Chapter

3
Plannin
g
IN THIS CHAPTER, you will begin to study planning, the first
management function, which sets an organization's agenda.
Establishing plans based on set goals will provide direction to the
organization's activities and, thus, reduce uncertainties and wastage.
Planning is an extremely complex process since it requires a systematic
method for recognizing and analyzing the elements of the
organization's external environment and matching them with the firm's
internal environment's factors and capabilities. Since plans are done in
an environment of uncertainty, you will also begin to understand how
assumptions are formulated based on forecasts of expected future
situations.
 OBJECTIVE
1 . D I S C U S S T H E N AT U R E O F P L A N N I N G ;
2 . C O M PA R E A N D C O N T RA S T T H E D I F F E R E N T T Y P E S O F
PLANS;
3 . D E S C R I B E P L A N N I N G AT D I F F E R E N T L E V E L S O F T H E
FIRM;
4 . A P P LY A P P R O P R I AT E P L A N N I N G T E C H N I Q U E S A N D
TOOLS; AND
5 . F O R M U L AT E A D E C I S I O N F R O M S E V E RA L
A LT E R N AT I V E S .
LESSON 1: DEFINITION AND NATURE
OF PLANNING

Planning is the first management function and very essential

essential component of management.

Importance of Planning

• Planning provides direction to all of the organization’s human resources

both managers as well employees. If they know their firm or their work
unit is trying to achieve what activities they should engage in to be able
to contribute to the achievement of the firm’s set vision, mission
goals,and objectives, they would coordinate thei actions and collaborate
• Planning is important because it reduces uncertainty;it compels
managers to consider future events that may affect their company.
Anticipating changes and theirimpact will help managers and other
workers to react to such changes appropriately.
• Minimizing of wastes will result if there is proper coordination of
activi- ties due to planning; negative practices, ineffectiveness, and
inefficiencies could be easily detected and can be corrected or
eliminated.
• Establishing goals and standards during planning may be used for
controlling, another necessary managerial function. Without planning,
goals and standards will be absent and controlling will not be
possible.
Relationship of Planning to Individual and
Organizational Performance
The relationship between planning and performance is generally
positive, but it's not definitive. Other environmental factors also impact
performance. The relationship is mainly due to the association between
systematic planning and an organization's financial status, higher
investment returns, income, and profit, attributed to good human
resource performance. The planning-performance relationship also
depends on the time spent on planning and execution.
Difference between Goals and Plans
Goals are the targets or desired ends that management wants to reach, while
plans are the actions or means that administrators/managers intend to use to
achieve organizational goals. In short, goals serve as the foun. dation of
planning. Goals precede plans because knowing the desired targets is a must
LESSON 2: TYPES OF PLANS
Organizational plans can be generally described in terms of length of time covered or time
frame. specificity, and frequency of use. Comprehensiveness refers to the completeness of
planning coverage;

Specificity refers to very detailed, clearly defined plans wherein objectives are clearly stated
and could easily be understood. Simple language must be used in order to facilitate
understanding of the plan.

Frequency of use refers to the number of times or instances a plan may be used. For example,
strategical plans have single use, while oper- ational plans are usually standing or are used
frequently or for several times. Referring to set plans is often necessary to ensure that all plans
are carried out, thus, hastening the achievement of the organization's goals. Managers meet
many planning challenges as they go about their tasks and direct their company's affairs. In
some organizations, the planning environment is steady, but in others, it is dynamic, so,
different types of plans are made to meet organizational needs. Different types of planning
include the following:
Operational plans - plans that apply to a particular unit area only; their scope is narrow;
achievement of company goals may not be achieved if operational plans are not clear.

Long-term plans - plans that go beyond three years; everyone must understand the organization's
long-term plans to avoid confusion that may divert the organization members' attention.

Short-term plans - plans that cover one year or less; such plans must lead toward the attainment of
long-term goals and are the responsibility of the unit/department heads.

Directional plans - plans that are flexible or give general guidelines only, although flexible and
general, these plans must still be related to the strategic plans.

Specific plans - plans that are clearly stated and which have no room for interpretation; language
used must be very understandable

Single-use plans - plans used or stated once only as this applies to the entire organization; refer to
the operational plans of the firm.
 STEPS IN
PLANNING
Planning is a process and, as such, involves steps-from carrying out its purpose, setting of
goals/objectives, and determining what should be done to accomplish them. Schermerhorn (2008)
gave five steps in the planning process:

1. Define your goals/objectives by identifying desired outcomes/results in very specific ways.

2. Determine where you stand in relation to set goals/objectives; know your strengths and
weaknesses.

3. Develop premises regarding future conditions; anticipate future events, generate alternative
"scenarios" for what may happen; identify for each scenario things that may help or hinder progress
toward your goals/ objectives;

4. Analyze and choose among action alternatives; list and carefully evalu- ate possible actions and
choose the alternative most likely to accomplish goals/objectives.
 Lesson 3: Planning at Different
levels in the firm

Different levels in the firm are all engaged in planning;

however, all the resulting plans must be related to one
another and directed toward the same goals. Planning at the
different levels include strategic planning, tactical planning,
and operational
 TOP-LEVEL MANAGEMENT PL ANNING
( S T R AT E G I C P L A N N I N G )
As earlier mentioned, top-level managers are responsible for the orga As auon's strategic planning
which involves making decisions about the organization's long-term goals and strategies. CEOs,
company presidents or the organization's senior executives develop and execute the said strategic
plan. They, however, do not formulate or execute the plan on their own; a management team
supports and helps top-level managers in carrying out these tasks.

Strategic planning starts with defining the organization's goals/objec tives, the major targets related
to the maintenance of the organization's stability, and its organizational culture, values, and growth
improving its productivity, profitability, effectiveness, and efficiency, among others.
MIDDLE-LEVEL MANAGEMENT
PLANNING (TACTICAL
PLANNING)
Tactical planning refers to a set of procedures for changing or transform- ing
broad strategic goals and plans into specific goals and plans that are applicable
and needed in one unit/portion of the organization. It is focused on major actions
that must be done by a unit in order to contribute its share for the achievement
of the strategic plan.
PLANNING HIERARCHY
Frontline/Lower-level Management Planning
(Operational Planning)
Operational planning involves identifying the specific procedures and
processes required at the lower levels of the organization. This also
involves routine tasks or tasks repeatedly done by the organization's
lower level units.
Integrating Strategic, Tactical, and Operational
Planning planning involves identifying the specific procedures and
Operational
processes required at the lower levels of the organization. This also
involves routine tasks or tasks repeatedly done by the organization's
lower level units.
LESSON 4: Planning Techniques and Tools and th
Applications

Planning is the first management function and very essential

essential component of management.

Importance of Planning
• Planning provides direction to all of the organization’s human resources
both managers as well employees. If they know their firm or their work
unit is trying to achieve what activities they should engage in to be able
to contribute to the achievement of the firm’s set vision, mission
goals,and objectives, they would coordinate thei actions and collaborate
well with one another
Planning techniques and Tools and their
Applications
effective planning in today's dynamic environments, different
'techniques and tools must be used, such as forecasting, contingency planning, scenario
planning, benchmarking, and participatory planning.
According to Schermerhorn (2008), forecasting is an attempt to predict what may happen
in the future. All planning types, without
exception, make use of forecasting.Forecasts used may either be quantitative or
qualitative. Opinions of prominent economists are used in qualitative forecasts while
mathematical calculations and statistical analyses of surveys/researches are used in
quantitative forecasts.
Contingency factors may offer alternative courses of action when the unexpected
happens or when things go wrong. Contingency plans must be prepared by managers,
ready for implementation when things do not turn out as they should be. Contingency
factors called "trigger points" indicate when the prepared alternative plan should be
implemented.
Benchmarking is another planning technique that generally find out what other
people and organizations do well and then plan how to incorporate these
practices into the company's operations. A common benchmarking technique
is to search for best practices used by other organizations that enabled them
to achieve superior performance. This is known as external benchmarking.
Internal benchmarking is also practiced by some organizations when they
encourage all their employees working in their different work units to learn and
improve by sharing one another's best practices. Participatory planning is a
planning process that includes the people who will be affected by the plans
and those who will be asked to implement them in all planning steps.
 Lesson 5: Decision
A Lor make choices that affect their jobs and the organization they work for.

Making
This lesson's focus is on how they make decisions by going through the eight
steps of the decision-making process suggested by Robbins and Coulter (2009)

Type of Decision
Making
A decision is a choice among possible alternative actions. Like planning,
decision-making is a challenge and requires careful consideration for both
types of decisions, namely:

Structured or programmed decision - a decision that is repetitive and can be

handled using a routine approach.
Such repetitive decision applies to resolving structured problems which are
straightforward, familiar, and easily defined.
Unsructured or nonprogrammed decisions -
applied to the resolution of problems that are new or unusual, and
for which information is incomplete. Such nonprogrammed
decisions are described to be unique, nonre-curring and need
Types of decision
custom-made making conditions
decisions.
Certainty conditions - ideal conditions in deciding problems; these are situations in which a
manager can make precise decisions because the results of all alternatives are known.

Risk or uncertainty conditions - a more common condition in deciding problems.

Risk or uncertainty conditions compel the decision maker to do estimates regarding the
possible occurrence of certain outcomes that may affect his or her chosen solution to a
problem. Historical data from his or her own experiences and other secondary information
may be used as bases for decisions to be made by the decision maker under such risk
conditions.
Thankyou!