MGT1-Principles of Management

Quarter 1 – Module 5
Planning

As we study and immerse ourselves in “Organization and Management” in the

process, it is necessary to define and discuss the nature and level of planning, and
types of plans. The module is subjected to discuss Module 5 – Definition and Nature of
Planning After going through the module, you are expected to: 1. Discuss the nature
and level of planning and types of plans.

As we go further, let us try to recall our lesson about the phases of economic
development and its impact to business environment.

• Economic development generally refers to the sustained, concerted actions of

policymakers and communities that promote the standard of living and economics
health of a specific area.
• Walt Whitman Rostow, also known as W.W. Rostow, was an economist in the
Lyndon B. Johnson administration from 1966-1969. He also published articles and
developed models on economic development.
• Taxes are used to maintain the infrastructure of a city, state or country-roads,
bridges, tunnels, public transportation, libraries and other public building and
services, including police officers and fire-fighters, all benefits from tax money
collected from individuals and businesses.

Definition of Planning
What is planning and its Nature, Importance, and Types

• Planning is the first of essential managerial functions. Planning is important as by

nature it enquirers about organizational goals and involves decision making
about desired ways and means to achieve goals.

• Planning is the process by which managers establish goals and define the
methods by which these goals are to be attained. Planning involves selecting
missions and objectives and the actions to achieve them; it requires decision
making, which is choosing from among alternative future courses of action.

• Planning is thus taken as the foundation for future activities. Newman has thus
defined it as, “Planning is deciding in advance what is to be done; that is a plan is
a projected course of action.” So, planning can be thought of as deciding on a
future course of action. It may also be treated as a process of thinking before
doing it.

Management has to plan for long-range and short-range future direction by

looking ahead into the future, by estimating and evaluating the future behavior of the
relevant environment and by determining the enterprise’s own desired role. Planning
involves determining various types and volumes of physical and other resources to be
acquired from outside, to allocate these resources in an efficient manner among
competing claims and to make arrangements for the systematic conversion of these
resources into useful outputs. As it is clear from the above discussion, plans have two
basic components: goals and action statements.

Goals represent an end state — the targets and results that managers hope to
achieve. Action statements represent the means by which an organization goes ahead
to attain its goals. Planning is a deliberate and conscious act by means of which
managers determine a course of action for pursuing a specific goal.

Nature of Planning

The nature of planning can be understood by examining its four major aspects.
They are;
1. It is a contribution to objectives,
2. It is primacy among the manager’s tasks.
3. It is pervasiveness, and
4. The efficiency of resulting plans.

The contribution of Planning to the Attainment of Objectives

Since plans are made to attain goals or objectives, every plan and all its support
should contribute to the achievement of the organization’s purpose and objectives.
An organized enterprise exists to accomplish group objectives through willing and
purposeful co-operation.

Primacy of Planning

That planning is the prime managerial function is proved by the fact that all other
functions such as organizing, staffing, leading and controlling are designed to support
the accomplishment of the enterprise’s objectives.

Planning quite logically, therefore, comes first before executing all other
managerial functions as it involves establishing the objectives necessary for all group
efforts. Also, all the other managerial functions must be planned if they are to be
effective. Likewise, planning and controlling are inextricably bound up. Control without a
plan is meaningless because the plan provides the basis or standard of control.

Pervasiveness of Planning

Planning is a unique and universal function of all 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 managers must have some function
of planning.

Because of one’s authority or position in the managerial hierarchy, one may do

planning, but some kind or amount of planning a manager must do.

According to Weihrich and Koontz; “All managers, from presidents to first-level

supervisors – plan.”

The Efficiency of Plans

Plans should not only be effective, but also efficient. The effectiveness of a plan
relates to the extent to which it accomplishes the objectives. The efficiency of the plan,
however, means its contribution to the purpose and objectives, offset by the costs and
other factors required to formulate and operate it.
 Plans are efficient if they achieve their objective at a reasonable cost when such
a cost is measure not only in terms of time, money or production but also in terms of
satisfaction of the individual or group. Both conceptual and practical reasons are put
forward in support of planning. Two conceptual reasons supporting systematic planning
by managers are limited resources and an uncertain environment.

Facing Environmental Uncertainty

The second most important conceptual reason is that organizations continually

face environmental uncertainty in the course of accomplishing the tasks. Organizations
meet this challenge largely through planning safeguards. Some organizations do this
job better than others partly because of their different patterns of response to
environmental factors beyond the organization’s immediate control. Besides, managers
have several practical reasons for formulating plans for themselves, their employees,
and various organizational units, viz.,

1. to offset uncertainty and change;

2. to focus organizational activity on a set of consciously created objectives;
3. to provide a coordinated, systematic roadmap for future activities;
4. to increase, economic efficiency via efficient operation; and
5. to facilitate control by establishing a standard for subsequent activities.

Planning and Performance

Although organizations that use formal planning do not always outperform those
that do not plan, most studies show positive relationships between planning and
performance.

Effective planning and implementation play a greater part in high performance

than does the amount of planning done. Studies have shown that when formal planning
has not led to higher performance, the external environment is often the reason.

The Role of Goals and Plans in Planning

Planning is often called the primary management function because it establishes the
basis for all other functions. Planning involves two important elements: goals and plans.
Goals (often called objectives) are desired outcomes for individuals, groups, or entire
organizations.

4 TYPES OF PLAN

There are main 4 types of plan;

1. Hierarchical Plans:
These plans are drawn at three major hierarchical levels, namely, the
institutional,
the managerial and the technical core. The plans for these three levels are;
Strategic plan.
Administrative or Intermediate plan.
Operational plans can also be categorized according to frequency or
repetitiveness of use.
 Source: https://www.researchgate.net/figure/Planning-hierarchy-adapted-from-ANZECC-2000-16-in-
boldrelevant-strata-for-Cameroon_fig2_232974301

2. Standing Plans:

Standing plans are drawn to cover issues that managers face repeatedly. Such a
standing plan may be called a standard operating procedure (SOP). Generally, five
types of standing plans are used;
a) Mission or purpose
b) Strategy
c) Policies
d) Rules
e) Procedures

3. Single-use Plans:

Single-use plans are prepared for single or unique situations or problems and are
normally discarded or replaced after one use. Generally, four types of single-use
plans are used. These are;
a) Objectives or Goals
b) Programs
c) Projects
d) Budgets
 Source: https://www.intechopen.com/books/recent-advances-in-flood-risk-management/

4. Contingency Plans:

Contingency plans are made to deal with situations that might crop up if
these assumptions turn out to be wrong. Thus contingency planning is
the development of alternative courses of action to be taken if events
disrupt a planned course of action.

Source: https://www.intechopen.com/books/recent-advances-in-flood-risk-
management/evidencebased-contingency-planning-to-enhance-local-resilience-to-flood-disasters
Assessment

Activity 1: Independent Activity

Directions: Read the question below and write your answer in a yellow paper.
In 5-8 sentences, I would like you to write your answer to this question: Why does a
business need contingency goals?
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________

Activity 2: Fill in the Blank

Directions: Read carefully the passages below. Fill in the blank with the correct answer
in the space provided for before each number.

___________________ 1. the process by which managers establish goals and define

the methods which these goals are to be attained.
___________ 2. a plan that has three major hierarchical levels namely, institutional, the
managerial and the technical core.
___________ 3. a plan that covers issues of the mangers face repeatedly.
___________ 4. a plan that prepares for single or unique situation or problems and are
normally discarded or replaced after one use.
___________ 5. a plan deals with situation that might crop up if these assumptions turn
out to be wrong.

Activity 3: MULTIPLE CHOICE: Choose the letter of the best answer. Write your
answer in the space provided before each number.

____1. Mitchell’s plan is to get a master’s degree and then a Ph.D. in systems
engineering, if he finds the academic work too difficult, he may stop after the Master’s
degree and look for work in the consulting field. This description is Mitchel’s
a. Single-use plan c. benchmark
b. Contingency plan d. None of the above

____2. Guillaume carefully planned his budget for graduate school because he would
need to borrow money. Tuition was 35,000, and he would need living expenses for 4
years in Manila. This was
a. A standing plan c. A hierarchical plan
b. A single plan d. A repeated use plan

____3. Which of the following is not a type of single-use plan?

a. Programs c. Projects
b. Rules d. Budgets

____4. Another term for a standing plan

a. Standard operating procedures c. Standard operation policy
b. Standardization operation d. Standard operating policy
procedures
____5. Planning is deciding in advance what is to be done; that is a plan is a projected
course of action.
a. Koontz c. Rostow
b. Weilhrich d. Newman

____6. The following are types of standing plans except ONE.

a. Mission or purpose
b. Policies
c. Operation
d. Strategy
____7. Single-use plans has four types except ONE.
a. Objectives or Goals
b. Programs
c. Projects
d. Policies
____8. The nature of planning can be understood by examining major aspects except
ONE.
a. Distribution of proper assignment or task.
b. Primacy among the manager’s tasks.
c. Pervasiveness
d. Efficiency of resulting plans.
____9. Designed to support the accomplishment of the enterprise’s objective.
a. Staffing
b. Leading
c. Controlling
d. All of the above
____10. Plans are efficient if they achieve one from statement below.
a. Mission and vision
b. Objectives at a reasonable cost
c. Manager goals
d. All of the above

Prepared by:

Art Osores

Reference:

Organization and Management

Published by the Department of Education – Division of City Schools - Manila