PLANNING

Any kind of organization towards

activities to be done in the future. It
defines the organizations goals,
appropriate strategies, and
develops coordination between
activities.
 OBJECTIVES
Specific with a definite time
frame.

GOALS
Broad in terms of scope and
unbounded in terms of time.
 2 Types of Planning
FORMAL INFORMAL
A plan reduced to written A plan conceived in the
form. It is diciplned and any mind of the manager. It is
changes to be made and flexible and can involve
written in advance. sudden changes.
1. PROVIDES SPECIFIC
BENEFITS OF
DIRECTION PLANNING
2. MINIMIZES DEGREE 4. INSTALLS CONTROL
OF RISKS MEASURES

3. IMPROVES 5. FACILITATES
PRODUCTIVITY AND DECICION MAKING
EFFICIENCY
1. SET THE GOALS
Lack of clear goals can lead to confusion.
Define what the business needs or BASIC STEPS IN
PLANNING
requires. Goals may be changed.

2. EVALUATE THE
ENVIRONMENT
EXTERNAL INTERNAL
ENVIRONMENT ENVIRONMENT
Provides information about trends in the industry Identifies the resources and strengths
and opportunities that can be used. “With the available to the business, and provides
current trends in the industry, how can we information about its present status or
achieve our goals?” capacity.
3. IDENTIFY
BARRIERS
Barriers are forces that may hinder the
attainment of goals or objectives.

EXTERNAL INTERNAL
BARRIERS BARRIERS
They are forces from outside the business. Forces within the business.

4. DEVELOP A PLAN AND

ALTERNATIVES
Keeping in mind various environmental factors, a plan should include suggestions from different
functional areas. Alternative courses should have clear pros and cons and expected benefits to enchance
the planning and evaluation process.
5. IMPLEMENT THE PLAN
The implementation of the plan requires careful monitoring. The manager must
continuously check on the progress of the implementation and regularly evaluate
any abnormalities.

6. REVIEW THE RESULTS

Plans do not remain the same. Plans must be reviewed to know whether it will lead to
the achievement of goals.
BASIC PRINCIPLES IN
PLANNING (SMART)
Specific Measurable
Must have clear parameters or indicators A goal must be measurable by number.
that will help realize the vision-mission
statement of the company Stated Goal
Clearly states exact numbers and a clear
An official statement such as a mission-
time frame, as well as how the goal will be
vission
achieved
Will propel all members of an organization in
the same direction Real Goal
What the business is actually doing
It contains specific activities measurable by
output, amount, and level of performance
Attainable and Realistic Time-bound
Take into consideration the various internal A good business plan with have a time frame
and external variables when planning A business should achieve its goals
Beware of the strengths and weaknesses according to a schedule
of the business to determine the attainability A sound basis for evaluating if a business is
of your goal capable of achieving its goal.
Is your goal beyond the businesses
capabilities?
It is important to be critical and honest
about whatan organization can or can not
do
 SCOPE
The coverage or bredth of the plan

STRATEGIC PLAN
Covers the whole organization
Conducted by top management, or from the corporate

TYPES level to meet the goals of the organization, usually in

broad terms
Defines the final direction of the business

OF OPERATIONAL PLAN
“The functional plan”
Provides the blueprint for how the strategic plan will be

PLANS implemented and the specific actions to be taken

Trims down the broad coverage of the strategic plan and
splits it into phases/areas
Prepared from the functional level/operating units
Cover a one-year/annual period
 TIME FRAME

LONG-TERM SHORT-TERM
A plan immediately implemented
A period of more than 3 years
within a year or less
Usually broad with a wider scope
Also considered an operational plan

MEDIUM-TERM
Bridges long-term and short-term
and includes their intermediate
activities
Guides the short-term plan in the
overall direction of the business
FREQUENCY OF APPLICATIONS
SINGLE-USE PROJECT
A plan particularly intended for one A major unit of the program
activity. Once accomplished, no Each project is handled by one
further activities will take place person to ensure proper
implementation
PROGRAM Contains a limited scope and a
Has a substantial number of specific time frame
activities BUDGET
Contains steps to be taken,
A plan expressed in monetary units
parameters for evaluating the
and a control device to limit the
performance, and people involved
number of expenses
in the program
Used in the program or project. Any
Composed of several projects
activities should be in accordance
with the budget
FREQUENCY OF APPLICATIONS
STANDING PLAN
Activities repeated by the entire
PROCEDURES
business firm inherent to the Detailed statements on how
nature and operation of its business. policies are put in action
Limited to a particular activity and
Ex: loan processing of a rural bank,
the making of food in a restaurant specific in implementation
Decisions made by managers are
called a standardized decicion RULES
specific statements on what not to
POLICIES do
General or broad guidelines that A specific action to follow or not to
govern daily activities/decisions follow
Set by top management
What should and should not be
PURPOSE
SPECIFIC PLAN
DIRECTIONAL
When it specifies the goal to
Does not specify parameters
achieve within a designated
Preferable when the situation
time frame
has higher uncertainty and
Most preferable when the
there are no accurate
market condition is
predictions in the market
determinable and the
The manager adapts a flexible
uncertainty is considered
stand
low
It eases doubts and does
not cause ambiguity
between members
 PLANNING AT DIFFERENT
LEVELS OF THE FIRM
TOP LEVEL MIDDLE LEVEL
MANAGEMENT MANAGEMENT
Thet highest position in a company. They The link between top and low level
are responsible for the companies overall management. They support the top level
direction. and establish businesses competitiveness,
critically study competitors, and adopt the
proper competitive strategies.
LOW LEVEL MANAGEMENT
Sets its goals according to the plan outlined by middle-level management.
They have the widest scope of the operational planning, and spend most of their time
directing day-to-day activities rather any actual conceptual planning.
 CORPORATE-LEVEL STRATEGY
A strategy created by top management meant to dictate the
direction of the entire organization. It is an overarching plan
covering all oparations with the highest level of strategy.

ENVIRONMENTAL SCANNING
To formulate a corporate-level strategy an environmental scanning
must be conducted. Environmental scanning is the analyzing and
detecting of internal and external environment to determine an
organizations strengths and weaknesses, trends and
opportunities.
 TYPES OF CORPORATE-LEVEL STRATEGIES
OF TOP LEVEL MANAGEMENT

GROWTH STRATEGY
RENEWAL/TURNAROUND Used to expand a businesses market,
STRATEGY increase its number of products, or go into
vertigal/horizontal integration
Used when a company experiences
substantial and continuing poor
performance
STABILITY STRATEGY
Caused by economic problems
caused by the business community When a business continues to do what its
doing without change
COMMON COMPETITIVE STRATEGIES
FOR MIDDLE LEVEL MANAGEMENT

COST LEADERSHIP STRATEGY

Attempting to reach a competitive advantige by producing
goods/services at the lowest cost

DIFFERANTIATION STRATEGY
Attracting customers by making the company,
product, or service unique in some way to stand out
against other companies
 FIVE COMPEITING FORCES IN THE
INDUSTRY

THREAT OF NEW THREAT OF BARGAINING BARGAINING RIVALRY AMONG

ENTRANTS SUBSTITUE POWER OF POWER OF FIRMS IN THE
PRODUCTS BUYERS SUPPLIERS INDUSTRY
Activity
 PLANNING TECHNIQUES AND
TOOLS
-Plans at various levels are not only prepared simply in
accordance with the whims and caprices of the managers.
Rather, the plans are prepared with the aid of some planning
techniques and tools.

-The term techniques and tools pertain to instruments that

may facilitate the preparation of the plans.
 Qualitive
The Planning techniques
and tools are broadly
classified as either:

Quantitive
 Quantitative Techniques Qualitative Techniques
The quantitative techniques make use of the qualitative techniques of preparing a plan
numerical values in the process of does not make use of numbers as basis for the
formulating the plans and evaluating the
final decision.
results.

This techniques Assumes that the numerical This approach is usually based on the
value is highly influenced by the relationship judgement or professional experience of
between variables. experts in the field of management,
economics,finance,accounting,production,oper
Example: ation,and engineering.
If it has established that there is a direct
relationship between the level of
The qualitative techniques that must be
consumption and the population, the
estimated number of units to produce shall employed will depend primarily on the
consider the expected share in the projected purpose of the plan or study. the various
population. qualitative techniques to choose from are as
then quantitative techniques shall include follows:
among others the ff: 1. PESTEL analysis
1. Break-even analysis
2. SWOT analysis
2. Linear Programming
3. Five Forces Model
3. PERT/CPM
and more..... 4. and more.....
 DECISION-MAKING FROM
SEVERAL ALTERNATIVES
Planning is basically a decision-making process. All managers from various levels
make decisions from several alternatives.
In other words, there is no decision-making process when there are no alternatives.
Stated otherwise, one does not have to decide when there are no choices.

For example,a junior high school student has to decide whether to take the vocational
track (first alternative) or academic track(second alternative) in senior high school.
In this case, there are two alternatives.However,the junior high school student does
not have to decide if he or she cannot go to college because of financial issues.
He or she just has to take the vocational track in senior high school.
The Role of Rationality and Intuition
in the Decision-making Process
 It is highly emphasized that at this point, the manager has already
determined the business problem or has already set the goal, and
identified viable alternatives.Remember likewise that the identified
alternatives should meet the requirements of SMART principles.

In making a decision from alternatives,the manager may observe these

procedural steps:

a. Identify the decision criteria.

b. Provide weights to the criteria.

c. Analyze the alternatives quantitatively.

d. Evaluate the alternatives using the qualitative factors.

e. Decide on the alternatives to implement.

 Identify the Decision Criteria

-There is no specific rule as to the identification of criteria to beused.The

most important concern is that the criteria should be reflective of or
parallel to the goals or objectives.

Provide Weights to the Criteria

-Considering the effects of the alternatives on the resources and on the

priority set by the business,each criterion is provided with a weight. The
criterion which the management considers important bears the highest
weight.

Using the preceding example,the management may give a weight of 10

to the cost of borrowing co stand 8 to the number of customers.
 Analyze the Alternatives Quantitatively
-
-This is usually a difficult task since there is a need to maluse of verifiable data in the
analysis. The skills and knowledge of accountants,economists,engineer
statisticians,and other experts play very significant roles at this point in the decision-
making process.

For example,the accountant may determine the estimated cost of capital while the
economist may determine the number of expected customers after studying their
borrowing behavior.

Evaluate the Alternatives Using the Qualitative Factors.

-Usually,the manager decides not simply by quantitative analysis but by giving equal
importance to the qualitative factors.
There are instances when the qualitative factors have significant influence on the final
decision of the management.
For example,all the quantitative elements favor extending loans to a group of farmer-
borrowers toincrease the loan portfolio. However,the peace-and-order situation does
not warrant the same scenario for the next three years since farmers may not be able
to pay the principal and the interest.
 Decide on the Alternatives to Implement.

-After fully evaluating all the alternatives,the next steps to

implement the chosen alternative. In this stage, the
manager must continually monitor the progress of the
plan to determine whether there are events that
necessitate modifying the plan.
Once there are new developments that occur during the
implementation phase with significant effect on the
business,the plan should immediately be modified.