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
1

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.

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 companys
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.

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.

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

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 managers 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 managers 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.
6

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
5th 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.

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.

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

Formation of specific target

Implementation

Feed back

Alt. 5

Definition of planning :
According ot koontz and Odonnell, 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)
10

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

The four perspectives together build consensus around the organizations 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.

11

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 nonfinancial assets which have been strategically identified as requirements for future
growth to achieve objectives.

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
PLANNING
(long term)
BUSINESS
PLANNING

Environment

Develop

Strategy

and own internal

Objectives
Strategies

discussions

Organisation

and Strategies

Environmental

Develop

Assumptions & Scenarios* Business Plan

12

Preferred

Agree consequences and

Objectives for Oper.Plan

(medium term)
* includes
organizational change plans

Output, Required resources

OPERATIONAL
PLANNING (annual)
MONITORING
& EVALUATION

Departmental Planning, Budgets etc.

Performance
assessment

Annual
Target

13

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.
14

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
employees important role in the attainment of the objectives of the organization.
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:

15

 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 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)
16

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 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 pre determined objectives of various departments. For
example, the sales departments 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.
17

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 organizations 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
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
must address (Makridakis & Wheelwright, 1977).

18

the issues that the practitioner

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
19

fails completely and sometimes its near the predicted value but still not the exact value.
Often 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
20

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

Applications of Forecasts
Accounting

Cost/profit estimates

Finance

Cash flow and funding

21

Human Resources
Marketing
MIS
Operations
Product/service design

Hiring/recruiting/training
Pricing, promotion, strategy
IT/IS systems, services
Schedules, MRP, workloads
New products and services

Demand Management
Demand Management

Independent Demand:
Finished Goods/Services

Dependent Demand: Raw Materials, Component parts,

Sub-assemblies, etc.

B(4

D(2

C(2

E(1

22

D(3

F(2

23

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.

CPFRs 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:

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 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 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.

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

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. Its 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

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 years 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

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

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

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,

34

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
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

35

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 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

36

(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
no = 2
d

Where

= value for selected alpha level of 0.0025 at each tail

s 2 = 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

n0 = sample size (output)

based on 95% confidence level

37

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

ttab = 1.96 at each tail
7 0.04

1.96 2 1.167 2
no =

no =

5.2318
0.0784

no =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;
n
( o)
1+
N
n
n= 0

Where

n0

= initial sample size

N = population size

38

n = adjusted sample size

Therefore,

n=

n=

67
(67)
1+
220

67
1.3046

n=51.4

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

n
response
n

51
0.95

n
=54
n

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

39

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.
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.

40

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 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
41

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, chisquare, 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 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

42

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;

x 2= ij
j

(fo fe)2
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
2
x = (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
43

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

x
= 100
n

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.
44

CHAPTER FOUR
DATA PRESENTATION, ANALYSIS AND INTERPRETATION OF RESULT

4.1

INTRODUCTION

TABLE I
Questionnaire
Administered
54
54

Total

Questionnaire Returned

Questionnaire not
Returned

50
50

%
92

4
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

14

Joint Stock Company

Others e.g. Cooperative Society etc.

10

20

Total

50

100

Source: Field Survey, 2015.

4.2

SOCIO-DEMOGRAPHIC ANALYSIS OF MILITARY PERSONNEL

45

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 E nterprises by Number of Dependants and Age
No of dependants of the

Age of the Respondents

Respondents
Variations

Frequency n=50

Percentage.

Variable

(%)
No of

Frequency

Percentage (%)

n=50
Age

dependants
1

13

26

15-20

14

14

28

21-26

10

20

12

24

31-35

15

30

14

40-45

12

5 and above

46-above

12

24

Total

50

100.00

Total

50

100.00

Source: Field Survey, 2015

Age of Starting the Business and Educational Background

46

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
Variables

Freq n=50

Education Background of the Respondents

(%)

Age of Starting Business

Variables

Freq n=50

(%)

Highest education qualification

15-20

18

WASE

18

36

21-26

15

30

OND

15

30

31-35

14

28

HND/BSc

11

22

40-45

14

MSc

46-above

10

Others

Total

50

100

Total

50

100

Source: Field Survey, 2015

Marital Status and Number of Children of the Respondents
47

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. (%)

Marital Status

Variations

Freq n=50

Per (%)

Number of Children

Single

16

32

18

36

Married

23

46

12

24

Divorced

10

10

20

Widow

12

16

5 and above

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 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
48

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

How many yrs did you

Year business was

work for someone?

established

Freq n=50

(%)

Less than one yr

Less than one yr

One yr

16

One yr

Two yrs

20

40

Two

14

Three yrs

12

Three

10

22

Four yrs

16

Four

14

30

Five yrs

10

five yrs

12

24

Six yrs and above

Six yrs and above

Total

50

100

Total

50

100

Source: Field Survey, 2015

Number of Employees in the Business

49

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

Variables

Freq n=50

Per (%)

No of employees

Freq n=50

Per (%)

No of employees

1-4

32

64

5-10

24

48

5-9

10

20

11-15

15

30

10-14

12

16-20

12

15-19

21-25

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
50

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.

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

300

200

200

100

100

Count

Count

300

0
Missing

1-4

no of employees

5-9

10-14

15-19 20 and above

6.00

0
Missing

.00

10-13

14-17

no of current employees

51

18-21

22-25 26 and above 6.00

500

Current Employees

400

300
Employees at start
200
Counts

1-5

6-10

11-

16-20

< 20

Number of Employees

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

52

present capital stood at N1m- N5,000,000, 4(8%) had their capital to be N5,999,999N10,999,999.
Table VIII: Estimated Value of Initial Capital at the Commencement of the Business
Capital at Present

Initial capital at the Commencement

Variables

Freq n=50

(%)

Variables

Freq n=50

(%)

Below N50,000

26

52

Below N1m

37

74

N50,999 N100,000

14

28

N1m N5, 000,000

18

N100,999 N150,000

10

N5, 000, 999 N10, 000,000

N150,999 N200,000

N10, 000,999 N15, 000,000

N200,999 and Above

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 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
53

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

Capital at start

10
Counts
<50

50-100

>100-

>150-200

Capital Estimate in Thousand

54

>200

500

Current Annual Expenditure

400

300

Initial Annual Expenditure

200
Counts
<50

50-100

>100-

>150-200

>200

Annual
Expenditure

Question:

Do you understand what planning and forecasting in an organization

means?

Table IX
Responses
YES
NO
TOTAL
Source: Field Survey, 2015

Frequency
50
0
50

Percentage %
100
100

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?
55

Table X
Responses
YES
NO
TOTAL
Source: Field Survey, 2015

Frequency
50
0
50

Percentage %
100
100

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
Very possible
Impossible
Possible
TOTAL
Source: Field Survey, 2015

Frequency
2
45
3
50

Percentage %
4
90
6
100

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
YES
NO
TOTAL

Frequency
48
2
50

56

Percentage %
96
4
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
YES
NO
INCONCLUSIVE
TOTAL
Source: Field Survey, 2015

Frequency
32
8
10
50

Percentage %
64
16
20
100

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
Strongly Agree
Agree
Disagree
TOTAL
Source: Field Survey, 2015

Frequency
37
7
6
50

57

Percentage %
74
14
12
100

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

Disagree

Strongly Disagree

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
58

Option

Number of Respondent

Percentage (%)

Strongly Agree

10

20

Agree

10

20

Neutral

10

20

Disagree

12

24

Strongly Disagree

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 chisquare statistical analysis. The chi-square value is given as;
K

(FoFe)2
Fe

2= ij
J

Where

fO = Observed frequency
f e = expected frequency

59

 = summation/ total
DECISION RULE
Accept the null hypothesis (Ho) if the calculated
(

tab

tab

i.e.

) .

Reject the null hypothesis (Ho) if the calculated

tab

is less than the

is greater than the

tab

i.e.

).

4.3.1 TEST OF HYPOTHESIS 1

Ho1: Planning and Forecasting have no significant impact on business
organization
In testing the above hypothesis, data collected from response to question 7 and 8 is
found most appropriate;

4.3.1a:
Questions

Strongly
agree

Agree

Neutral

Disagree

Strongly
disagree

Total

8(4.5)

20 (13.5)

14 (10)

4(10)

4(10)

50

60

10

1 (4.5)

7(13.5)

6(10)

16(10)

20(12)

50

Total

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

Cell no.

( FoFe)2
Fe

1.

Fo
8

Fe
4.5

Fo Fe
3.5

(Fo -Fe)2
12.25

20

13.5

6.5

42.25

3.13

14

10

16

1.6

10

-6

36

3.6

12

-8

64

5.33

4.5

-3.5

12.25

2.72

13.5

-6.5

42.25

3.13

10

-4

16

1.6

16

10

36

3.6

10

20

12

64

5.33

2.72

X2 = 32.8
Degree of freedom (df/v) = (r-1) (c-1)
Where:
61

r = number of rows (2)

k = number of column (5)
v = (2-1)(5-1)
v= 14
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
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

62

Questions

Strongly
agree

Agree

Neutral

Disagree

Strongly
disagree

Total

24(17)

20 (15)

2 (6)

2 (7)

2(5)

50

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

Cell no.

( FoFe)2
Fe

1.

Fo
24

Fe
17

Fo Fe
7

(Fo -Fe)2
49

20

15

25

1.67

-4

16

2.67

-5

25

3.57

-3

1.8

10

17

-7

49

2.88

10

15

-5

25

1.67

10

16

2.67

12

25

3.57

10

1.8

63

2.88

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= 14
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:

64

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
65

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

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 chance. Planning 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

66

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.
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 assistants to make decisions for which they are responsible. Most

67

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 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).

68

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