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Planning is deciding in advance what is to be done
in the future
Accordingto Koontz and O Donnell it is decidingin advance what to do, how to do it, when to doit and who is to do it. Planning bridges the gapfrom where we are to where we want to go. Itmakes it possible for things to occur which would
not otherwise happen
Planning is a step that involves mapping outexactly how to achieve a particular goal.
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Four major factors summarize the
essential nature of planning. These are:
1. Contribution to purpose and objectives
- planning is required to facilitate
accomplishment of business purposes and
objectives. This statement is taken fromthe nature of organized business.
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2. Planning as the first basic function
3. Planning as a function of all managers
- Planning is a function of all managers,
although the character and scope of
planning will differ from one authority to
another.
4. Planning for efficient organization
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Objectives or goals- it can use interchangeably. it is the
ends toward which activity is aimed.
Estimated result expected in future
Mission- identifies the basic purpose or
function or tasks of an enterprise oragency or any part for the existence of anorganization.
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Programs- are a complex of goals, policies, procedures,
rules, task assignments, steps to be taken,resources to be employed, and other elements
necessary to carry out a given course of action.Project scheduling- refers to the identificationand analysis of the activities from the projectplanning stage up to the start of normal operations.
Policies- are general statements or understandings thatguide or channel thinking in decision making
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Procedures- are plans that establish a required
method of handling future activities
Rules- spell out specific required actions or no
actions, allowing no discretion
Budget- is a statement of expected results
expressed in numerical terms.
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Philosophy- it is the value and the beliefs of an
organization holds as the guiding light. Theseare usually passed on by the founder of theorganization.
Strategy- it is the method of shaping a companys
future and involves determining the long-rundirection of the organization. A company mayhave the strategy to diversify into relatedbusiness within the next few years.
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Breadth Planning
(a) Strategic plans- plans are apply to entire
organization and establish organizational overall
goals. Cover extended periods of time.
(b) Operational plans- encompass a particular
operational area of organization. These are not
broad like strategic plans but narrow. It specify the
details of how the overall goals are to be
achieved. Cover short time period
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Time frame of planning
(a) Long term plan- are those with a time
frame of 3-5 years. (b) Short term plan- are those that cover year
or less.
(c) Intermediate plans- Any time period
between long term and short term plan.(1-3years)
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Specificity of planning
(a) Specific plans- are clearly define and leave no
room for interpretation, these state its objectives in
a way that eliminates ambiguity and problems withmisunderstandings.
Flexible plans that set out general guidelines, provide
focus, yet allow discretion in implementation
(b) Directional plans- plans are flexible that setoutgeneral guidelines to deal with high uncertainty
and ambiguity.
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Frequency of use planning
(a) Single use plans is one time plans
specifically designed to meet the need of aunique situation.
(b) Standing plans are ongoing plans that
provides guidance for activities performed
repeated. Its include policies, rules andproducers.
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Business Planning
- created through time as a series of ideas
is gradually developed. Effective plans arenot written in one sitting. Each part of plan
leads into the next. Each influences the
other; all parts are interdependent.
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Define the business Idea.- description of the business idea.- make it precise, concise and specific)
Establish goals and objectives Evaluate the ideas, goals, and
objectives Forecast Cash needs Identify sources of funds Write a business plan
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Decisionis a choice between alternatives.
Decision making is the process of choosing one
alternative over the others. Making good decisionsshould be a process.
It is a process of
identifying problems and
resolving them, or of
identifying opportunities
and taking advantage of
them.
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Judgmenta process of evaluating
alternatives
Choicea process of selecting a specific
alternative to implement
Judgment can occur without being
followed by choice.However, some level of judgment will
always precede choice.
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There are many decision-making models.
Here is another that is not nearly as
insightful as the one above, but it is onethat many of the students will be familiarwith.
1. Identify the problem.2. List alternatives.
- brainstorming
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3. Select the best alternative.
4. Implement the chosen alternative.
5. Evaluate.
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There are various quantitative and specific techniques that areavailable to aid the manager in his planning process. Some ofthese are the following:
1. Forecastin g.This is an attempt to foretell or predicts future
trends, events, or conditions from known data and toprepare for the expected changes in business or industry.
Many decisions are based on estimates of what is likely tohappen in the future. It was merely based on the analyses ofpast and present, are called forecasts.
Managers merely rely on their own intuition in predicting thefuture events
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There are no universal forecasting
methods; some commonly used methods
of forecasting are:
Survey Method
Trend Method or time series analysis
Economic Method
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2. Break-even 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)
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3. Scheduling.
- Schedules plans that allocate resources by
detailing what activities have to be done, the
order in which they are to be completed, who isto do each, and when they are to be completed.
Represent the coordination of various activities.
Network analysis- quantitative technique usedfor scheduling
PERT and CPM
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4. Management by Objectives (MBO)
- it is an approach to management
designed to encourage initiative andprevent working at cross-purposes, or
indeed, for no purpose at all.
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Lack of real commitment in planning
Interchanging planning studies with plans
Failure to develop and implement sound strategies
Lack of meaningful objectives and goals
Tendency to underestimate the importance of planningpremises
Failure to see the scope of plans
Failure to see planning as a rational process
Too much reliance on experience Failure to use the principle of limiting factor
Lack of top management support
Lack of clear delegation
Lack of adequate control techniques and information