PLANNING

Organizations and Management

I. Definition and Nature of Planning

and by determining the enterprise's own
Planning is very important. As by nature, it
desired role. It involves determining various
inquires about organizational goals and
types and volumes of physical and other
targets and involves decision-making about
resources to be acquired from outside, to
desired ways and means to achieve them. It
allocate these resources efficiently among
is the most basic of all managerial functions.
competing claims, and to make
It is the process by which managers
arrangements for the systematic
establish goals and define the methods by
conversion of these resources into useful
which these goals are to be attained. It
outputs.
involves selecting missions and objectives
and the actions to achieve them; it requires As it is clear, plans have two (2) basic
decision-making, which is choosing from components: goals and action
among alternative future courses of action. It statements. Goals represent an end state
is, therefore, a rational approach to – the targets and results that managers
achieving pre-selected objectives. hope to achieve. Action statements
represent how an organization goes
Planning is taken as the foundation for
ahead to attain its goals. Planning is a
future activities. It is about deciding in
deliberate and conscious act through
advance what is to be done; that is, a
which managers determine a course of
plan is a projected course of action. So,
action for pursuing a specific goal.
planning can be thought of as deciding
a future course of action. It may also be Planning to a manager means thinking
treated as a process of thinking before about what is to be done, who is going to
doing it. do it, and how and when s/he will do it. It
also involves thinking about past events
Management has to plan for long-range
(retrospectively) and future opportunities
and short-range future direction by
and impending threats (prospectively).
looking ahead into the future, by
Planning requires determining
estimating and evaluating the future
organizational strengths and weaknesses
behavior of the relevant environment
and involves decision making about
desired ways and means to achieve
them. There are, however, differences
 PLANNING
Organizations and Management

between decision-making and planning.

Decisions can be made without planning 3. Pervasiveness of Planning. Planning is a
but planning cannot be done without unique and universal function of all
making decisions. managers. The character and scope of
planning may vary with each manager's
authority and with the nature of the policies
and plans outlined by superiors, but all
The nature of planning can be understood by managers must have some function of
examining its four (4) major aspects: planning. Because of one's authority or
1. Contribution of Planning to the Attainment position in the managerial hierarchy, one may
of Objectives. Since plans are made to attain do more or less of planning, but certainly, a
goals, every plan and all its support should manager always does a certain
contribute to the achievement of the amount/measure of
organization’s purpose and objectives. An planning.
organized enterprise exists to accomplish
4. The Efficiency of Plans. Plans should not
group objectives
only be effective, but also efficient. The
through willing and purposeful co-operation. effectiveness of a plan relates to the extent to
2. Primacy of Planning. That planning is the which it accomplishes the objectives.
prime managerial function is proved by the However, a plan is efficient if its contribution
fact that all other functions such as to the purpose and objectives offsets the
organizing, staffing, leading, and controlling costs and other factors required to formulate
are designed to support the accomplishment and operate it. Plans are efficient if they
of the enterprise's objectives. Planning achieve their objective at a reasonable cost
logically comes first before the execution of when such a cost is measured not only in
all other managerial functions as it involves terms of time, money, or production
establishing the objectives necessary for all but also in terms of satisfaction of the
group efforts. Also, all the other managerial individual or group. Both conceptual and
functions must be planned if they are to be practical reasons are put forward in support
effective. Control without a plan is of planning. Two (2) conceptual reasons
meaningless because the plan provides the supporting systematic planning by managers
basis or standard of control. are limited resources and an uncertain
environment.
PLANNING
Organizations and Management

II. Types of Plans action to be taken if events disrupt a planned

course of action.
Hierarchical Plans – These plans are drawn
at three (3) major hierarchical levels, namely,
the institutional, the managerial, and the III. Planning at Different Levels in the Firm
technical core. The plans in these three (3)
Planning is the part of management
levels are a strategic plan, administrative or
concerned with creating procedures, rules,
intermediate plan, and operational plan.
and guidelines for achieving a stated
Frequency-of-use Plans – Plans can also be objective. Planning is carried out at both the
categorized according to frequency or macro and micro levels. Managers
repetitiveness of use. They are broadly
need to create broad objectives and mission
classified as:
statements as well as look after the
• Standing Plans - These are drawn to day-to-day running of the company.
cover issues that managers face repeatedly.
Such a standing plan may be called a
Strategic Plan – This is a high-level overview
standard operating procedure (SOP).
of the entire business, its vision, objectives,
Generally, five (5) types of standing plans are
and value. This plan is the foundational basis
used: mission or purpose, strategy, policies,
of the organization and will dictate decisions
rules, and procedures.
in the long-term. The scope of the plan can
• Single-use Plans - These are
be two (2), three (3), five (5), or even 10 years.
prepared for single or unique situations or
problems and are normally discarded or
replaced after one use. Generally, four (4) Managers at every level will turn to the
types of single-use plansare used. These are strategic plan to guide their decisions. It will
objectives or goals, programs, projects, and also influence the culture within an
budgets. organization and how it interacts with
customers and the media. Thus, the strategic
Contingency Plans – These are made to deal
plan must be forward-looking, robust but
with situations that might crop up if these
flexible, with a keen focus on accommodating
assumptions turn out to be wrong. Thus,
contingency planning is the development of future growth.
alternative courses of
PLANNING
Organizations and Management

The crucial components of a strategic plan

are: Tactical Plan – This plan describes the tactics
the organization plans to use to achieve the

• Vision – Where does the organization want ambitions outlined in the strategic plan. It is a

to be five (5) years from now? How does it short-range (i.e. with a scope of less than one

want to year), a low-level document that breaks

down the broader mission statements into
influence the world?
smaller, actionable chunks. If the strategic
• Mission – The mission statement is a more
plan is a response to “What?” the tactical plan
realistic overview of the company’s aim and
responds to “How?” Creating tactical plans
ambitions. Why does the company exist?
is usually handled by mid-level managers.
What does it aim to achieve through its
The tactical plan is a very flexible document; it
existence? For instance, a clothing company
can hold anything and everything required to
might want to “bring high street fashion to the
achieve the organization’s goals. That said,
masses”, while a non-profit might want to
there are some components shared by most
“eradicate polio”.
tactical plans:
• Values – “I inspire. Go above & beyond.
• Specific Goals with Fixed Deadlines
Innovate. Exude passion. Stay humble. Make it
Suppose your organization aims to become
fun.” These aren’t fragments from a
the largest shoe retailer in the city. The
motivational speech. These values will guide
tactical plan will break down this broad
managers and influence the kind of
ambition into smaller, actionable goals. The
employees you hire. There is no template to
goal(s) should be highly specific and have
follow when jotting down the
fixed deadlines to spur action – expand to two
values. You can write a 1,000-page essay, or
(2) stores within three (3) months, grow at
something as simple as Adidas’ core values:
25% per quarter, or increase revenues to
Performance, Passion, Integrity, and Diversity Php1M within six (6) months, and so on.
– it’s all up to you. There are no rules for
• Budgets
writing the perfect strategic plan. This is an
The tactical plan should list budgetary
open-ended, living document that grows with
requirements to achieve the aims specified in
the organization. You can write whatever you
the strategic plan. This should include the
want in it, as long as it dictates the future of
budget for hiring personnel, marketing,
your organization.
sourcing,
PLANNING
Organizations and Management

manufacturing, and running the day-to-day

operations of the company. Listing the Single-Use Plans – These plans are created
revenue outflow/inflow is also a for events/activities with a single occurrence.
recommended practice. This can be a one-time sales program, a
• Resources marketing campaign, a recruitment drive, etc.

The tactical plan should list all the resources Single-use plans tend to be highly specific.

you can muster to achieve the organization’s

aims. This should include human resources, IP, Ongoing Plans – These plans can be used in
cash resources, etc. Again, being highly multiple settings on an ongoing basis.
specific is encouraged. Ongoing plans can be of different types, such
• Marketing, Funding, etc. as:

Finally, the tactical plan should list the • Policy – A policy is a general document that
organization’s immediate marketing, dictates how managers should approach a
sourcing, funding, manufacturing, retailing, problem. It influences decision making at the
and PR strategy. Their scope should be micro-level. Specific plans on hiring
aligned with the goals outlined employees, terminating contractors, etc. are

above. examples of policies.

Operational Plan – This plan describes the • Rules – Rules are specific regulations

day-to-day running of the company. The according to which an organization functions.

operational plan charts out a roadmap to The rules are meant to be hardcoded and

achieve the tactical goals within a realistic should be enforced stringently. “No smoking

timeframe. This plan is highly specific with an within premises”, or “Employees must report

emphasis on short-term objectives. “Increase by 9 a.m.”, are two (2) examples of rules.

sales to 150 units/day”, or “hire 50 new • Procedure – A procedure describes a

employees” are both examples of operational step-by-step process to accomplish a
plan objectives. Creating the operational plan particular objective. For example, most
is the responsibility of low-level managers organizations have detailed guidelines on
and supervisors. Operational plans can be hiring and training employees, or sourcing
either single-use or ongoing, as described raw materials. These guidelines can be called
below: procedures. Ongoing plans are created on an
ad-hoc basis but can be repeated and
changed as required.
PLANNING
Organizations and Management

Operational plans align the company’s

strategic plan with the actual day to day
running of the company. This is where the
macro meets the micro. Running a successful
company requires paying equal attention to V. Planning Techniques and Tools

know just the broad objectives, but also how • Forecasting is the process of predicting what
the objectives are being met on an everyday will happen in the future.
basis, hence the need for such intricate • Contingency planning involves identifying
planning. alternative courses of action that can be
implemented when an original plan proves
inadequate because of changing
IV. The Planning Process
circumstances.
1. Define goals or objectives by identifying
• Scenario planning is a long-term version of
desired outcomes or results in very specific
contingency planning that involves identifying
ways.
several alternative future scenarios or states
2. Determine where you stand about setting
of affairs that may occur, and then making
goals or objectives; know your strengths and
plans to deal with each scenario should it
weaknesses.
occur.
3. Develop premises regarding future
• Benchmarking is a technique that makes
conditions; anticipate future events, generate
use of internal and external comparisons to
alternative scenarios for what may happen;
better evaluate current performance and
identify for each scenario things that may
identify possible actions to improve the future.
help or hinder progress toward your goals or
• Participatory planning includes the people
objectives.
who will be affected by the plans and those
4. Analyze and choose among action
who will be asked to implement them in all
alternatives; list and carefully evaluate
planning steps.
possible actions and choose the alternative
most likely to accomplish goals or objectives.

5. Implement the plan and evaluate results;

take corrective action and revised plans
needed.
PLANNING
Organizations and Management

VI. Decision-making There are three (3) conditions that managers

may face as they make decisions. They are
A decision is a choice among possible
the following:
alternative actions. Like planning,
decision-making is a challenge and requires • Certainty – This exists only when the

careful consideration for both types of managers know the available alternatives as

decisions, namely: well as the conditions and consequences of

those actions. There are little ambiguity and a
• Structured or Programmed decisions
relatively low possibility of making a bad
are routine and repetitive, and the
decision. It assumes that a manager has all
organization typically develops specific ways
the necessary information about the situation.
to handle them. A programmed decision
Hence, decisions under certainty mean a
might involve determining how products will
perfectly accurate decision will be made time
be arranged on the shelves of a supermarket.
after time. Of course, decision making under
For this kind of routine, repetitive problems,
certainty is rare.
standard arrangement decisions are typically
made according to established management • Risk – A state of risk exists when the

guidelines. manager is aware of all the alternatives but is

unaware of their consequences. The decision
• Unstructured or non-programmed
under risk usually involves clear and precise
decisions are typically one-shot decisions
goals and good information, but future
that are usually less structured than a
outcomes of the alternatives are just not
programmed decision.
known to a degree of certainty. A risk situation
requires the use of probability estimates. The
Every day a manager must make hundreds of ability to estimate may be due to experience,
decisions in the organization. Managers do incomplete but reliable information, or
not function in a theoretical world but they intelligence. Statistical analysis can be
function within the reality that many things applied to the calculation of probabilities for
are not known. success or failure.

• Uncertainty – In today's complex

environment, most significant decisions are
made under a state of uncertainty where
there is no awareness of all the alternatives
PLANNING
Organizations and Management

and the outcomes, even for the known

alternatives. To make effective decisions,
managers must require as much relevant
information as possible. Such decisions
require creativity and the willingness to take a

chance in the face of such uncertainties. In

such situations, managers do not even have
enough information to calculate probabilities
and degrees of risk. So, statistical analysis is
of no use.

Hence, managers need to make certain

assumptions about the situation to provide a
reasonable framework for decision making.
Intuition, judgment, and experience always
play major roles in the decision-making
process under conditions of uncertainty.

Hence, we can say that the greater the

amount of reliable information, the more likely
the manager will make a good decision.
Hence, the manager should make sure that
the right information is available at the right
time.