Chapter 3 Lesson 1-5 PDF

“Those who fail to plan, plan to fail.” Lesson 1: Definition and Nature of Planning Objective: Discuss the nature of planning. Planning ▪– is a process that involves the setting of organization’s goals establishing strategies for accomplishing those goals, and developing plans of action or means...

“Those who fail to plan, plan to fail.” Lesson 1: Definition and Nature of Planning Objective: Discuss the nature of planning. Planning ▪– is a process that involves the setting of organization’s goals establishing strategies for accomplishing those goals, and developing plans of action or means that managers intend to use to achieve organizational goals. Definition of Terms: ▪ Goal Setting – the identification of targets or desired ends that management wants to reach. ▪ Vision – a mental image of what the organization will be in the future as desired by the company management and employees. ▪ Mission – basic purpose of an organization and range of their operation. ▪ Objectives – steps needed in order to attain desired ends.  Why Do Managers Plan? Purposes of Planning ▪ Provides direction ▪ Reduces uncertainty ▪ Minimizes waste and redundancy ▪ Sets the standards for controlling Planning is important for the following reasons: ▪ It provides direction to all the organization’s human resources – both managers as well as the employees. ▪ It reduces uncertainty; it compels managers to consider future events that may affect their company. ▪ Minimizing of waste 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. ▪ Establishing goals and standards during planning may be used for controlling, another necessary managerial function. Relationship of Planning to Individual and Organizational Performance ▪Is there a clear relationship between planning and performance? Lesson 2: Types of Plans Objective: Compare and contrast the different types 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 – the completeness of planning coverage; for example: it may start from plan that covers the entire organization called the strategic plans, up to operational plans that apply to a particular operational area only. Length of time covered or time frame – a plan may be long-term or short-term plans. Specificity – refers to very detailed, clearly defined plans wherein objectives are clearly stated and could easily be understood. Frequency of use – refers to the number of times or instances a plan may be used.  Types of Plans 1. Strategic plans – plan’s that establish the organization’s overall goals and apply to the entire firm, they are broad in scope and are the responsibility of the CEO, president, and general manager of the company. 2. Operational plans - plans that apply to a particular unit area only; their scope is narrow; achievement of the company goals may not be achieved if the operational plans are not clear. 3. Long-term plans – plans that go beyond three years; everyone must understand the long-term plan to avoid confusion that may divert the organization’s members’ attention. 4. Short-term plans – plans that cover one year or less; such plans must lead toward the attainment of long term goals and are the responsibility of the unit/department heads. 5. Directional plans – plans that are flexible or give general guidelines only; although flexible and general, these plans must still be related to strategic plans. 6. Specific Plans – plans that are clearly stated and which have no room for interpretation; language used must be very understandable. 7. Single-use plans – plans used or stated once only as this applies to the entire organization; refer to the strategic plans of the firm. 8. Standing plans – plans that are on-going; provide guidelines for different activities done repeatedly; refer to the identified activities of operational plans. 7–14 Specific Versus Directional Plans Steps in Planning (Schermerhorn 2008) 1. Define your goals/objectives by identifying desired outcomes results in very specific ways. 2. Determine where you stand in relation to set goals/objectives; know your strengths and weaknesses. 3. Develop premises regarding future conditions; anticipate future events, generate alternative “scenarios” for what may happen; identify for each scenario things that may help or hinder progress toward your goals/objectives. 4. Analyze and choose among actions alternatives; list and carefully evaluate possible actions and choose the alternative most likely to accomplish goals objectives. 5. Implement the plan and evaluate results; take corrective action and revise plans as needed. Exercise: 1.Choose one of the formal goals set by your school. List down three operational plans that will enable the school administrators / coordinators to achieve this chosen goal. Lesson 3: Types of Planning at Different Levels of the Firm Objective: Describe planning at different levels in the firm. Different levels in the firm are all engaged in planning. However, all the resulting plans must be related to one another and directed toward the same goals. Planning at Different Levels in the Firm 1. Top-level Management Planning (Strategic Planning) – starts with defining the organization’s goals/objectives, the major targets related to the maintenance of the organization’s stability, and its organizational culture, values, and growth improving its productivity, profitability, effectiveness, efficiency among others. 2. Middle-level Management Planning (Tactical Planning) – refers to a set of procedure for changing and transforming broad strategic goals and plans into specific goals and plans that are that are applicable and needed in one unit / portion of the organizational goals. 3. Operational plans sit at the bottom of the totem pole; they are the plans that are made by frontline, or low-level, managers. All operational plans are focused on the specific procedures and processes that occur within the lowest levels of the organization. 4. Even the best plans can fail, especially in today's fast-paced, chaotic business environment, and as such, it is important for managers at all levels to engage in contingency planning. Contingency plans allow a manager to be flexible and change-savvy by providing an alternative course of action, which can be implemented if and when an original plan fails to produce the anticipated result. Lesson 4: Planning Techniques and Tools and their Applications Objective: Apply appropriate planning techniques and tools. 1. Forecasting ✓An attempt to predict what may happen in the future. ✓A planning tool that helps management in its attempts to cope with the uncertainty of the future, relying mainly on data from the past and present and analysis of trends. ✓It starts with certain assumptions based on the management's experience, knowledge, and judgment.  Forecasting Techniques Types of Forecasting Techniques ✓Quantitative ✓Qualitative  Forecasting Techniques Quantitative Time series analysis Regression models Econometric models Economic indicators Substitution effect Qualitative Jury of opinion Sales force composition Customer evaluation  Forecasting Techniques Quantitative Time series analysis Regression models Econometric models Economic indicators Substitution effect  Forecasting Techniques Qualitative Jury of opinion Sales force composition Customer evaluation 2. Contingency Planning - Offer alternative courses of action when the unexpected happens or when things go wrong. This plan must be prepared by managers ready for implementation when things do not turn out as they should be. 3. Scenario Planning - Planning for future state of affairs is a long-term version of contingency planning. Several future states of affairs must be identified and alternative plans must be prepared in order to meet the changes of challenges in the future. This is a big help for organizations because it allows them to plan ahead and make necessary adjustments in their strategies and operations. 4. Benchmarking -planning technique that generally involves external comparisons of company’s practices and technologies with those of other companies. -identifying the best practices (achieved results) of industry leaders and then comparing your own business performance with them. Benchmarking steps: 1.Identify the area you want to improve. 2.Measure your performance in that area. 3.Decide which companies or industry you would like to benchmark. 4.Determine how you will collect the data on your target. 5.Compare data collected to your performance. 6.Develop an action plan to close any gaps you may discover. 5. Participatory Planning planning process that includes the people who will be affected by the plans and those who will be asked to implement them in all planning steps. Lesson 5: Decision Making Objective: Formulate a decision from several alternatives.  Decision Making a thorough process of selecting a logical choice from the available options. It begins with problem identification and ends with the evaluation of implemented solutions.  8 Steps in Decision Making Process 1.Identify the problem. 2.Identify the decision criteria 3.Allocate weights to the criteria 4.Develop alternatives 5.Analyze the alternatives 6.Select an alternative 7.Implement the chosen alternative 8.Evaluate decision effectiveness. Step 1: Identify the Problem The problem may be defined as a puzzling circumstance or a discrepancy between an existing and a desired condition. Step 2: Identify the Decision Criteria These are important or relevant to resolving the identified problem. Step 3: Allocate Weights to the Criteria This is done in order to give the decision maker the correct priority in making the decision. Step 4: Develop Alternatives This step requires the decision maker to list down possible alternatives that could help resolve the identified problem. Step 5: Analyze the Alternatives Alternatives must be carefully evaluated by the decision maker using the criteria identified in step 2. Step 6: Select an Alternative This is the process of choosing the best alternative or the one which has the highest total points in step 5. Step 7: Implement the Chosen Alternative This step puts the decision into action. Changes in the environment must be observed and assessed, especially in cases of long-term decision, to see if the chosen alternative is still the best one. Step 8: Evaluate the Decision Effectiveness This is the last stage and involves the evaluation of the outcome or result of the decision to see if the problem was resolved. If the problem still exists, the manager has to assess what went wrong and if needed, repeat the whole step or the whole process. Types of Decision ▪ Structured or programmed decisions – a decision that is repetitive and can be handled using a routine approach. ▪ Unstructured or non-programmed decisions – applied to the resolution of problems that are new or unusual and for which information is incomplete. Type of Decision Making Conditions ▪ Certainty Conditions – ideal conditions in depicting problems; these are situations in which a manager can make precise decisions because the results of all alternatives are known. ▪ Risk or uncertainty conditions – this condition compel the decision maker to do estimates regarding the possible occurrence of certain outcomes that may affect his or her chosen solution to a problem.