Chapter 3

Module 5
Week 5

Planning

Objectives
1. Discuss the nature of planning
2. Compare and contrast the different types of plans
3. Describe planning at different levels in the firm

INTRODUCTION

Planning enables management to command the future rather than being swept away by
future. In a fast changing environment the need for planning is all the more important because
risk and uncertainty increase. In such an environment contingent plans can be prepared.

A plan may be defined as detailed course of action designed today to do something

tomorrow. Thus, planning is an intellectual attempt by a manager to anticipate the future for
better organizational performance.

WHAT IS PLANNING?
 Planning is a process that involves the setting of the organization’s goals, establishing
strategies for accomplishing those goals and developing plans of actions that managers intend
to use to achieve said organizational goals.

Planning is important because: it provides direction to all of the organization’s human

resource’ managers and employees, reduced uncertainty and minimizes wastes of time, effort
and resources.

GOALS are the targets that management desires to reach while PLANS are the means or
actions which management intends to use to achieve the said goals/targets.

“Planning is a management function that involves anticipating future trends and

determining the best strategies and tactics to achieve organizational objectives.” -(Nickels)

“Planning is the selection and sequential ordering of tasks required to achieve an

organizational goal” - (Aldag and Stearns)

“Planning is deciding what will be done, who will do it, where, when and how it will be
done, and the standards to which it will be done.” -(Cole and Hamilton)

Plans are best described in terms of their:

• Comprehensiveness
• Time frame
• Specificity
• Frequency of use

PLANNING AT VARIOUS MANAGEMENT LEVELS

Types of Planning

1. Top Management Level – strategic planning

  Refers to the process of determining the major goals of the organization and the
policies and strategies for obtaining and using resources to achieve those goals.
 The whole company is considered, specifically its objectives and current resources.
 Strategic plan- output of strategic planning which spells out the decision about long
range- goals and the course of action to achieve these goals.

2. Middle Management Level – intermediate Planning

 Refers to the process of determining the contributions that subunits can make with
allocated resources.
 The goals of a subunit are determined and a plan is prepared to provide a guide to the
realization of the goals.

3. Lower Management Level – operational planning

 Refers to the process of determining how specific tasks can best be accomplished on
time with available resources.
 This must be performed in support of the strategic plan and the intermediate plan.

The Organization and Types of Planning Undertaken

THE PLANNING PROCESS

1. Setting Organizational, Divisional, or Unit goals
The first task of the engineer manager is to provide a sense of direction to his firm,
to his division, or to his unit. Goals may be defined as the precise statement of results
sought, quantified in time and magnitude, where possible.
 2. Developing strategies or tactics to reach those goals
The ways to realize the goals are called strategies and these will be the concern of
the top management. The middle and lower management will adapt their own tactics to
implement their plans. A strategy may be defined as a course of action aimed at ensuring
that the organization will achieve its objectives. A tactic is a short term action taken by
management to adjust to negative internal or external influences. The decision about short-
term goals and the courses of action are indicated in the tactical plan.

3. Determining resources needed

The quality and quantity of resources needed must be correctly determined. Too
much resources in terms of either quality or quantity will be wasteful and too little will
mean loss of opportunities for maximizing income.

4. Setting standards
The standards for measuring performance may be set at the planning stage. When
actual performance does not match with the planned performance, corrections may be
made or reinforcements given.
A standard may be defined as a quantitative or qualitative measuring device
designed to help monitor the performances of people, capital goods, or processes.

TYPES OF PLANS
 Marketing Plan – this is the written document or blueprint for implementing and controlling
an organization’s marketing activities related to a particular marketing strategy.

 Production Plan – this is a written document that states the quantity of output a company
must produce in broad terms and by product family.

 Financial Plan – it is a document that summarizes the current financial situation of the firm,
analyzes financial needs, and recommends a direction for financial activities.

 Human resource management plan – it is a document that indicates the human resource
needs of a company detailed in terms of quantity and quality based on the requirements of
the company’s strategic plan.

PLANS WITH TIME HORIZON

 Short- range plans – these are plans intended to cover a period of less than one year.
First-line supervisors are mostly concerned with these plans.

 Long-range plans – these are plans covering a time span of more than one year. These
are mostly undertaken by middle and top management.

PLANS ACCORDING TO FREQUENCY OF USE

A. Standing Plans
 - these are plans that are used again and again, and they focus on managerial situations
that recur repeatedly.

 Policies – they are broad guidelines to aid managers at every level in making decisions
about recurring situations or function.
 Procedures – they are plans that describe the exact series of actions to be taken in a
given situation.
 Rules – they are statements that either require or forbid a certain action.

B. Single Use Plans

- these plans are specifically developed to implement courses of action that are
relatively unique and are unlikely to be repeated.

 Budget – is a plan which sets forth the projected expenditure for a certain activity and
explains where the required funds will come from.

 Programs – is a single-use plan designed to coordinate a large set of activities.

 Project – is a single-use plan that is usually more limited in scope than a program and is
sometimes prepared to support a program.

PARTS OF THE VARIOUS FUNCTIONAL AREA PLANS

Contents of the Marketing Plan (William Cohen)

1. The Executive Summary – which presents an overall view of the marketing project and its
potential.

2. Table of Contents

3. Situation Analysis and the Target Market

4. Marketing Objectives and Goals

5. Marketing Strategies

6. Marketing Tactics

7. Schedules and Budgets

8. Financial Data and Control

Contents of the Production Plan

1. the amount of capacity the company must have

2. how many employees are required

3. how much material must be purchased

The Contents of the Financial Plan

1. An analysis of the firm’s current financial condition as indicated by an analysis of the most
recent statements

2. A sales forecast

3. The capital budget

4. The cash budget

5. A set of pro formula (or projected) financial statements

6. The external financing plan

Contents of the Human Resource Plan

1. personnel requirements of the company

2. plans for recruitment and selection

3. training plan

4. retirement plan
ACTIVITY 1
1. Prove or disprove the statement “Planning is everyone’s job in the organization
including those in the non-management level.”

2. Describe the types of plans appropriate to the following situations:

a. Once I a lifetime event

b. Organization’s competition- related activities

c. Investment related activites

3. Discuss the value of preparing strategic plan.

ACTIVITY 2
Summarize ways to make planning effective
ACTIVITY 3
Case. CAMELOT RECORDS: Those Were the Days    

Mr. Miguelito Salde worked very hard as salesman of recorded music. He represented a
company which distributes compact discs and cassette tapes with foreign labels. For about ten
years, he personally called on dealers in Metro Manila and the provinces to convince them to
buy his products. His exposure to the industry provided him with the right mindset to establish
his own recording outfit.
With his mind working, Miguelito hatched a plan on how he will go about operating his
own company: the Camelot Records. In addition to his knowledge about the market, he
collected information on the production aspect of recording. The plan and the required
information were all stored in Miguelito's memory.
Later, Miguelito mentally prepared a financial plan, as well as a personnel recruitment
program, no matter how crude they are. When he thought that his business plan is complete,
he began to implement it with the required speed. He worked systematically by following a
procedure he alone knows, and explaining to his recruits the exact functions of each of them.
Within a few months of operating, the company was able to produce two long playing
cassette tapes and CDs with recordings of original Filipino music. Local singers and composers
were tapped. The market received moderate response. Miguelito went on producing more
recorded music until one of the first ten albums became a commercial hit! This feat catapulted
the company to recognition by the industry. The company's commercial hits were followed by
other hits in succession.
All of the successful moves of the company were made without the benefit of a written
plan. What Miguelito did was to personally supervise all activities from hiring talents to
providing directions to salesmen. This he did vigorously with the company's total workforce of
51 employees.
As the company grew with more productions and more than 200 employees, Miguelito's
immediate subordinates are getting worried that their boss must be feeling the burden of a
workload that is getting heavier as the years pass. The staff feels that their leader must begin to
delegate some of the responsibilities to qualified persons. They thought that to be fully
organized, a written plan must be devised so every employee could effectively assist in
implementing the various projects of the company.
When the staff mentioned to Miguelito about the importance of a written plan,
Miguelito replied by saying:
 "This company was organized without written plan; it became successful without a
written plan; it will continue to be so without a written plan.

Questions:
1) What are the possible adverse effect to business of Miguelito's no written plan strategy.
2) Explain the value of shared planning as a requisite to strategic business growth.