PRINCIPLES OF

MANAGEMENT
Prepared By:
Engr. Shawn Michael F.
Fabrigar
Technological University of the Philippines
Electrical Engineering Department
College of Engineering
Manila, Philippines
 PLANNING
• Importance
• Objectives
• Process
• Policies and procedures
• Types of planning
• Decision making
• Process of decision making
• Types of decision
• Problems involved in decision making.
PLANNING
What is Planning?
• It involves defining the organization’s goals, establishing an overall strategy,
and developing a comprehensive set of plans to integrate and coordinate
organizational work.

• Informal planning – nothing is written down.

- little or no sharing of goals
- general and lacking in continuity

• formal planning – written

- defines specific goals
 Benefits of Planning
• Allows decisions to be made ahead of time.
• Permits anticipation of consequences.
• Provides direction and a sense of purpose.
• Provides a unifying framework; avoiding piecemeal decision making.
• Improves competitive strength
• Achieves better coordination
• Helps identify threats and opportunities and reduces risks.
• Facilitates managerial control through the setting of standards for
monitoring and measuring performance.
 Why Do Managers Plan? / Importance of Planning
Purposes of Planning
• It is the primary management function that establishes the
basis for all other management functions
• It establishes coordinated effort
• It reduces uncertainty
• It reduces overlapping and wasteful activities
• Manage complexities & competition
• It establishes goals and standards used in controlling
 Steps in Planning
1. Being Aware of Opportunities
2. Establishing Objectives or Goals
3. Developing Premises
4. Identify/Determining Alternative Courses
5. Evaluating Alternative Courses
6. Selecting a Course
7. Formulating Derivative Plans
8. Quantifying Plans by Budgeting
 Steps in Planning
• Being Aware of Opportunities: In light of Market,
Competition Customer desire, Strength and weaknesses
• Setting objectives or goals: Where we want to be & what
we want to accomplish & when
• Considering planning premises: In what environment will
our plans operate
• Identifying alternatives: What are the most promising
alternatives to accomplishing our objectives
 Steps in Planning
• Comparing alternatives in light of goals sought: Which
alternative meets our goals at lowest cost & at highest profit
• Choosing an alternative: Selecting the course of action
• Formulating derivative plans: such plans as to buy
equipment, buy materials, hire & train workers
• Budgets: Develop such budgets as Volume & price of sale
operating expenses necessary for plans, Capital expenditure
TYPES OF PLANS
 Types of Plans based on Breadth
• Strategic Plans - Apply to the entire organization
- establish organization’s overall goals
- seek to position the organization in terms of it’s
environment
• Operational Plans – Specify the details of how the overall
goals are to be achieved
- tend to cover short time periods
 Types of Plans based on Time
• Long-term plans – time frame beyond three years
• short-term plans – cover one year or less

Types of Plans based on Specification

• Specific plans – clearly defined with little room for interpretation
- required clarity and predictability often do not exist
• Directional plans– flexible plans that set out general guidelines
- provide focus without limiting courses of action
 Types of Plans based on frequency of use
• Single-use plans – One-time plans specifically designed to
meet the needs of a unique situation
- seek to position the organization in terms of it’s
environment
• Standing plans – Ongoing plans that provide guidance for
activities performed repeatedly
- include policies, procedures, and rules
DECISION MAKING
 Managerial Decision Making
• Decision making: the process by which managers respond to
opportunities and threats by analyzing options, and making
decisions about goals and course of action.

• Decision in response to opportunities: managers respond to

ways to improve organization performance.

• Decision in response to threats: occurs when managers are

impacted by adverse events to the organization.
 Types of Decision Making
• Programmed Decisions: routine, almost automatic process.
- Managers have made decision many times before
- There are rules or guidelines to follow.
- Example: Deciding to reorder project materials

• Non-Programmed Decisions: unusual situations that have not been often addressed
- No rules to follow since the decision is new.
- These decisions are made based on information, and a manager’s intuition and
judgment.
- Example: Should the firm invest in a new technology?
 The Classical Model
• Classical model of decision making: a prescriptive model
that tells how the decision should be made.
- Assumes managers have access to all the information
needed to reach a decision.
- Managers can then make the optimum decision by easily
ranking their own preferences among alternatives.
- Unfortunately, managers often do not have all (or even
most) required information.
The Classical Model
 The Administrative Model
• Administrative Model of decision making: Challenges the
classical assumptions that managers have and process all the
information.
- As a result, decision making is risky.

• Bounded rationality: There is a large number of alternatives

and information is vast so that managers cannot consider it all.
- Decisions are limited by people’s cognitive abilities.
References:
• https://www.slideshare.net/BALASRIPRASADKAMARAP/pom-
unitii-principles-of-management-notes-bba-i-semester-ou