MODULE 4

Planning
: Concepts
and Discussant:
Aiza C. Colet
BN2ES

Practices
Expectations:
1.To be familiar with the concept, nature, process of and
approaches to planning.
2.To be knowledgeable with the hierarchy, types, and
characteristics of objectives.
3.To know planning hierarchy and planning time horizon
and the corresponding levels of management.
4.To learn about the planning types and models.
5.To know the different kinds of plans.
Develop Creative Thinking
 Embracing New Ideas
 Thinking Positively
 Deciding on Actions
-Assumptions should always be challenged.
-Conventional Thinking should not be rejected just
because it is conventional.
-New ideas are as valuable as any others but should
not be adopted simply because they are new.
Managerial Functions
PLANNING

CONTROLLING

ORGANIZING

LEADING/
MOTIVATION
 Planning: Concept and Definition
Planning is:
 The formal process of conceptualizing an organization
vision, mission and overall goals and objectives and
deciding how best to achieve them within aa short,
medium and long term.
 A function by which managers must decide “what is to be
done, which is to be done, how it is to be done, and who
is to do it.” (George Steiner)
 The process of determining how the management system
will achieve its objectives. It determines how the
 PLAN- a navigational
tool that maps out a
destination and charts a
course to get there.

OBJECTIVE-is the
expectation or result desired
at a future point in time
 PURPOSE OF PLANNING
 Managers plan in order to make decisions today
based on premises of what might happen in the
future.
 Effective planning reduces the guesswork
manager’s face when making decisions.
 To facilitate the accomplishment of enterprise and
objectives.
 Protective Purpose: to minimize risk by reducing
uncertainties surrounding business conditions and
clarifying consequences of related management
actions.
 Affirmative Purpose: to increase the degree of
organizational success.
 PLANNING APPROACHES
1. Informal planning is a process of intuitively deciding
on objectives and activities needed to achieve them
without rigorous and systematic investigation.
2. Formal planning is the process of using systematic
criteria and rigorous investigation to establish
objectives, decide on activities, and formally
document organizational expectations.
3. Predetermined plans provide guidelines for future
activities.
 QUALIFICATIONS OF PLANNERS
• First, they should have considerable practical
experience within their organization.
• Second, planners should be capable of replacing any
narrow view of the organization they may have
acquired while holding other organizational positions
with an understanding of the organization as a
whole.
QUALIFICATIONS OF PLANNERS continuation…

• Third, planners should have the knowledge of

and interest in the social, political, economic,
technological and cultural trends in the external
environment that could affect the future of the
organization.
• The fourth qualification for planners is that they
be able to work well with others.
DUTIES OF PLANNERS
1. Overseeing the planning process.
2. Evaluating developed plans.
3. Solving planning problems.
CEO and Planning
“When the manager must plan, he seems to do so
implicitly in the context of daily actions, not in some
abstract process reserved for two weeks in the
organization’s mountain retreat. The plans of the chief
executive I studied seemed to exist only in their heads
as flexible, but often specific intentions”.
-Henry Mintzberg
Mintzberg found that nearly all executives agreed
that formal planning improves decision making
and reduces errors. Also, the planning environment
is changing with international commerce; intuition
simply isn’t sufficient to capture the essence of
global affairs.
What is Intuition?
Experience-based decisions

Values or ethics- Affect-

based decisions Initiated decisions

INTUITION

Subconscious mental Cognitive-based decisions

processing
As planners, chief executives seek answers to these
broad questions:
• In what direction should the organization be going?
• In what direction is the organization going now?
• Should something be done to change this direction?
• Is the organization continuing in an appropriate or
right direction?
Keeping informed about social, political, economic,
technological, and cultural trends is of utmost importance in
helping chief executives answer these questions.
 Advantages of Planning
•Gives an organization a sense of direction. ...
•Focuses attention on objectives and results. ...
•Establishes a basis for teamwork. ...
•Helps anticipate problems and cope with
change. ...
•Provides guidelines for decision making. ...
•Serves as a prerequisite to employing all
other management functions.
Planning Process
STEP 1: SCAN AND ANALYZE THE ENVIRONMENT

Tools for Environment Scanning

1. Competitor Intelligence- environmental scanning
activity that seeks to identify who competitors are, what
they are doing, and how their actions will affect the
organization.
2. Forecasting- process of predicting outcomes.
-Quantitative Forecasting
3. Benchmarking- the search for the best practices among
competitors or non competitors.
Steps in Benchmarking
 Form a benchmarking planning team.
 Gather internal and external data.
 Analyze data to identify performance gaps.
 Prepare and implement action plan.
 BEST PRACTICES
STEP 2: PREPARE A MISSION STATEMENT
In the second phase of planning, managers define
the organization’s mission statement. Mission is the
organization’s “reason for existence”. Mission
Statement is a broadly stated definition of the
organization’s basic business scope and operation that
distinguishes it from similar types of organization.
STEP 3: SET GOALS AND
OBJECTIVES
Establishing objectives is the
most important phase of the
planning process. Objectives serve
as reference points for every
decision-maker and guide the
organization’s routine activities.
They serve as basis for
performance evaluation when
managers perform the control
GOALS are general statements of what an
organization seeks to accomplish.
OBJECTIVES are specific statements which have
the same purposes as goals.

Establishing goals and objectives serves many

purposes:
• It identifies the basic ends and means to those
goals;
• It provides a sense f direction, decision guidelines
and performance criteria;
• It reduces uncertainty within the organizations.
Assessing Goals & Objectives: Guide
Questions
• What is to be accomplished?
• Why is it to be undertaken?
• What is expected of the parties
involved?
• How wil one know when it is
accomplished?
STEP 4: DEVELOP ACTION PLANS
*Develop alternative plans.
*Identify and develop appropriate programs,
projects, and budgets for the organizational
action plan.
*Stratify plans to assure full coordination of
activities.
*Plan development begins with the ranking of
projects according to how they contribute to
accomplishing one or more of the objectives.
*At strategic level, policy
statements express preferred
goals and objectives.
*At tactical level, procedural
directives reinforce objectives.
*At operational level, action
plan may reflect schedules and
performance budgets.
STEP 5: ESTABLISH CONTROL SYSTEMS
*The final step in planning is to stablish control system that
enable managers to measure and adjust for what actually
happened, as opposed to what they planned.
*Implement the plan with appropriate flexibility and
checkpoints for adaptation.
*Documentation of the plan must be made and communicated
to appropriate management and staff at all levels.
*Actual performance can be measured against to objectives.
ELEMENTS OF THE PLANNING PROCESS OF AN
ONGOING ORGANIZATION

1.State organizational objectives.

2.List alternative ways of achieving objectives.
3.Develop premises on which to base each alternative.
4.Choose the best alternative.
5.Develop plans to implement chosen alternative
6.Put the plans into action. Implement.
 TYPES OF
OBJECTIVES
HIERARCHY OF *Profit Objectives
OBJECTIVES *Growth Objectives

*Strategic Objectives CHARACTERISTICS

*Tactical Objectives OF OBJECTIVES
*Operational Specific
Objectives Measurable
Achievable
Realistic
Time Bound
HIERARCHY OF PLANNING
Missio
n

Strategic plans

Tactical plans

Operational plans
 HIERARCHY OF PLANNING
1.Strategic Planning-Board Level and Top Management
The planning hierarchy describes the delicate
relationship between planning and decision making.
2.Tactical Planning-Middle Management
Middle management is responsible for translating strategic
plan into shorter-term, usually one-year tactical plan.
Tactical plans involve allocating resources to specific
purposes expressed in budgets.
3.Operational Planning-Supervisory Level
Operational planning is accomplished by first-
level supervisors in the firing line of daily
operations. These include shop-level supervisors,
shift supervisors, and individuals in charge of work
groups.
Operational objectives are narrow in scope and
focus on the firm’s internal activities. They are also
short-lived and subject to sudden change.
MANAGEMENT BY OBJECTIVES (MBO)
*Management by objectives is an management
approach that uses objectives as the primary means of
managing an organization.

The MOB Process

Four specific steps are involved in the MBO process:
1.Set goals.
2.Develop action plans.
3.Review progress.
4.Appraise overall performance.
Benefits of MBO
*Participation encourages a more cohesive work
environment and a stronger commitment to objectives
by subordinates.
*High priority activities receive clear and purposeful
attention.
*Better communication is achieved between managers
at various organization levels.
*This enhances collaboration and keeps subordinates
better informed about the plans and activities in other
parts of the organization.
Broad Categories of Documented Plans
Communicating Plans. Planning requires clear
and effective communication at all levels before
performance begins to mirror expectations.
Standing-use plans are plans that are used on
a continuous basis to achieve consistently
repeated objectives.
Shewhart Cycle for Quality Management
Quality practitioners use the Shewhart Cycle – the
planning cycle used in companies that have instituted
quality management; also called PDCA – plan, do,
check, act

Policies
A policy is a statement that provides a general
framework for decision making.
Policies are also instruments of delegation that alert
subordinates to their obligations.
Effective policy statements have three characteristics:
They are clear and understandable, stable over time, and
Major Objectives:
Profitability targets and expectations for investment
efficiency.
Profitability trends including returns to assets and
equity interests.
Dividend payments and commitments to stockholders.
Growth of the firm through long-range
technological/market innovations.
Social responsibility for employee health and safety,
public safety.
Social consideration for ecology, pollution,
employment, economy customer considerations, image
Facilitating Objectives
Product development and research and development.
Equal employment opportunities, affirmative action.
Market penetration, new-customer development,
foreign expansion.
Advertising and promotions policies, pricing
considerations.
Cost containment, materials management, inventory,
and purchasing.
Cash flow management, credit position, payables,
and receivables policies.
Customer credit, financing of sales, collection.
Production and quality control criteria.
Supporting Operations
Wage and salary administration considerations.
Personnel management, hiring, training, promotions,
termination
Layoff and cutbacks, labor relations, grievances
Vacation, holidays, leaves, travel, employee theft,
security
Performance appraisal, standards for work,
absenteeism.
Procedures
Procedures lay down the “how” of doing activities –
the step- by- step ways of doing certain tasks.
Good procedures provide a sequence of actions that,
once completed, fulfilled specific objectives.
 
Rules
Rules spell required action or inaction, allowing no
discretion unlike policies. Rules guide action with out
specifying a time sequence, unlike procedure.
Single-Use Plan
Plan that is used once to achieve unique objectives or
to achieve objectives seldom repeated. 

Program: An Ambivalent Single Use-Plan

A program is a single-use plan comprising multiple
activities supported by budget.
Project:
A project is aa single use-plan with a specific and
uncomplicated short-term objective.
Budgets
a budget describes in numerical terms resources
allocated to organizational activities. A budget
communicates organizational expectations for
results.
Types of Budgets
*Cash Budget
*Revenue Budget
*Expense Budget
*Variable Budget
*Fixed Budget
*Profit Budget
 
Schedule
*A schedule is a commitment of resources and labor to
tasks with specific time frame.
 
Flexibility and Adaptability in Planning
Flexible planning allows for reasonable deviations in
performance, recognizing that wherever human being are
involved, there will be some variation in behavior.
Flexibility in planning suggests nothing more than
using common sense.
Contingency Planning
Contingency plan is a conscious effort to
develop alternative plans to be prepared for
future conditions.
Planning premises are those considerations or
variables taken into account by managers that are
expected to influence a company’s objectives or
its activities.
Comprehensive Planning
Comprehensive planning is the total
involvement of an organization in systematic
planning at all levels to integrate objectives and
coordinate formal planning processes.
Approaches to Planning

*Centralized Top-down Planning

Top-down planning is the prevalent approach in
small and highly centralized organizations.

*Decentralized Bottom-up Planning

Bottom-up planning is an approach to planning
in which authority to establish objectives and
planning responsibilities is delegated to lower-level
managers who are expected to initiate planning
activities.
Team Planning
Team Planning is a participate
approach to planning whereby planning
teams composed of managers and staff
specialists initiate plans and formulate
organizational objectives.
Aiza C.Colet
BN2ES