Chapter 3 Planning

recall - PEST ANALYSIS - SWOT ANALYSIS - 3 Types of Business CHAPTER 3 FUNDAMENTALS OF PLANNING “If you fail to paln,you are planning to fail.” -Benjamin Franklin Topical Overview The planning Function  The planning Process  Types of Plans Used by Managers ...

recall - PEST ANALYSIS - SWOT ANALYSIS - 3 Types of Business CHAPTER 3 FUNDAMENTALS OF PLANNING “If you fail to paln,you are planning to fail.” -Benjamin Franklin Topical Overview The planning Function  The planning Process  Types of Plans Used by Managers  Planning tools and Techniques  Time Management  Avoiding Procastiantion  Decision -Making  The Decision-Making process  Influences on Decion Making  Introduction to Strategic Planning and Management Lesson 3.1 The Planning Function Planning is the central function of management.All the managemrnt functions,planning is the one that sets the stage for the other functions by providing a sense of direction on how to accomplish organizational objectives. Planning,simply put is the process of setting objectives and determining ways to achieve them.It involves the setting of goals or objectives,identifying strategies and tactics,and formulating rules,policies,and procedure. The plan is apredetermined course of action that is intended to achieve a specific goal.It is a statement of objectives to be through the conduct of certain actions steps. In other words,a plan resembles a “blueprint” for action. NATURE OF PLANNING Planning is considered to be an intellectual process.It requires the use of intellect,foresight,sound judgement,and intuition. Some of the essential features and characteristics of the palnning function are as follows. 1. Planning is goal-oriented. 2. Planning is a primary manegerial function. 3. Planning is pervasive. 4.Planning involves coordination. 5.Planning is a process. IMPORTANCE AND BENIFITS OF PLANNING  1.Planning improves organizational focus.  2. Planning offsets uncertainty and change.  3.Planning improves organizational flexibility.  4. Planning improves action orientation.  5.Planning secures economy and efficiency.  6. Planning improves coordination and control.  7.Planning increaes organizational effectiveness.  ADVANTAGES OF PLANNING With a well-crafted plan,the  palnning functions bring to the organization certain advantages ,some of which are as follows: 1.All efforts are directed toward desired objectives or results. 2. Unproductive work and waste of resources can be mininimized.  3. Planning enables a company to remain competitive with rivals in the industry.  4. Through careful planning,mistakes and delays could be anticipated and avoided.  5.Planning allows companies to manage change effectively.  6.Planning systematically investigates and identifies alternative methods or alternative solutions to aproblem.  7.Planning maximizes utilization of avilable resources for optimum productivity and profits.  8.Planning sets the foundation for control standards.  9.Planning enables management to analyze and respond to its environment.  DISADVANTAGE OF PLANNING  1. Planning cannot be give perfect forecast against uncertatinty.  2. Planning can sometimes be very costly.  3. When palns are flexible,the organization may find it difficult to adapt changes in circumstances.  4. Too much palnning sometimes delays action.  5. Planning sometimes place too much attention on the future instead of the present.  Lesson 3.2 The Planning Process The planning process involves the following steps:  1. Define your objectives.  2. Analyze situations and resources.  3. Develop premises regarding future condtions.  4.Analyze alternative courses of action and make a pan.  5. Implement the plan and evaluate results. Setting Objectives The first step in the palnning process is to know and identify what you want to achieve.This is important because it clarifies what the desired results are going to be and gives a sense od direction for the other succeeding steps in the process.  Obectives are defined as the goals that the organization wants to achieve.Through objectives,which are considered as the endpoints of planning,the specific results or desired outcomes that one intends to achieve for the organization are identified.Objectives are organizational targets that set for the organization the direction it wants to take and provide a basis for measuring its effectiveness and efficiency.  To be effective,goals or objectives should have certain qualities,which are easy to remember with the acronym SMART:  1. Specific.Goals should be precise and exact.  2. Measurable. Goals should quantify desired results.  3. Attainable( but challenging). Goals should be realistically achievable but should be challenging enough to encourage employees to work hard and be creative.  4. Relevant.Goals should contribute to the overall purpose of the organization.  5.Time-bound.Goals should specify a target date for completion.  Vision and Mission The process of setting objectives sometimes coincides with or is preceded by the formulation of the organization’s vision and mission. A vision is afuturistic statement of what the organization wants to become in the long - term. A mission,on the otherhand,describes the fundamental reason for the existence of the organization a purpose behind why it does what it does and whay it would like to become what it envision to be in the future that gives the firm a sense of direction in making its activities meaningful and interesting. SITUATIONAL ANALYSIS After outlining objectives,the next step in the planning process is situational analysis. It is the method of carefully analyzing and evaluating objectives in realtion to the environment both internal and externak as well as identifying available resources,strenghts and  weaknesses in realtion to the object that is desired.  This process analyze past events,examines current conditions,and attempts to forecast future trends.It also evaluates whether resources are adequate or available to be able to achieve predetermined targets.This where one determines where he stands in reaching his objectives.  SCENARIO ANALYSIS.  The next step in the planning process is called scenario analysis. It is the process of analyzing future events are anticipated and alternative “scenarios”for what may happen are generated.This is important to identify the factors in each scenario that may help or hinder the accomplishment of the objectives set. Analysis of Alternatives  The fourth step is the identification of alternative courses of action that may be undertaken to achieve predetremined goals. Based on the situational and scenario analyses that were performed a range of alternative courses of action may be identified and lsited. These courses of action then should be analyzed and evaluated in terms of their advantages and disadvanatges,cost,practically,effects and potential of being able to mmeet specified targets. Implementation and Monitoring  The final step in planning p[rocess is the implementation of the plan. The identified action steps are now carried out.Progress is then measured as to how the objectives are being achieved.More over,actual results are being compared from expected outxcomes for purpose of feedback and evaluation.Corrective actions are the taken when necssary and initial plans are revised and modified as needed. LESSON 2 : TYPES OF PLANS 1.) Functional Area Plans. Plans may be prepared according to the needs of the different functional areas. Marketing Plan - is the written document or blueprint for implementing and controlling an organization's marketing activities related to be a particular marketing strategy. Production Plan - is a written document that states the quantity of output a company must produce in broad term and by product family. Financial Plan - is a document that summarizes the current financial situation of the firm, analyzes financial needs, and recommends a direction for financial activities. Human Resources 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. Managers at the lower levels of organization use operational plans.  2.) Plans with Time Horizon. Short-Range Plans - are plans intended to cover a period of less than one year. First line supervisors are mostly concerned with these plans. Long-Range Plan - are plans covering a time span of more than one year. It is mostly undertaken by Middle and top management.  3.) Plans with varied Frequency of Use - are plans covering a time span of more than one year. Middle and top management mostly undertake these. Standing Plans - These are plans that are used again and again, and they focus on managerial situations that recur repeatedly. Single-Use Plan - These plans are specifically developed to implement courses of action that are relatively unique and are unlikely to be repeated. Plans to according to Manegerial Level STRATEGIC PLAN- are long -range plans that set broad directions for the organization. They are provide a guide allocating organizational resources intended for long-term performance. A stratetgy is a general idea of what is to be done to achieve goal.In preparing strategic plans,top management identifies to decisons on how to achieve the long term vision of the organization. Middle-managers,who supervise working areas,divisons,and units prepare tactical plans.A tactical paln is an intermidiate term paln that translates broad strategic goals included in a strategic into specific goals an action steps into a specific portion or function within an organization. Tactics, in contrast to strategy,refer to the more specific and detailed steps on how the stratrgy is to be implemted. Lesson 3 : Planning at different levels in the firm Strategic Planning for Top Management - determining major goal of the organization - concern of top management - the whole company is considered Intermediate Planning for Middle Management - concern of middle management - supporting strategic plans Operational Planning for Lower Management - determining specific task - responsibility of lower management Lesson 4 : Planning techniques and tools Most popular and useful tools and techniques used in planning are: 1.Forecasting-refers to the process of making assumptions about what will happen in the future. Qualitative forecasting- uses expert opinions to predict the future. Quantitative forecasting-uses mathematical and statistical techniques and analyses of historical data and surveys to predict future events.  Contingecy planning is the process of identifying alternative courses of action that can be implemented to meet the needs of changing circumstances.The concep of contingency planning is also widely recognized in the expression of always having a “Plan B in case Plan A does not work.  Scenario Planning It always ask the question “what if this happens?” and identifies courses of action as aresponse.For this reason,planning may also sometimes be called “what if” analysis.  Benchmarking is atechnique that makes use of external comparisons to better evaluate current performance and identify possible actions for the future.The process of benchmarking identifies best practices which are methods or techniques of other organizations that make them superior to others and stant out from among their competitors.  Staff Planners-They hire or seek the help of person who do the planning for the. These persons called staff planners. Lesson 3.5 TIME MANAGEMENT  One of these resources is time. It is important for managers and for all ou us to be able to optimize the use of time at work to cahieve results.  Time management as most authors would be put it refers to the act of managing time a a resource to be able to perform importnat tasks and achieve targeted goals or abjectvives. However, if we analyze it although time is considerd to be a resource ane cannott literally “manage” time. This is because we can only manage that which we can control.  The process of optimizing time in terms of two aspects: 1. Time budgeting or time allocation which refers tp determining tasks to be achieved for an identified time period. 2. Self management which refers to managing oneself ane activities and aligning ir with an available time resources to be optimized. Personal “Time Management” Tips 1. Prioritize. Work on the most important and urgent task first. 2.Schedule your task and follow your schedule. 3. Avoid request or other activities that might divert you from what you really should be doing. 4. Do not get bogged down in details too much. 5. Avoid procrastination. 6. Develop system for managing your technological lifestyle. 7 Set realistic and doable deadlines in your to-do list and schedules and allow your schedules to flexible enough so as not to sacrifice the more important matters of your personal life.  Lesson 3.6 Avoiding Procastination Procastination refers to the delaying of action for no good reason.It is a matter of personal of personal attitude or preference,intentionally delaying doing somerthing when one knows it can be done or it already should be done. According to Steven Berglas in his Harvard Business Review article “Chronic Time Abuse”, when procrastinate there is agap between intention and action and this often has an effect on personal or workplace productivity especially if deadlines and targets are expected to be met.  Why do People Procastinate In the study of workplace psychology, there are many different reason why people procastinate some with deep-rooted justifications,whereas some are simply superficial. Some of these are as follows: 1.Some people do not proceed to doing tasks at once because they fear failure or negative consequences. 2. Many people procastinate because they want to delay doing uncomfortable,overwhelming or tedious tasks. 3. People frequently choose not to do a particular task they feel that the rewards they will obtain from doing so may not be meanigful. 4.Some people procastinate because they do not like being controlled or the feeling that their schedules or to-do lists are overwhelming. 5. People sometimes are assigned to task they do not find interesting. 6. One curious reason why people procastinate is to achieve the simulation and excitement that comes from rushing to meet a deadline. 7.Procastinate is sometimes a sympton of anegative emotional state such as self-defeating behavior or depression.  Tips on how to avoid Procastination Avoiding the tendency to procastinate is really a matter of behavior and attitude adjustment. Some tips to help you avoid procastination are as follows: 1. Focus on doing a particular task one at a time by breaking a major task down to its smaller units. 2. Make a commitment to others in terms of targets or deadlines to encourage you to work to meet them. 3. Reward yourself for achieving your targets ,deadlines or milestones. 4. Try to calculating the cost every time you choose to procrastinate. 5. Post personal reminders in your work station or mobile device to remind you of your to-do list and schedules. 6. Post encouraging notes in your work and living areas to motivate you to finish your taska and achieve your targets or goals. 7. keep track of your work progress by using a progress chart or making notes in your daily planner or work organizer.  Lesson 3.7 DECISION -MAKING Manegerial decison-making is one of the ultimate and most significant taska that a manger needs to do. The success of an organization and its ability to reach its objectives depend on how well a manager solves problems that arise and makes important decisions on behalf of the organization. WHAT IS A PROBLEM? A problem may be described as apressing situation that warrants attention and needs to be a dealt with.Ofentimes,it represesnts a discrepancy or inconsistency between an actual state and desired condtion. When a problem arises,action steps must be takene to address it.These alternative courses of action are called solutions.Ultimately only one course of action has to be chosen. This is called the decision. Hence,we can say that problem-solving is the process of identifying alternative courses of action to address the resolution of the problem ,whereas decision-making is the process of choosing the most viable and practical alternative as solution to the problem. TYPES OF MANEGERIAL DECISIONS Structured problems which are problems that are famillia,straight forward and clear.These problems are considered routinary and tend to occur over and over again. It is typically solved by a programmed decisions that are repetitive and routinirary and based on solutions culled from past experiences. Unstructured problems which are in the form of new or unusual situations that are entirely unfamiliar.These problems have not been experienced before and so are more difficult to deal with it. These problems require nonprogrammed decisions that necessitate novel or unique solutions. Crisis or Crisis situations that tend to threaten the entire well-being of the organization. Such situation requires extreme types of non- programmed decisions taht are usually dished out by the organization through the conduct of crisis management programs that are designed to prepare management to meet and address the demands brought about by crisis situations.  Lesson 3.8 : The Decision Making  Decision making is the process of defining the problem and identifying and choosing alternative courses of action in a manner appropriate to the demands of the situation.  > “The heart” of all the management function  > Decision making is responsibility of the manager.  The manager’s decision making skills are very crucial to his success as a professional. There are five usual steps in decision making; 1.identification and definition of the problem 2. developing alternative solutions 3. deciding on preferred course of action 4. implementing the decision and 5. evaluating the results Identifying and Diagnosing the Problem The first step in the decison-making process is identifying and diagnosing the problem. Two mistakes are usually committed in this process: 1. Defining the problem too narrowly or too broadly. 2. Focusing on symptoms instead of causes.  Developing Alternative Solutions The second step is to develpo and generate alternative courses of action to solve the problem identified. The following are some of the important criteria to be used when evaluating alternatives: 1.Cost -what efforts or resources need to be spent to solve the problem? 2. Benifits- what will we get in return when the problem is solved? 3. Timeliness-how fast can the solution be implemented? 4. Acceptability- is it practicallfeasibility,and realistic? 5.Ethical soundness- is it the right thing to do?  Selecting a Preffered Course of Action This “preffered” course of action is the point of choice after weighing all available alternatives. Management theory has two models of decision-making 1.classical decision model-assumes that decisions are made based on complete information available to the problem -solver.As a result the person makes an optimizing decision which is the alternative that gives the best or “perfect” solution to the problem. This situation therefore creates a bounded rationality which is a phenomenon that states decisons are made only within the constraints or limits of the information available. 2. behavioral decision model which assumes that people only act makes a satisficing decision which is the first satisfactory and practical solution. Implementing the Decision A decision is not really a decision and solution cannot really solve a problem until it is implemented.It is important however to take note that when implementing a decision to solve the problem,the manager make sure that the key persons from whom support is needed directly participate in the problem-solving process. Failure to do this may result in what is called a lack-of -participation error,which may cause the problem to remain unsolved. EVALUATING RESULTS The final step in the decion-making process is to evaluate wheter the choosen alternative or solution was effective in solving the problem or not.Evaluating the decisions you make will help improve your decision- making skills and enable you to reassess your past decions and revise or correct them as needed in the other decisions that you are going to make in the future. Lesson 3.9 Influences on Decision-Making Influence the decision-making process and bears significantly on the type of decision that is made. Some of these factors are as follows: 1. Heuristics and biases 2. Intuition-Based on experience ,feeling and perception 3. Personality and cognitive intelligence 4. Emotions 5.Quality and accessibilty of information 6. Degree of certainty 7. Crisis and conflict 8.Ethics and values 9.Procrastination 10.Creativity Introduction to Strategic Planning and Management Expounding on that concept is a specialized field of management study called strategic management. This field of management study looks at a strategy as a comprehensive action plan that identifies the long term dierction of an organiztion. Porter’s Five Forces Model 1. Industry competition 2.New entrants 3. substitute products or services 4. bargaining power of suppliers 5. bargaining power of customer An attractive industry is said to be one in which there is less existing competition few threats from new entrants or substitutes and low bargaining power among suppliers and buyers. In contrast an unaattractive industry is characterized as one in which there is intense rivalry among competitors. Porter’s Model for Competitive Strategy 1. market scope companies must be able to decide whether it wants to cater to a broad market only a narrow portion of the market. 2. in terms of source of competitive advantage companies must be able to decide on whether it would bank its strategies based on ow price or the uniqueness of its product or service. Michael Porter identified three general competitive strategies which firms may adopt to obtain competitive advanatage: 1. Cost leadership strategy.Organizations try to have lower costs in its production or distribution process to sell their product or services at lowe prices. This strategy is typically targeted price -sensetive customers who focus more on prices rather than uniqueness or quality of the product they are going to buy. 2. Differentation strategy. Organizations pursuing this strategy obtain competitive advantage by offering unique products to customers.Their focus is on the high quality of their products or services.This strategy is geared toward customers who value quality over price and would tend to buy products because of the uniqueness of their features that make the product “worth the money”. 3. Focus strategy. Organizations pursuing this strategy concentrate on a particular market segment or niche in an effort to serve the needs or meet the demands of that market segment bettrer than the others. Typical Product brands in the market Type of Product Cost Leadership Differentiation Strategy Focus Strategy strategy Toothpaste Beam Colgate Sensodyne Hapee Close-up Pepsodent Unique Systema Shampoo Rjoice Pantene Gard palmolive Dove Head&Shoulders Tressemme Clear Alfaparf Shampoo Barhsoap Zest Safeguard Dr.Kaufmann’s Palmolive Lesson 5 : Application of planning tools and techniques Success and failure of planning depend on a number of factors.  Condition- managers must be aware  Time factor- managers must use their time wisely  Resources available – supports, funds, materials  Skills and attitude of the management - commitment  Political, social and environmental conditions-  Physical facilities - Improved science and technology  Collection and analysis of data The Decision Making Process  Ø Diagnosing Problem (suliranin)  Ø Analyzing the Environment (suriin)  Ø Articulate Problem or Opportunity (ipahayag)  Ø Develop Viable Alternatives  Ø Evaluate Alternatives  Ø Make a Choice  Ø Implement Decision  Ø Evaluate and Adapt Decision Result ACTIVITY#1: Choose any business industry, create at least 5 plans. Explain the purpose of each business plan.