module6 - planning
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Management Function:
PLANNING
Cole io de San Juan de Letran
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5The Manager
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Foodfor the BRAIN
I learnedthat theonly way youare going
to get anywherein lifeisto work hardatit. Whether
you're a musician, a writer, an athleteor a businessman(a manager), thereisno getting aroundit. Ifyoudo,
you'll winifyoudon't, youwon't.
Bruce Jenner, Olympic Gold Medalist
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Introduction
A manager creates and maintains an
environment also called as an internal
environment or simply the organization, so that
others can work efficiently in it.
A manager's job consists of planning, organizing,
directing, and controlling the resources of the
organization. These resources include people, jobs or
positions, technology, facilities and equipment,
materials and supplies, information, and money.
Managers work in a dynamic environment and must
anticipate and adapt to challenges.
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DefinitionPlanning is a logical and systematic approach of
formulating the objectives, programs, procedures,
rules and regulations, and other types of plans.
Planning is considered the most basic of all
managerial functions. Without this basic function,
the other four functions of a manager cannot be
tackled efficiently and effectively.
Therefore, a manager organizes, staffs, directs, and
controls in order to guarantee the attainment of
objectives and other types of plans.
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Definition
Planning is a process that involves
defining the organizations goals,establishing an overall strategy for
achieving those goals, and developing a
comprehensive set of plans tointegrate and coordinate organizational
work.
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The Role of Goals and
Plan in Planning
Goals are desired outcomes for
individuals, group, or entire organizations.
Plans are documents that outline how
goals are going to be met including resource
allocations, schedules, and other necessaryactions to accomplish the goals
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Types of Goals
Stated Goals official statements of what
an organization says, and what it wants its
various stakeholders to believe, its goals are.
Real Goals goals that an organization
actually pursues, as defined by the actionsof its members.
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Approaches to
Establishing GoalsTraditional Goal Setting an approach to setting goals are
set at the top level of the organization and then broken down
into subgoals for each level of the organization.
Means-Ends Chain an integrated network of goals in
which the accomplishment of goals at one level serves as the
means for achieving the goals, or ends, at the next level.
Management by Objectives a management system in
which specific performance and goals are jointly determined
by the employees and managers, progress toward
accomplishing those goals in periodically reviewed, and
rewards are allocated on the basis of this progress.
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Characteristics of Well-
designed Goals Written in terms of outcomes rather
than actions
Measurable and quantifiable Clear as to a time frame
Challenging yet attainable
Written down
Communicated to all necessary
organizational members
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Steps in Goal Setting
1. Review the organizations mission
2. Evaluate available resources
3. Determine the goals individually orwith input from others
4. Written down the goals and
communicate them to all who need to
know.
5. Review results to see whether goals
are being met.
How might the planning in a non-profit institution such as the Colegio de San Juan de Letran differ from planning in a for-profit company such as
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Types of Plans
Breadth Time
Frame
Specificity Frequency
of Use
Strategic
Operational
Long-term
Short-term
Directional
Specific
Single-use
Standing
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Types of Plans
Strategic Plans plans that apply to the entire
organization, establish the organizations goals,
and seek to position the organization in term ofits environment.
Versus
Operational Plans plans that specify the details
of how the overall goals are to be achieved.
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Types of Plans
Long-term Plans are plans with time frame
beyond three years.
Versus
Short-term Plans are plans covering one year
or less.
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Types of Plans
Specific Plans are plans that are clearly defined
and that leave no room for interpretation.
Versus
Directional Plans are plans that are flexible
and that set out general guidelines.
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Types of Plans
Single-use Plans pertains to a one-time plan
specifically designed to meet the needs of a
unique situation.
Versus
Standing Plans are ongoing plans that provide
guidance for activities performed repeatedly.
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Purpose of Planning
1. Planning establishes coordinated effort.
2. Planning reduces uncertainty by forcingmanagers to look ahead, anticipate
change, consider the impact of change,
and develop appropriate responses.
3. Planning reduces overlapping andwasteful activities.
4. Planning establishes goals and standards
that are used in controlling.
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The Nature of Planning
C
ont. to purpose and objectives The first basic function
Function of all managers
Efficient organization
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The Pervasiveness of
Decision Making
Planning- defining goals, establishing
strategies for achieving those goals, anddeveloping plans to integrate and
coordinate activities
What are the organizations long-term objectives?
What strategies will best achieve those objectives?
What should the organizations short term objectives be?
How difficult should individual goals be?
Decision making is synonymous with managing
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The Pervasiveness of
Decision Making
Organizing- what tasks are to be done, who is
to do them, how the tasks are to be grouped,
who reports to whom, and where decisions
are made
How many employees should I have report directly to me?
How much centralization should there be in the organization?
How should jobs be designed?
When should the organization implement a different structure?
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The Pervasiveness of
Decision MakingControlling- monitoring activities to ensure
that they are going as planned
What activities in the organization needed to be controlled?
How should those activities be controlled?
When is a performance deviation significant?
What type of management information system should theorganization have?
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The Decision Making
Process1. Identifying a problem
2. Identifying decision criteria
3. Allocating weights to the criteria4. Developing alternatives
5. Analyzing alternatives
6. Selecting an alternative7. Implementing the alternative
8. Evaluating decision effectiveness
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The Decision Making
Process1 My sales representatives need new computers!
2 Price; weight; warranties; screen type; reliability;
screen size
3 Reliability10
, screen size 8,4 Acer, Compaq, Gateway, HP, Micromedia, NEC, Sony
Toshiba
5 Acer, Compaq, Gateway, HP, Micromedia, NEC, Sony
Toshiba
6 Acer, Compaq, Gateway, HP, Micromedia, NEC,
Sony Toshiba
7 Gateway
8
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The MBO Process1. Formulize long-range organizational objectives
2. Develop specific divisional objectives
3. Establish departmental objectives
4. Set individual job objectives
5. Formulate action plans
6. Implement and take corrective action
7. Review progress toward objectives
8. Appraise overall performance, reinforce behavior, andstrengthen motivation through: Manager training and
self development, compensation, and career and
manpower
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The Basic Steps in
Business Planning1. Define the business idea
2. Establish goals and objectives
3. Evaluate the ideas, goals, and objectives
4. Forecast cash needs
5. Identify source of funds
6. Write a business plan
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Relationship Between The Planning
Process and the Business Plan
PLANNING PROCESS BUSINESS PLAN
Definition of management Description of the
business
Marketing plan Marketing aspect
Organizational and
management plan
Management/
organization aspect
Production plan Production/ technical
aspect
Financial Plan Financial aspect
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Managerial Decision Making
Decision-Making Approach
-Rationality
- Bounded Rationality
- Intuition
Decision-Making
Process
Decision Makers Style- Directive
- Analytic
- Conceptual
- Behavioral
Types of Problems
and Decisions
-W
ell structured programmed- Poorly structured - nonprogrammed
Decision Making
Conditions- Certainty
- Risk- Uncertainty
Decision-Choosing best alternative
- Implementing
- Evaluating
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Making Decisions:
Rational Decision Making describes choicesthat are consistent and value maximizing within
specified constraints.
Bounded Rationalitypertains to behavior that isrational within the parameters of a simplified decision-
making process, which is limited or bounded by an
individuals ability to process information.
Intuitive Decision Making refers to asubconscious process of making decisions on the basis
of experience and accumulated judgment.
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Assumptions of Rationality
The problem is clear and unambiguous.
A single, well defined goal is to be achieved.
All alternatives and consequences are known.
Preferences are clear.
Preferences are constant and stable.
No time or cost constraints exist.
Final choice will maximize payoff.
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What is intuition?
Experience-based decisions Managers make decisions
based on theirpast
experiences.
Affect-initiated decisions Managers can make decisions
based on the feelings oremotions
Cognitive-based decisions Managers make decisions
based on skills, knowledge,
and training
Values or ethics-based
decisions
Managers make decisions on
ethical values or culture
Subconscious mental
processing
Managers use data from
subconscious mind to help
them make decisions
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Types of Problems and
DecisionsWell-Structured Problems (WSP) and Programmed
Decisions (PD). WSP are straight-forward, familiar, and
easily defined problems. PDis a repetitive decision that
can be handled by a routine approach. (EX: customerwanting to return a purchase to retails store, dropping
subject, etc.)
Poorly-Structured Problems (PSP) and
Nonprogrammed Decisions (NPD). PSP are problemsthat are new or unusual and for which information is
ambiguous or incomplete. NDP is a unique decision that
requires a custom-made solution. (EX: selection of
architect to design)
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Decision-Making
ConditionsCertaintypertains to a situation in which a managercan make accurate decisions because all outcomes are
known. (EX: deciding in which bank to deposit)
Riskrefers to those conditions in which the
decision maker is able to estimate the likelihood
of certain outcomes. (EX: adding lift to the
facility)
Uncertaintypertains to a situation in which a
decision maker has neither certainty nor
reasonable probability estimates available.
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Decision-Making Styles
Directive Style a decision making style characterized by
low tolerance for ambiguity and a rational way of thinking.
Efficient and effective. Focus on short run. Minimalinformation and assessing few alternatives.
Analytic Style - a decision making style characterized by
high tolerance for ambiguity and a rational way of thinking.
Want more information and alternatives before makingdecisions.
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Decision-Making Styles
Conceptual Style - a decision making style characterized by
high tolerance for ambiguity and a intuitive way of thinking.
Tend to be very broad in their outlook and will look at manyalternatives. Focus on long run and finding creative solutions
to problems.
Behavioral Style - a decision making style characterized by
low tolerance for ambiguity and a intuitive way of thinking.Work well with others. Concerned about the achievements of
subordinates and respective to suggestions from others.
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Why Managers Fail in Planning
1. Lack of commitment in planning
2. Interchanging planning with plans
3. Failure to develop and implement sound strategies
4. Lack of meaningful objectives and goals
5. Tendency to underestimate the importance of planning
premises
6. Failure to see the scope of plans
7. Failure to see planning as a rational process
8. Too much reliance on experience9. Failure to use the principle of limiting factor
10. Lack of management support
11. Lack of clear delegation
12. Lack of adequate control techniques and information
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Planning Tools and
TechniquesTechniques for assessing the environment
Environmental scanning pertains to the screening of large amount of
information to anticipate and interpret changes in the environment.
Competitor intelligence seeks to identify who competitors are, what they
are doing, and how their actions will affect the organization.
Forecasting predictions of outcomes.Quantitative forecasting applies a set of mathematical rules to a series of past
data to predict outcomes.
Qualitative forecasting - uses the judgment and opinions of knowledgeable
individuals to predict outcomes.
Benchmarking the search for the best practices among competitors
or non-competitors that lead to their superior performance.
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Planning Tools and
TechniquesTechniques for allocating resourcesResources refers to the assets of the organization including financial, physical, human,
intangible, and structural/cultural.
Budgeting/ Budget a numerical plan for allocating resources to specificactivities.
Scheduling refers to 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.
Breakeven analysis refers to a technique for identifying the point at which
total revenue is just sufficient to cover total costs.
Linear Programming pertains to a mathematical technique that solves
resource allocation problems.
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Planning Tools and
TechniquesContemporary planning techniques
Project management refers to the task of getting a
projects activities done on time, within budget, and
according to specifications.
Scenario planning pertains to a consistent view of what
the future is likely to be.