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Chapter 3

PLANNING TECHNICAL ACTIVITIES

If managing organization is to be pursued vigorously, planning will constitute the most important
activity. Managers who plan are afforded with the opportunity to carefully analyze situations
which directly contribute to effective decision-making.

The engineer manager, regardless of his management level, will have to devote some of his time
to planning. The higher the management level the engineer manager is in, the more
sophisticated his planning activity becomes. Why and how this is so shall be discussed in this
chapter.

THE NATURE OF PLANNING

There are many instances when managers are overwhelmed by various activities which are at
times beclouding his judgment. This must be expected since anybody who is confronted by
several situations happening simultaneously will loose sight of the more important concerns. To
minimize mistakes in decision-making, planning is undertaken.

A plan, which is the output of planning, provides a methodical way of achieving desired results.
In the implementation of activities, the plan serves as a useful guide. Without the plan, some
minor tasks may be afforded major attention which may, later on, hinder the accomplishments of
activities.

An example of the difficulty of not having a plan is illustrated below.

The management of an engineering firm was able to identify the need to hire additional
three employees. The manager proceeded to invite applicants, screen them, and finally
hired three of them. When the hiring expense report was analyzed, it involved more than
double the amount spent by other firms in hiring the same number of people.

When an inquiry was made, it was found out that the manager committed some errors in
judgment. For instance, he used an expensive advertising layout in a newspaper when a
simple message will do.

Also, it was found out that the absence of a hiring plan contributed to the high cost of
hiring.

PLANNING DEFINED

Various experts define planning in various ways, all which are designed to suit specific purposes.

Planning, according to Nickels and others, refers to “the management function that involves
anticipating future trends and determining the best strategies and tactics to achieve
organizational objectives.” This definition is useful because it relates the future to what could be
decided now.

Aldag and Stearns, on the other define planning as “the selection and sequential ordering of
tasks required to achieve an organizational goal.” This definition centers on the activity required
to accomplish the goals.
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The definition of Cole and Hamilton provides a better guide on how to effectively perform this
vital activity. Planning, according to them is “deciding what will be done, who will do it, where,
when, and how it will be done,” and the standards to which it will be done.”

For our purpose, it will suffice to define planning as selecting the best course of action so that
the desired result may be achieved. It must be stressed that the desired result takes priority and
the course of action chosen is the means to realize the goal.

PLANNING AT VARIOUS MANAGEMENT LEVELS

The term strategic planning refers to the process of determining the major goals of the
organization and the policies and strategies for obtaining and using resources to achieve those
goals. The top management of any firm is involved in this type of planning.

In strategic planning, the whole company is considered, specifically its objectives and current
resources. The output of strategic planning is the strategic plan which spells out “the decision
about long-range goals and the course of action to achieve these goals.”

Intermediate Planning

Intermediate planning refers to “the process of determining the contributions that subunits can
make with allocated resources.” This type of planning is undertaken by middle management.

Under intermediate planning, the goals of a subunit are determined and a plan is prepared to
provide a guide to the realization of the goals. The intermediate plan is designed to support the
strategic plan.

Figure 3.1 Types of Planning

MANAGEMENT LEVEL PLANNING HORIZON

Chief Executive Officer,

Top President,
Management Strategic Planning
Vice Presidents, (one to ten years)
General Manager,
Division Heads

Middle Functional Mangers,

Management Product Line Managers, Intermediate planning
Division Heads (six months to two)

Lower Unit Managers, Operational planning

Management First Line Supervisors (one week to one year)
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Figure 3.2 The Organization and Types of Planning Undertaken

PRESIDENT/
GENERAL MANAGER

responsible for
STRATEGIC PLANNING

MARKETING PRODUCTION FINANCE PERSONNEL

MANAGER MANAGER MANAGER MANAGER

responsible responsible responsible responsible

for for for for
INTERMEDIATE INTERMEDIATE INTERMEDIATE INTERMEDIATE
PLANNING PLANNING PLANNING PLANNING

INDUSTRIAL FACTORY QUALITY

ENGINEERING MANAGER CONTROL
MANAGER MANAGER

responsible responsible responsible

for for for
OPERATIONAL OPERATIONAL OPERATIONAL
PLANNING PLANNING PLANNING

Operational Planning

The term operational planning refers to “the process of determining how specific tasks can best
be accomplished on time with available resources.” This type of planning is a responsibility of
lower management. It must be performed in support of strategic plan and the intermediate plan.

THE PLANNING PROCESS

The process of planning consists of various steps depending on the management level that
performs the planning task. Generally, however, planning involves the following:
1. setting organizational, divisional, or unit goals
2. developing strategies or tactics to reach those goals
3. determining resources needed
4. setting standards

Setting Organizational, Divisional or Unit Goals

The first task of the manager is to provide a sense
executive), to his division (if division chief), or to his
provides an answer to the said concern. If everybody
may be) is aware of the goals, there is a big chance
the realization of such goals.
of direction to his firm (if he is the chief
unit (if a supervisor). The setting of goals
in the firm (or division or unit, as the case
that everybody will contribute his share in
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Goals may be defined as the “precise statement of results sought, quantified in time and
magnitude, where possible.” Example of goals are provided in Fig. 3.3

Figure 3.3 Examples of Goals, By Organizational Level

ORGANIZATIONAL EXAMPLE OF GOAL

LEVEL

To attain a return
COMPANY On investment of
25%

Josh Construction Corporation

To increase the number of

COMPANY Projects undertaken by the
company

Project Management
Division

To increase the number

COMPANY
Of project engineers

Personnel Services Unit

Developing Strategies or Tactics to Reach Goals

After determining the goals, the next task is to devise some means to realize them. The ways to
realize the goals are called strategies and these will be the concern of top management. The
middle and the lower management will adapt their own tactics to implement their plans.

A strategy may be defined as a “course of action aimed at ensuring that the organization will
achieve its objectives.”

An example of a strategy is as follows:

The decision of a construction firm’s management to diversify its business by engaging

also in the trading of construction materials and supplies.

When the above mentioned strategy is implemented, it may help the construction firm realize
substantial savings in the material and supply requirements used in their construction activities.
The firm will also have greater control in the timing of deliveries of materials and supplies.

A tactic is a short-term action taken by management to adjust to negative internal or external

influences. They are formulated and implemented in support of the firm’s strategies. The decision
about short-term goals and the courses of action are indicated in the tactical plan.

An example of a tactic is the hiring of contractual workers to augment the company’s current
workforce.
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Determining Resources Needed

When particular sets of strategies or tactics have been devised, the manger will, then, determine
the human and nonhuman resources required by such strategies or tactics. Even if the resource
requirements are currently available, they must be specified.

The quality and quantity of resources needed must be correctly determined. Too much resources
in terms of either quality or quantity will be wasteful. Too little will mean loss of opportunities for
maximizing income.

To satisfy strategic requirements, a general statement of needed resources will suffice. The
specific requirements will be determined by the different units of the company.

To illustrate:

Suppose the management of a construction firm has decided, in addition to its current
undertakings, to engage in the trading of constructions materials and supplies.

A general statement of required resources will be as follows: A new business unit will be
organized to deal with the buying and selling of construction materials and supplies. The
amount of Php 50 million shall be set aside to finance the activity. Qualified persons shall
be recruited for the purpose.

Setting Standards

The standards for measuring performance may be set at the planning stage. When actual
performance does not match with the planned performance, corrections may be made or
reinforcements given.

A standard may be defined as “a quantitative or qualitative measuring device designed to help

monitor the performances of people, capital goods, or processes.”

An example of a standard is the minimum numbers of units that must be produced by a worker
per day in a given work situation.

TYPES OF PLANS

Plans are different types. They may be classified in terms of functional areas, time horizon, and
frequency of use.

Functional Area Plans

Plans may be prepared according to the needs of the different functional areas. Among the types
of functional area plans are the following:
1. Marketing Plan – this is the written document or blueprint for implementing and
controlling an organization’s marketing activities related to a particular marketing
strategy.
2. Production plan – this a written document that states that the quantity of output a
company must produce in broad terms and by product family.
3. Financial Plan – it is a document that summarizes the current financial situation of the
firm, analyzes the financial needs, and recommends a direction for financial activities.
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4. Human resource management plan – it is a document that indicates the human resource
needs of a company detailed in terms of quantity and quality and based on the
requirements of the company’s strategic plan.

Plans With Time Horizon

Plans with time horizon consist of the following:

1. Short-range plans – these are plans intended to cover a period of less than one year.
First-line supervisors are mostly concerned with these plans.
2. Long-range plans – these are plans covering a time span of more than one year. These
are mostly undertaken by middle and top management.

Plans According to Frequency Use

According to frequency use, plans may be classified as:

1. Standing Plans
2. Single-Use Plans

Standing Plans. These are plans that are used again and again, and they focus on managerial
situations that recur repeatedly.

Standing plans may further classified as follows:

1. Policies – they are broad guidelines to aid managers at every level in making decisions
about recurring situations or function.
2. Procedures – they are plans that describe the exact series of actions to be taken in a
given situation.
3. Rules – they are statements that either require or forbid a certain action.

Single-Use Plans. May be further classified as follows:

1. budgets
2. programs
3. projects

A budget, according to Weston and Brigham, is “a plan which sets forth the projected
expenditure for a certain activity and explains where the required funds will come from.”

A program is a single-use plan use designed to coordinate a large set of activities.

A project is a single-use plan that is usually more limited in scope than a program and is
sometimes prepared to support a program.

PARTS OF THE VARIOUS FUNCTIONAL AREA PLANS

The Contents of the Marketing Plan

The structure and content of marketing plans vary depending on the nature of the
organizations adapting them. William Cohen maintains that the following must be included
ion the marketing plan.

1. The Executive Summary – which presents an overall view of the marketing project and
its potential.
2. Table of Contents
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3. Situational Analysis and Target Market

4. Marketing Objectives and Goals
5. Marketing Strategies
6. Marketing Tactics
7. Schedules and Budgets
8. Financial Data and Control;

The contents of the Production Plan

The production plan must contain the following:

1. the amount of capacity the company must have
2. how many employees are required
3. how much material must be purchased

The Contents of the Financial Plan

1. An analysis of the firm’s current financial condition as indicated by an analysis of the
most recent statements
2. A sales forecast
3. The capital budget
4. The cash budget
5. A set of proforma (or projected) financial statements
6. The external financing plan

Contents of the Human Resources Plan

1. Personnel requirements of the company
2. Plans for recruitment and selection
3. Training Plan
4. Retirement Plan

PARTS OF THE STRATEGIC PLAN

1. Company or corporate mission
2. Objectives or goals
3. Strategies

Company of corporate mission refers to the “strategic statement that identifies why an
organization exists, its philosophy of management, and its purpose as distinguished from other
similar organizations in terms of products, services, and markets.”

MAKING PLANNING EFFECTIVE

Planning is done so that some desired results may be achieved. At times, however, failure in
planning occurs.

Planning may be made successful if the following are observed:

1. recognize the planning barriers
2. use of aids to planning
The planning barriers, according to Plunkett and Attner, are as follows:
1. manager’s inability to plan
2. improper planning process
3. lack of commitment to the planning process
4. improper information
5. focusing on the present at the expense of the future
6. too much reliance on the planning department
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7. concentrating on only the controllable variables

Among the aids to planning that may be used are:

1. Gather as much information as possible
2. Develop multiple sources of information
3. Involve others in the planning process

QUESTIONS FOR REVIEW AND DISCUSSION

1. Why is planning an important activity for managers?

2. How may “planning” be defined?
3. What planning activities are undertaken at various management levels?
4. What are the steps in the planning process?
5. What are the types of plans? How may they be classified?
6. What is a production plan?
7. What is a budget?
8. What is meant by “company mission”?
9. What are the barriers to planning?
10. What may be used as aids in planning?

SUGGESTED ITEM FOR RESEARCH

Interview the chief executive/general manager of a firm and inquire about planning activities
undertaken by the firm.