4.3 Case Three


As a highly motivated young entrepreneur Mohamed decided it was time to start his own enterprise. Having sold many private residences as a sales representative, Mohamed felt that the logical move was to build and sell individual homes. After much thought and with the knowledge that he could borrow some capital from his father, Mohamed decided to build two houses on speculation. He planned to start one in six months and the second when the first house was nearly completed. He obtained a contractor's license, necessary building permits, secured the land, had plans drawn, and set a goal of making L.E. 8000 profit on each house. He obtained price lists on lumber supplies and investigated pay scales for labor. Using appropriate formulas for figuring labor and material costs he felt he would be ready to begin construction when the ground thawed by mid April which was still five months hence.


(1)       What important aspects of the planning process might he have overlooked?

(2)       What impact could this oversight have on Mohamed's ability to reach his profit goal?


Skill developers

(1)       Understanding of the planning process is still quite limited, although in some organizations many people have a working knowledge of the process. To determine the extent of knowledge in your area, do the following:

(a)       Select five persons from among your friends, coworkers or acquaintances.

(b)       Ask them to write down in three or four sentences what they think planning is.

(c)       Compare in one paragraph for each person their ideas with the model described, what parts are similar? What steps are missing?

(2)       Locate one organization that claims to have a formal planning process (company, government organization, school, university system…etc). Discuss their planning process with someone who is involved in the process. Compare their process with the model described.