Module 7 Planning

Objective: To be familiar with the concept, nature, and process of

planning
1. What is the concept of planning
-Develop goals and objectives which serve as the criteria by
which to judge organizational effectiveness
-Basis for organizing, leading, and controlling
2. What is the definition of planning
-Process of conceptualizing an organization vision, mission,
goals, and objectives based on environmental trends and
organizational capabilities
-Deciding how best to achieve them within a certain period of
time
3. What is a plan?
-A navigational tool that maps out a destination and charts a
course to get there
CEO seeks answers to the following:
- In what direction should the
organization be going?
b. -In what direction is the organization
going now?
c. -Should something be done to change
this direction?
-Is the organization continuing in an
appropriate or right direction?
What is the purpose of planning
-To make decisions today based on
trends
-To reduce guesswork when making a
decision
-To clarify consequences of management
decisions
-To facilitate the accomplishment of goals
and objectives
What are the qualifications of a planner
-Experience and conceptual skills to
understand how all the parts of the
organization function and interrelate
-Knowledge of the external environment
that could affect the future of the
organization and the expertise to
determine how to react to the trends to
maximize success.

What are the duties of a planner

-Overseeing the planning process
-Evaluating developed plans
-Solving planning problems
a. weakness in dealing with
competition
b. declining sales volume
c. inventory problems (delayed
deliveries, increased waste or usage,
pilferage, spoilage, increased sales
d. high operating expenses
e. high capital investments in
equipment

4. What are the elements of the plan Managers make decisions

-based on their past experiences
-What has to be done? -based on their feelings and emotions
-When will it be done? -based on skills, knowledge, and training
-based on data from subconscious mind
-How will it be done? -based on ethical values or culture
-Who will do it?
Embracing new ideas
-We form habits of thinking and often
reject new thinking because we view
change as risk
-If we are cautious by nature, we are not
likely to think be skeptical of new ideas
-To prevent a debate, do not challenge
conclusions but ask for the basis of the
conclusion
 -Always challenge assumptions
-Encourage new thinking by
brainstorming
5. What are the approaches to planning according to style What are the characteristics of good
objectives?
a. Informal Planning -SMART
-intuitively deciding on objectives and activities needed
to achieve them
b. Formal Planning
-rationally deciding on objective and activities using
rigorous and systematic
investigation
c. Scenario Planning/Predetermined Plans
-provide assumptions on which an alternative to
reaching objectives is based
6. Approaches to Planning according to structure
a. Centralized top-down planning: strategic planning is first
done by executives, tactical planning follows to reinforce
strategic objectives, and operational planning is
accomplished after tactical planning.
b. Decentralized bottom-up planning: decisions at lower
levels are aggregated at higher echelons to form a
comprehensive company plan
c. Team planning: relies on task force teams comprising
managers and planning specialists temporarily assigned
responsibilities for formulating plans
7. Planning Process
a. Scan and analyze the environment
- external
 Industry trends/Competitor intelligence
 Trends/Forecasting
 Best practices/Benchmarking
- internal environment
b. Review/Prepare a Mission Statement
c. Set strategic goals and objectives
-Strategic
 Growth: Increase sales by 100% in three years
Internal expansion through new products and new
markets
External expansion through diversification and
joint venture
 Profits: double profits in 3 years
 Share: increase market share by 30% in 3 years
d. Develop and implement plans
-Tactical (Programs)
 Marketing:
Product development program
Market penetration program
Market expansion program
  Manufacturing
Consolidate into one the divisions’ manufacturing
Sell off old and unprofitable plants
Streamline list of suppliers
 Administration
Build an IT infrastructure to share information
across the organization
Provide early retirement plans for selected people
-Operational (Schedules)
 Launch the new product by the third quarter
 Production plans must be set by the second
quarter
 Prototyping must be finished by the first quarter
 Market testing must be finished and done by the
first quarter
 Set up the new joint venture on January
e. Establish control systems
 Financial controls
 Market controls
 Clan controls

8. Correlate planning hierarchy, planning time horizon, and level of management

Planning hierarchy Planning time horizon Level of management

Mission For the lifetime of the BOD
-Why does the organization exist? organization
Strategic Plans Long-term (3-5 years) Top Management
-Grand strategies, profitability, and -Facilitating goals and
position in the industry objectives
-Concerned with Social, economic,
political, technological trends
-Concerned with future technology,
energy resources, changes in
productivity, cultural changes
Tactical Plans Medium term (1-2 years) Middle Management
-Annual sales, Annual production, -Supporting goals
Annual profits, Annual RND -Divisional responsibilities,
expenditure, Technology internal objectives, annual
development, etc. budget
Operational Plans Short-term (1 – 12 months) Lower Management
-Monthly sales quotas, production -Implementing objectives
cycles
 9. Prioritizing a task
1. Is the task urgent?
2. Is the task routine?

Take
immedia
A
Yes
te action
Task
Complet
Set aside a
time to A
e it today Yes complete

Is there a
task Task
No deadline

Yes
?
Set B
Is it
No realistic
urgent/ deadline Task
importan
t
Allocate
time to
C
Does it
help you
Yes complete
Task Save the
task for
C
No Yes work
efficiently Is the
Yes quiet
tiem Task
Is it No task
necessar
routine
y Don’t do
No
Is the
task No it
necessar
y
10. What are the types and models of planning Don’t do
it
-MBO: management by objectives No
a. Specific goals are set collaboratively for the
organization as a whole and every unit and individual within
it
b. The goals are used as a basis for planning, managing
organizational activities, assessing and rewarding
contribution
-Single use plans: used once to achieve unique objectives or to
achieve objectives seldom repeated
a. Program: multiple activities orchestrated to achieve
one important objective; clear beginnings and definite
endings (for a student – academic programs)
b. Projects: single objective; not repeated; short
 period
c. Budgets: describe in numerical terms resources
allocated to organizational activities;identify resources,
such as money, materials, human resources, and
overhead expenses allocated to an activity
Revenue budget – future sales
Cash budget – forecasts cash on hand and how
it will needed
Expense budget – list primarily activities and
allocates amount to each
Profit budget – combines revenue and expense
budget of various units to determine each unit’s
profit contribution
Variable budget,
Fixed budget
d. Schedule: commitment of resources and labor to
tasks with specific time frame
-Standing plans: plans that are used on a continuous basis to
achieve consistently repeated objectives
a. Policies: general framework for decision making
(customer policy, hiring standards,
purchasing policy – alerts employees of their
obligations)
b. Procedures: lay down the “how” of doing
activities, the step by step ways of doing certain
tasks (reinforce policy)
c. Rules: spell required action or inaction, allowing
no discretion
d. Quality Management (PDCA)
-Contingency plans: alternative set of objectives and activities
that can be implemented if circumstances change so drastically
as to make the preferred plan infeasible.
a. Changes in government legislation,
b. tax regulations,
c. access to raw materials,
d. cost of resources such as oil/energy,
e. availability of personnel with needed skills,
f. high interest rates,
g. technological changes/obsolescence,

11. Types of objectives

-Major objectives:
a. Profitability
b. Dividend payments
c. Growth through long-range technological/market
 innovations
d. Social responsibility for employee health and safety,
public safety
e. Social considerations for ecology, pollution,
employment, economy
f. Customer considerations, image of the firm
-Facilitating objectives
a. Product development and RND
b. Equal employment opportunities, affirmative action
c. Market penetration, new customer development,
foreign expansion
d. Advertising and promotions policies, pricing
considerations
e. Cost containment, materials management, inventory,
and purchasing
f. Cash flow management, credit position, payables,
and receivable policies
g. Customer credit, financing of sales, collection
h. Production and quality control criteria
-Supporting objectives
a. Wage and salary administration considerations
b. Personnel management, hiring, training, promotions,
termination
c. Layoff and cutbacks, labor relations, grievances
d. Vacation, holidays, leaves, travel, employee theft,
security
e. Performance appraisal, standards for work,
absenteeism