PLANNING

CHAPTER 6
PLANNING DEFINED

 Planning may be defined as selecting the best course of action in anticipation of

future trends so that the desired result may be achieved it must be stressed that the
desired result takes first priority in the course of action chosen the means to
realize the goal.
NATURE OF PLANNING
 There are many instances when managers are which at times cloud
his judgment this must be expected since anybody who is confronted
by the managing several situations happening simultaneously will
lose sight of the more important concerns of managing. to minimize
mistakes in decision-making, planning is undertaken.
 A plan, which is the output of planning, provides a methodical way
of achieving desired results. in the implementation of activities, the
plans serves as a useful guide. without the plan, some minor task
may be afforded major attention, which may, later on, hinder
accomplishment of objectives. an example of difficulty of not
having a plan is illustrated on the next page.
 The management of a firm was able to identify the need of hire three additional
employees. the manager proceeded to the invite applicants, screen them, and
finally hired three of them. when the hiring expense report was analyzed, it was
found that the hiring expense was more than double the amount spent by other
firms in hiring the same number of people. when an inquiry was made, it was
determined that the money there committed some errors of judgment. for instance,
he used an expensive advertising layout in a newspaper when a simple message
will do. it was also revealed that the absence of a hiring plan contributed on the
high cost of hiring.
PLANNING AT VARIOUS
MANAGEMENT LEVELS
 Since managers could be occupying positions in any of the various
management levels, it will be useful for them to know some aspects
of planning undertaken under different management levels. as
indicated in figure 15 and 16, learning activities undertaken at
various levels as follows:
1. Strategic planning for top management - 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. strategic planning is the concern top of
management.
 Instead of strategic planning, the whole company is considered,
specifically its objectives and current resources. output of strategic
planning is the strategic plan, which spells out the decision about
long range goals in the course of action to achieve those goals.
2. Intermediate planning for middle management - intermediate
planning refers to the process of determining the contributors that
subunits can make with allocated resources. this type of planning is the
concern of middle management.
 under intermediate planning, the goals of a sub unit are determined
and a plan is prepared to provide a guide for realization of the goals.
the intermediate plan is designed to support the strategic plan.
3. Operational planning for lower management - operational planning
is the process of determining how specific tasks can be accomplished
on time with available resources. this type of planning is the
responsibility of lower management. it must be performed in support of
the strategic an intermediate plans.
MANAGEMENT LEVEL PLANNING HORIZON

Top Management Chief Executive Officer, President, Vice President, General Manager, Division Heads Strategic planning (one to ten years)

Functional Managers, Product Line Managers, Department Heads

Middle management Intermediate Planning ( 6 months to 2 years)

Unit Managers, First Line Supervisors

Lower management Operational Planning (One week to one year)
THE PLANNING PROCESS
 The process of planning consists of various steps depending on the management
level that performs the planning task. Generally, however,  planning involves the
following: 
 1. setting organizational, divisional, or unit goals -  the first task of the manager is
to provide a sense of direction to his firm ( if he is
the chief executive), to his division ( if he heads a division), or to his unit (if he is a
supervisor). the setting of goals provides an answer to said concern. is everybody
in the firm (or division or unit, that's the case maybe) is aware of the goals, there is
a big chance that everybody will contribute his share in the realization of such
goals. 
        Goals are precise statements of results sought, quantified in time
and magnitude, where possible. According to Davis and Weckler (1977) goals are
“concrete results that the organization intends to achieve within a specified
period.” Examples of goals are provided in
 2. Developing strategies or tactics to reach goals - after determining the goals, the next task
is devise some means to realize them. Davis chosen to realize the goals are called strategies
and this will be the concern of top management. the middle and lower management
will adopt their own tactics to implement their plans.  
        strategy may be defined as a course of action aimed at ensuring the organization will
achieve its objectives. the decision of a construction firm’s management to diversify its
business by also engaging in trading of construction materials and supplies in an example of
strategy. when this is implemented, it may help the construction firm realize
substantial savings in the material and supply requirements of their construction activities. the
firm will also have greater control in the aiming of deliveries of materials and supplies.  
 a tactic is a short-term action by management to adjust to negative or external influences. they
are formulated and implemented in support of the firm's strategies. the decision about short-
term goals and the courses of action are indicated in the tactical plan. An example of tactic is
hiring a contractual workers to augment the company's current workforce. 
3. Determining resources needed - when particular sets of strategies or tactics have
been devised, the manager will then determine the human and non-human
resources required by such strategies or tactics. even if the resource requirements are
currently available, they must be specified 
        quality and quantity of resources needed must be correctly determined. who
many resources in terms of either quality or quantity will be wasteful; too little will
mean loss of opportunities for maximizing income. 
 To satisfy strategic requirements a general statement of needed resources
will suffice, the different units of the company will determine the specific
requirements.  
  
 To illustrate:
 Suppose the management of a construction firm has decided, in
addition to tis current undertakings, to engage in the trading of
construction materials and supplies. A general statement of required
resources will be as follows:
“A new business unit will be organized to deal with the buying and selling
of construction materials and supplies. The amount of ₱55 million shall be
set aside to finance the activity. Qualified persons shall be recruited for
the purpose.”
4. Setting Standards - The standards for measuring performance may
be set at the planning stage. When actual performance of people,
capital, goods, or processes. An example of a standard is the minimum
number of units that must be produced by a worker per day in a given
work situation.
1. Functional Area Plans. Plans may be prepared according to the needs of the
different functional areas. Among the types of functional area plans are the
following:
a. Marketing Plan – is the written document or blueprint for implementing and
controlling an organization’s marketing activities related to a particular marketing
strategy.
b. Production Plan – is a written document that states the quantity of output a
company must produce in broad terms and by product family.
c. Financial Plan – is a document that summarizes the current financial situation
of the firm, analyzes financial needs, and recommends a direction for financial
activities.
d. Human Resource Plan – is a document that indicates the human resource
needs of a company detailed in terms of quantity and quality and based on the
requirements of the company’s strategic plan.
2. Plans with Time Horizon. Plans with the time horizon consist of the
following:
a. Short-Range Plans – are plans intended to cover a period of less than one
year. First line supervisors are mostly concerned with these plans.
b. Long-range Plans – are plans covering a time span of more than one year.
Middle and top management mostly undertake these.
3. Pans with Varied Frequency of Use. According to frequency of use, plans
may be classified as:
a. Standing plans. These are plans that are used again and again, and they
focus on managerial situations that recur repeatedly. Standing plans may be
further classified as follows:
i. Policies – refer to broad guidelines used by managers to help make
decisions and take actions on specific circumstances.
ii. Procedures – are plans that describe the exact series of actions to be taken
in a given situation.
iii. Rules – are plans that describe the exact series of actions to be taken in a
given situation.
b. Single- Use Plans. These plans are specifically developed to implement
courses of action that are relatively unique and unlikely to be repeated.
Single-use plans may be further classified as follows:
i. Budget Plan – sets forth the projected expenditures for a certain
activity and explains where the required funds will come from.
ii. Program Plan – is designed to coordinate a large set of activities.
iii. Project Plan – is usually more limited in scope than a program plan and
is sometimes prepared to support a program
PARTS OF THE VARIOUS
FUNCTIONAL AREA PLANS
 The manager may be familiar with plans, knowing the details from
beginning to end. However, the ever present possibility of moving
from one management level to the next and from one functional area
to another makes it important for the manager to be familiar with
other functional area plans.
1. Marketing Plan. The structure and content of marketing plans vary depending on the nature
of the organizations adapting them. The typical marketing plan includes the following:
a. Executive summary – which presents a overall view of the marketing project and its
potential;
b. Table of contents;
c. Situational analysis and target market;
d. Marketing objectives and goals;
e. Marketing tactics;
f. Schedule and budgets; and
g. Financial data control.
h. An example of marketing plan is shown in Figure 19.
2. Production Plan - The Production plan must contain the following:
a. Production capacity the company must have;
b. Number of employees required; and
c. Quantity of materials which must be purchased.
d. An example of production plan schedule is shown in Figure 20.
1. Financial Plan. The components of the financial plan are as
follows:
a. An evaluation of the firm’s current financial condition as
indicated by an analysis of the most recent financial
statements;
b. A sales forecast;
c. the capital budget;
d. the cash budget;
e. a set of pro forma (or projected) financial statements; and
f. the external financing plan.
1. Human Resource Plan. The human resource plan must contain the
following;
a. Personnel requirements of the company;
b. Plans for recruitment and selection;
c. Training plan; and
d. Retirement plan.
5. Strategic Plan. The strategic plan must contain the following:
a. Company or corporate mission;
b. Objectives or goal; and
c. Strategies.
d. The company or corporate mission refers to the strategic statements that
identify why an organization exists, its philosophy of management, and its
purpose as distinguished from other similar organizations in terms of
products, services, and markets.
MAKING PLANNING EFFECTIVE

 Planning is done so that desired results may be achieved. At times,

however, failure in planning occurs. Planning may be made
successful by recognizing the planning barriers, and by using the
aids to planning.
1. The planning barriers consists of the following:
a. Manager’s inability to plan;
b. Improper planning process;
c. Lack of commitment to the planning process;
d. Improper information;
e. Focusing on the present at the expense of the future;
f. Too much reliance of the planning department; and
g. Concentrating on only the controllable variables.
 Among the aids to planning that may be used are:
a. Gathering as much information as possible;
b. Developing multiple sources of information; and
c. Involving others in the planning process.