
n o= ¿¿

5.2318
n o=
0.0784

n o=66.73

If the sample size is greater than 5% of the population (i.e. 5% of 220 = 11) or the population is

relatively small the sample size can be adjusted using the Cochran 1977; Bartlett 2001; and

Bahaman 2005 formular for sample correction given as;

n0
n=
( n¿¿ o)
1+ ¿
N

Where n0 = initial sample size

N = population size
n = adjusted sample size

33
Therefore,

67
n=
( 67)
1+
220

67
n=
1.3046

n=51.4

To adjust for response rate Chadwick (2001) provide the following formular i.e

n n
−¿= ¿
%response

n 51
−¿= ¿
0.95

n−¿=54 ¿

3.4. SOURCES OF DATA COLLECTION

The three major sources of data collection in any research work are basically;

1. Primary sources of data collection

2. Secondary sources of data collection
3. Experimental sources of data collection

Primary Data
Primary data refers to data that are specifically gathered for the particular research at hand. This

source supplement the secondary data source, the main mode of collection of primary data is

through interview and questionnaire.

34
Secondary Data
The secondary sources of data are previously gathered data by another researcher other than the

one carrying out a current research.

Experimental data
This is data obtained by an experiment from artificial environment or field study.

For the purpose of this research work the primary sources of data collection will be used

3.5 METHODS OF DATA COLLECTION

There are basically three instrument used in gathering data from the Primary sources of data

collection i.e. interview, observation and questionnaire.

a. Personal interview: The researcher gathers information relevant to his / her research

work from the respondent. The interview method is divided into two main parts. These

are the structured and the unstructured interviews. The structured interviewing involves

provisions of a set of questions properly lined up for supply to the respondents or the

person you are interviewing. It provides a guide for the respondent you are interviewing.

The unstructured interview is the one that has no specific format. The interviewer asked

the questioned randomly. The respondent has no access to the question before the

interviewer.

b. Questionnaire: This is the fully documented data collection instrument used whereby a

set of question was to be administered to a group of staff within the banks to answer.

Their responses formed the solid bases upon which the findings and conclusions were

35
 drawn. The questionnaire can be open-ended (unstructured) questionnaire or close –

ended (structured) questionnaire.

In an open-ended or unstructured questionnaire, the respondent is given freedom to

decide the aspect detail or length of his or her answer. It is known as the free answer or the free

response that call for response of more than a few words. In unstructured questionnaire, the topic

is established for the respondent, who is left to answer, as he/she likes. He has the choice of

answering the question either in short or lengthy form. The Closed ended or structured

questionnaire on the other hand helps keep the questionnaire on a reasonable length and thus

encourage response and validity in term of representativeness of the returns. This kind of

questionnaire is essential because it set a limit or some controls measure over the extent to which

the respondent could answer the questions. It is also refers to as the multi choice question as

respondent only need to tick, circle, insert a word and phrase or sentence in the blank space

provided by the researcher.

3.6 METHOD OF DATA ANALYSIS.

In statistics, techniques for measuring differences or relationships and the extent of such

relationship includes; simple percentage, correlation, regression analysis, chi-square, student t

test, etc. for the purpose of this research, the chi-square test, simple percentage and correlation

analysis is found most appropriate.

3.6.1 CHI-square
Chi-square usually denoted x2 is used to measure the discrepancies existing between the

observed and expected values in a sample. The technique is also referred to as the goodness of fit

test. The method is used in determining the number of objects or responses that fall into two or

36
more groups in a research situation. It has no special attributes, but its values are restricted to

non-negative real numbers only. It only seeks to determine the probability that any differences in

both observed and expected number of cases falling in each cell of the cross-table occurred

because of sampling variations. The chi- square method will be used to test the hypothesis 1 and

to determine whether there is any significant difference or variations in the variables under study.

The formula for calculating chi-square[X2] according to Avwokeni (2004:193) is;

k
(fo−fe)2
x 2=∑ ij
j fe

Where X2 = Output of the model

fo = Observed frequency or actual frequency
fe = Expected frequency theoretical frequency
∑ = Summation/ total

According to Sidney (1956:25), the size of the degree of freedom (df) reflects the number of

observations that are free to vary after certain restriction have been made on the data. At a

predetermined level of significance, degree of freedom for contingency table x 2=¿(r-1)*(h-1) for

2×2 , 2× 3 , 3× 2. contigency table ,where r is the row number and h is the column number.

The level of significance varies, for example x20.0001, x2 0.01, or x20.05 etc.

The confidence interval ranges from 90%, 95%, 99% etc.

3.6.2 SIMPLE PERCENTAGES

This is used in determining the ratio of responses using the formula:

x
%= ×100
n

37
Where:

X = frequency of response
n = total number of response

3.7 justification of method or tools of analysis

The tool of data analysis i.e. the chi square and simple percentage method of data analysis are

justify for use in this research based on the following consideration;

If the observation are independent (i.e. randomly selected). In this study the respondent who are

the subject are selected using a simple random technique.

The expected frequency in each cell is at least five

The cell must be mutually exclusive (i.e. each case can fall in one and only one cell)

If the distribution assumption of the population cannot be confirmed

The sample size is at least 30 (i.e.≥30) in this study the sample size is 54

The use of simple percentage is also justify on the basis of its ability to show the estimate or

frequency of response clearly on which inference can be made.

CHAPTER FOUR

DATA PRESENTATION, ANALYSIS AND INTERPRETATION OF RESULT

4.1 INTRODUCTION

TABLE I

Questionnaire Questionnaire Returned Questionnaire not Returned

38
 Administered
54 50 % 4 %
Total 54 50 92 4 8
Source: Field Survey, 2015.

Structure of Respondents’ Business

The structure of business covered by the survey of the study shows that 30(60%) are sole trade
business, 7(14%) are partnership business, 3(6%) belong to the category of company while
10(20%) are under cooperative society in the studied business organization.

Table II: Descriptive Statistics of Organization by Structure of their businesses

Variations Frequency n=50 Percentage (%)

Structure of Businesses

Sole ownership 30 60

Partnership 7 14

Joint Stock Company 3 6

Others e.g. Cooperative Society etc. 10 20

Total 50 100

Source: Field Survey, 2015.

4.2 SOCIO-DEMOGRAPHIC ANALYSIS OF MILITARY PERSONNEL

Number of Dependant Relatives and Age of the Respondents

Looking at the number of dependents of the respondents, the survey revealed that 136(32.2%)
have one dependant, 171(40.5%) have two dependants, 37 (8.7%) have three dependants, 34(8%)
have 4 dependants while 44(10.6%) have five dependants and above. Majority of the women
enterprises, 174 (41.23%) interviewed were between the ages of 31-35. This was followed by
the age range of 21-26 which is 155 (36.72%). It was observed that few of them are either too
young between ages 15 and 20 (4.26%) or too old between the ages of 40 and above 75
(17.78%).

Table III: Descriptive Statistics of Enterprises by Number of Dependants and Age

39
 No of dependants of the Age of the Respondents
Respondents

Variations Frequency n=50 Percentage. Variable Frequency n=50 Percentage (%)

(%)

No of Age
dependants

1 13 26 15-20 7 14

2 14 28 21-26 10 20

3 12 24 31-35 15 30

4 7 14 40-45 6 12

5 and above 4 8 46-above 12 24

Total 50 100.00 Total 50 100.00

Source: Field Survey, 2015

Age of Starting the Business and Educational Background

Table IV was designed to capture the statistics on age of establishment and educational

background of the respondents. Few of the respondents 9(18%) were at the age range of 15-20

when they started business, 15(30%) were at the age range of 21-26 when they started their

business, 14 (28%) were at the age range of 31-35 when they started their business while 7(14%)

were between the age of 40 and 45 when their business started while 5(10%) of them were 46 old

and above when they started their business. Considering the respondents educational

qualification, majority of them 18 (36%) have WASSCE, 15(30%) of them are with OND

certificates, 11 (22%) are with HND/BSc certificates while only 4(8%) obtained MSc status in

their certification and only 2(4%) have other certificates which was not actually specified.

Table IV: Descriptive Statistics of Business Organization by Education and the Age they Started
Business
Age of Business Education Background of the Respondents

40
 Variables Freq n=50 (%) Variables Freq n=50 (%)

Age of Starting Business Highest education qualification

15-20 9 18 WASE 18 36

21-26 15 30 OND 15 30

31-35 14 28 HND/BSc 11 22

40-45 7 14 MSc 4 8

46-above 5 10 Others 2 4

Total 50 100 Total 50 100

Source: Field Survey, 2015

Marital Status and Number of Children of the Respondents

Out of the 50 respondents, it was observed that 23 (46%) were married while 16 (32%) are still

single, 5(10%) of them are divorced while 6(12%) of them are widow. Correspondently, or

12(24%) of them have two children, 10(20%) of them have three children, 8(16%) had 4 children

while 2(4%) of them have five dependants and above.

Table V: Descriptive Statistics of business organization by Marital Status and

Number of Children
Variations Freq n=50 Per. (%) Variations Freq n=50 Per (%)

Marital Status Number of Children

Single 16 32 1 18 36

Married 23 46 2 12 24

Divorced 5 10 3 10 20

Widow 6 12 4 8 16

5 and above 2 4

Total 50 100 Total 50 100

Source: Field Survey, 2015

Length of Work Experience and when the Business was Started

The majority of the businesses surveyed had prior experience in their fields of endeavour.
For example, out of the 50 business organization, 3(6%) of the respondents had less than

41
one year working experience, 8(16%) of the respondents has one year working
experience, 20(40%) of them worked two years, 6(12%) had working experience of three
years, while 8(16%) and 5(10%) had a working experience of between four and five
years respectively before they started their own personal business. In other words, out of
the businesses, more than half of them had related prior experience in their kind of trade.
The survey also revealed that 2(4%) of the respondents established their business in less
than one year ago, 3(6%) of the organization under the study started their business in the
last one year, 5(10%) of them started their business in the last two years, 45 (10.66%) of
them started their business in the last three years, 10(20%) started their business in the
last four years while 14(28%) of them started their business in the last six years and
above, 4(8%) of them started their business in the last six years and above

Table VI: Descriptive Statistics of Respondents by Length of Work Experience and

When the Business was started

Variations Freq n=50 (%) Variations Freq n=50 (%)

How many yrs did you work Year business was

for someone? established

Less than one yr 3 6 Less than one yr 2 4

One yr 8 16 One yr 3 6

Two yrs 20 40 Two 5 14

Three yrs 6 12 Three 10 22

Four yrs 8 16 Four 14 30

Five yrs 5 10 five yrs 12 24

Six yrs and above - - Six yrs and above 4 8

Total 50 100 Total 50 100

Source: Field Survey, 2015

Number of Employees in the Business

42
The study also showed that 32(64%) of them had between one to four employees in their
business when they started the business, 10(20%) of them had five to nine employees,
6(12%) employed ten to fourteen employees, 2(4%) of them employed fifteen to nineteen
employees in their organization when they started. On the other hand, 24(48%) of them
have between ten to thirteen employees in their business, 15(30%) fourteen to seventeen
employees in their business, 6(12%) had eighteen twenty-one employees in their
organization, 5(10%) had between twenty-two to twenty-five employees in their
organization.

Table VII: Descriptive Statistics of Respondents by Number of Employees engaged by them at the
Commencement and at Current

Number of Employees engaged at start Number of Employees currently engaged

Variables Freq n=50 Per (%) Variables Freq n=50 Per (%)

No of employees No of employees

1-4 32 64 5-10 24 48

5-9 10 20 11-15 15 30

10-14 6 12 16-20 6 12

15-19 2 4 21-25 5 10

20 and above - - 26 and above - -

Total 50 100 Total 50 100

Source: Field Survey, 2015

The number of employees at the start of the business and the current number are cross tabulated

and represented in the figure below. Enterprises in the study that started business with 1-5

employees had a higher rate of labour turnover when compared to those that started their

business with more than five employees. Figure 20 also shows that the number of establishments

that had 6-10 employees rose from less than two hundred to above two hundred considering all

the sectors used as case study of the research work. Graphically the above Table 4.7 can be

represented in figures as below.

43
 Figure 4.1: Number of Employees at Start and Current number of employees

300
300

200 200

100 100

Count
Count

0 0
Missing 1-4 5-9 10-14 15-19 20 and above 6.00 Missing .00 10-13 14-17 18-21 22-25 26 and above 6.00

no of employees no of current employees

500

Current Employees
400

300

Employees at start
200
Counts

1-5 6-10 11-15 16-20 < 20

Number of Employees

44
Estimated Value of Initial Capital at the Commencement of the Business
Looking at the value of initial capital of the business at commencement, it can be seen from

Table VII that 26 (52%) of the respondents started their business with an amount that is below

N50,000, 14(28%) started their business with amount between N50,999 and N100,000, 5(10%)

of them started their business with N150,999-N200,000, 3(6%) of them had the estimated value

of their initial capital to be between N150,999-to N200,000, while 2(4%)of them started their

business with N2,000,999 and above. On the other hand, 37(74%) of the respondents’ capital

had grown to N1m, 9(18%) of them had their present capital stood at N1m- N5,000,000, 4(8%)

had their capital to be N5,999,999-N10,999,999.

Table VIII: Estimated Value of Initial Capital at the Commencement of the Business

Initial capital at the Commencement Capital at Present

Variables Freq n=50 (%) Variables Freq n=50 (%

)

Below N50,000 26 52 Below N1m 37 74

COM 14 28 N1m – N5, 000,000 9 18

N100,999 – N150,000 5 10 N5, 000, 999 – N10, 000,000 4 8

N150,999 – N200,000 3 6 N10, 000,999 – N15, 000,000 - -

N200,999 and Above 2 4 N15, 000,999 and Above - -

Total 50 100 Total 50 100

Source: Field Survey, 2015

The estimates of initial capital of the business and the current capital are cross tabulated
and represented in the figure below. The diagram shows the business organization that
started with less than fifty thousand and those who had fifty thousand as capital at present
decreased tremendously. However the capital continued to rise but not at high rate as
expected. The graph shows four stages of capital investment for business at start up. (i) A
step increase and a sudden sharp fall in capital investment at the beginning for businesses

45
 who started with less than fifty thousand; (ii) a relatively steady investment between fifty
and one hundred and fifty with (iii) elastic point at one hundred and fifty follows by (iv)
a steady increase in investment at two hundred thousand. In the same vein, the current
capital investment from less than fifty to one hundred and fifty thousand shows steady
increase in four stages with an elastic point at 200 thousand where it declines. This can
also be represented in a figure as in Figure 4.2

Figure 4.2 Estimate of Initial and Current Capital

40

Current Capital
30

20

10 Capital at start

Counts

<50 50-100 >100-150 >150-200 >200

Capital Estimate in Thousand

46
 500
Current Annual Expenditure

400

300 Initial Annual Expenditure

200

Counts

<50 50-100 >100-150 >150-200 >200

Annual Expenditure

Question: Do you understand what planning and forecasting in an organization

means?

Table IX

Responses Frequency Percentage %

YES 50 100

NO 0 -

TOTAL 50 100

Source: Field Survey, 2015

The result from table IX shows that out of the 50 respondents all of them at least knew what

planning and forecasting is all about. The level of knowledge is 100% within the management

staff level in these businesses.

Question: Do you believe that planning and forecasting is important to an

organization?
Table X

47
 Responses Frequency Percentage %

YES 50 100

NO 0 -

TOTAL 50 100

Source: Field Survey, 2015

The importance of planning and forecasting to an organization cannot be over emphasized. As

the study show that majority strongly believes its importance.

Question: Is it possible for an organization to achieve her goal(s) without planning

and forecasting?
Table IX

Responses Frequency Percentage %

Very possible 2 4

Impossible 45 90

Possible 3 6

TOTAL 50 100

Source: Field Survey, 2015

Table IX shows us that achieving organizational goal(s) cannot do without planning and

forecasting as it is discovered from this study.

Question 5: Is planning and forecasting responsible for success in your organization?

Table X
Responses Frequency Percentage %

YES 48 96

NO 2 4

48
 TOTAL 50 100

Source: Field Survey, 2015

Base on the assessment above, it can be said that so far the success in an organization is basically

the responsibility of planning and forecasting.

Question 6: Has your organization been able to implement planning and forecasting
effectively?
Table XI
Responses Frequency Percentage %

YES 32 64

NO 8 16

INCONCLUSIVE 10 20

TOTAL 50 100

Source: Field Survey, 2015

From table xi above, business organizations has so far been able to implement planning and

forecasting system fairly effective as reflected. However, About 50% of business owner and staff

held that agreement of implementing planning and control as against 36% who held the opposite

view.

Question: Do you think that management skills play an important role in the
planning and forecasting process?
Table XII
Responses Frequency Percentage %

Strongly Agree 37 74

Agree 7 14

Disagree 6 12

TOTAL 50 100

Source: Field Survey, 2015

49
From the study of research, it is clearly showed that the role of management skills is very

necessary in planning and forecasting as it plays a very important role in the planning process.

Question: Performance based pay is responsible for superior customer service delivery in our
organization
Planning and forecasting play a significant role in the success of a business
organization as they superceed any other managerial functions

Table XIII:
Variables Number of Respondent Percentage (%)

Strongly Agree 24 48

Agree 20 40

Neutral 2 4

Disagree 2 4

Strongly Disagree 2 4

Total 50 100

Source: Field Survey, 2015

The table above indicates that 88% of the respondent strongly agree or agree to the above

statement that planning and forecasting help in the success of a business organization while 8%

disagree.

Question: Planning and forecasting play a significant role in the profitability of a

business organization.

TABLE XIV: Response to question 10

Option Number of Respondent Percentage (%)

Strongly Agree 10 20

Agree 10 20

Neutral 10 20

50
 Disagree 12 24

Strongly Disagree 8 16

Total 50 100

Source: Field Survey, 2015

From the data indicate above 40% of the respondent strongly disagree/disagree and that planning

and forecasting aids the profitability of a business organization, 20 % of the respondent are

neutral while 40% strongly/agree

4.3 TESTING OF HYPOTHESES

Having enumerated the postulated hypothesis at the early stage of this research work, the aim

here is to subject them to relevant statistical test with a view to accept or reject them. In doing so

the hypothesis will be, pick one by one using the appropriate data analysis technique. The

hypothesis in this project work will now be tested using chi-square statistical analysis. The chi-

square value is given as;

K 2
( Fo−Fe)
2=¿ ∑ ij ¿
Fe
X J

Where fO = Observed frequency

f e = expected frequency
∑ = summation/ total
DECISION RULE

Accept the null hypothesis (Ho) if the calculated is less than the tab i.e. (
tab) .

Reject the null hypothesis (Ho) if the calculated is greater than the tab i.e. (
tab).

4.3.1 TEST OF HYPOTHESIS 1

Ho1: Planning and Forecasting have no significant impact on business

organization

51
In testing the above hypothesis, data collected from response to question 7 and 8 is found most

appropriate;

4.3.1a:

Questions Strongly Agree Neutral Disagree Strongly Total

agree disagree

9 8(4.5) 20 (13.5) 14 (10) 4(10) 4(10) 50

10 1 (4.5) 7(13.5) 6(10) 16(10) 20(12) 50

Total 9 27 20 20 24 100

Note: the expected frequency in the bracket is computed using the following formula;

the expected frequency ( ) =

Table 4.3.1b: chi square TABLES

(Fo−Fe)2
Cell no.
Fe
Fo Fe Fo – Fe (Fo -Fe)2
1. 8 4.5 3.5 12.25 2.72

2 20 13.5 6.5 42.25 3.13

3 14 10 4 16 1.6

4 4 10 -6 36 3.6

52
 5 4 12 -8 64 5.33

6 1 4.5 -3.5 12.25 2.72

7 7 13.5 -6.5 42.25 3.13

8 6 10 -4 16 1.6

9 16 10 6 36 3.6

10 20 12 8 64 5.33

X2 = 32.8

Degree of freedom (df/v) = (r-1) (c-1)

Where:
r = number of rows (2)
k = number of column (5)
v = (2-1)×(5-1)
v= 1×4
v=4
Decision

The critical value of chi square for 1% significance level for a 4 degree of freedom is given
as 13.28 and the calculated value of chi square is 32.8. Since the chi square calculated is
greater than the critical value of chi square at 4 degree of freedom. We do not accept the null
hypothesis (reject null hypothesis) that Planning and Forecasting have no significant impact
on business organization and conclude that Planning and Forecasting have a significant
impact on business organization

4.3.2 TEST OF HYPOTHESIS 2

Ho2: Planning and Forecasting have no significant impact on the profitability

of business organization

53
In testing the above hypothesis, data collected from response to question 9and 10 is found most

appropriate;

table 4.3.1a: To test for the hypothesis

Questions Strongly agree Agree Neutral Disagree Strongly Total

disagree

7 24(17) 20 (15) 2 (6) 2 (7) 2(5) 50

8 10 (17) 10(15) 10(6) 12(7) 18(5) 50

Total 34 30 12 14 10 100

Note: the expected frequency in the bracket is computed using the following formula;

the expected frequency ( ) =

table 4.3.1b: chi square TABLES

(Fo−Fe)2
Cell no.
Fe
Fo Fe Fo – Fe (Fo -Fe)2
1. 24 17 7 49 2.88

2 20 15 5 25 1.67

3 2 6 -4 16 2.67

4 2 7 -5 25 3.57

5 2 5 -3 9 1.8

6 10 17 -7 49 2.88

7 10 15 -5 25 1.67

54
 8 10 6 4 16 2.67

9 12 7 5 25 3.57

10 8 5 3 9 1.8

X2 = 25.18

Degree of freedom (df/v) = (r-1) (c-1)

Where: r = number of rows (2)
k = number of column (5)
v = (2-1)×(5-1)
v= 1×4
v=4
Decision
The critical value of chi square for 1% significance level for a 4 degree of freedom is given as

13.28 and the calculated value of chi square is 25.18. Since the chi square calculated is greater

than the critical value of chi square at 4 degree of freedom. We reject null hypothesis and

conclude that planning and forecasting have significant impact on the profitability of business

organization:

55
 CHAPTER FIVE

SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.1 SUMMARY
 The attainment of goal(s) in an organization is the desire of every organization. Whether

profit or non-profit oriented. The concept of planning is deciding in advance what to do,

how to do it, when to do it and for who. It involves a known objective and proposing

course of action that will achieve them. Planning involves predictions and requires action.

Planning is done by setting up clear flexible, consistent and objective plans for the entire

organization and such plans much be known through the organization so that employees

can help to achieve the organizational to achieve goal(s).

 For an organization to achieve her goal(s) there must be an effective planning and

forecasting, there must adherence to the set plans and the conformity to forecasting.

 While planning is the starting point of the achieving organizational goal(s), very

necessary. As it provides a watchfulness and feed back which is essential? When

monitoring progress in the achievement of plans.

 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

5.2 CONCLUSION

56
Planning is dealing in advance what to do, how to do it, when to do it and who to do it. Planning

bridges the gap between where are and where we want to be, it makes it possible for things

happened. Although, the exact future on seldom be predicted and factors beyond control may

interfere with the best-laid plans unless there is planning events are left on [Link] is a

function of all managers although the characters and breath of planning will vary with their

authority and with their name of phonies and plans outline by their superiors. Planning is

unique in that it establishes the objectives necessary for all group efforts. Besides, plans must be

made to accomplish these objective or goal before the manager knows what kind of organization

relationship and personal qualifications are needed along which course subordiantes are to be

directed and led and what kind of control is to be applied. And of course, all the other managerial

fucntions must be planned if they are to be effective.

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.

5.3 RECOMMENDATIONS

As earlier said for effective performance of individual working together in a group the most

essential task is to see that purpose and objective method of attaining them are clearly

understood. If group effort is to be effective, people must know what they are expected to

accomplish.

 Planning must be faced because it will not occur unless it is forced and the facilities

(funds) to undertake it are made available.

57
 Planning is an intellectually demanding process. So it requires the conscious

determination of courses of action and the basing of decision on purpose, knowledge and

conclusion estimates lie there must be awareness when the plans are.

 In period of change and world wide revival planning becomes matter of great urgency for

those who manage the resources of an organization or a nation, it is critical that every

manager establishes a climate for planning.

 Good planning must be organized because through appropriate grouping activities and

clear delegation of authority. Managers must be hold responsible for planning within

their area of authority. What is sometimes neglected is sufficient staff assistant’s to make

decisions for which they are responsible. Most managers should improve their planning if

they had well in guttering information and its analysis.

 Communication is a difficult process. It is most difficult either when there is nothing

available is general vaguer or inapplicable to managers planning problems. Chiotic

managers have attainted to make sure that clear goals premises and policies are

communicated to those who must know or have them for environment effective planning.

 It is understandable that all alert managers would want to have an adequate and effective

system of forecasting to assist that in making sure that event conform to plans.

 Forecasting should remain workable in the face of changed plans, unforeseen

circumstances of outright failures. A complex programmer of managerial plans may fail.

The forecasting system should report such failures and should contain sufficient elements

of operations despite such failures. A complex programmer of managerial plans may fail.

The forecasting system should report such failures. In other word, if control is to remain

58
 effective, despite failure or unforeseen changes of plans, flexibility is required in their

design.

 The more planning decision is committed for the failure, the more important it is that

management constantly checks on events and expectations and redraw plans as necessary

to maintain a course towards a desired goal(s).

59
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