Saint Anthony Academy

Batuan, Bohol, Philippines

Member: Bohol Association of Catholic Schools ( BACS)
Catholic Education Association of the Philippines (CEAP)
ORGANIZATION AND MANAGEMENT 12

Name:___________________________ Year & Section:___________________________

Date:______________________________ Score: __________________
Teacher: Ms. Anabel A. Bahinting, LPT
ACTIVITY NO. 7
(Week 7)
Topic: Planning
Competencies:*Discuss the nature of planning
*Compare and contrast the different types of plans
*Describe planning at different levels in the firm
*Apply appropriate planning techniques and tools
*Formulate a decision from several alternatives
Objectives: *Discuss the nature of planning
*Enumerate and discuss the different types of plans
Concept Notes:
Planning is primary management function. It involves setting the direction and goals of an
organization, establishing a system that will define the activities of the organization, and formulating a plan
to ensure that the system works toward achieving the goals of the organization. Planning is significant
because it is the initial task that defines all the other management functions. All levels of management
conduct planning. Top management defines the goals and comes up with general plans, which are then given
to lower management. Lower managers conduct their own planning to implement the general plans and
come up with concrete means to achieve the goals of top management.
Planning is by nature an intellectual exercise. Because decision making is very crucial part in
planning meticulous deliberation is required. Goals must be clearly established, and these should adhere to
the vision and mission of the company. Strategies should be presented in detail to clearly determine the
course the company will take in achieving its goals.
Planning is also a continuous process. Strategies may be revised and changed depending on the
circumstances, and these changes have an impact on the operations of the company. The company has to
quickly adapt to these changes to ensure that it is still on track toward achieving its goals.
VISION AND MISSION STATEMENTS
An important aspect of planning is defining the company’s identity and reason for being. This is
embodied in the company’s vision and mission statements. A vision statement describes what the company
wants to achieve and where it wants to go in the future. It determines the course and direction of the
company and identifies which markets, technologies, products, or customers to focus on. Below are the
characteristics of effectively worded vision statements:
1. Graphic- The vision projects to the market the kind of company that the management wants to create and
the kind of company it aspires to be.
2. Directional- It describes the path where the company wants to go and presents specific plans to move
forward in the future.
3. Focused- The vision is very specific so managers are properly guided on what to do in terms of resources
and strategies.
4. Flexible- Although the vision should be focused, it allows room for managers to change based on market
situations, technological advancements, and customer preferences.
5. Feasible- The vision is achievable and realistic.
6. Desirable- The vision is clear on why the path is practically sensible and serves the interests of members
in the long run.
7. Easy to communicate- The vision is easy to understand, articulated, and can be simplified into a
powerful slogan.

A mission statement describes a company’s reason for its existence. It answers the question why the
company exists. A good mission statement identifies the company’s products and services; the costumer’s
needs that the company seeks to satisfy; the target markets that it want to serve; and the approach to be taken
to satisfy costumers’ needs. Lastly, it should present the company’s unique identity that distinguishes itself
from competitors.

GOALS & OBJECTIVES

Goals are specific accomplishments or action plans that are usually attained after a long period.
These are broader in scope because the intentions are more general and involve outputs that are intangible
and non-measurable.
Objectives refer to action plans that involve shorter periods and more measurable outputs. These
tend to be more specific and result in tangible outcomes.
TYPES OF PLANS
There are three main types of plans that a manager uses in devising strategies to achieve company
goals.
1. Strategic plans. These plans are designed by the top management such as the CEO or president. These
are usually broad plans based on the company’s vision, mission, and values, and address the company as a
whole. They are used as bases for more specific plans that will enable the company to achieve growth and
profitability, boost productivity and return on investment, and improve customer service.
2. Tactical plans. While strategic plans involve the company as a whole, tactical plans create specific plans
for specific areas of the company. These plans translate broader plans into functional goals for each area or
department. The elements of tactical plans include budget, resources, and goals with specific deadlines.
3. Operational plans. These are specific procedures and processes made by frontline or low-level managers.
Operational plans often involve specific events such as marketing campaigns, campus recruitment, and
others. Operational planning also involves the formulation of ongoing plans that define specific operations
of the organization. Ongoing plans can be in any of the following forms:
a. Policy- a set of principles that guide managers in addressing a particular issue
b. Rule- a regulation which describes and regulates the functions of an organization
c. Procedure- a step-by-step process in accomplishing a task or achieving an objective

CONTINGENCY PLANNING
A contingency plan is a special plan created for unexpected scenarios or changes. All plans, no
matter how carefully laid out, are not fully error-free. Thus, contingency plans are made to manage all
possible risks that may arise from the original plan. It is part of a manager’s job to always be ready with
alternative courses of action in case the original plan does not work out.
One of the common types of contingency plans is a crisis management plan. It is a plan made in
preparation for any kind of crisis such as industrial disasters like fire, or natural disasters like an earthquake
or a typhoons. These calamities or disasters can be easily anticipated. However, their effects are not easy to
determine. It is necessary, therefore, to come up with crisis management plans for any form of disaster.
When a crisis occurs, damage containment is required. To limit the effects of a disaster, a rapid response is
needed to address devastated areas and affected personnel. Effective crisis management will help the
company reestablish the normal state of its environment and restore the regular operations and functions of
the company. Crisis management involves the establishment of a crisis management team, emergency
communication systems and utilities, an evacuation site, and procedures for losses and damages.
Scenario planning is another form of contingency planning. The company formulates plans for both
positive and negative scenarios that may arise from the implementation of plans. The possible outcomes for
each scenario are analyzed in formulating plans and appropriate steps are identified to address them. For
instance, the oil company Royal Dutch Shell has been using scenario planning since 1986 to anticipate oil
price changes. The Japanese company Xerox has also undertaken scenario planning which considers
different scenarios regarding the functionality of their copiers and printers.

THE PLANNING PROCESS

There are five steps involved in the planning process. It starts with the formulation of goals and
objectives, followed by the identification of the appropriate courses of action, placing due regard for their
affordability, efficiency, and practicality. These courses of action determine the responsibilities that will be
assigned to specific personnel. The assignment of responsibilities requires setting timelines for the
implementation of each course of action. The next step involves the documentation and distribution of the
plan to the people concerned. The review of the plan ensures that any proposed revisions should be
acknowledged, discussed, and approved. The plan is then adjusted to incorporate these revisions and
changes.

FORMULATE THE GOALS AND OBJECTIVES

IDENTIFY THE COURSES OF ACTION

ASSIGN RESPONSIBILITIES

DOCUMENT THE PLAN AND DISTRIBUTE TO PEOPLE CONCERNED

REVIEW THE PLAN AND ADJUST ACCORDINGLY

PLANNING AT DIFFERENT LEVELS IN THE FIRM
The planning process requires that plans and strategies are formulated at different levels of the firm.
The company starts with a strategic plan that outlines the primary goals and the strategies to be employed by
each level. This is to help identify tasks that will require inputs from various levels of the firm. Formulating
strategies to address specific tasks requires the involvement of all employees in the organization.
Collaboration, therefore, is essential both in the planning stage and in the implementation of strategies.
TOP-LEVEL MANAGEMENT PLANNING
The corporate strategy is usually conceptualized by the chief executive officer and other members
of the top management. A comprehensive and detailed plan should be formulated since it will be the
backbone of subsequent plans. Top-level planning essential for a diversified company or a company with
multiple businesses. It is needed for crucial tasks such as identifying which industries a company will invest
in or which business ventures it should undertake in the future.
The top management also formulates the general business strategy. This is concerned with building
a competitive advantage for a single business unit of a diversified company. Top management is aided by
unit heads who contribute crucial information that determines targets and appropriate strategies to achieve
them.
MIDDLE-LEVEL MANAGEMENT PLANNING
A functional strategy determines a particular function or process and is formulated by middle-level
management officers. The one responsible for crafting a functional strategy is usually the manager in charge
of the department or area concerned. The general manager then makes the final approval of the strategy.
LOW-LEVEL MANAGEMENT PLANNING
An operational strategy is a narrower and more focused strategy formulated by low-level managers
or frontline supervisors. Operational planning requires the identification of resources that can be utilized to
achieve the outlined plans and goals. Financial resources include the capital or investment that a company
needs to start and sustain the business. Human resources are the company’s primary assets and are
composed of employees who possess the skills and competencies needed for specific tasks and operations.
On the other hand, physical resources include production facilities, distribution channels, and information
technology systems that enable the execution of strategies. The implementation of operational strategies
involves all the levels of the firms, from the top management to low-level managers. For that reason,
strategy that requires significant resources needs to be carefully planned and managed.
PLANNING TECHNIQUES AND TOOLS
Planning requires managers to develop and propose alternative courses of action. Several qualitative
and quantitative tools are used to ensure the selection of the best course of action. There are three qualitative
techniques that can be used in planning. These are follows:
1. Brainstorming- This is a common technique used by groups of planners in selecting a common solution
for a problem. It stimulates thinking and allows the group to work together in generating ideas. There are no
restrictions to the flow of ideas and every member is encouraged to give his or her thoughts regarding the
plan. The free flow of ideas, however, makes this technique more informal and unstructured.
2. Nominal group technique- This is a highly structured method that allows members to give their own
inputs based on an agenda. The structured and formal nature of this method restricts personal discussion
among group members and minimizes conflict during discussions. Also, the risk of one member dominating
the planning is also limited, since all opinions in this method are considered to be equally important.
3. Delphi technique- This is also a highly structured technique similar to the nominal group technique.
However, the difference lies in the means of formulating courses of action. This technique does not require a
group meeting. Rather, the group leader distributes questionnaires to all group members to collect and
assimilate their ideas. In this technique, the participants in planning do not need to know each other. It is the
group leader that facilitates the collection of data and manages the flow of information. Through this
technique, the participants can avoid personality conflict and groupthink or the tendency of the members of
the group to conform to the prevailing opinions of the group. One advantage of this technique is that no one
can dominate the group or influence decisions. Planning is also more objective and there is an assurance that
the decisions arrived at are a product of an objective and well-thought-out process.

Apart from qualitative techniques, managers can also employ quantitative tools in planning and decision-
making. These are the following:
1. Decision tree- It is an excellent tool for weighing different alternatives. It consists of a graph showing
potential and alternative decision paths for the proposed plan. This method is especially useful for decisions
that involve a succession of small decisions. All alternatives, from the most likely to the most unlikely ones,
are given equal weight. Afterwards, the possible consequences for each proposed path are analyzed to guide
in formulating the potential and alternative paths for subsequent decisions.
2. Payback method- Managers use this method in evaluating alternatives in purchasing equipment,
furniture, and fixtures. Managers consider certain factors such as length of use or utility, warranties, cost or
repair, maintenance cost, and sales generated for a specific period before actually buying the product.
Usually, managers choose the alternative that results in the quickest payback of the initial cost.
DECISION MAKING AND THE COMMON TYPES OF DECISION MODELS
Decision making is a major aspect of planning and the manager can choose to use one of three
decision models. The type of decision model used can have a significant effect on determining goals and
strategies that will be implemented by the company.
Rational of Logical Decision Model
This process involves a logical step-by-step analysis of several possible contributing factors in
making the decision. This model can be summarized in the chart below.
Identify the problem
Identify the decision criteria
Assign weights to the criteria
Formulative alternative courses of action
Choose the best alternative
Implement the chosen alternative
Evaluate the results

Intuitive Decision Model

The second type of decision-making style is the intuitive decision model. Managers do not use
objective methods in decision making but instead use their “gut feeling” and instincts. The intuitive decision
model is most suited for managers who have several years of managerial experience. In looking into
situations and courses of action, managers rely on their experiences and knowledge gained from previously
encountered scenarios. Managers try to identify similarities between situations they are currently facing and
those they have previously addressed. This decision model has a high rate of success, especially if done by
experienced managers. However, the reliance on feelings and instincts often does not lead to the most ideal
decisions but to imperfect plans and strategies instead.
Predisposed Decision Model
The third type is the predisposed decision model. The manager, once he or she decides on a solution,
will no longer look for other alternative solutions. The chosen solution is considered the most acceptable and
effective solution and the manager then gathers the needed resources to implement the decision. This model
is the weakest since the manager makes a unilateral, snap decision. There is also a tendency for the manager
who makes the decision to collect data and information that support his or her decision, ignoring all other
contrary data.

COGNITIVE BIASES
Decision making is not a perfect, error-free process. One factor that contributes to errors in decision
making is cognitive bias. This refers to the tendency to look at situations based on subjective standards or
perspectives. Cognitive biases often lead managers to make wrong illogical conclusions regarding certain
situations and people. The following are examples of cognitive biases:
1. Escalating commitment- This type of error happens when a manager, despite his or her knowledge of a
project’s failure, continues to acquire more resources to pursue the project instead of abandoning it. The
manager does this due to a feeling of personal responsibility regarding the project. The manager may also be
attempting to salvage the unsuccessful project to protect his or her reputation.
2. Prior hypothesis bias- This happens when a manager holds on to his or her prior belief that a project will
succeed even when evidence to the contrary has been provided. The manager will still strongly pursue the
said project while only accepting opinions that agree with his or her views.
3. Representativeness- It is the tendency to make generalizations based on a small sample or a single
experience. This happens every time a new product becomes popular and starts a trend.
4. Reasoning by analogy- It refers to the tendency to conclude that the results of one situation can be
repeated in a similar situation.
5. Illusion of control- It is a type of error that many top-level managers commit when they become
overconfident regarding their ability to solve problems. Using their many years of experience and relying on
their status in the industry, they tend to underestimate the problems they encounter. This attitude clouds their
judgment and eventually leads to poor decisions.
6. Framing bias- This kind of bias correlates the outcome with how a problem or decision is framed. In
business, the wrong framing of a simple aspect of a business can result in problems that will cost a company
its profits. When a company is confronted with a problem, most managers tend to stick to their conventional
frames of reference and refuse to entertain the notion of implementing changes in their views regarding the
company.
7. Availability error- This error is committed by managers when they immediately use available resources
on a project that is expected to immediately provide profit, rather than holding off waiting for a later
opportunity that will generate even greater profit.

CONTEMPORARY STRUCTURED DECISION-MAKING MODELS

Aside from the traditional decision-making models mentioned, there are three contemporary
decision-making models that can be used by managers in planning. These models are considered structured
models as they offer a more systematic way of solving problem, utilizing a step-by-step process.

Kepner-Tregoe Matrix Model

This model offers a systematic way of evaluating alternatives by implementing a rational process of
analyzing aspects of a situation or problem. It aims to remove the pressure from planners and minimize the
risks of chosen alternatives. This approach was developed by Charles Kepner and Benjamin Tregoe in the
1960s.
Following are the four basic steps in the Kepner-Tregoe Matrix Model:
1. Situation appraisal- In assessing the situation, the manager clarifies aspects of the scenario and outlines
possible causes.
2. Problem analysis- The root cause of the problem is identified. Also, the manager analyzes how the cause
brought about the problem.
3. Decision analysis- Various solutions and courses of action are identified and evaluated by conducting risk
analysis. The analysis ensures that all possible consequences of all alternatives are identified.
4. Potential problem analysis- A possible final decision is determined and carefully scrutinized. The pros
and cons of implementing the chosen alternative are identified. From the results, appropriate actions are
proposed to minimize the identified risks.

Vroom-Yetton-Jago Decision Model

This model was originally developed by Victor Vroom and Philip Yetton in 1973, and revised in
1988 in collaboration with Arthur Jago. This model focuses not on identifying possible decisions, but on
selecting the best leadership style suited for planning and decision-making. This model identifies five
leadership styles based on the situation and the involvement required of members of the group in the
decision-making process.
1. Autocratic I (A1)- The leader is the sole decision-maker. Using all the information available, the
manager makes the decision for the firm.
2. Autocratic II (A2)- The manager gathers pertinent information from members of the group but they do
not know the purpose of such information. There is still no involvement from the group members. The
manager still decides based on the information gathered.
3. Consultative I (C1)- This leadership style lets the group members know the problem situation but the
final decision still rests on the manager.
4. Consultative II (C2)- The manager discusses the situation with the group and gathers suggestions from
the group members. The manager makes the final decision.
5. Group II (G2)- All the group members are responsible for coming up with the final decision. The
manager presents the problem and acts as the facilitator in the process. He or she lets the group agree on the
final selection of the alternative.

Observe-Orient-Decide-Act (OODA) Loop Model

This model was brought about by the application of military tactics in business situations. The
Observe-Orient-Decide-Act Loop was developed by US Air Force Colonel John Boyd as a decision-making
model for air combat. According to him, decision-making is essentially a cycle of actions-observe, orient,
decide, and act-that an individual does in quick succession to address a situation.
The four steps involved in the decision-making cycle for this model are defined below:
1. Observe- The manager should gather as much information as possible regarding the business
environment. He or she scans the environment and observes what the competitors are doing and how
costumers respond to the product or service the company currently offers. If the company is about to enter
the market, the manager observes how prospective customers behave. All this stage, the manager conducts
SWOT and PEST analyses to gather information.
2. Orient- After scanning the environment, the manager should take a closer look at the information
gathered during the first stage. Cultural beliefs, traditions, values, and previous buying preferences of
consumers should be carefully studied. The characteristics of the market, competitors, and the industry as a
whole should also be analyzed. The manager filters the information gathered and concentrates on those that
are relevant to the business or the task to be implemented. Among the crucial information that the manager
should determine at this stage are the expected return in investment, forecasted sales, possible cost, and
payback period of alternative investments.
3. Decide- The manager now decides and chooses the best possible alternative.
4. Act- Once an alternative is chosen, the manager puts the chosen plan into action and supervises its
implementation.
 ORGANIZATION AND MANAGEMENT 12

Name:___________________________ Year & Section:___________________________

Date:______________________________ Score: __________________
Teacher: Ms. Anabel A. Bahinting, LPT
ACTIVITY NO. 7
Exercises
A. Fill in each blank with the correct answer. (10 pts)
______________1. It is the setting of direction for an organization, establishing a system, and ensuring that the
system follows that direction.
______________2. It describes a company’s reason for existence.
______________3. They are specific accomplishments or action plans that are usually attained after a longer
period.
______________4. It describes the direction where the company is going.
______________5. These are plans made by top managers.
______________6. These plans support strategic plans because they become a specific plans used in a particular
area.
______________7. This kind of bias relates the outcome with how a problem or decision is framed.
______________8. It is a strategy concerned with building a competitive advantage for a single business unit of a
diversified company.
______________9. It is a document which states how managers can decide on a particular issue.
______________10. These are plans that can be implemented in case the original plan fails.

B. Answer briefly the following questions. (10 pts)

1. Why is planning considered a primary management function?
2. How can a company benefit from having a good vision and mission statement?