PLANNING GAP INDUSTRY ANALYSIS AND ITS RELEVANCE IN BUSINESS PLAN

Question: What do you understand by planning gap? discuss the relevance of planning gap in industry analysis? Answers are written below:

Whenever we talk about planning gap, the following comes to our mind.

1.                  Sales forecasting

2.                  planning per se

3.                   present product

4.                  production objective

5.                  new product development

WHAT IS SALES FORECAST

            This is an estimate of sales, in monetary physical units for a specific future periods under a proposed business plan or programme and under an assumed set of economic and other an environmental forces (planning premises) outside the business organization for which the forecast and estimate is made. (imaga, 2000).

            The forecast may be for a specified items of merchandise (good and sales) or for an entire line of products. Sales forecast is an important branch of economics.

2.         Planning Per se         

            There are various definitions of planning, though planning is better explained than defined and for this reason, we will discuss briefly about planning.

            Planning is seen as a concept of executive action that embodies the skills of anticipating influencing and controlling the nature and direction of change.

3.         Present Products:- This is the product that the organization have at that particular time it is the goods that is on sale for the organization. This is the current products.

4.         Production Objectives: This is simply the intents of the organization in producing the particular product. This is down when the executive shall have forecast the business environment to know the viability of the products.

5.         Planning Gap:- First and Foremost, “GAP” is seen as an error or an omission.

            Planning gap is the sales forecast of present product plus sales estimate of new product, therefore, this gap can be seen as the opening between sales forecast of present plus sales estimate of new product when related to provisional objectives. For a forecast to be perfect, that gap that constitutes a barrier must be filled.

            This job of filling this gap is done mostly by the top management because, it could be a mistake made during the initial broad plan of the organization or an error during the sales forecasting.

THE RELEVANCE OF THE PLANNING GAP IN INDUSTRY ANALYSIS

            In every production industry, planning gap is not relevant, because planning gap is of no positive use to the organization, rather it is an omission which top management should work hard to avoid.