Planning horizon

from Wikipedia, the free encyclopedia

Planning horizon (or period , planning period ) is at planning of the time period to be scheduled, for the.

General

Important features of planning in business administration are the planning object , planning subject , planning data and planning period. The subject of planning can be the future existing workplaces in a company , the planning subject is the decision-maker who is responsible for workplace planning, and planning data is in particular the personnel capacity required in the future . The planning horizon determines the temporal scope of the planning and is an essential design feature of every planning. The length of the planning horizon depends on three factors:

  • of the corporate goals from which the period of action results (e.g. short-term or long-term profit maximization );
  • the importance of the decision problem for the company (e.g. short-term decisions about the market price or long-term investment decisions ) and
  • the possibilities of obtaining information for the decisions (e.g. the further the planning horizon extends into the future, the more imperfect the data situation).

According to Jan Tinbergen, planning periods are limited by an “economic horizon”, which forms the upper time limit for planning. Beyond this horizon, there are no longer any real prognoses and probabilities, but there are still logical alternatives in the event of high statistical uncertainty . Therefore, the planning horizon should be chosen so that the risk policy horizon is less than or equal to the economic one.

Planning period and probabilities

The time range of a planning is important because the forecast reliability with short planning horizons (e.g. 1 day) - with the same planning data - is much greater than with long periods (5 years). The longer the planning horizon, the more unpredictable the future events and the more difficult it becomes to estimate the probability of their occurrence . This is because the probabilities of occurrence decrease as the planning horizon increases. The further the actions and consequences of actions to be planned lie in the future, the more indeterminate the occurrence of future events and the greater the likelihood that the planning will deviate from the later implementation. Conversely, the more reliable the data and the shorter the planning horizon, the more precise the planning. If, for example, a company has concluded three-month supply contracts with all customers, it can predict and plan the revenues from these contracts with a high probability with a planning horizon of one month . With a planning horizon of one year, on the other hand, the existing supply contracts have expired and may have only been partially extended: the probability of revenue is already low. The longer a planning horizon is, the worse the quality of the available planning-relevant information . The choice of the planning horizon therefore decides which probabilities of occurrence can be expected during the planning horizon.

Planning period and planning dates

The reliability of the forecast also depends on the available planning-relevant data (information). The higher the degree of aggregation of the data, the greater the forecast reliability for a longer forecast period and vice versa. The uncertainty of the planning data increases with a larger planning horizon. This is due to the imperfect information about future developments, which leads to imperfect foresight (predictability). The imperfection of information, which increases over time, is named in the specialist literature primarily as the reason for the limitation of the planning period. The “economic horizon” limits the planning period because of the imperfect information situation. Therefore the planning period is limited due to the increasing uncertainty .

species

According to the length of the planning horizon, a distinction is made in business administration between short, medium and long-term corporate planning. With regard to the duration of the planning horizons, it should be borne in mind that this can vary depending on the economic sector . In cyclical sectors (such as telecommunications ) there are shorter planning horizons than in less cyclical sectors ( energy suppliers ). The short-term planning extends over a period of one month, the medium-term one to two years and the long-term planning covers a planning horizon of three, five or ten years. The short-term financial planning deals, for example, in particular with liquidity planning ( cash management ), the medium-term takes into account already planned investments and their financing , the long-term financial planning has to accompany the company in its long-term strategy . In practice, the planning horizon can be between a few seconds ( spontaneous purchase ) and 20 or more years ( town planning , infrastructure planning such as local transport plans or open-cast lignite mining ).

In the detailed planning a short period with precise planning data is based, while the rough planning is characterized by a long planning horizon with compacted data.

consequences

Determining the planning period is an economic decision based on a cost-benefit analysis . The extension of the planning horizon causes additional costs for the procurement of information , which are only justifiable as planning costs if the planning benefit resulting from the longer planning period is greater than the planning costs due to a better selection of alternative courses of action. As a rule, companies limit themselves to short and medium-term planning ( operational planning ), while they operate long-term strategic planning with low planning costs.

Banking

In banking , the planning horizon is the point in time by which an investor would like to have access to his invested capital again.

Individual evidence

  1. ↑ Günter Wöhe : Introduction to General Business Administration , 2013, p. 63
  2. ↑ Wolfgang Lück (Ed.): Lexikon der Betriebswirtschaft , 1983, p. 895
  3. ↑ Dieter Schneider: Investment and Financing , 1970, p. 38
  4. ↑ Jan Tinbergen: A problem of dynamics , in: Zeitschrift für Nationalökonomie, Volume 3, 1932, p. 171
  5. ↑ Lothar Streitferdt: Fundamentals and problems of business risk theory , 1973, p. 54
  6. ↑ Guido Pieroth: Systematic forecast errors in corporate planning , 2013, p. 14 f.
  7. ↑ Jörg Schlüchtermann: Planning in Decision-Making Fields with Open Time , 1996, p. 3
  8. ↑ Günther Zäpfel, Helmut Gferer: Successive production planning , in: Economy Scientific Study, 1984, p 237
  9. ^ Roland Rollberg: Integrated corporate planning , 2001, p. 10
  10. ^ Wolfgang Hilke: Dynamische Preispolitik , 1978, p. 104
  11. ^ Wolfgang Hilke: Dynamische Preispolitik , 1978, p. 42
  12. ↑ Waldemar Wittmann : Entrepreneurship and imperfect information , 1959, p. 137 ff.
  13. ↑ Ulrich Ermschel, Christian Möbius, Holger Wengert: Investment and Financing , 2011, p. 95
  14. ↑ Reiner Michel, Sonja Kreplin, Lars Keil: The know-how of excellent financial planning with the PC , 2000, p. 1
  15. ↑ Ulrich Ermschel, Christian Möbius, Holger Wengert: Investment and Financing , 2011, p. 95
  16. ↑ Guido Pieroth, Systematic forecast errors in corporate planning , 2013, p. 15
  17. ^ Wolfgang Grill, Ludwig Gramlich, Roland Eller: Gabler Bank Lexikon: Bank, Börse, Zusammenarbeit , AD, 1996, p. 1233