CHAPTER 3 - PLANNING\

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1. 1. CHAPTER 3: PLANNING
2. 2. PLANNING Planning 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.
3. 3. PLANNING PLANNING is important because: it
provides direction to all of the organization’s human
resource’ managers and employees, reduced
uncertainty and minimizes wastes of time, effort
and resources.
4. 4. PLANNING GOALS are the targets that
management desires to reach while PLANS are the
means or actions which management intends to use
to achieve the said goals/targets.
5. 5. PLANNING Plans are best described in terms of
their: • Comprehensiveness • Time frame •
Specificity • Frequency of use
6. 6. PLANS Comprehen siveness Time frame
Specificity Frequency of use PLANNING
7. 7. PLANNING Planning steps include: • Defining of
goals/objectives determining where you stand in
relation to set goals/objectives • Developing premise
regarding future conditions
8. 8. PLANNING Planning steps include: • Analyzing
and choosing action alternatives • Implementing the
plan • Evaluating results and taking corrective
action
9. 9. PLANNING Defining of goals/objectives
determining where you stand in relation to set
goals/objectives Developing premise regarding
future conditions Analyzing and choosing action
alternatives Implementing the plan Evaluating
results and taking corrective action How does a
MANAGER plan?
10. 10. PLANNING Planning types includes: 1. Strategic
6. Directional 2. Tactical 7. Specific 3. Operational8.
Single use 4. Long term 9. Standing plans 5. Short
term
11. 11. TYPES OF PLANNING STRATEGIC PLANNING •
Strategic planning sets the long-term direction of
the organization in which it wants to proceed in
future.
12. 12. STRATEGIC PLANNING • It focuses on the broad
future of the organization. Incorporating both
external information gathered by analyzing the
company’s competitive environment and the firms
internal resources, managers determine the scope
of the business to achieve the org long-term
objectives.
13. 13. STRATEGIC PLANNING • Strategic planning
involves the analysis of various environmental
factors and the competition. • Most strategic plans
focus on how to achieve goals three to five years
into the future.
14. 14. STRATEGIC PLANNING • It has the potential to
impact dramatically, both positively and negatively,
on the survival and success of the organization. •
Typically 3-5 years of horizon • Top management is
involved in framing the strategic plans.
15. 15. They are for shorter time frame and usually
focused for 1-2 yearsTactical plans translate the
strategic plans into specific goals for specific parts
of the organizations. TACTICAL PLANNING
16. 16. Although tactical plans should complement the
organizations overall strategic plan, they are often
somewhat independent of other tactical
plans.Instead of focusing on the entire corporation,
tactical plans typically affect a single business
within an organization. TACTICAL PLANNING
17. 17. They try to integrate various organization units
and ensure the commitment to strategic
plans.Tactical plans are concerned with
implementation of strategic plans by coordinating
the work of different departments in the
organization. TACTICAL PLANNING
18. 18. They typically focus on the short term usually 12
months or less.Operational plans translate the
tactical plans into specific goals and actions for
small units of the organization. OPERATIONAL
PLANNING
19. 19. These plans are least complex than strategic
and tactical plans, and rarely have a direct effect on
other plans outside of the department or unit for
which the plan was developed.OPERATIONAL
PLANNING
20. 20. Long term planning is of strategic nature and
involves long period say 3-5 yrs. The long term plans
usually encompass all the functional areas of the
business and are affected within the existing and
long-term framework of economic, social and
technological factors.LONG-TERM PLANNING
21. 21. Short term planning is usually a plan made for
one year. These are aimed at sustaining
organization in its production and distribution of
current products or services to the existing
markets. These plans directly affect functional
groups( production, marketing, finance)SHORT-
TERM PLANNING
22. 22. Standing plans are put to use again and again
over a long period of time. Once established they
continue to apply until they are modified or
abandoned. Standing plan help managers in dealing
with routine matters in a pre-determined and
consistent manner.STANDING PLANS
23. 23. Examples of standing plans are: organizational
mission and long term objectives, strategies,
policies, procedures and rules.STANDING PLANS
24. 24. Single use plans are non-recurring in nature and
deal with problems that probably will not be
repeated in the same form in future.Single use
plans are relevant for a specified time and after the
lapse of that time, these plans are formulated again
for the next period. SINGLE USE PLANS
25. 25. Generally these plans are derived from the
standing plans Examples: projects, budgets,
targets.SINGLE USE PLANS
26. 26. STANDING vs. SINGLE USE STANDING PLANS
SINGLE-USE PLAN PLANS 1) OBJECTIVES 2)
POLICIES & STRATEGIES 3) PROCEDURES 4)
METHODS 5) RULES 1)PROGRAMMES 2) PROJECTS
3) BUDGETS
27. 27. Plans that are clearly defined and leave no room
for interpretationSPECIFIC PLANS
28. 28. Flexible plans that set out general guidelines,
provide focus, yet allow discretion in
implementation.DIRECTIONAL PLANS
29. 29. DIRECTIONAL vs. SPECIFIC
30. 30. 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.PLANNING at DIFFERENT LEVELS
CORPORATE LEVEL
31. 31. What resources should be allocated to each
business? In which business should the
corporation invest money?  What markets should
the firm be in?  What industries should we get into?
 These corporate-level executives primarily focus
on the questions such as PLANNING at DIFFERENT
LEVELS CORPORATE LEVEL
32. 32. What advantages do we have over competitors?
 What are our strengths and weaknesses?  What
are their strengths and weaknesses?  Who are our
direct competitors?  At this level, managers
attempt to address questions such as:  At this level
managers focus on determining how they are going
to compete effectively in market. PLANNING at
DIFFERENT LEVELS BUSINESS LEVEL
33. 33. Depending on the business structure this can
include managers responsible for business within a
specific geographic region or managers responsible
for specific retail stores. 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 finance, marketing, human resources or product
development. PLANNING at DIFFERENT LEVELS
FUNCTIONAL LEVEL
34. 34. What information about competitors does my
unit need in order to help the business compete
effectively? What activities does my unit need to
perform well in order to meet customer
expectations?  Functional managers attempt to
address questions such as: PLANNING at
DIFFERENT LEVELS FUNCTIONAL LEVEL
35. 35. INTERRELATIONSHIP BETWEEN PLAN TYPES
AND LEVELS Types of plans Strategic plans Tactical
plans Organizational levels Corporate level Business
level Operational plans Functional plans
36. 36. Assumptions of rationality: a rational decision
maker would be fully objective and logical. He will
have a clear and specific goal and know all the
possible alternatives and consequences. A type of
decision making in which choices are logical and
consistent and maximize value. DECISION MAKING
RATIONAL
37. 37. PARTICIPATORY PLANNING BENCHMARKING 
SCENARIO PLANNING  CONTINGENCY PLANS 
FORECASTING 
38. 38. Decisions are made in the best interest of the
organization. Making decisions rationally would
consistently lead to selecting the alternative that
maximizes the likelihood of achieving that goal.
DECISION MAKING RATIONAL
39. 39. They are being rational within the limits of their
ability to process information. Managers make
decisions rationally but are bounded by their ability
to process information. Because they cant possibly
analyze all information on all alternatives, manager
satisfice rather than maximize. i.e. they accept the
solutions that are good enough.  It is more realistic
approach DECISION MAKING BOUNDED
RATIONALITY
40. 40. It can be cognitive-based , experience-based,
value or ethics based, or subconscious mental
processing Making decisions on the basis of
experience, feelings and judgment. DECISION
MAKING INTUITION BASED
41. 41. LINEAR THINKING STYLE is characterized by a
person’s preference for using external data and
facts and processing this information through
rational, logical thinking to guide decisions and
actions. DECISION MAKING STYLES
42. 42. DECISION MAKING STYLES NON-LINEAR
THINKING STYLE is characterized by a person’s
preference for using the internal sources of
information ( feeling and intuitions) and processing
this information with the internal insights, feelings
and hunches to guide decisions and actions.
43. 43. DECISION MAKING ERRORS and BIASES 1.
Immediate gratification: it describes the decision
makers who tend to want immediate rewards and to
avoid immediate costs. For this individuals, decision
choices that provides quick payoffs are more
appealing than those that may provide payoffs in the
future.
44. 44. DECISION MAKING ERRORS and BIASES 2.
ANCHORING EFFECT: it describes the situation
when decision makers fixate on initial information
as a starting point and once then set, fail to
adequately adjust for subsequent information. First
impressions, ideas, prices and estimates carry
unwanted weight relative to the information
received later.
45. 45. DECISION MAKING ERRORS and BIASES 3.
SELECTIVE PERCEPTION BIAS: when decision
makers selectively organize and interpret events
based on their biased perception, they are using
selective perception bias. This influences the
information they pay attention to , the problems
they identify and the alternatives they develop.
46. 46. DECISION MAKING ERRORS and BIASES 4.
CONFIRMATION BIAS: decision makers that seek
out the information that reaffirms their past choices
and discount information that contradict the past
judgments is the confirmation bias. This people
ignore the critical information that challenges their
preconceived ideas.
47. 47. DECISION MAKING ERRORS and BIASES 6.
AVAILABILITY BIAS: it causes decision makers to
tend to remember events that are the most recent
and vivid in their memory. The bias distorts their
ability to recall events in an objective manner and
results in distorted judgments and probability
estimates.
48. 48. DECISION MAKING ERRORS and BIASES 7.
REPRESENTATION BIAS: when decision maker
assess the likelihood of an event based on how
 closely it resembles other events. Managers see
identical situation where they don’t exist. 8.
RANDOMNESS: it occurs when decision makers try
to create meaning out of random events.
49. 49. DECISION MAKING ERRORS and BIASES 9.
SUNK COST ERRORS: decision makers forget that
current choices cant correct the past. They
incorrectly fixate on past expenditures of time,
money or effort in assessing their choice.
50. 50. DECISION MAKING ERRORS and BIASES 10.
SELF-SERVING BIAS: decision makers who are quick
to take credit for their success and to blame failure
on outside factors exhibit this bias.
51. 51. DECISION MAKING ERRORS and BIASES 11.
HINDSIGHT BIAS: it is the tendency for decision
makers to falsely believe, after that outcome is
actually know, that they could have accurately
predicted the outcome of the event.
52. 52. STEPS in DECISION MAKING STEP 1:
IDENTIFICATION OF THE PROBLEM STEP 2:
IDENTIFICATION OF THE DECISION CRITERIA STEP
3: ALLOCATION OF WEIGHTS TO THE CRITERIA
STEP 4: THE DEVELOPMENT OF ALTERNATIVES
53. 53. STEPS in DECISION MAKING STEP 5: THE
ANALYSIS OF ALTERNATIVES STEP 6: SELECTION
OF AN ALTERNATIVE STEP 7: IMPLEMENTATION OF
THE ALTERNATIVE CHOSEN STEP 8: EVALUATION
THE DECISION EFFECTIVENESS
54. 54. DECISION MAKING CONDITIONS 1. CERTAINTY:
it is the ideal situation to make decision. The
outcome of every alternative is known. 2. RISK: a
 situation in which the decision maker is able to
estimate the likelihood of certain outcomes.
55. 55. DECISION MAKING CONDITIONS 3.
UNCERTAINTY: A situation in which a decision
maker has neither certainty nor reasonable
probability estimates available.
56. 56. DECISION MAKING CONDITIONS 3.
UNCERTAINTY: A situation in which a decision
maker has neither certainty nor reasonable
probability estimates available.
57. 57. TASK 1 State at least one long term plan for a
business firm with corresponding tactical and
operational plans to achieve them.
58. 58. EXAMPLE HOTEL SERVICE STRATEGIC PLAN To
expand Hotel Service to different parts of the
Philippines in 7 years OPERATIONAL PLAN
FINANCIAL DEPARTMENT To allocate 30% of annual
hotel income for planned expansion of hotel service
TACTICAL PLAN FRONTLINE MANAGERS FOR
TRAINING DEVELOPMENT To have continuing
training development programs for Hotel Personnel
to ensure excellent Hotel services which will ensure
good hotel income.
59. 59. TASK 2 Arrange the steps of the Decision
Making Process according to its chronological order.
Number the first step 1 and the last step 8.
60. 60. TASK 2 ___ Development of alternatives ___
Evaluation of Decision Effectiveness ___
Identification of Decision Criteria ___ Identification
of a Problem ___ Analysis of alternatives ___
Implementation of alternative Chosen ___ Allocation
of Weights to the Criteria ___ Selection of alternative
1. DECISION-MAKING

2. SPECIFIC OBJECTIVES:

• To be able to identify the steps in decision making process.

• Appreciate and understand the value of the process in decision making by relating it to day to day life
situation.

• Formulate a decision using the steps in decision making process.

3. Guide Questions: • Have you ever made a choice that resulted in a consequence that you did not
want? • How do we decide whether we should do something or not? • How do you make a choice or
decision?

4. Exercise to Build Decision Making and Problem Solving Lost at Sea In this activity, participants must
pretend that they've been shipwrecked and are stranded in a life boat. Each team has a box of matches,
and a number of items that they've salvaged from the sinking ship. Members must agree which items are
most important for their survival. Mosquito net A can of petrol A water container A shaving mirror
Emergency rations a sea chart A fishing rob Shark repellent A bottle of rum A VHF radio Plastic sheet
Chocolate bars

5. The "correct" order collated by the experts at the US Coast Guard (from most to least important): 1.
Shaving mirror. (One of your most powerful tools, because you can use it to signal your location by
reflecting the sun.) 2. Can of petrol. (Again, potentially vital for signaling as petrol floats on water and
can be lit by your matches.) 3. Water container. (Essential for collecting water to restore your lost fluids.)
4. Emergency rations. (Valuable for basic food intake.) 5. Plastic sheet. (Could be used for shelter, or to
collect rainwater.) 6. Chocolate bars. (A handy food supply.) 7. Fishing rod. (Potentially useful, but there
is no guarantee that you're able to catch fish. Could also feasibly double as a tent pole.)

6. 8. Rope. (Handy for tying equipment together, but not necessarily vital for survival.) 9. Shark repellent.
(Potentially important when in the water.) Bottle of rum. (Could be useful as an antiseptic for treating
injuries, but will only dehydrate you if you drink it.) 10. Radio. (Chances are that you're out of range of
any signal, anyway.) 11. Sea chart. (Worthless without navigational equipment.) 12. Mosquito net.
(Assuming that you've been shipwrecked in the Atlantic, where there are no mosquitoes, this is pretty
much useless.)
7. DECISION MAKING • 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.

8. Determine why this decision will make a difference to your customers or fellow employees.
Recognizing the problem or opportunity and deciding to address it. STEPS IN THE DECISION MAKING
PROCESS 1. IDENTIFY THE DECISION

9. Ask yourself what you need to know in order to make the right decision, then actively seek out
anyone who needs to be involved. Determine what information is relevant to the decision at hand so
that you can make a decision based on facts and data. STEPS IN THE DECISION MAKING PROCESS 2.
GATHER INFORMATION

10. 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. Identify the various solutions at your disposal. STEPS IN THE
DECISION MAKING PROCESS 3. IDENTIFY ALTERNATIVES

11. 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. In this step, you’ll need to evaluate for feasibility, acceptability and
desirability to know which alternative is best. STEPS IN THE DECISION MAKING PROCESS 4. WEIGH THE
EVIDENCE

12. You may also choose a combination of alternatives now that you can fully grasp all relevant
information and potential risks. Be sure that you understand the risks involved with your chosen route.
STEPS IN THE DECISION MAKING PROCESS 5. CHOOSE AMONG ALTERNATIVES

13. 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.STEPS IN THE DECISION MAKING PROCESS 6. TAKE ACTION

14. Ask yourself what you did well and what can be improved next time. Evaluate your decision for
effectiveness. STEPS IN THE DECISION MAKING PROCESS 7. REVIEW YOUR DECISION

15. SELF CHECK Identify which step of decision making process is being defined. 1. The evaluation of
decision after it is being implemented. 2. Identifying several possible paths of actions. 3. Collecting
pertinent information before making decision. 4. Implementing the alternative action you take. 5.
Identifying the advantages and disadvantages of each alternative. 6. Defining the nature of decision you
need to make. 7. Selecting the most appropriate alternative to implement.

16. Answer Key 1. Review the decision 2. Identify alternatives 3. Gathering Information 4. Taking action
5. Weighing the evidence 6. Identify the decision 7. Choosing among alternatives
17. Homework Fill in the spaces provided in the Decision Making Wheel. Start by stating the problem in
the hub of the wheel. Next, move through the 9 choices, one by one.