LA SALETTE OF RAMON, INC.

Ramon, Isabela – 3319 Philippines

S.Y. 2025 – 2026
Tel. No. (072) 323-0550, (072) 323-0454 E-mail: lasaletteoframon@[Link]
Re-Accredited by Philippine Accrediting Association of Schools, Colleges and Universities – Level II

Organization and Management 12

MODULE Lesson 3:
Planning and Organizing
3

Teacher’s Note

This module provides you with specific knowledge and skills necessary to the effective use and
techniques of planning that may be applied in the real world practice.

Find Out!
Target Most Essential Learning Competencies (MELCs):
 Apply appropriate planning techniques and tools in business decision making.
 Analyze the nature of organization and types of organization structures.

PLANNING TOOLS AND TECHNIQUES

There are three categories of planning tools and techniques:

 Techniques for assessing the environment
 Techniques for allocating resources
 Contemporary planning

1. TECHNIQUES FOR ASSESSING THE ENVIRONMENT:

Many larger accounting firms have set-up external analysis departments to study the wider environment in
which they and their client operate.

There techniques helps manager to do that:

1. Environmental Scanning
2. Forecasting
3. Benchmarking

[Link] Scanning: Managers use to screen large amount of information to anticipate and interpret
changes in the environment. Analyzing what is the need of customers and the market survival strategy of the
competitors.
1.1 Competitive Intelligence: Process by which the organization gather information about their competitors and
get answer to question. Who they are? What they are doing? How will they affect us?
1.2 Global Scanning: World markets are complex and dynamic. Managers must focus how he should update
the business.
2. Forecasting: Predict the future events effectively.
2.1 Quantitative Forecasting: Set of mathematical rules to a series of past data to predict outcomes.
2.2 Qualitative Forecasting: Uses judgement and opinions of knowledgeable individuals to predict outcomes.
CPRF (Collaborative Planning, Forecasting and Replenishment) Provide framework for the flow of information,
goods and services between retailers and manufacturers.

Effectiveness of forecasting Helps the managers in decision making

Quantitative
 Time series analysis (Duration to complete)
 Regression models (Predicting a variable by assuming another variable)
 Econometric models (Sales change due to taxation)

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 Economic indicators (using factor to predict e.g GDP)
 Substitution Effect (DVD vs Pen Driver)
Qualitative
 Jury of option (recruiting)
 Sales Force Composition (Predicting next year sales)
 Customer Evaluation (Surveying Dealers)
3. Benchmarking: The search for the best practices among competitors and non-competitors that lead to their
superior performance.
Steps in Benchmarking:

2. TECHNIQUES FOR ALLOCATING RESOURCES:

Managers must focus on the resource allocation before the execution of a work.
Examples:
Financial (equity, debts), Human (skilled labors), Physical (raw materials, equipment), and Intangible (brand
names, reputation)

1. BUDGETING:
o Numerical plans for allocating resources to specific activities.
o Used to improve time, space and use of material resources.

Important of Budgeting:
Organizational Success: Effective budgeting system is a key to organizational success.
Effective Budgeting System: Is a great way to successfully attain the business goals objectives having been
quantified and clearly stated.

Methods to improve budgeting:

 Collaborative and communicate
 Be flexible
 Goals should drive budgets- budgets should not determine goals
 Use budgeting/planning software when appropriate

TYPES OF BUDGETS
Fixed or Static Budget – it refers to an estimate of predetermined incomes and expenditure, which once
prepared doesn’t change with the variations in the activity levels achieved.

TYPES OF FIXED OR STATIC BUDGET

 Revenue Budget – it is forecast of company’s sales revenues and expenditures, including capital related
expenditure. “Project Future Sale”
 Expense Budget – it is forecast all of the elements of a business operating expense, such as salaries, rent,
depreciation, and others. List primary activities and allocates dollar amount to each.

Flexible or Variable Budget – flexible budget is a financial plan created for different activity level. It can be
freely adjusted on the basis of output produced. Takes into account the costs that vary with volume.

TYPES OF FLEXIBLE OR VARIABLE BUDGET

 Cash Budget – is an estimate of the cash flow of an individual or company over a specific period of time to
determine weather cash is being spent productively
“Forecast cash on hand and how much will be needed.”
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 Profit Budget – “combines revenue and expense budgets of various units to determine each unit’s profit
contribution.”

2. SCHEDULING -plans that allocate resources by detailing what activities have to be done. The order in
which they are to be completed who is to do each and when they are to be completed.

2.1 PERT ANALYSIS

A flow chart diagram that despict the sequence of activities needed to complete a project and the time or
costs associated with each activity.
To understand this one must know the following terms:
 Events: endpoints for completion
 Activities: time required for each activity
 Slack Time: time an individual activity can be delayed.
 Critical Path: most time consuming sequence of events.

STEPS IN PERT ANALYSIS:

1. Identify every significant activity that must be achieved
for a project to be completed.
2. Determine the order in which these events must be
completed.
3. Diagram the flow of activities from start to finish.
4. Compute a time estimate for completing each activity.
5. Determine a schedule for the start and finish dates of
each activity and for he entire project.

3. BREAK EVEN ANALYSIS

Used to determine the point at which all fixed costs have been recovered and profitability begins

4. LINEAR PROGRAMMING
Helps in selecting which is the most suitable or optimistic method to find the solution.

DECISION MAKING – is a process which begins with problems and ends with the evaluation of implemented
solution.
8 STEPS OF DECISION MAKING PROCESS SUGGESTED BY ROBBIN AND COULTER (2009)
1. Identify the problem
2. Identify the decision criteria
3. Allocate weights to the criteria
4. Develop alternative
5. Analyze the alternative
6. Select an alternative
7. Implement the chosen alternative
8. Evaluate decision effectiveness

TYPES OF DECISION MAKING

 STRUCTURED OR PROGRAMMED DECISION
Routine almost automatic process. Manager have made the decision many times before there are rules or
guidelines to follow.
 UNSTRUCTURED OR NON-PROGRAMMED DECISION
Unusual situations that have not been often address. No rules to follow since the decision is new. These
decision are made based on information and a manager’s institution and judgement.
DECISION MAKING CONDITIONS
Certainty – a situation in which a manager can make an accurate decision because of the outcome of every
alternative choice in known.
Risk – a situation in which the manager is able to estimate the likelihood (probability) of outcomes that result
from the choice of particular alternatives.,

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 ORGANIZATION

ORGANIZATION – a organization is a collection of people who work together and coordinate their actions to
achieve a wide variety of goals.
Formal Organization – is a system of well define jobs, each bearing a definite measure of authority,
responsibility and accountability.
Informal Organization – is a network of interpersonal relationship that arises when people associate with one
another.

THE NATURE OF ORGANIZATION

 Technology in organization
 Organizational Environment
 The dynamic or organization

1. TECHNOLOGY IN ORGANIZATION
The word technology has been derived from Greek words “techne” meaning art or skill and “logia” in
context of day to day practice “technology” is a distinct word referring to the use and knowledge of humanity’s
tools and techniques.
Technology is one of the central and most significant elements related to effective operations
management in an organization.
The introduction to modern technology greatly enhance the structure of the organization the link
between departments and outside clientele reduce the number of people handling different activities.
Example:
1. Communication are delivered faster and decision making are made right away because of available of data
and information.
2. Secretaries and clerks became obsolete as more technical people are needed in the organizational set up.
3. The presence of specialized staff free the manager from routine activities.
4. The use of computer system for storing the information and data can help monitor the effective performance
of his staff.

2. ORGANIZATIONAL ENVIRONMENT
What is an Organizational Environment?
The organization works within the framework provided by various elements of society. All such
elements which lie outside the organization are called external environment or simply as environment. Also the
organization may create an environment internal to it which affects the various sub-systems of the
organization. The following sectors are the external and internal environment:

1. THE INDUSTRY- The industry includes those organizations operating with the same goals purpose and
products. These organizations are the same business that provides competition. The state of the industry plays
a significant role in the survival of an organization. It helps determine the goals of the organization.
2. THE SOURCE OF MATERIAL AND OTHER PRODUCTION INPUTS- The external environment provide
the material inputs either for the production of new products for internal use in communication. It is important
that the organization maintain good relationship with the suppliers of inputs to operate effectively.
3. HUMAN RESOURCES- Human resources comprise the internal and external environments. Internal when
the employees are hired to do the job necessary for the effective operation of the company. The external
environment when they serve as potential manpower in the company’s expansion program, they organized
themselves into unions that may be favorable or unfavorable to the existence of the organization.
4. THE FINANCIAL SECTOR- Money is the name of any organization. The financial sectors are the banks and
other financial institutions. The availability of money with low interest rates encourages organizations to grow.
Organizations need outside sources of funds to grow fast.
5. THE CUSTOMERS AND OTHER STAKEHOLDERS- The customers buy the goods and services of the
organization. The market influences the growth and expansion of organization. Market expansion increases
the company’s profitability, but if it shrinks the company has to cut back its operation. The stakeholder’s
patronage is necessary in the growth of an organization.
6. THE ADVANCEMENT OF TECHNOLOGY- Technology updates help the organization and diversity
into new products and services. It influences the level of skills and the improvement in the quality of product
and services.
7. THE COUNTRY’S ECONOMICS CONDITION- The general economic condition of the country affects an
organization’s health condition. Unemployment reduces economics activity as there can be an excess supply
of goods in the market. High interest rates and inflation reduces the purchasing power of the people, while the
excess production capacity affects the organizational health conditions.
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8. THE GOVERNMENT- The political system of the country highly effects the organization. The government
regulates business organization. Imposes taxes and passes laws. It imposes conditions on environmental
safety, fair trade, practices, product subsides, label statutes and establishes several guidelines for the
organization to follow. The government regulates the flows of inputs and sometimes provides
protection to sometimes provides protection to some favored organizations.
9. THE SOCIO-CULTURAL ENVIRONMENT- This sector refers to the demographic characteristics of
the society. Demographic condition refers to age, income distribution, the work force educational level and the
place where the people live either rural or urban. Our value system of love for imported goods affects our local
industries.
10. THE INTERNATIONAL COMMUNITY- The international community provides the greatest competition for
quality goods and services. It could provide opportunities to exceed our exports against our imports. We
consume more foreign products due to our value system and our inadequacy to improve our product.
We should create a balance of trade with other countries at present: the backbone of our economy is the
export to our own people.

3. THE DYNAMIC OF ORGANIZATION

Dimensions
1. Structural Dimensions – describe the internal characteristic of an organization.
2. Contextual Dimensions – Describe the organizational setting that influence and shapes the structure
dimension

STRUCTURAL DIMENSIONS
a. Formalizations is the amount of written documentation, including procedures, job descriptions, regulation
and policy manuals.
b. Specialization is the degree to which organizational task are subdivided into separate jobs
c. Standardization is the process where procedures, machines, material and measuring instruments are set to
repeatable and attainable level as basis for measurement of performance are perform in uniform manner.
d. Hierarchy of Authority describes who reports to whom and the spa of control for each manager. Span of
control is the number of subordinates reporting to superior.
e. Complexity is the number of activities or sub-system within the organizational framework. It can be
measured in three dimensions.
 Vertical Complexity
 Horizontal Complexity
 Spatial Complexity
f. Centralization is the extent to which decision-making is done by the Top Management.
Decentralization is the extent to which authority to make decision is delegated to lower levels of management
g. Professionalism is the level of formal education training of employees.
h. Personal Ratio refer to development of people to various functions and department. There could be
administrative ratio clerical ratio or ratio of indirect to direct labor employees.

CONTEXTUAL DIMENSION
a. Organization Size refers to the statistical number of employees in the total organizational setup.
b. Organizational Technology refers to the use of modern facilities in the production of goods or services it is
measured in terms of how it is applied efficiently and effectively in transforming inputs to quality outputs.

PRINCIPLES OR ORGANIZATION
DIVISION OF LABOUR – breaking down jobs into simple & repetitive tasks
Advantages:
 Repetition improves performance
 Time Saving
Disadvantages
 Lack of Specialization
 Not Suitable for large scale organization

UNITY OF COMMAND
 No member or organization should report to more than one superior
 An employee is responsible to only one supervisor, who in turn is responsible to only one supervisor and so
on up the organizational hierarchy.

AUTHORITY & RESPONSIBILITY

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 Authority is the right inherent in a manager to give orders and be obeyed. Required to coordinate activities in
an organization can be delegated to subordinates for proper functioning and efficient performance
 Responsibility comes with authority
 Operating responsibility: can be delegated to subordinate
 Ultimate Responsibility: cannot be delegated
SPAN OF CONTROL
 Refers to the number of people, the managers control. Difficult to determine the optimum number. Narrow
spam leads to many hierarchies and a tall organizational structure.
 Scalar principal: authority and responsibility should flow in a clear unbroken line from top to bottom.
 Departmentalization: breaking down activities into specialized groups.

TYPES OF ORGANIZATIONS
 Public Sector Organization
 Private Sector Organization
 Non-Government Organization (NGO)

PUBLIC SECTOR ORGANIZATIONS- The public sector is usually compromised of organizations that are
owned and operated by the government and exist to provide services for its citizens. Through the process of
outsourcing, public sector organizations will often engage private enterprises to deliver goods and services to
its citizens
PRIVATE SECTOR ORGANIZATION- The private sector is the part of a country’s economic system that is run
by the individuals and companies, rather than the government. Most of the private organizations are run with
the intention of making profit.
NON-GOVERNMENT ORGANIZATION- A non-government organization is a non-profit, citizen-based
organization that functions independently of government.

TYPES OF ORGANIZATIONAL STRUCTURE

FLAT ORGANIZATIONAL STRUCTURE- A flat organization has an organizational structure with few or
no levels of middle management between staff and executives.
FUNCTIONAL ORGANIZATIONAL STRUCTURE- Is a type of organizational structure that uses the principal
of specializations based on function or role.
DIVISIONAL ORGANIZATIONAL STRUCTURE- The structure of divisional organization groups each
organizational function into a division. Each division contains all the necessary resources and functions within
it.
MATRIX ORGANIZATIONAL STRUCTURE Is an organizational structure in which each individual reports
to more than one supervisor

Additional References:

Prepared by:

Sherwin G. Castillejos, LPT

Subject Teacher

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