ORGANIZATION AND MANAGEMENT – MIDTERM LESSON

PLANNING
The Nature of Planning
It 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 function. All levels of management conduct
planning.
Vision and Mission Statements
Vision – describes what the company wants to achieve and where it wants to go in the future
Mission – described a company’s reason for its existence.
Goals and Objectives
Goals - specific accomplishments or action plan that usually attained after a long period
Objectives – refer to action plans that involve shorter period and measurable output

TYPES OF PLANS
Organizational plans can be generally described in terms of comprehensiveness, length of time covered
or time frame, specificity, and frequency of use.
CHARACTERISTICS OF PLAN
1. Comprehensiveness refers to the completeness of planning coverage; for example: it may start
from plans that cover the entire organization, called strategic plans, up to operational plans that
apply to a particular operational area only. The more comprehensive the plan is, the better, as
this could completely guide both the employer and employee toward the fast achievement of
company goals.
2. 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.
3. Frequency of use refers to the number of times or instances a plan may be used. For example,
strategical plans have single use, while operational 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:

1. Strategic plans – plans that establish the organization’s overall goals and apply to the entire firm;
they are broad in scope and are the responsibility of the CEO, president, and general manager
of the company.
2. 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.
3. 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.
4. 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.
5. 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.
 6. Specific plans – plans that are clearly stated and which have no room for interpretation;
language used must be very understandable
7. Single-use plans – plans used or stated once only as this applies to the entire organization; refer
to the operational plans of the firm.
8. Standing plans – plans that are ongoing; provide guidance for different activities done
repeatedly; refer to the identified activities of operational plans.
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 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. Analyze and choose among action alternatives; list and carefully evaluate possible actions and
choose the alternative most likely to accomplish goals/objectives.
4. Implement the plan and evaluate results; take corrective action and revise plans as needed.

FORMS OF BUSINESS ORGANIZATION

The form of a business organization may depend on its purpose, nature of operations, and resources.
However, a business organization’s form may change with the changing times and the demands they
present.

Change is constant and organizations continue to undergo various changes to ensure effectiveness,
efficiency, and relevance in the world of business.
Simple business organizations – these refer to business organizations with few departments, centralized
authority with a wide span of control, and with few formal rules and regulations. These are easy to
manage because of their simple form. However, change of form follows as the company expands its
operations.
Functional business organizations – these pertain to business organizations that group together those
with similar or related specialized duties that introduce the concept of delegation of authority to
functional managers like the personnel manager, sales manager, or financial manager but allow CEOs
to retain authority for strategic decisions.
Divisional business organizations – these are business organizations made up of separate business units
that are semi-autonomous or semi-independent, with a division head responsible for his or her unit’s
performance In other words, each division has its own functional organization and its own general
manager; however, the central headquarters management maintains responsibility for the delineation
of organizational goals of the individual divisions.
Profit business organizations – these are business organizations designed for the purpose of achieving
their organizations’ mission, vision, goals, and objectives and maintaining their organizational stability
through income generation and profit-making activities. Immediate revenues or cost factors account
for their success or failure.
Nonprofit organizations – these are business organizations designed for the purpose of achieving their
organizations’ mission, vision, goals, and objectives, providing service to clients without expecting
monetary gains or financial benefits for their endeavors. Their success or failure may be measured by
the high or low evaluation scores they obtain.
TYPES OF ORGANIZATION STRUCTURE

An organization structure is a system made up of tasks to be accomplished, work movements from one
work level to other work levels in the system, reporting relationships, and communication passageways
that unite the work of different individual persons and groups. The types of organizational structures
include:
a. VERTICAL STRUCTURE - Vertical organizational structure is a pyramid-like top-down
management structure. These organizations have clearly defined roles with the highest level of
leadership at the top, followed by middle management then regular employees.
b. HORIZONTAL STRUCTURE - Horizontal organizational structure is a flat management structure.
Organizations with these structures often have few managers with many employees, and they
allow employees to make decisions without needing manager approval.
c. NETWORK STRUCTURE - The network structure is a newer type of organizational structure
viewed as less hierarchical (i.e., “flatter”), more decentralized, and more flexible than other
structures. In a network structure, managers coordinate and control relationships that are both
internal and external to the firm.

ORGANIZATION THEORIES

There are two main classifications of theories regarding organizational design according to Robbins
and Coulter (2009): traditional and modern. Traditional pertains to the usual or old-fashioned ways,
while modern refers to contemporary or new design theories.
Traditional organizational design theories include:
SIMPLE - This organizational design has few departments, wide spans of control, or a big number of
subordinates directly reporting to a manager; has a centralized authority figure and has very little
formalization of work; usually used by companies that start out as entrepreneurial ventures.
FUNCTIONAL - This organizational design groups together similar or related specialties. Generally,
functional departmentalization is utilized and put into practice in an entire organization. For example:
A marketing firm that markets cars and related products like tires, car batteries, and accessories.
DIVISIONAL - This organizational design is made up of separate business divisions or units, where the
parent corporation acts as overseer to coordinate and control the different divisions and provide
financial and legal support services.

Modern organizational design theories include:

TEAM DESIGN
In team design, the entire organization is made up of work groups or teams. Its advantages include
empowerment of team members and reduced barriers among functional areas. It also has
disadvantages, including a clear chain of command and great pressure on teams to perform.
MATRIX-PROJECT DESIGN
Matrix design refers to an organization design where specialists from different departments work on
projects that are supervised by a project manager. This design results in a double chain of command
wherein workers have two managers—their functional area manager and their project manager—who
share authority over them.
FORMAL AND INFORMAL ORGANIZATIONS
Whether an organization is formal or informal is determined by the kind of relationships that prevail in
each organization type.
Formal organizations are characterized by hierarchical and reporting relationships among groups or
members. On the other hand, informal organizations consist of informal groups born out of the need
for social affiliation.
Both formal and informal organizations may exist in the same organization structure.

Formal organizations and informal organizations both have functions and advantages that benefit the
organization and its members.
Formal organizations have the following function:
1. Accomplish goals that require cooperation or collaboration among formal groups in the
organization;
2. Produce or bring about new and creative ideas and solutions to company problems;
3. Coordinate interdepartmental activities;
4. Implement company rules/regulations and policies; and
5. Orient/train new employees.

Meanwhile, informal organizations’ function includes the following:

1. Satisfy the members’ need for affiliation;
2. Give the individual members a chance to develop their self-esteem;
3. Give individual members an opportunity to share their ideas;
4. Lessen individual members’ insecurities; and
5. Provide a mechanism to solve members’ personal and interpersonal
problems.