Organizational and Management

Module 3 Planning

Instructor: NICKO D. ORDANZA

Course Title: ORGANIZATION AND MANAGEMENT

Course Description: This course is designed to familiarize the students with the basic
concepts, principles, and processes related to business organization,
and the functional area of management. Particular emphasis be given
to the study management functions like planning, organizing, leading
and controlling, and orient the students on the importance of these
functions and the role of each area in entrepreneurship.

Credit hours: 3 hours

Pre-Requisite:

MODULE 3 PLANNING

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[Link] OUTCOMES

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. Formulate a decision from several alternatives

B. PRETEST

True or False: Write TRUE if the statement is correct and False if the statement is
incorrect

1. Planning provides direction to all of the organization’s human resources both managers as
well as employee?
2. Long-term 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.
3. Operational 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.
4. Benchmarking is another planning technique that generally involves external comparisons of
a company’s practices and technologies with those of other companies.
5. Structured or programmed decision a decision that is repetitive and can be handled using a
routine approach

C. CONTENT

Lesson 1: Definition and Nature of Planning

Planning is the first management function and a very essential component of management.

The following present the importance of planning:

• Planning provides direction to all of the organization’s human

resources— both managers as well as employees. If they know what
their firm or their work unit is trying to achieve and what activities
they should engage in to be able to contribute to the achievement of
the firm’s set vision, mission, goals, and objectives, they would
coordinate their actions and collaborate well with one another.

• Planning is important because 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.

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 • 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.

• Establishing goals and standards during planning may be used for controlling, another
necessary managerial function.

Without planning, goals and standards will be absent and controlling will not be possible.

Relationship of Planning to Individual and Organizational Performance

Is there a clear relationship between planning and performance?

Although numerous researchers have shown a generally positive
relationship between planning and performance, it would not be
advisable, however, to judge that organizations or individuals
who formally plan have better performance compared to those
who do not plan.

There are other environmental factors that also affect individual

or organizational performance, thus, result in reducing the impact
of planning to performance. It is safer to say that 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.

Finally, 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.

Difference between Goals and Plans

Goals are the targets or desired ends that management wants to reach, while plans are the
actions or means that administrators/managers intend to use to achieve organizational goals. 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.

Lesson 2: Types of Plan

Organization plans can be generally described in terms of comprehensiveness, length of time

covered or time frame, specificity, and frequency of use.

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,

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as this could completely guide both the employer and employee toward the fast achievement of
company goals.

A plan may be long-term or covering more than three years, or short-term, covering one year or
less. Top-level management usually sets the long-range plans, while lower-level management
focuses on short-term goals.

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.

Frequency of use refers to the number of times or instances a plan may be used. For example,
strategically 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:

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

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.

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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.

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.

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.

Specific plans – plans that are clearly stated and which have no room for interpretation;
language used must be very understandable

Single-use plans – plans used or stated once only as this applies to the entire organization;
refer to the operational plans of the firm.

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 five 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. Develop premises regarding future conditions; anticipate future events, generate

alternative “scenarios” for what may happen; identify for each scenario things that may help or
hinder progress toward your goals/ objectives;

4. Analyze and choose among action alternatives; list and carefully evaluate possible
actions and choose the alternative most likely to accomplish goals/objectives.

5. Implement the plan and evaluate results; take corrective action and revise plans as
needed.

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Lesson 3: Planning at Different Level in the firm
Different levels in the firm are all engaged in planning; however, all the resulting plans must be
related to one another and directed toward the same goals. Planning at the different levels of
management include strategic planning, tactical planning, and operational planning

Top-level Management Planning (Strategic Planning)

As earlier mentioned, top-level managers are

responsible for the organization’s strategic
planning which involves making decisions about
the organization’s long-term goals and strategies.
CEOs, company presidents, or the organization’s
senior executives develop and execute the said
strategic plan. They, however, do not formulate or
execute the plan on their own; a management
team supports and helps top-level managers in
carrying out these tasks.

Strategic planning starts with defining the organization’s goals/objectives, the major targets
related to the maintenance of the organization’s stability, and its organizational culture, values,
and growth improving its productivity, profitability, effectiveness, and efficiency, among others.

Middle-level Management Planning (Tactical Planning)

Tactical planning refers to a set of procedures for changing or transform- ing broad strategic
goals and plans into specific goals and plans that are applicable and needed in one unit/portion
of the organization. It is focused on major actions that must be done by a unit in order to
contribute its share for the achievement of the strategic plan.

Frontline/Lower-level Management Planning (Operational Planning)

Operational planning involves identifying the specific procedures and processes required at the
lower levels of the organization. This also involves routine tasks or tasks repeatedly done by the
organization’s lower level units.

Integrating Strategic, Tactical, and Operational Planning

The present organizational planning is not as rigid as the

hierarchical planning earlier discussed in this chapter.
Managers in different hierarchical levels of the organization
may contribute their ideas or suggestions in developing the
strategic plan, a task originally assigned to the senior
executives. Also, frontline managers may make decisions
that could influence strategy formulation in the higher levels.
All plans, however, must be directed toward the
achievement of the organization’s strategic goals. Finally,

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CEOs or company presidents must see to it that all communication lines in their organization
are open, that there is excellent dissemination of information to all levels, and they are aware of
everything that is happening in their firm.

Lesson 4: Planning Techniques and Tools and their Applications

For effective planning in today’s dynamic environments, different techniques and tools must be
used, such as forecasting, contingency planning, scenario planning, benchmarking, and
participatory planning. According to Schermerhorn (2008), forecasting is an attempt to predict
what may happen in the future. All planning types, without exception, make use of forecasting.
Business periodicals publish forecasts such as employment and unemployment rates, increase
or decrease of interest rates, stock market data, GNP/GDP data, and others. Forecasts used
may either be quantitative or qualitative. Opinions of prominent economists are used in
qualitative forecasts while mathematical calculations and statistical analyses of
surveys/researches are used in quantitative forecasts. These, however, are just aids to planning
and must be treated with caution. As the name implies, forecasts are predictions and may be
inaccurate, at times, due to errors of human judgment.

Contingency factors may offer alternative courses of action when the unexpected happens or
when things go wrong. Contingency plans must be prepared by managers, ready for
implementation when things do not turn out as they should be. Contingency factors called
“trigger points” indicate when the prepared alternative plan should be implemented.

Meanwhile, planning for future states of affairs is a long-term version of contingency planning
and is also known as scenario planning. Several future states of affairs must be identified and
alternative plans must be prepared in order to meet the changes or challenges in the future.
This is a big help for organizations because it allows them to plan ahead and make necessary
adjustments in their strategies and operations. Some examples of changes or challenges that
may arise in future scenarios are environmental pollution, human rights violations, climate and
weather changes, earthquake damages to communities, and others.

Benchmarking is another planning technique that generally involves external comparisons of a

company’s practices and technologies with those of other companies. Its main purpose is to find
out what other people and organizations do well and then plan
how to incorporate these practices into the company’s
operations. A common benchmarking technique is to search
for best practices used by other organizations that enabled
them to achieve superior performance. This is known as
external benchmarking. Internal benchmarking is also
practiced by some organizations when they encourage all their
employees working in their different work units to learn and
improve by sharing one another’s best practices.

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Participatory planning is a planning process that includes the people who will be affected by the
plans and those who will be asked to implement them in all planning steps. Creativity, increased
acceptance and understanding of plans, and commitment to the success of plans are the
positive results of this planning technique.

All managers and workers/employees in

organizations make decisions or make choices that
affect their jobs and the organization they work for.
This lesson’s focus is on how they make decisions
by going through the eight steps of the decision-
making process suggested by Robbins and Coulter
(2009).

Lesson 5: Decision Making

Types of Decisions

A decision is a choice among possible alternative

actions. Like planning, decision-making is a
challenge and requires careful consideration for
both types of decisions, namely:

Structured or programmed decision

– a decision that is repetitive and can be handled
using a routine approach.

Such repetitive decision applies to resolving

structured problems which are straightforward,
familiar, and easily defined. For example, a
restaurant customer complains about the dirty
utensils the waiter has given him. This is not an unusual situation, and, therefore, standardized
solutions to such a problem may be readily available.

Unstructured or non-programmed decisions – applied to the resolution of

problems that are new or unusual, and for which information is incomplete.

Such nonprogrammer decisions are described to be unique, non-recurring and need custom-
made decisions. For example, a hotel manager is asked to make a decision regarding the
building of a new hotel branch in another city to meet the demands of businessmen there. This
is an unstructured problem and, therefore, needs unstructured or non-programmed decisions to
resolve it.

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Types of Decision-making Conditions

Conditions, under which decisions are made, also vary. These are:

Certainty conditions – ideal conditions in deciding problems; these are situations in which a
manager can make precise decisions because the results of all alternatives are known.

For example, bank interests are made known to clients so it is easier for business managers to
decide on the problem of where to deposit their company’s funds. The bank which offers the
highest interest rate, there- fore, is the obvious choice of the manager when asked to make a
decision.

Risk or uncertainty conditions – a more common condition in deciding problems.

Risk or uncertainty conditions compel the decision maker to do estimates regarding the possible
occurrence of certain outcomes that may affect his or her chosen solution to a problem.
Historical data from his or her own experiences and other secondary information may be used
as bases for decisions to be made by the decision maker under such risk conditions. For
example, a manager is asked to invest some of their company funds in the money market
offered by a financial institution. Risk factors must be considered, because of the uncertainty
conditions involved, before making a decision—whether to invest or not in the said money
market.

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D. LEARNING ACTIVITIES

Read, Understand and Answer the Case Study Questions

Marciano Aquino pharmaceutical company

➤ Marciano Aquino works for a pharmaceutical company manufacturing generic medicines

which sell at lower costs compared to branded medicines. In his eagerness to sell their low-cost
drugs to increase company revenues, he used social media to spread negative rumors and
gossip regarding the manufacturer of the branded equivalents of their generic products; this
became viral on the Internet after a few weeks.

As employee, Christopher, became aware of what Marciano was doing and reported this to their
supervisor, who in turn, reported Marciano’s unethical way of competing with their rival company
to their department head for sales. For fear of being sued for unethical competition by their rival
company, the department head called Marciano, a tenured employee, and without asking for
any explanation, asked him to write a voluntary resignation letter immediately, explaining orally
that this was the order of their company owner because of his irresponsible behavior.

Marciano, who felt bad about this unexpected order from his superior, decided to write a
voluntary resignation and submitted this to the department head the next day. He felt that the
said company superior did not see his good intentions and that it was not worth it to continue
serving them.

After a month, he realized that he acted in anger and he should not have followed the
department head’s order; and upon the advice of some of his friends, he decided to file a
complaint for illegal dismissal and termination without due process with the National Labor
Relations Commission (NLRC).

Questions

1. Was the department head right in asking Marciano to resign immediately? Explain
your answer.

2. In your opinion, will the complaint/case Marciano filed at the NLRC against the
pharmaceutical company prosper? Explain your answer.

E. ASSESSMENT

Define the following key terms:

 Planning
 Goal setting
 Vision
 Mission
 Objectives
 Organizational plan
 Strategic plan

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  Operation plan
 Strategic planning
 Tactical planning
 Operational planning
 Trigger point
 Forecasting
 Bench making
 Decision-making

Discussion Question

1. How important is planning to organization managers?

2. In your own opinion, is there a clear relationship between planning and performance?
Explain.

3 Which comes first, goal-setting or planning? Explain your answer.

Explain the relationship between planning and controlling

4. What are the bases for describing organizational plans?

5. Name at least five types of plans. Which, in your opinion, is the hardest to prepare?

6. Which plan is described to be short-term, specific, and narrow? Explain your answer.

7. Name the five steps in planning. Is there a particular step that could be bypassed or
eliminated? Explain your answer.

8. Name and define the three planning types that take place in the three hierarchical levels of
managerial planning.

9. If the strategic goal of your organization is the improvement of its profitability, what routine
tasks could be included in your operational planning? Name some of these tasks.

10. Describe present-day organizational planning. Is it rigid or flexible? Explain your answer.

11. Explain the relationship between planning and communication.

12. What are the useful planning tools and techniques that are currently used in many
organizations? Define each.

13. Which is a better planning tool: forecasting or benchmarking? Explain your answer.

14. Why are “trigger points” important in contingency plans?

15. Name some examples of changes or challenges, other than those mentioned in this
lesson, which may occur in future scenarios.

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16. Enumerate the steps involved in decision-making. Which is the most important step?
Explain your answer.

17. Why is it easier to make a structured or programmed decision?

18. Describe the characteristics of an unstructured or nonprogrammer decision.

19. Compare the two types of decision-making conditions. Do you agree with the statement
that risk conditions in decision-making are more common?

F. References

Delfinado, Rica D. ed. “Business As Usual”, The Philippine Star (8 September 2014):D-1.

Flores, Wilson Lee, “After 60 Years, Dr. George S.K. Ty Returns to Alma Mater UST to
Receive Degree”, The Philippine Star (10 August 2014): E-4.

Santos, Ma. Regina Elvira C. “Unlocking the Business Licensing Puzzle (A Handbook)
“Philippine Copyright ISBN978-971-587-083-2, 2013.

International Labor Organization, and Asian development Bank. “ASEAN Community 2015:
Managing Integration for Better Jobs and Shared Prosperity.” Accessed November 13, 2014.
[Link]/asia/ whatwedo/publications/WCMS_300672/lang––en/[Link]

Millenium Project. “MDGs.” Accessed October 14, 2014. [Link]/goals/.

National Economic Development Authority. “Philippine Development Plant 2011–2016.”
Accessed

October 14, 2014. [Link]/?p=1128.

Organization and Management by: Helena Ma. F. Herrera, Ph.D

G. RUBRICS

Problem Solving and Research Capability 50%

 Answer to the Case Study Question and Potential Solution to the Case Study

Problem

Written Communication 30%

Critical Thinking 20%

 Analysis and Synthesis of the Articles ____

TOTAL: 100%

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