Objectives:

1. Discuss the nature of planning;

2. Compare and contrast the different types of plans;
3. Describe planning at different levels of the firm;
4. Apply appropriate planning techniques and tools;
and
5. Formulation a decision from several alternatives
Function of Management
POSDICON
1. Planning
2. Organizing
3. Staffing
4. Directing
5. Controlling
PLANNING
 PLANNING
is a process that involves the
setting of the organization’s
goals, establishing strategies for
accomplishing those goals, and
developing plans of action or
means that managers intend to
use to achieve organizational
goals.
 PLANNING
 It is the first management function and a
very essential component of management,
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
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 or expected future
situations.
 Two Basic
Components of Planning
1. GOAL
2. PLAN
 DIFFERENCE BETWEEN GOALS AND PLANS

GOAL-SETTING is the
identification of targets
or desired ends that
management wants to
reach.
 DIFFERENCE BETWEEN GOALS AND PLANS
PLANS are the
actions or means that
administrators/
managers intend to
use to achieve
organizational goals.
 DIFFERENCE BETWEEN GOALS AND PLANS
In short, goals serve as the
foundation of planning.
Goals precede plans
because knowing the
desired targets is a must
before establishing plans
for reaching them.
 VISION
A mental image of what the
organization will be in the future,
as desired by the company
management and employees. A
vision can be expressed as the
state in the future of what the
organization’s may be.
 MISSION
Basic purpose of an
organization and range of
their operations. It is an
enduring statement of
purpose of an organization’s
existence that distinguishes
itself from others.
 VALUES
The fundamental and
shared beliefs that will
provide the organization’s
behavior in meeting its
objectives and in dealing
with others.
 OBJECTIVES
Steps needed in
order to attain
desired ends.
 IMPORTANCE OF PLANNING
1. It provides direction to
all of the organization’s
human resources – both
managers as well as
employees.
 IMPORTANCE OF PLANNING
2. It reduces uncertainty; it
compels managers to consider
future events that may affect
their company. Anticipating
changes and their impact will
help managers and other
workers to react to such changes
appropriately.
 IMPORTANCE OF PLANNING
3. Minimizing of wastes will
result if there is proper
coordination of activities due
to planning; negative
practices, ineffectiveness, and
inefficiencies could be easily
detected and can be
corrected or eliminated.
 IMPORTANCE OF PLANNING
4. Establishing goals and
standards during
planning may be used for
controlling, another
necessary managerial
function.
 PLANNING
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 mainly due to
association of systematic planning
with the excellent financial status of
the organization and higher return of
investments, higher income, and
profit that could be traced to the
excellent performance of its human
resources.
 RELATIONSHIP OF PLANNING TO INDIVIDUAL
AND ORGANIZATIONAL PERFORMANCE
The planning-performance relationship
could also be associated with the time
spent in preparing and executing a formal
organizational or individual plan. A well-
thought-out plan requires a longer period
of preparation; its execution or application
must also be done for a certain period of
time – months or years- before it begins to
affect performance.
DECISION MAKING
MODEL AND GOAL
SETTING
Decision Making Process

H (Healthful) Does this choice present any health

risks?
E (Ethical) Does this choice reflect what you value?
L (Legal) Does this option violate any local, state or
federal laws?
P (Parental Approval) Would your parents approve
of this choice?
Values: are the ideas, beliefs, and attitudes about
what is important that help guide the way you live
Steps to Decision Making
Step 1- State the situation
Step 2- List the possible options
Step 3- Weigh the possible outcomes
Step 4- Consider your values
Step 5- Make a decision and take
action
Step 6- Evaluate your decision
 Goal Setting There are different types of goals.
Long Term Goals
Cover a longer time period Have multiple
necessary steps to accomplish Have larger return
in self esteem
Short Term Goals
Fairly easy to accomplish Usually don’t take
much time to see them through Are often used to
help accomplish long term goals
Goal Setting: Action Plan
Step 1- Select a goal to work on
Step 2- List what you will need to do to reach
the goal
Step 3- Identify sources of help and support
Step 4- Set a reasonable time frame for
reaching you goal
Step 5- Establish checkpoints to evaluate your
progress
Step6- Reward yourself after reaching your
goal
PLAN S.M.A.R.T. CONCEPT
SPECIFIC - What, Why, and How
MEASURABLE
ACTION ORIENTED
REALISTIC
TIMELY
SMART Goals
 S-Specific: state clearly and concisely what you want to
accomplish
 M-Measurable: state what you want and when you want it. They
enable you to measure your progress at any point along the way.
 A-Action Oriented: state how they will be achieved. They specify
what you will do to reach your goal.
 R-Realistic: are possible. They are attainable, considering the
resources and constraints related to your situation.
 T-Timely: have a specific deadline. They allow reasonable time to
achieve them, but not so much time that you lose focus or
motivation.
BASIC STEPS IN
PLANNING
If you have a clear idea of where you are
and where you want to go, business-wise,
you can develop a realistic, achievable
plan to get there. The management
planning process helps your company
through the steps of defining a desired
outcome and developing a strategy to
achieve it. Setting this planning process in
motion helps you move forward with
clarity, and saves you wasted time,
energy and capital.
 1. ASSESS YOUR SITUATION
To know where you want to go, you
must first understand where you are.
Gather data about your company's
present situation, including sales figures
and customer feedback. Identify the
company's strengths and weaknesses,
soliciting both the internal voices of
your staff and the external voices of
your clients.
 2. SET PRIORITIES
This refers to existing conditions within and
outside the organization. Those within the
organizations are funds, facilities, policies,
personnel resources, and attitudes and values of
top management.
Those outside the organization are the external
factors. Both internal and external environments
certainly affect the organizational objectives.
Thus, objectives must be tailored to the
environments of the organization.
 3. Set Goals
Use the vision you have crafted to
create measurable goals.
For example, if you value customer service, you may
work toward the goal of responding to every piece of
customer feedback; if you're committed to
environmental values, you may set the goal of having a
carbon-neutral workplace in three years. Be as clear and
specific as possible when creating your goals, using
numbers to measure progress and success, and charting
timelines for achieving your objectives.
 4. CREATE ACCOUNTABILITY SYSTEMS
Develop systems for evaluating progress as you
work toward achieving the goals you have set.
Put different managers and staff members in
charge of domains, such as tracking sales
figures. Create a chain of accountability
showing who is ultimately responsible for
different outcomes. Have backup plans so you
can shift gears and dedicate additional
resources if the process isn't going according to
plan.
 5. Evaluate and Review
Create formal protocols for assessing your progress.
Bring as many voices as possible into this evaluation
process, and encourage honesty and objectivity.
Assess how well you are progressing toward your goals,
but also be open to reassessing the goals themselves,
as long as you do so in ways that are still consistent with
your long-term vision. Technologies and circumstances
may change, making your goals less achievable or
relevant. But if you do revisit your goals, do so with your
vision in mind so you can find other ways of expressing
it in your work.
NATURE OF
PLANNING
 1. Focuses on Achieving Objectives:
Management begins with planning and planning
begins with the determining of objectives. In the
absence of objectives no organization can ever
be thought about. With the determining of
objective, the way to achieve the objective is
decided in the planning.
In case, it is necessary to change the previously
decided course of action for the attainment of
objectives, there is no hesitation to do so. It is
thus clear that planning is helpful in the
attainment of objectives.
 2. Primary Function of Management
Planning is the first important
function of management. The
other functions, e.g., organizing,
staffing, directing and controlling
come later. In the absence of
planning no other function of
management can be performed.
 3. Pervasive
Since the job of planning is performed by the managers
at different levels working in the enterprise, it is
appropriate to call it all-pervasive. Planning is an
important function of every manager; he may be a
managing director of the organization or a foreman in a
factory.
The time spent by the higher-level managers in the
process of planning is comparatively more than the time
spent by the middle-level and lower-level managers. It
is, therefore, clear that all the managers working in an
enterprise have to plan their activities.
 4. Continuous
Planning is a continuous process for the
following reasons:
(a) Plans are prepared for a particular
period. Hence, there is need for a new plan
after the expiry of that period.
(b) In case of any discrepancy plans are to
be revised.
(c) In case of rapid changes in the business
environment plans are to be revised.
 5. Futuristic
Planning decides the plan of action what is to be
done, how is it to be done, when it to be done, by
whom is it to be done all these questions are
related to future. Under planning, answers to these
questions are found out.
While an effort is made to find out these answers,
the possibility of social, economic, technical and
changes in legal framework are kept in mind.
Since planning is concerned with future activities,
it is called futuristic.
 6. Involves Decision Making
Planning becomes a necessity when
there are many alternatives to do a job.
A planner chooses the most appropriate
alternative. Therefore, it can be asserted
that planning is a process of selecting
the best and rejecting the inappropriate.
It is, therefore, observed that planning
involves decision making.
 7. A Mental Exercise
Planning is known as a mental
exercise as it is related to thinking
before doing something. A planner
has mainly to think about the
following questions:
(i) What to do? (ii) How to do it? (iii)
When to do it? (iv) Who is to do it?
TYPES OF
PLANS
 1. ORGANIZATIONAL PLAN
A comprehensive plan for
the entire organization
covering time frame,
specific purpose, frequency
of use, and others.
 2. STRATEGIC PLAN
A strategic plan is an outline of steps designed
with the goals of the entire organization as a
whole in mind.
Strategic plans look ahead over the next two,
three, five or even more years to move the
organization from where it currently is to where it
wants to be.
top level management develops the directional
objectives for the entire organization.
 3. TACTICAL PLAN
a tactical plan is concerned with what the lower
level units within each division must do, how they
must do it, and who is in charge at each level
Tactics are the means needed to activate a
strategy and make it work
Tactical plans are concerned with shorter time
frame and narrower scopes than are strategic plans
These plans usually span one year or less
 4. OPERATING PLAN
Day to day decision making
Operations controlled against
standards and rules
Control via weekly/monthly
reports
The implementation of the
operational plan!
 Main types of
OPERATIONAL PLAN
A. Single-use plan
B. Standing Plan
 A. SINGLE-USE PLAN
-developed to carry out a
course of action not likely
to be prepared in the
future
 B. STANDING PLAN
 Developed for activities the recur regularly
over a period of time
Ex. 1. Policy, which is a guideline for making
decisions.
2. Procedure, which are step-by-step
instructions for performing an activity or task.
3. Rule, which is a specific plan for
controlling human behavior at work.
 SHORT-TERM PLAN
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.
 LONG-TERM PLAN
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.
OTHER TYPES OF PLANS
Plans can be classified in a number of
ways on the basis of frequency of use,
purpose and the time horizon.
1. Production Plans 5. Functional Plans
2. Financial Plans 6. Departmental Plans
3. Marketing Plans 7. Group Plan
4. Manpower Plans 8. Section Plan
5. Short-term Plan 10. Long-term Plan
 PLANNING AT
DIFFERENT LEVELS
IN THE FIRM
Planning exists in all
levels of the business
organization. Basically,
they use the same
business process.
 TOP-LEVEL MANAGEMENT
Perform long-term planning.
Their scope of planning
encompasses the whole
organization. Examples of their
planning are the corporate
mission, objectives, and major
policies and strategies.
 MIDDLE-LEVEL MANAGEMENT
Concerned with the
planning of the more
specific objectives of
implementing the general
goals of top-level
management.
 FIRST-LEVEL MANAGEMENT
Responsible for the
scheduling of workers
and developing the
procedures for doing the
job.
The success of planning
from the different levels of
management depends
on close coordination
and harmony.
 PLANNING
TOOLS and
TECHNIQUES
 1. QUANTITATIVE PLANNING TOOLS

Numerical data in which

sufficient information is
available to determine
relationships between
variables is used.
 1. QUANTITATIVE PLANNING TOOLS
a. PERT stands for Program
Evaluation and Review
Technique. It is used to
schedule and control projects
whose completion cannot be
precisely determined.
 1. QUANTITATIVE PLANNING TOOLS
b. CPM means Critical Path
Method. It is used to
schedule and control
projects whose completion
can be precisely
determined.
 1. QUANTITATIVE PLANNING TOOLS
Both PERT and CPM are applied to
control time of project completion by
scheduling the tasks involves. Both
techniques can save time and
consequently costs of production.
This enables the business enterprise
to reduce its prices in order to
generate more sales.
 1. QUANTITATIVE PLANNING TOOLS
c. BREAK-EVEN ANALYSIS compares total
revenue (TR) with total cost (TC).
TR = price x quantity value
TC = fixed cost + variable cost
When TR=TC, it is break-even.
It means that incomes and expenses are equal. TR
> TC = PROFIT. TR < TC = LOSS.
The use of break-even analysis enables the
business enterprise to determine at what point
incomes from sales exceed expenses.
 2. QUALITATIVE PLANNING TOOLS

This do not use numbers like

arithmetic or mathematics.
These are based on expert
judgment, opinion or
experiences.
 2. QUALITATIVE PLANNING TOOLS

a. DELPHI TECHNIQUE
forecasts are performed
by consultants, or
specialists who are
outsiders.
 2. QUALITATIVE PLANNING TOOLS
b. BRAINSTORMING
a group effort in solving a problem.
Participants are experts who are
employees of the organization. They
feel free to discuss their ideas or
suggestions. After the session, the
best ideas are selected by the
manager.
 2. QUALITATIVE PLANNING TOOLS
c. QUALITY CIRCLE
A cooperative effort of employees and a
supervisor. This technique originated from
Japan which intended to increase productivity
or employees, and to enhance more their
cooperation in cost reduction methods.
Sessions are conducted regularly, almost daily
to discuss only one problem the supervisor, or
participants want to solve.
 2. QUALITATIVE PLANNING TOOLS
d. MANAGEMENT by OBJECTIVE (MBO)
A one-on-one approach which requires face-
to-face meetings between managers and
subordinates. They act together to establish
common objectives which are directed
towards the attainment of corporate
objectives. Follow-up sessions are made to
check progress, and to make adjustments if
needed. The manager provides support to
improve performance of the subordinates.