ORGANIZATION & MANAGEMENT

WORKSHEET
5 PLANNING

Performance Standard (PS): The learners shall be able to formulate effective

plans for a specific business endeavor.

MELC 5: 1. Discuss the nature and levels of planning and types of plans.
(ABM_AOM11-Ie-g-10)

Duration: 1 week (4 hours)

WHAT IS THIS WORKSHEET ALL ABOUT?

This worksheet will help the learners to analyze the importance of

planning concepts in the business organization. In this chapter, you will learn
how planning is being done before starting to work and its processes in attaining
the organization’s goal. Be careful in answering the exercises and tasks by
carefully reading every given instruction. Let’s begin!

LET’S TRY THIS! (Explore)

Activity 5.1: Fast Learning Review

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.

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 Congratulations for completing the first activity. Did you
enjoy them?

Let’s Learn

Now you will be learning about the definition and

nature of planning. Study the inputs given and be
ready to complete different activities that will test your
knowledge and understanding as you go through the
lesson.

LECTURE

Definition and Nature of Planning

In this chapter, you will begin to study planning, the first management
function which sets an organization’s agenda. Establishing plans based on set
goals will provide direction to the organization’s activities and, thus, reduce
uncertainties and wastage. Planning is an extremely complex process since it
requires a systematic method for recognizing and analyzing the elements of the
organization’s external environment and matching them with the firm’s internal
environment’s factors and capabilities. Since plans are done in an environment of
uncertainty, you will also begin to understand how assumptions are formulated
based on forecasts of expected future situations.
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.
 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.

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  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 higher return of
investment, 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 the action 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.

Type of Plans
Organizational 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, as this could completely guide both
the employer and employee towards the fast achievement of company goals. A
plan may be long-term, or covering more than three years, or short short-terms,
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 cloud 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.

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For example, strategical 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.

Classification on the Basis of Levels in the Organisation:

Similar to objectives, plans are made for different organisational levels.
Plans classified on this basis are discussed below:

1. Strategic Plans:
Strategic plans are made to achieve the overall organizational goals. They
achieve strategic goals through effective allocation of resources over different
functional/ product areas. They match the organizational strengths and
weaknesses with the environmental opportunities and threats. They are
comprehensive and general in nature. They are made for all functional areas of
business. They are made by the top-level managers in consultation with board
members and middle- level managers and generally relate to a period of more
than 5 years.

2. Tactical Plans:
Tactical plans are the means to support and implement strategic plans. They are
made to achieve tactical goals of the organization. They are related to
departmental goals of the enterprise. These plans are made by middle-level
managers in consultation with lower-level managers and normally relate to
intermediate period of 1 to 5 years. While strategic plans are general in nature,
these plans are more specific and precise.

3. Operational Plans:
Operational plans support the tactical plans. They are made to achieve
operational goals of the enterprise. These plans are highly specific and
determine what different sections of the organization need to perform. While
resources are allocated in strategic plans, their efficient use to achieve overall
organizational goals is ensured by operational plans.

These plans are made by lower-level managers in consultation with middle-level

managers and relate to short periods of time of less than one year, say some
weeks, months or even days. Different single-use and standing plans are made
in operational planning to achieve the overall organization goals. Plans to meet
the delivery schedules, adjust the production schedules, budget the costs etc.
are the common activities performed in operational planning.

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Plans (strategic, tactical and operational) classified on the basis of levels in
the organization are tabulated as follows:

These plans related to three types of goals can be diagrammatically

represented as follows:

Class # 2. Classification on the Basis of Use:

On the basis of use, plans can be:
1. Single-Use Plans

2. Standing Plans.

Single-Use Plans:
Single use plans are made to serve a specific objective. They cease to exist once
the objective is achieved. They are, thus, short lived plans made for nonrecurring
activities. For example, if company wants to install a machine, it has to plan its
purchase; whether it wants to buy a new machine or a second hand machine,
whether it wants to buy or acquire it on lease. Various alternative courses of
action will be guided by their respective returns and costs and once the machine
is acquired, the plan does not exist any more. Single use plans are intended to
achieve a particular objective which is not likely to be repeated in future. These
are meant to deal with problems which are non-repetitive and distinct in nature.

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Different types of single use plans are:
1. Programmes,

2. Budgets,

3. Strategies and

4. Projects.

1. Programmes:
Programme is a sequence of activities where each sequence is timed (time taken
to complete each step is determined) to successfully achieve the overall
objectives. According to Terry and Franklin, programme is “a comprehensive
plan that includes future use of different resources in an integrated pattern and
establishes a sequence of required actions and time schedules for each in order
to achieve stated objectives.”

Programmes are single use plans made for a specific action. It is made to
achieve a specific objective that represents a series or sequence of steps, time
required to accomplish each step and resources allocated to accomplish each
step. Programme is a sequence of activities carried to implement a policy or
accomplish an objective.

Each programme has specific objectives, policies, procedures, methods and

budgets to support its expenses.

Steps in making a programme: A programme can be made in six steps:

(i) Divide the total work into parts:
As the first step in making a programme, total work load is determined and
divided into parts.

(ii) Develop the sequence of various parts:

After the steps are determined, they are arranged in a sequential order and
relationship amongst the steps is established to facilitate coordination.

(iii) Determine the responsibility for each part:

The divided parts or steps are assigned to people according to their skills and
abilities. This helps in determining who will do what and also fixes their
responsibility.

(iv) Determine how each part will be completed and what resources are
necessary: It determines the way each step will be accomplished and arranges
resources (human and non-human) for their completion.
(v) Determine the time required for completing each part:
To ensure that the programme is completed within the time schedule, time
required to accomplish each part is determined. Delay in completion increases
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financial and non-financial costs and, therefore, it is necessary to determine the
time to complete the overall programme and each step of the programme.

(vi) Develop a schedule for implementing each step:

A schedule or time table for implementing each step in programme is determined
to ensure optimum utilization of resources allocated over different steps of the
programme.

Types of programmes: Programmes can be of two types:

(i) Major programme:
It is the main programme designed to achieve a specific objective, for example,
setting up a plant and machinery or modernization of an existing unit.

(ii) Minor programme:

It is a sub-plan designed to achieve the major programme. For setting a new
plant and machinery, minor programmes are made to analyze the sources from
where the machinery can be purchased, arranging funds from various sources,
arranging for installation, air conditioning plant for the machine, training people to
work on the machine, arranging for people to work over-time (if the need be), etc.

2. Budget:
Meaning:
Budgets are plans that specify resources for specific activities in a given period of
time. Managers make decisions through budgets to allocate resources over
various courses of action. It is a statement of inflow and outflow of financial
resources spread over a period of time. The time period for which budget is
prepared is known as planning horizon. A budget may be prepared for one year,
six months, or even one month depending on the nature of business activities.
The time period is generally divided into shorter periods known as sub-periods. A
budget prepares the expected inflows and outflows of men, material, output etc.
expressed in monetary terms.

Budget is “a plan for income or outgo, or both, of money, personnel, purchased

items, sales items or any other entity about which the manager believes
determining the future course of action will assist in managerial efforts”.

A budget also acts as a controlling device. It plans the organizational

performance and ensures that actual performance is in conformity with planned
performance. The basic element of budget is the planning horizon; it refers to the
time period covered by the budget. There may be long-term or short-term
budgets depending on the nature of enterprise. For enterprises operating in a
stable environment, the planning period could be long, say one year while for
concerns which are affected by seasonal variations, a six monthly or a quarterly
budget may suffice.

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The time period over which a budget is spread may be sub-divided into shorter
intervals called sub-periods. A yearly budget, for example, may have monthly
intervals as sub-periods; a monthly budget may be sub-divided into daily
activities. The purpose of sub-division is to co-ordinate and control the flow of
activities from one sub- period to another sub-period. This enables the managers
to trace the deviations before the end of the budgeted period.

Features of a budget:
A budget has the following features:
(i) A plan:
Budget is a plan that provides the standard of performance.

(ii) Controlling device:

A budget aims at reporting performance according to the estimated levels. It,
thus, acts as a controlling device.

(iii) Future oriented:

Past provides the basis for making budgets but budgets are made for controlling
future actions.

Types of budgets:
There can be a variety of budgets. These can be broadly classified as
follows:
(i) Operating budgets:
These budgets relate to operating or daily activities of the business and involve
revenues and expenses.

They can be of the following types:

(a) Expense budgets:
They relate to expenses of the organization in producing goods and services.
The expenses can be fixed or variable.

(b)Revenue budgets:
They project earnings from sales and other business activities.

(c) Profit budgets:

They are the projections of profits. Profit is the difference between revenue and
expense budgets.

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 Study the inputs given and be ready to complete
different activities that will test your knowledge and
understanding as you go through the lesson.

WHAT CAN YOU DO? (Engage)

Exercise No. 5.1:

1. What are the bases for describing organizational plans?
2. Name at least 3 types of plans. Which, in your opinion is the hardest to
prepare and why?
3. Which plan is described to be short-term and long-term? Explain your answer.

LET’S SEE WHAT YOU HAVE LEARNED (APPLY)

Note: This is the evaluation and application of learning.
Exercise 5.2
As a student of SFSASHS, you are required to submit a proposal addressed
to our School Principal by crafting a strategic plan (at least 2 plans). This will be
used in preparing the School Improvement Plan (SIP) for Year 2020-2023.
Please use the format provided below.
Strategic Plan
Sta. Fe Stand-Alone SHS
Year 2020-2023

Strategic Activities Time Persons Budget Success

Plan Frame Involved Indicator
Plan #1:

Plan #2:

-End-