There are nine factors that can influence the planning process: Globalization, Economic, Political, Legal, Social, Cultural, Technological, Diversification and Competition.
Our business assignment help experts selected the economic factors that most affect the planning process and explained the how this factor affects the planning process with an example of organization.
Economic Factors Affecting Planning Process
Every organization has to make planning for all the activities in order to achieve the goals and objectives in an effective manner. With the help of planning, organizations are able to achieve the objective of measuring the performance of employees based on the specific objectives. At the same time, it has been analyzed that there are various factors that affect the planning process of the organizations. In order to create the effective plan, organizations need to understand the factors that affect the planning process. Economic factors such as customer demands, growth rate of the country, interest rate, labor cost, etc.
Affect the planning process of the companies. Due to change in customer demand, organizations also have to make changes in its planning process. Changing in the planning process will be helpful in coping with the external market environment. Further, it has been analyzed that availability of labor also affects the budget planning of the organizations. According to the interest rate and growth rate, organizations prepare the budgets. According to the demand of product and services, organizations make planning for the production of goods and services.
Therefore, it has been analyzed that economic factors plays an important role in making effective planning for the allocation of resources in the companies. For example given by business experts, due to downturn of economic conditions, Ford Company has suffered the huge loss of $5.9 billion in the year 2009. Automotive operations of Ford was reported a loss in every region. So, due to such type of loss, company has make changes in its planning process in order to overcome these issues. Millions of people in the company was became jobless and depend on government support. Company has made changes in its strategies and policies and made reserves for the future contingencies.
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