ORGANIZATIONAL AND MANAGEMENT

HANDOUTS

LESSON 3: THE MANAGER

DIFFERENT TYPES OF MANAGERS

1. PROBLEM- SOLVING MANAGER- focuses on providing a solution to every

problem of the company. This manager also concentrates on achieving the
company’s goals.

2. PITCHFORK MANAGER- threatens employees to work towards a goal. This

manager employs fear tactics and uses an “iron hand” to push employees for results
to avoid consequences.

3. PONTIFICATING MANAGER- Neither follows any strategy nor prepares for any
situation or task and usually ends up with inconsistent results. The ability of the
manager is to make people feel at ease when he or she is around.

4. PRESUMPTUOUS MANAGER- thinks only of himself or herself. This type of

manager is not a team player and usually works for personal gain or interest.

5. PERFECT MANAGER- is open to change and personal growth. However, he or

she can be very mechanical and may lack the interpersonal skills to interact more
closely with his or her members.

6. PASSIVE MANAGER- wants to please everyone and make the team members
happy. However, being a crowd pleaser becomes a hindrance because of his or her
lack of drive and assertiveness to manage the team.

7. PROACTIVE MANAGER- possesses the good qualities of the other types of

managers. He or she has the drive of the problem–solving manager to spearhead
solutions.

MAIN MANAGEMENT FUNCTIONS

THE KEY MANAGEMENT FUNCTIONS ARE PLANNING, ORGANIZING,

LEADING, AND CONTROLLING.

1. PLANNING- is the management function wherein managers identify and select

the company’s goal and determine the corresponding courses of action to achieve
them. As planners, the goal for managers is to improve the company’s overall
performance by formulating strategies to be implemented.

2. ORGANIZING- refers to structuring the business organization in such a way that

employees are grouped together to perform jobs or tasks. The organization ensures
that the employees can perform efficiently and coordinate effectively to achieve the
company’s goal.

3. LEADING- managers help the company achieve its objectives by influencing their
subordinates to perform the tasks assigned to them.
4. CONTROLLING- requires managers to identify any deviations from strategies and
methods used in attaining the company’s objectives. The manager then implements
corrective actions to maintain or improve performance.

LEVELS OF MANAGEMENT

1. TOP-LEVEL MANAGEMENT- this is so-called “SENIOR MANAGEMENT” or

“UPPER MANAGEMENT”. The managers at this level have titles such as Managing
Director, Chief Executive Officer, Chief Operating Officer, Executive Vice President,
and Chairman of the Board. These managers must have extensive knowledge in
management and must be multiskilled and analytical.

2. MIDDLE-LEVEL MANAGEMENT- are assigned to supervise specific units or

departments within the company and are highly specialized in managing the tasks
and operations of their assigned units. They are also responsible for carrying out the
decisions made by the top-level management and applying them to their units.

3. LOWER-LEVEL MANAGERS- are also called “FRONTLINE MANAGERS” or

“SUPERVISORS”. These managers usually directly oversee employees or workers
and are tasked with carrying out the decisions communicated by middle managers.

MANAGEMENT ROLES

INTERPERSONAL MANAGEMENT ROLES

1. FIGUREHEAD- the manager performs social, inspirational, legal, and ceremonial

duties. The manager is a symbol and must be on hand for people or agencies that
only deal with him or her because of their status and authority.

2. LEADER- the leader role is at the heart of the manager-subordinate relationship

and managerial power. The leader is a pervasive presence among subordinates,
although the relationship between the leader and other members of the group tends
to be indirect.

3. LIAISON- the manager is an information and communication center. A liaison

builds and maintains relationships with other companies. The manager possesses
networking skills to maintain internal and external contacts.

INFORMATIONAL MANAGEMENT ROLES

1. MONITOR- the manager seeks and receives information from various sources to
evaluate the organization’s performance, well-being, and situation. The managers
perform vital tasks such as monitoring internal operations, external events, ideas,
trends, analysis, and possible threats.

2. DISSEMINATOR- the manager communicates external information to the

organization and facilitates information exchange between subordinates.
3. SPOKESPERSON- the manager relays information to other groups and entities
outside of the company. Key influencers and stakeholders are kept informed of
company performance, plans and policies.

DECISIONAL MANAGEMENT ROLES

1. ENTREPRENEUR- the manager designs and initiates new opportunities for the
company. An entrepreneur is a risk taker, and it is often involved in start-ups and
new projects.

2. DISTURBANCE HANDLER- involved in stepping into deal, evaluate the situation,

reallocate resources, and provide adequate support to the company.

3. RESOURCE ALLOCATOR- the manager oversees and controls resource

allocation by evaluating major decisions involving resources. Managers develop
appropriate models and plans for conducting their evaluations.

4. NEGOTIATOR- as a negotiator, the manager takes charge of communicating and

negotiating with other organizations, and even among members of the company.

MANAGEMENT SKILLS

1. CONCEPTUAL SKILLS- refer to the manager’s ability to analyze a particular

situation, identify new opportunities and resources, and decide on the best strategies
and courses of action.

2. HUMAN SKILLS- includes the manager’s capacity to motivate, lead and control
the behavior of the subordinates. A manager should know how to effectively
communicate, coordinate, and relate with his or her employees.

3. TECHNICAL SKILLS- these are specific competencies that a manager should

have in relation to the type of task assigned to him or her.
 UNIT 2: THE FIRM AND ITS ENVIRONMENT

LESSON 4: ENVIRONMENTAL- SCANNING SWOT AND PEST ANALYSIS

MAJOR PROBLEMS FACED BY BUSINESSES

Based on extensive research and a series of interviews with top management of

different companies all over the world, here are some of the most significant
problems that companies face today.

UNCERTAINTY

- It strikes fear in company executives because its effects can result in

staggering costs. Uncontrollable external factors like political, economic,
technological, and social forces are always at work. The common reaction to
uncertainty is to stick with manageable short-term goals.

GLOBALIZATION

- Is a concern of the top company executives because of the changes it brings.

These changes may require costly adjustments to cope with the challenges of
serving new markets and trends. Companies may need to offer new products
and services to better serve new markets.

INNOVATION

- Companies should build a more innovative culture in their respective

organizations. For healthy innovation to happen, there should be a balance
between how much freedom should be given to employees and the level of
control exercised by managers to implement their authority and impose
discipline among employees.

GOVERNMENT POLICIES

- Companies should adhere to the new government regulations and policies on

environmental, financial, marketing, and other aspects of the business. Such
policies may complicate the decisions of top executives, but managers should
continually improve.

TECHNOLOGY

- Technological advancements happen fast and companies have to cope by

investing in new technologies to take advantage of their benefits before they
become obsolete. The competitive business environment requires companies
to stay informed about changes and make appropriate adjustments in their
operations.
DIVERSITY
- Diversity adds value to products and services since different ideas and
perspectives are utilized in the process. The managers need to make the
proper adjustments in their communication with employees, suppliers,
customers, investors, and business partners.

COMPLEXITY

- Globalization and information technology have led to the emergence of a

complex business environment. Business transactions have become more
complex because of the diverse cultures of people across countries.

INFORMATION OVERLOAD

- Innovations in information technology have led to fast-paced communication

and the availability of large amounts of information on the internet. Effective
information management is a good investment since the result can provide
valuable insights, especially for marketing and strategic business planning.

THE ENVIRONMENT OF THE FIRM

The business firm’s environment refers to the condition and elements that define its
operations and determine its success. There are two types of the firm’s
environment. These are the internal and external environments.

INTERNAL ENVIRONMENTS
- Consists of elements that have a direct impact on the business operations.
These include the employees, the board of directors, and the managers. The
elements of the internal environment are directly controlled and can be freely
modified by the firm itself.

EXTERNAL ENVIRONMENTS

- Consists of factors that have an indirect but significant influence on the

operations of the business. There are two types of external environments.

1. MICROENVIRONMENT

- Is also known as the “OPERATING ENVIRONMENT” It consists of the

customers, suppliers, regulatory agencies, and competitors. The factors in this
environment have direct relevance to the business operations but are
uncontrollable to a certain extent.
2. MACROENVIRONMENT

- Is also known as the “GENERAL ENVIRONMENT”. It consists of the

economic, political, social, legal, and technical environment of the business
organization. The factors in this environment are beyond the control of the
firm but are important determinants of success.

ENVIRONMENTAL SCANNING

ENVIRONMENTAL SCANNING is the actual monitoring and evaluation of

information

From the external and internal environment of the business organization. The
information is then provided to the key people to guide the organization in its
business operations. The information is then provided to the key people to guide the
organization in its business operations and in preparing for target market operations.
There are three models of environmental scanning as follows:

1. AD HOC ENVIRONMENTAL SCANNING- this is not often done and is usually

applied during a crisis. The firm does ad hoc scanning to determine whether a
problem is either external or internal.

2. REGULAR SCANNING- is usually done at least once a year or at regular

intervals.

3. CONTINUOUS SCANNING- refers to the continuous collection of data on a broad

range of environmental factors. It is also referred to as continuous learning is done to
monitor the components of an organization’s internal environment.

STRATEGIC PLANNING: SWOT AND PEST ANALYSES

SWOT ANALYSIS- is a technique that identifies the Strengths and Weaknesses of a

company, as well as the Opportunities and threats it faces.

STRENGTHS- include the company’s attributes that give a competitive edge over
others. The strengths of the company contribute to its good performance and a
positive reputation in the business scene. It may include being a market leader,
having a good brand image, and providing quality products and services.

WEAKNESSES – these are attributes of a company that needs to be improved or

changed. These attributes may hinder the company’s growth and performance.
Examples are lack of access to technology, and limited distribution channels, poor
location, lack of facilities and equipment.
OPPORTUNITIES- these are factors or events that can give a positive impact to the
company if properly addressed. It comes from different forms like new markets,
potential profits, and additional sources.

THREATS- external factors which may negatively impact the company. These are
trends, changes, or movements over which the company has no control but should
be addressed to maintain its status in business.

PEST ANALYSIS

- Is a method used in analyzing POLITICAL, ECONOMIC, SOCIAL AND

TECHNOLOGICAL FACTORS affecting the company.

POLITICAL FACTORS

- Include laws, regulations, and restrictions that may intervene or affect the
company’s business course. Significant political factors include tax policies,
labor laws, environmental laws, trade restrictions, and tariffs.
- Businesses also have to comply with the required legal documents, pay fees
and secure permits before they begin their operations.

ECONOMIC FACTORS

- Directly affects the capability of businesses to generate profits. These include

economic growth, interest rates, exchange rates, and inflation rates. The
increase in the prices of raw materials and basic commodities is also an
important factor that affects business.

SOCIAL FACTORS

- Include demographic aspects such as age, group, affiliation, religion, civil

status, and the economic status of the consumers. Companies focus on
information regarding their target market, particularly its buying habits,
attitudes, ethics, personalities, and values. Analyzing social factors can help
a company implement changes and improvements in its operations, products,
and services.

TECHNOLOGICAL FACTORS

- Include research and development activities, automation, licensing, patenting,

technological shifts, and outsourcing decisions. An important technological
factor at present is the Internet, which has greatly improved the way business
functions are done.
 LESSON 5: THE LOCAL AND INTERNATIONAL BUSINESS ENVIRONMENTS

LOCAL BUSINESS ENVIRONMENT

- Is defined by political, economic, social, and technological factors that affect

business firms. Examples affecting the local business environments include
weather conditions, calamities, unpredictable prices, and the outsourcing of
business functions.

INTERNATIONAL BUSINESS ENVIRONMENT

- Also defined as political, economic, social, and technological forces.

Companies that operate on an international scale should take note of the
environments of specific countries they operate in. They should take note of
the political environment specifically the stability of the government.

THE FIVE PHASES OF ECONOMIC DEVELOPMENT

MERCANTILISM, INDUSTRIAL REVOLUTION, FORDISM, POST FORDISM and

GLOBALIZATION.

During the age of mercantilism, countries used trade to accumulate wealth and build
colonial empires. The Industrial revolution introduced more efficient production and
operations and mechanization in factories. Fordism gave rise to modern production
methods and the rise of multinational corporations beginning with the Ford Motor
Company. The Post- Fordism period saw the prevalence of information technology
in business transactions.
 LESSON 6: THE BUSINESS ORGANIZATION

FORMS OF BUSINESS ORGANIZATIONS

There are three forms of business organizations based on the ownership structure.
These are sole proprietorship, partnership, and corporation. A wise manager
considers the characteristics of the business organization that he or she wishes to
establish making the business plan as each presents unique advantages,
opportunities, and challenges.

1. SOLE PROPRIETORSHIP

- Companies are owned by one person who is usually hands-on in managing

day-to-day activities. Many small businesses start in this type of business. It
is own the entire business including all assets and profits.

- Assets are resources with economic value that are owned and controlled by
the business owners. Examples of assets are facilities, equipment,
machinery, cash, office supplies, and raw materials.

- Liabilities are debts or obligations which arise during business operations.

- Sole proprietorships are also considered single taxpayers and are assigned a
single Tax Identification number. owners also apply for a business trade name
and register the business with the Department of Trade and industry.

ADVANTAGES AND DISADVANTAGES OF A SOLE PROPRIETORSHIP

ADVANTAGE: It is the most manageable and least expensive form of ownership.

Proprietors have complete control over the business and can make decisions based
on their own judgment. It is easy to implement changes in the business setup.
Furthermore, if desired by the owner, the business can also be easily dissolved.

DISADVANTAGE: The sole proprietorship has unlimited liability since they assume
all the debts of the business. This may put personal assets at risk when the business
experiences losses. Obtaining additional capital is also difficult because of the low
guarantee of profitable returns to lenders.
2. PARTNERSHIP

- Is a form of business organization where ownership of the business is shared

by two or more members. The partners mutually agree on how decisions will
be made and how the profits and losses will be shared. They also agree on
how future partners will be admitted and how disputes will be resolved legally.

- Under the Civil code of the Philippines, a partnership is considered a juridical

person or an entity having a separate legal personality from the partners. A
partnership can either be a general partnership or a limited partnership.

- GENERAL PARTNERSHIP is a form of partnership wherein the partners have

unlimited liability for the debts and obligations of the partnership.

- LIMITED PARTNERSHIP is a form of partnership wherein one or more

general partners have unlimited liability and limited partners have liability that
is only up to the amount equal to their capital contributions.

ADVANTAGES AND DISADVANTAGES OF A PARTNERSHIP

ADVANTAGES : one of the advantages of a partnership is a wider capital base.

Having more partners involved in the business allows for diversification of the
contributed monetary funds, skills, and resources.

- Expansion is also easier since there are more people who will manage the
different branches of the business.
- In addition, those who would like to be employed in the partnership may be
attracted by the incentive of becoming a partner later.

DISADVANTAGE: Partners are jointly liable for all the obligations and effects
stemming from the decisions of the other partners. Unless the individual
responsibilities and liabilities are clearly delineated, this may cause disagreement
among the partners.

- Partnerships have a limited life because of their general instability. This

instability is not referring to business unprofitability but rather to several
internal factors which make the partnership vulnerable to dissolution. These
internal factors include the death, withdrawal, or insolvency of a partner.
3. CORPORATION- Has a distinct personality separate from its owners. This means
that is treated like an individual person with benefits from certain rights as well as
obligations and responsibilities.

- A corporation can enter contracts, secure loans, sue and be sued, hire
employees, and pay taxes.
- A corporation has a minimum of five and a maximum of fifteen owners who
are called shareholders. Each shareholder owns a part of the company and
has some authority over its direction. Shareholders elect a board of directors
who oversee the major policies and decisions of the corporation.
- A corporation is owned and established under the corporation Code and
regulated by the SEC. The shareholders of a corporation are also registered
with the SEC and are assigned at least one share of the company stock.
- Their liability is only up to the extent of their share capital. The minimum paid-
up capital required of corporations in the Philippines is 5,000 pesos.
- Corporations are subject to tax, which is separate from the individual taxes of
its shareholders.

TWO TYPES OF CORPORATION

1. STOCK CORPORATION- has a capital stock divided into shares and dividends.
Surplus profits are given to shareholders depending on the number of shares held.

2. NON-STOCK CORPORATION – does not issue shares of stock and is

established primarily for public interest such as foundation for charitable, educational
, social, cultural, and other similar purposes.

ADVANTAGES AND DISADVANTAGES OF A CORPORATION

ADVANTAGE: One of the advantages of a corporation is its limited liability to its

shareholders. They can be held accountable for their individual investments of
shares in the corporation.
- The corporation can deduct the benefits it provides to its employees
and consider them as expenses. It also has general stability since the
death or withdrawal of one shareholder does not result in its
dissolution.

DISADVANTAGE: The process of forning the corporation or incorporation is more

complicated than forming a sole proprietorship and partnership. A corporation is
closely monitored by the government and other local agencies like the SEC.
FOREIGN BUSINESS ORGANIZATIONS

In the Philippines, the government recognizes four forms of foreign business

organizations. These businesses are incorporated based on foreign laws and
considered representatives of foreign corporations. They are regulated by the
government.

BRANCH OFFICE- is organized to do the activities of the lead office from the host
country. The minimum paid capital of a branch office is 200,000 US DOLLARS. This
can be lowered to 100,000 US DOLLARS if advanced technology is involved or at
least 50 employees are directly employed. Ut required to register with the SEC.

REPRESENTATIVE OFFICE- fully supported by the head office and does not obtain
funds from its main office overseas. It deals directly with the clients of the parent
company and engages in business activities such as communication, promotion of
products, and quality control of products for export. The initial minimum inward
remittance is 30,000 US DOLLARS for operating expenses. It should be registered
with the SEC.

REGIONAL HEADQUARTER- only performs activities that primarily involved

supervision, communication, and coordination. It serves as a coordinating center for
its subsidiaries, affiliates, and branches in the region and acts as an administrative
branch.

REGIONAL OPERATING HEADQUARTERS- performs the following services to its

affiliates, subsidiaries and branches in the Philippines. It derives its income from its
activities in the country. The required capital is 200,000 US DOLLARS as one time
payment.

1. administration and planning

2. Acquisition of the raw materials
3. Marketing
4. Technical support and communications
5. Research and development

CLASSIFICATION OF BUSINESSES

1. SERVICE BUSINESS- Iis a type of business that provides labor and other
services to customers. Examples are transportation companies like airlines and
shipping lines; professional services like accounting, legal, engineering, and
customer service.
2. MERCHANDISING BUSINESS- is a type of business that purchases products
from other businesses like manufacturers and sells them to customers at a higher
retail price. Examples are grocery stores, supermarkets, car dealers, and electronic
stores.

3. MANUFACTURING BUSINESS- is a type of business where raw materials are

transformed into finished goods through product processing labor and other
manufacturing processes.

LESSON 7: THE ETHICAL ENVIRONMENT OF THE FIRM

BUSINESS ETHICS AND MANAGEMENT

An ethical issue refers to a concern on which an individual must decide based on

several alternatives of what is morally right or wrong. In business, these issues play
a crucial role in decision-making. Any manager should be guided by a set of
business ethics which are moral principles and standards that guide businesspeople
in their transactions. Business Ethics sets the moral standards for any kind of
business function.

PERSPECTIVES ON ETHICS

1. UNIVERSALISM- this is the principle that states that all people should have
certain values like honesty, respect, and cooperation. Universalism requires every
person to always reenact these values in the same way under all circumstances.

2. EGOISM- this is the principle that promotes the greatest good to oneself. It is
focused on the perspective that people ultimately act for self-advancement, no
matter how good their intentions are.

3. UTILITARIANISM- this is the principle that focuses on the greatest good for the
greatest number of people. In this perspective, the ultimate concern of managers is
to make decisions that are beneficial to the greatest number of people.

4. RELATIVISM- this is the principle that states that ethical behavior is based on a
person’s own and other relevant people’s opinions and viewpoints. It acknowledges
that there are different standards for each culture.

5. VIRTUE ETHICS- this is the principle that states that morality depends on the
maturity of a person with good moral character. Based on society’s moral standards,
a moral person can interpret these as the application of personal virtues.

CORPORATE INTEGRITY

- Refers to that sense of “wholeness” created by the right relationships among

the members of the corporation. It has five dimensions: cultural, interpersonal,
organizational, social, and natural.

- Cultural Dimension has the most impact on the internal relationships in the
company. Culture is what unites employees, and cultural aspects such as
 language, rituals, behavioral patterns, and beliefs form the framework that
determines the manner by which people relate to one another.

- The Interpersonal dimension focuses on the relationship among people.

Important relationships that impact the organization include family relations,
civil life, and work relations.

- The Organizational dimension considers the main purpose of the business,

particularly the economic and financial purposes, managerial purposes and
civic purposes.

- The social dimension views the organization as actively engaging with

society. The business must be seen not only as a business leader but also as
a significant social element in society.

- The natural dimension looks into how the organization relates to nature.
Managers should consider how their business operations and activities impact
the environment.

CORPORATE SOCIAL RESPONSIBILITY

Corporate social responsibility refers to the engagement of the business firm in

activities that pursue goals that are beneficial to society. Good corporate social
responsibility leads to a good corporate image. A firm should aim to pursue long-
term goals which will benefit society.

Corporate social responsibility enhances a company’s image. Companies should

always observe good and responsible practices to maintain a positive image among
the public.

Social obligations and social responsiveness pertain to actions that are motivated by
bon- mandatory reasons. An organization, in its conduct of socially responsible
activities, should go beyond the standards imposed by the law and cater to the
greater interests of society.

UNIT 3: PLANNING, ORGANIZING, AND STAFFING

LESSON 8 : PLANNING AND DECISION MAKING

THE NATURE OF PLANNING

- Planning is a primary management function. It involves setting the direction

and goals of an organization, establishing a system that will define the
 activities of the organization, and formulating a plan to ensure that the system
works toward achieving the goals of the organization.

- Planning is significant because it is the initial task that defines all the other
management functions.

- The planning process has five steps: formulate goals, establish courses of
action, assign responsibilities, document and distribute the plan to people
concerned, and acknowledge revisions and adjust plans accordingly.

- Planning at the top management level involves crafting corporate strategies

as conceptualized by the chief executive officers and other members of top
management. Planning at the middle management level is related to a
particular function or process. Planning at the lower management includes the
development of operational strategies by lower-level managers or frontline
supervisors.

- Planning is by nature an intellectual exercise. Because decision-making is a

very crucial part of planning, meticulous deliberation is required. Goals must
be clearly established, and these should adhere to the vision and mission of
the company.

- Planning is also a continuous process. Strategies may be revised and

changed depending on the circumstances, and these changes have an impact
on the operation of the company.

VISION AND MISSION STATEMENTS

- A vision statement describes what the company wants to achieve and where it
wants to go in the future. It determines the course and direction of the
company and identifies which markets, technologies, products, or customers
to focus on.

CHARACTERISTICS OF EFFECTIVELY WORDED VISION STATEMENTS:

1. GRAPHIC- the vision projects to the market the kind of company that the
management wants to create and the kind of company it aspires to be.

2. DIRECTIONAL- It describes the path where the company wants to go and

presents specific plans to move forward in the future.

3. FOCUSED- the vision is very specific, so managers are properly guided on what
to do in terms of resources and strategies.
4. FLEXIBLE- although the vision should be focused, it allows room for managers to
change based on market situations, technological advancements, and customer
preferences.

5. FEASIBLE- the vision is achievable and realistic.

6. DESIRABLE- The vision is clear on why the path is practically sensible and
serves the interests of members in the long run.

7. EASY TO COMMUNICATE- the vision is easy to understand, and articulated, and

can be simplified into a powerful slogan.

MISSION STATEMENT

- Describes a company’s reason for its existence. It answers the question of

why the company exists. A good mission statement identifies the company’s
products and services, the customers’ needs that the company seeks to
satisfy; the target markets that it wants to serve. It should present the
company’s unique identity that distinguishes itself from competitors.

EXAMPLE OF MISSION STATEMENT (APPLE COMPUTER)

Apple is committed to bringing the best personal computing experience to students,

educators, creative professionals, and consumers around the world through its
innovative hardware, software, and internet offerings.

GOALS
- Specific accomplishments or action plans are usually attained after a long
period. There are broader in scope because the intentions are more general
and involve outputs that are intangible and non-measurable.

EXAMPLE: To increase revenues and minimize expenses. To achieve this goal the
company can identify the following objectives: increase annual sales by 10% by
having three corporate accounts every month and minimize expenses by cutting
monthly utility bills by 12%.

OBJECTIVES

- Refers to action plans that involve shorter periods and more measurable
outputs. These tend to be more specific and result in tangible outcomes.

TYPES OF PLANS
1. STRATEGIC PLANS- these plans are designed by the top management such as
the CEO or president. These are usually broad plans based on the company’s vision,
mission, and values, and address the company.

2. TACTICAL PLANS- tactical plans create a specific plan for specific areas of the
company. These plans translate broader plans into functional goals for each area or
department.

3. OPERATIONAL PLANS- these are specific procedures and processes made by

frontline or low-level managers. Involve specific events such as marketing
campaigns, campus, recruitment, and others. It involves the formulation of ongoing
plans that define specific operations of the organization. Ongoing plans can be in
any of the following plans.

a. Policy- a set of principles that guide managers in addressing a particular issue.

b. Rule – a regulation that describes and regulates the functions of an organization.
c. Procedure- a step-by-step process in accomplishing a task or achieving of an
organization.

CONTINGENCY PLANNING

Is a special plan created for unexpected scenarios or changes? All plans no matter
how carefully laid out, are not fully error-free. Contingency plans are made to
manage all possible risks that may arise from the original plan.

TWO TYPES OF CONTINGENCY PLANNING

CRISIS MANAGEMENT PLAN- one of the common types of contingency plan. It is a

plan made in preparation for any kind of crisis such as industrial disasters like fire, or
natural disasters like earthquakes or a typhoon.

- Crisis management involves the establishment of a crisis management team,

emergency communication systems and utilities, an evacuation site, and
procedures for losses and damages.

SCENARIO PLANNING- is another form of contingency planning, The company

formulates plans for both positive and negative scenarios that may arise from the
implementation of plans.

The possible outcomes for each scenario are analyzed in formulating plans and
appropriate steps are identified to address them.

THE PLANNING PROCESS

5 STEPS IN THE PLANNING PROCESS

1. Formulation f goals and objectives

2. Identification of the appropriate courses of action.
3. Assignment of Responsibilities
4. Documentation and distribution of the plan to the people concerned
5. Review of the plan

FACTORS TO CONSIDER ENSURING THAT THE PLANNING PROCESS GOES

SMOOTHLY

1. The firm must align its plans with the vision and mission to determine the direction
the company wishes to take.
2. Environmental scanning is done as it provides essential information that will guide
planners. SWOT analysis can be conducted by the planners of the company to
identify internal and external factors that may affect the implementation of the
proposed plan.
3. The company should ensure that may have adequate resources that will enable
them to realize its plans.

PLANNING AT DIFFERENT LEVELS IN THE FIRM

TOP-LEVEL. MANAGEMENT PLANNING

- The corporate strategy is usually conceptualized by the chief executive officer

and the other members of the top management. A comprehensive and
detailed plan should be formulated since it will be the backbone of subsequent
plans.

- It is essential for a diversified company or a company with multiple

businesses.

- It is needed for crucial tasks such as identifying which industries a company

will invest in or which business ventures it should undertake in the future.

- The top management also formulates the general business strategy. This is
concerned with building a competitive advantage for a single business unit of
a diversified company.

MIDDLE-LEVEL MANAGEMENT PLANNING

- A functional strategy determines a particular function or process and is

formulated by the middle- level management officers. The one responsible for
crafting a functional strategy is usually the manager in charge of the
department.

LOW – LEVEL MANAGEMENT PLANNING

- An operational strategy is a narrower and more focused strategy formulated

by low- level managers or frontline supervisors.
- Operational planning requires the identification of resources that can be
utilized to achieve the outlined plans and goals.

FINANCIAL RESOURCES
 - Include the capital or investment that a company needs to start and sustain
the business.

HUMAN RESOURCES

- Are the company’s primary assets and are composed of employees who
possess the skills and competencies needed for the specific tasks and
operations.

PHYSICAL RESOURCES

- Includes production facilities, distribution channels, and information

technology systems that enable the execution of strategies.

PLANNING TECHNIQUES AND TOOLS: A QUALITATIVE TECHNIQUE

1. BRAINSTORMING- this is a common technique used by groups of planners in

selecting a common solution for a problem. It stimulates thinking and allows the
group to work together in generating ideas.

2. NOMINAL GROUP TECHNIQUE - this is a highly structured method that allows

members to give their own inputs based on the agenda. The structured and formal
nature of this method restricts personal discussions among group members.

3. DELPHI TECHNIQUE- this is also a highly structured technique like the nominal
group technique. This technique does not require a meeting. Rather the group
leader distributes questionnaires to all group members to collect and assimilate their
ideas. In this technique, the participants in planning do not need to know each other.
It is the group leader that facilitates the collection of data and manages the flow of
information.

QUANTITATIVE TECHNIQUE IN PLANNING

1. DECISION TREE- it is an excellent tool for weighing different alternatives. It

consists of a graph showing potential and alternative decision paths for the proposed
plan. This method is especially useful for decisions that involve a succession of small
decisions.
2. PAYBACK METHOD- managers use this method in evaluating alternatives in
purchasing equipment, furniture, and fixtures. Managers consider certain factors
such as length of use or utility, warranties, cost of repair, maintenance cost, and
sales generated for a specific period before buying the product.

DECISION MAKING AND THE COMMON TYPES OF DECISION MODELS

Decision-making is a major aspect of planning, and the manager can choose to use
one of three decision models. The type of decision model used can have a
significant effect on determining the goals and strategies that will be implemented by
the company.

1. RATIONAL OR LOGICAL DECISION MODEL

- this process involves a logical step-by-step analysis of several possible contributing
factors in making the decision.

1. Identify the problem.

2. Identify the decision criteria
3. Assign weights to the criteria
4. Formulate alternative courses of action
5. Choose the best alternative
6. Implement the chosen alternative
7. Evaluate the result

In the rational decision model, the human mind has its limits in gathering and
processing information needed to solve complex problems. Thus, a manager may
not be able to solve complex problems in a logical manner. This phenomenon is
called bounded rationality. To address this limitation, managers rely on decision
heuristics- also known as the “rule of thumb”

A widely used decision heuristic is the 80-20 rule. This rule states that 80 percent of
the consequences of a phenomenon is rooted in 20 percent of the causes.

INTUITIVE DECISION MODEL

Managers do not use objective methods in decision-making but instead, use their
“gut feeling” and instincts. It is most suited for managers who have several years of
managerial experience. This decision model has a high rate of success, especially if
done by an experienced manager.

PREDISPOSED DECISION MODEL

- The manager once he or she decides on a solution, will no longer look for
alternative solutions. The chosen solution is considered the most acceptable
 and effective solution and the managers then gather the needed resources to
implement the decision.
- This model is the weakest since the manager makes a unilateral, snap
decision.

COGNITIVE BIASES

- This refers to the tendency to look at situations based on subjective standards

or perspectives. It often leads managers to make wrong, illogical conclusions
regarding certain situations and people. The following are example of
cognitive biases.

1. ESCALATING COMMITMENT- this type of error happens when a manager,

despite his or her knowledge of a project’s failure, continues to acquire more
resources to pursue the project instead of abandoning it. The manager does this
due to a feeling of personal responsibility regarding the project.

2. PRIOR HYPOTHESIS BIAS- this happens when a manager holds on to his or her
prior belief that a project will succeed even when evidence to the contrary has been
provided.

3. REPRESENTATIVENESS- It is the tendency to generalize based on a small

sample or a single experience. This happens every time a new product becomes
popular and starts a trend.

4. REASONING BY ANALOGY- it refers to the tendency to conclude that the results

of one situation can be repeated in a similar situation.

5. ILLUSION OF CONTROL- It is a type of error that many top-level managers

commit when they become overconfident regarding their ability to solve problems.
This attitude clouds their judgments and eventually leads to prior decisions.

6. FRAMING BIAS- this kind of bias correlates the outcome with how a problem or
decision is framed. In business, the wrong framing of a simple aspect of a business
can result in problems that will cost a company its profits.

7. AVAILABILITY ERROR- this error is committed by managers when they

immediately use available resources on a project that is expected to immediately
provide profit, rather than holding off and waiting for a later opportunity that will
generate even greater profit.

CONTEMPORARY STRUCTURED DECISION-MAKING MODELS

1. KEPNER- TREGOE MATRIX MODEL

 - This model offers a systematic way of evaluating alternatives by implementing
a rational process of analyzing aspects of a situation or problem. It aims to
remove the pressure from planners and minimize the risks of chosen
alternatives.

- It is a rigorous process and requires preparation from managers who wish to

employ the model in their planning. Evaluation of the alternatives and risk
assessment is time-consuming. Managers should carefully weigh the factors
that contribute to the problem and how these, in turn, will affect the decision
that will be implemented.

THE FOLLOWING ARE THE FOUR BASIC STEPS:

1. SITUATION APPRAISAL- in assessing the situation, the manager clarifies

aspects of the scenario and outlines possible causes.

2. PROBLEM ANALYSIS- the root cause of the problem is identified. Also, the
manager analyzes how the cause brought about the problem.

3. DECISION ANALYSIS- various solutions and courses of action are identified and
evaluated by conducting risk analysis. The analysis ensures that all possible
consequences of all alternatives are identified.

4. POTENTIAL PROBLEM ANALYSIS- a possible final decision is determined and

scrutinized. The prons and cons of implementing the chosen alternatives are
identified.

VROOM- YETTON- JAGO DECISION MODEL

This model was originally developed by Victor Vroom and Philip Yetton 1973, and
revised in 1988 in collaboration with Arthur Jago. This model focuses not on
identifying possible decisions, but on selecting the best leadership style suited for
planning and decision making. This model identifies five leadership styles based on
the situation and the involvement required of a member of the group in the decision-
making process.

1. AUTOCRATIC 1 (A1)- the leader is the sole decision-maker. Using all the
information available, the manager makes the decision for the firm.

2. AUTOCRATIC II (A2)- The manager gathers pertinent information from members

of the group but they do not know the purpose of such information. There is still no
involvement from the group members.
3. CONSULTATIVE I (C1)- this leadership style lets the group members know the
problem situation but the final decision still rests on the manager.

4. CONSULTATIVE II (C2)- the manager discusses the situation with the group and
gathers suggestions from the group members. The manager makes the final
decisions.

5. GROUP II (G2) – All the group members are responsible for coming up with the
final decision. The manager presents the problem and acts as the facilitator in the
process. He or she lets the group agree on the final selection of the alternatives.

OBSERVE- ORIENT- DECIDE- ACT (OODA) LOOP MODEL

This model was brought about by the application of military tactics in business
situations. It was developed by US AIR FORCE COLONEL JOHN BOYD as a
decision-making model for air combat. According to him, decision-making is
essentially a cycle of actions- observe, orient, decide and act- that an individual does
in quick succession to address a situation.

THE FOUR STEPS INVOLVED IN THE DECISION-MAKING CYCLE FOR THIS

MODEL ARE DEFINED BELOW:

1. OBSERVE- the manager should gather as much information as possible

regarding the business environment. He or she cans the environment and observes
what the competitors are doing and how customers respond to the product or service
the company currently offers.

2. ORIENT- after scanning the environment, the manager should take a closer look
at the information gathered during the first stage. Cultural beliefs, traditions, values
and previous buying preferences of consumers should be carefully studied.

3. DECIDE- the manager now decides and chooses the best possible alternative.

4. ACT- once the alternative is chosen, the manager puts the chosen plan into action
and supervises its implementation.
-THE END-