CHAPTER 3:

Planning
PLANNING
-It is the most fundamental function of management.
-It is the basic process of setting up goals to be reached and course of action to be followed.

NATURE OF PLANNING
Planning is purposeful: It is goal oriented. It is directed towards efficiency.
Planning is a primary function: It is the basic level of management process.
Planning is a pervasive process: Many people believe in planning. It is the job of all managers in all types
of organizations.
Planning is an Intellectual Process: A mental process involving imagination, foresight and sound
adjustment but not guesswork.
Planning is a continuous process: An on-going/dynamic exercise as old assumptions change, old plans
are revised or new one are prepared.
Planning is a forward process: No plan can be prepared without knowledge of future.
Planning involves choice: Decision making is core of planning.

TYPES OF PLAN
FINANCIAL PLANNING
-Long term profit planning aimed at generating greater return on assets, growth in market
share, and at solving foreseenable problems.
CONTINGENCY PLANNING
-A contingency plan is a plan devised for an outcome other that in the usual (expected) plan. It is
often used for risk management when an exceptional risk that though unlikely, would have catastrophic
consequences.
STRATEGIC PLANNING
-A systematic process of envinsioning a desire future, and translating this vision into broadly
defined goals or objectives and a sequence of steps to achieve them.
SUCCESSION PLANNING
-Is a process for identifying and developing internal people with the potential to fill key business
leadership positions in the company. Succession planning increases the availability of experienced and
capable employees that are prepared to assume these roles as they become available.

PLANNING AT DIFFERENT LEVELS IN THE FIRM

CORPORATE LEVEL
-Planning at this level provide overall strategic direction for an organization, sometimes referred
to as the “grand strategy.” This is a concise statement of the general direction which senior leadership
intends to undertake to accomplish their stated mission or vision.
BUSINESS LEVEL
-Each business with an organization will develop a strategy to support the overall business
within its industry, and identifies how the available resources can be applied to improve the position of
the firm in relation to its competitors.
FUNCTIONAL LEVEL
-Describes support functions of a business. Finance, Marketing, Manufacturing, and Human
Resources are a few examples of functional level. Strategies at this level should be defined to support
the overall business and corporate level strategies.

PLANNING TECHNIQUES AND TOOLS

FORECASTING
 -is the process of predicting what will happen in the future.
CONTINGENCY PLANNING
-involves identifying alternative courses of action that can be implemented, if and when an
original plan proves inadequate because of changing circumstances.
SCENARIO PLANNING
-is a long term version of contingency planning that involves identifying several alternative
future scenarios or states of affairs that may occur, and then making plans to deal with each scenario
should it actually occur.
BENCH MARKING
-is a technique that makes use of internal and external comparisons to better evaluate current
performance and identify possible actions to improve the future.
STAFF PLANNERS
-are persons who take responsibility for leading and coordinating the planning function for the
total organization or one of its major components.

Some of the more common analysis tools and techniques include:

VMOST: This stands for Vision, Mission, Objectives, Strategy, and Tactical.

SWOT: The standard analysis tool, defined as Strengths, Weaknesses, Opportunities, and Threats.

PEST: This is a great tool to use in tandem with SWOT. The acronym stands for Political, Economic, Social and
Technology.

SOAR: This stands for Strengths, Opportunities, Aspirations, and Results. This is a great tool if you have a
strategic plan completed, and you need to focus on a specific impact zone.

DECISION MAKING
-the process by which managers respond to opportunities and threats by analyzing options, and
making decisions about goals and course of action.

TYPES OF DECISION MAKING

PROGRAMMED DECISION
-routine, almost automatic process
NON PROGRAMMED DECISON
-unusual situation that have not been often addressed.

DECISION MAKING CONDITIONS

*Risk
*Uncertainty
RISK
-means danger or threat that one might fail in doing some work
UNCERTAINTY
-situation where the current state of knowledge is such that the order or nature of things is
unknown. The consequences, extent or the circumstances is unpredictable.

Making effective decisions factors include:

*Perception *Goals
*Priority *Values
*Acceptability *Demands
*Risk *Style
*Resources *Judgement

SIX C’s DECISION MAKING

1.Construct 4. Compare
2.Compile 5. Consider
3.Collect 6. Commit