TYPES OF PLAN
ORGANIZATION AND MANAGEMENT
Definition and Nature of Planning
Planning is one of the major functions of management.
 It is a process that involves the setting of the
organization’s goals, establishing strategies for
accomplishing those goals and developing plans of
actions that managers intend to use to achieve said
organizational goals.
 It provides direction to all of the organization’s
human resource’ managers and employees, reduced
uncertainty and minimizes wastes of time, effort and
resources.
 Goals are the targets that management desires to
reach while plans are the means of or actions which
management intends to use to achieve the said
goals/targets.
Nature of Planning
 PRIMARY FUNCTION
Functions of management largely depends upon planning. It
provides the basic foundation from which all future
management functions arise.
 GOAL-ORIENTED
Plans arise from objectives. Objectives provide guidelines for
planning.
 CONTINUOUS PROCESS
It is an on-going process of adapting the organization with the
changes in business.
 FLEXIBLE
Planning selects the best alternatives based on certain
assumptions. There is a possibility of dead log in the functions
of the management. It has one more alternative to suit future
situation.
 MANAGERIAL FUNCTION
It is found at all levels and all departments of an organization.
It involves choosing the future course of action from among
alternatives.
 CONTINGENCY PLAN
They are made when something unexpected happens or
when something needs to be changed.
It is essential in moments when changes can’t be foreseen.
 OPERATIONAL PLANS
About how things need to happen.
This type of planning typically describes the day-to-day
running of the company.
Operational plans can be either single use, or ongoing.
1. Single Use
These plans are created for events/activities
with a single occurrence. This can be a one-time
sales program, a marketing campaign, a recruitment
drive, etc. Single use plans tend to be highly specific.
2. Ongoing Plans
These plans can be used in multiple setting
on an ongoing basis.
 STRATEGIC PLAN
“Strategic plans are all about why things need to happen.”
It is a high-level overview of the entire business, its vision,
objectives, and value.
This plan is the foundational basis of the organization and will
dictate decisions in the long-term.
The scope of the plan can be two, three, five, or even ten
years.
 TACTICAL PLAN
“Tactical plans are about what is going to happen”.
Describes the tactics the organization plans to use to achieve
the ambitions outlined in the strategic plan. It is a short range
(i.e. with a scope of less than one year), low-level document
that breaks down the broader mission statements into
smaller, actionable chunks.
The tactical plan is a very flexible document; it can hold
anything and everything required to achieve the
organization’s goals.
 LONG-TERM PLANNING
Usually converse a period of more than five years, mostly
between five and fifteen years. It deals with broader
technological and competitive aspects of the organization as
well as allocation of resources over a relatively long time
period. Long-term planning is considered as strategic
planning.
 SHORT-TERM PLANNING
Covers the period of one year while long term planning
covers 5-15 years. In between there may be medium-term
plans. Usually, medium term plans are focusing on between
two and five years. These may include plan for purchase of
materials, production, labor, overhead expenses and so on.
 STANDING PLANS
One, which is designed to be used over and over again. finance, marketing, human resources or product
Objectives, policies procedures, methods, rules and strategies development.
are included in standing plans. Its nature is mechanical. It
Depending on the business structure this can include
helps executives to reduce their workload. Standing plan is
managers responsible for business within a specific
also called routine plan. Standing or routine plan is generally
geographic region or managers responsible for specific retail
long range.
stores.
 SINGLE USE PLANS
Functional managers attempt to answer questions such as:
One, which sets a course of action for a particular set of
– What are activities does my unit need to perform well in
circumstances and is used up once the particular goal is
order to meet customer expectations?
achieved. They may include programmed, budgets, projects
and schedules. It is also called specific planning. Single use
plan is short range.

PLANNING AT DIFFERENT LEVELS IN THE FIRM

 Planning is vital to the continued success of

organization.
 Business planning is performed at various levels in
an organization, often in a hierarchical fashion.
 With each level drafting plans to achieve the goals
set in the level directly above.
 Planning at various stages involves nearly everyone
in an organization.

PLANNING AT DIFFERENT LEVELS

 Corporate Level

Most corporation of even moderate size have a corporate

headquarters. The heads of these groups are typically part of
the group of senior executives at the corporate headquarters.

Executives at the corporate level in large firms include both

those in the headquarters and those heading up the large
corporate groups such as finance, human resources,
marketing etc. Corporate Level

These corporate-level executives primarily focus on the

questions such as:

– What industries should we get into?

– What markets should the firm be in?

– In which business should the corporation invest

money?

– What resources should be allocated to each

business?

 Business Level

At this level managers focus on determining how they are

going to compete effectively in market.

At this level, managers attempt to address questions such as:

– Who are our direct competitors?

– What are their strengths and weaknesses?

– What are our strengths and weaknesses? DECISION MAKING

– What advantages do we have over competitors?
 Functional Level
At this level managers focus on how they can facilitate the
achievement of the competitive plan of the business. These
managers are often the heads of departments such as
 Is a process of selecting the best among the different
alternatives.
 It is the act of making a choice.
 The selection of choice of one best alternative.
 Note: Before making decisions all alternatives should
be evaluated from which advantages and
disadvantages are known. It helps to make the best
decisions.
STEPS IN THE DECISION MAKING PROCESS
1. IDENTIFY THE DECISION
 Recognizing the problem or opportunity
and deciding to address it.
 Determine why this decision will make a
difference to your customers or fellow
employees.
2. GATHER INFORMATION
 Determine what information is relevant to
the decision at hand so that you can make a
decision based on facts and data.
 Ask yourself what you need to know in
order to make the right decision, then
actively seek out anyone who needs to be
involved.
3. IDENTIFY ALTERNATIVES
 Identify the various solutions at your
disposal.
 It is important to come up with a range of
options. This helps you determine which
course of action is the best way to achieve
your objective.
4. WEIGH THE EVIDENCE
 In this step, you’ll need to evaluate for
feasibility, acceptability and desirability to
know which alternative is best.
 Managers need to be able to weigh pros
and cons, then select the option that has
the highest chances of success.
Note: It may be helpful to seek out a trusted second opinion
to gain a new perspective on the issue at hand.
5. CHOOSE AMONG ALTERNATIVES
 Be sure that you understand the risks
involved with your chosen route.
 You may also choose a combination of
alternatives now that you can fully grasp all
relevant information and potential risks.
6. TAKE ACTION
 Next, you’ll need to create a plan for
implementation. This involves identifying
what resources are required and gaining
support from employees and stakeholders.
Note: Getting others onboard with your decision is a key
component of executing your plan effectively, so be prepared
to address any questions or concerns that may arise.
7. REVIEW YOUR DECISION
 Evaluate your decision for effectiveness.
 Ask yourself what you did well and what
can be improved next time.
PLANNING TECHNIQUES AND TOOLS
LEARNINGOUTLINE
Techniques for Assessing the Environment
• List three different approaches to
environmental scanning.
• Explain what competitor intelligence is and
ways that managers can do it legally and
ethically.
• Describe how managers can improve the
effectiveness of forecasting.
Techniques for Allocating Resources
• List the four techniques for allocating
resources.
• Describe the different types of budgets.
• Tell what a Gantt chart does.
• Explain a load chart.
Techniques for Allocating Resources (cont’d)
• Describe how a PERT network analysis
works.
• Compute breakeven point.
• Describe how managers can use linear
programming.
Contemporary Planning Techniques
• Explain why flexibility is so important to
today’s planning techniques.
• Describe project management.
• List the steps in the project planning
process.
• Discuss why scenario planning has become
an important planning tool for managers.
Assessing the Environment
Environmental Scanning
 The screening of large amounts of information to
anticipate and interpret change in the environment.
 Competitor Intelligence
 The process by which organizations gather
information about their competitors
 Who they are? What are they
doing?
 Is not spying but rather careful attention to
readily accessible information from
employees, customers, suppliers, the
Internet, and competitors themselves.
 May involved reverse engineering of
competing products to discover technical
innovations.
Environmental Scanning (cont’d)
 Global Scanning
  Screening a broad scope of information on
global forces that might affect the
organization.
 Has value to firms with significant global
interests.
 Draws information from sources that
provide global perspectives on world-wide
issues and opportunities.
Forecasting
 The part of organizational planning that involves
creating predictions of outcomes based on
information gathered by environmental scanning.
 Facilitates managerial decision making
 Is most accurate in stable environments.
Types of Forecasting
 Quantitative forecasting
 Applying a set of mathematical rules to a
series of hard data to predict outcomes
(e.g., units to be produced).
 Qualitative forecasting
 Using expert judgments and opinions to
predict less than precise outcomes (e.g.,
direction of the economy).
COLLABORATIVE PLANNING, FORECASTING, AND
REPLENISHMENT (CPFR)
CPFR Software
Ø  Used to improve time, space, and use of
A standardized way for organizations to use the Internet to
exchange data.
Making Forecasting More Effective
1. Use simple forecasting methods.
2. Compare each forecast with its corresponding “no
change” forecast.
3. Don’t rely on a single forecasting method.
4. Don’t assume that the turning points in a trend can
be accurately identified.
5. Shorten the time period covered by a forecast.
6. Remember that forecasting is a developed
managerial skill that supports decision making.
Benchmarking
The search for the best practices among competitors and no
competitors that lead to their superior performance.
By analyzing and copying these practices, firms can improve
their performance.
The Benchmarking Process
1. Form a benchmarking team.
Identify what is to be benchmarked, select
comparison organizations, and to determine data collection
methods.
2. Collect internal and external data on work methods.
3. Analyze data to identify performance gaps and the
cause of differences.
4. Prepare and implement and action plan to meet or
exceed the standards of others.
Allocating Resources
Types of Resources
 The assets of the organization
 Financial: debt, equity, and retained
earnings
 Physical: buildings, equipment, and raw
materials
 Human: experiences, skills, knowledge, and
competencies
 Intangible: brand names, patents,
reputation, trademarks, copyrights, and
databases
 Structural/cultural: history, culture, work
systems, working relationships, trust, and
policies
- Allocating Resources: Budgeting
Budgets
 Numerical plans for allocating resources (e.g.,
revenues, expenses, and capital expenditures).
material resources.
 Are the most commonly used and most
widely applicable planning technique for
organizations?
- Allocating Resources: Scheduling
Schedules
Plans that allocate resources by detailing what activities have
to be done, the order in which they are to be completed, who
is to do each, and when they are to be completed.
Represent the coordination of various activities.
- Allocating Resources: Charting
Gantt chart
 A bar graph with time on the horizontal axis and
activities to be accomplished on the vertical axis.
 Shows the expected and actual progress of various
tasks.
Load Chart
 A modified Gantt chart that lists entire departments
or specific resources on the vertical axis.
 Allows managers to plan and control capacity
utilization.
- Allocating Resources: Analysis
Program Evaluation and Review Technique (PERT)  Developing scenarios that allow managers
determine in advance what their actions should be
 A flow chart diagram that depicts the sequence of
should a considered event actually occur?
activities needed to complete a project and the time
or costs associated with each activity.

 Events: Endpoints for completion

 Activities: time require for each activity

 Slack time: The time that a completed

activity waits for another activity to finish
so that they can begin jointly on another
activity

 Critical path: the longest path of activities

that allows all tasks to be completed,

Breakeven Analysis

 Is used to determine the point at which all fixed

costs have been recovered and profitability begins.

 Fixed cost (FC)

 Variable costs (VC)

 Total Fixed Costs (TFC)

 Price (P)

The Break-even Formula:

Linear Programming

A technique that seeks to solve resource allocation problems

using the proportional relationships between two variables.

Contemporary Planning Techniques

Project

 A one-time-only set of activities that has a definite

beginning and ending point time.

Project Management

 The task of getting a project’s activities done on

time, within budget, and according to specifications.

 Define project goals

 Identify all required activities, materials,

and labor

 Determine the sequence of completion

Scenario

 A consistent view of what the future is likely to be.

Scenario Planning

 An attempt not try to predict the future but to

reduce uncertainty by playing out potential
situations under different specified conditions.

Contingency Planning