PLANNING

and
DECISION MAKING
 The Nature of Planning:

PLANNING
1. Contribution to purpose and objectives
Planning is required to facilitate accomplishment of business purposes and objectives.
2. Planning as the first basic function
Since managerial functions of organizing, staffing, directing, and controlling are designed to
Planning is aaccomplishment
support the logical and systemic approach
of business of planning
objectives, formulating the objectives,
is logically programs,
performed before the
execution
policies, of all other managerial
procedures, functions.
budgets, rules and regulations, and other types of plans.
3. Planning as a function of all managers
Planning is a function of all managers, although the character and scope of planning will differ
Planning is considered the most basic of all managerial functions (organizing,
from one authority to another.
staffing,
4. Planningdirecting, and
for efficient controlling).
organization
The efficiency of a plan is evaluated by the amount it contributes to purpose and objectives
as offset by the expenses and other things required to formulate and implement it.
Objectives or Goals

The intended goal prescribes definite scope and

suggests direction to maximize the efforts of a
manager. It is also synonymous to aim, purpose, goal
and mission.
Mission

The mission can be defined in terms of an

organization’s product/services or
markets/customers.
Long-Range and Short-Range Objectives

Long-range objectives generally go beyond the current

fiscal year of the organization. They must support and
not conflict with the organizational mission.
Short-range objectives should be derived from an in-
depth evaluation of the organization’s long-range
objectives.
Program

It is the actual course of action designed to carry out the established objective. It is a
comprehensive plan that indicates 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.
It can be easily and systematically shown using a project schedule. Project scheduling
refers to the identification and analysis of the activities from the project planning stage up to
the start of normal operations.
A Gantt Chart should be used as a planning and control tool of studying the project
proposal. It was formulated in 1917 by Henry L. Gantt, a noted pioneer in the field of
industrial management, as a device for controlling the production of raw materials. It is now
widely used for a variety of purposes to suit performance/output/activities against a time
requirement.
Policies

These are basic guidelines for action. They indicate what is permitted and
what is not permitted. Promoting people from within can be personnel policy of
a company.
Policies are broad, general guides for action which constrain or direct objective
attainment. Policies channel how management should order its affairs and its
attitude toward major issues; they dictate the intent of those who guide the
organization. It defines the universe from which future strategies and plans are
derived. “It is the policy of the public relations department to answer in writing
all written customer complaints.”
Policy statements often contain the words to ensure, to follow, to maintain, to
promote, to be, to accept and other similar verbs.
Procedures

Procedures are series of related steps expressed in chronological order for a

specific purpose. Procedures and rules differ from policies only in degree. A
procedure defines in step-by-step fashion the methods by and through which
policies are achieved. They outline precisely how a recurring activity must be
accomplished. Procedures allow little flexibility and deviation. Well-established
formal procedures are often known as standard operating procedure (SOPs).
These are instructions as to how a particular thing should be done. A set of
may be prescribed in operating a machine handling employee grievances.
Rules

Rules require specific and definite actions for a given

situation. Rules have little doubt about what is to be
done. They permit no flexibility and deviation.
Budget

A plan stated in financial term. It is an estimate of income

and expenditures for a future period. The use of budget
enables executives to perform their management functions
more effectively since budget provides them with the proper
guidance in matters of disbursement.
Philosophy

The values and beliefs an organization holds as

the guiding light is the company’s philosophy.
Strategy

It is the method of shaping a company’s future and involves

determining the long-run direction of the organization.
The word strategy originated with the Greeks around 400
B.C. It pertained to the art and science of directing military
forces. A strategy outlines the basic art steps and
management intends to do to achieve its objectives.
 DECISION MAKING

This is the process of choosing a specific procedure or course of action

from among several possible alternatives. Judgment is important in
decision making. Decision making can be determined by non-
quantitative means, such as intuition, facts, experiences, and options.
Many decisions in management are also determined by quantitative
means such as operations research, linear programming, simulation,
Monte Carlo, gaming, and program evaluation review technique
(PERT).
 Techniques of Decision Making:

Marginal Financial Break-even

Analysis Analysis Analysis