Organization and Management Module 6

Organization and Management (Quarter 1)
MODULE 6
PLANNING
Objectives
At the end of this chapter, the students are expected to:
1. To apply appropriate planning techniques and tools in business
decision- making.
2. Analyze how to make planning effective.
INTRODUCTION
It is often remarked that Planning is a mere ritual in a fast-changing environment’.
This statement implies that in a highly turbulent and competitive environment planning
becomes an empty academic exercise. Rapid changes in the economic and non-
economic environment of business reduce the effectiveness of plans.
It becomes difficult for the planners to accurately forecast future conditions.
Planning premises or assumptions may have a low degree of accuracy. The reliability of
plans is open to doubt when the environmental forces are not stable.
Uncertainty and unpredictability of environment reduce the usefulness of planning in a
turbulent environment planning becomes a more time-consuming and expensive
exercise. Even the best laid planning may become redundant when the assumptions
and forecasts on which the plans are based turn out to be different. Plans have to be
revised again and again in a highly volatile environment. The plans might fail to guide
the destiny of the organization.
Making Planning Effective

Planning is done so that some desired results may be achieved. Planning may
be successful if the following are observed:
1. Recognize the planning barriers

2. Use of aids to planning
Planning Barriers According to Plunkett and Attner

1. Manager’s inability to plan
2. Improper planning process
3. Lack of commitment to the planning process
4. Improper information
5. Focusing on the present at the expense of the future
6. Too much reliance on the planning department
7. Concentrating on only the controllable variables
Aids to Planning
1. Gather as much information as possible
2. Develop multiple sources of information
3. Involve others in the planning process
DECISION-MAKING TECHNIQUES &
TOOLS MARGINAL ANALYSIS
Marginal analysis weighs the benefits of an input or

activity against the costs. This type of analysis helps
business leaders determine whether and activity or input is
providing the maximum return-on-investment (ROI). Marginal
analysis is an effective tool for decision-making because it
takes preferences, resources, and informational constraints
into
account, so managers can make more optimal decisions based
on this information.
To conduct a marginal analysis, you need to change a variable, such as the
quantity of an input you use, or the volume of output you produce. Once you’ve
identified that variable, determine what the increase in total benefits would be if one
more unit of the control variable were added. This is considered the marginal benefit of
the added unit. Likewise, the marginal cost of the added good should also be calculated.
The marginal cost is – you guessed it – the increase in total cost if one more unit of the
control variable were added. If the marginal benefit outweighs the marginal cost, then
there is a “net benefit” and the marginal unit of the variable should be added.
SWOT DIAGRAM
When you are planning to make a significant change

in your business, SWOT diagrams can help you break down the
situation into four distinct quadrants:
 Strengths: What does your company do better than its competitors? Think of both
internal and external strengths that you possess.
 Weaknesses: Where can your company improve? Try to take a neutral approach
and consider what factors may be hurting your business.
 Opportunities: Look at your strengths and think of how you can leverage them to
create new openings for your business. Also consider how eliminating a specific
weakness could open you up to a new opportunity.
 Threats: Determine what challenges stand in the way of achieving your goals.
Identify the primary threats to your organization.
DECISION MATRIX
When you are dealing with multiple choices and

variables, a decision matrix can bring clarity to the disarray.
A decision matrix is similar to a pros/cons list, but it allows you to place
a level of importance on each factor. That way, you can more
accurately weigh the different options against each other.
How to Create a Decision Matrix:

 List your decision alternatives as rows
 List relevant factors as columns

 Establish a consistent scale to assess the value of each combination
of alternatives and factors
 Determine how important each factor is towards making your final decision
and assign weights accordingly
 Multiply your original ratings by the weighted rankings
 Add up the factors under each decision alternative
 The option that scores the highest wins

Decision Matrix Example:
In this example, a company is trying to make a decision about which vendor they should
work with for an upcoming project. The factors they are using to evaluate each option
are: capabilities, reputation, reliability, and price. They care more about the capabilities
and price than the reputation and reliability of the vendor, so they weighted the
importance of those factors accordingly. Based on the results from their decision matrix,
they should be able to confidently decide on Vendor 2.
Figure 16
Decision Matrix Example
PARETO ANALYSIS
The Pareto Principle helps in identifying changes that
will be the most effective for your business. The principle is
named after economist Vilfredo Pareto, who found that an 80/20
distribution occurs regularly in the world. In other words,
20% of factors frequently contribute to 80% of the
organization’s growth.
An example of this principle applying to business management would be 80% of sales

coming from 20% of your customers. A business can leverage the Pareto Principle by
identifying the characteristics of the top 20% of their customers and finding more
customers like them. When you can identify what small changes will make the largest
impact, you are able to prioritize the decisions that have the highest level of influence.
This allows managers to dedicate their energy and resources on what will actually move
the needle for their business.
ACTIVITY 1
Write your answer in a piece of yellow pad paper.
Make a plan of what do you want to do for a one whole day starting from the time you
wake up until the time you are going to sleep.
ACTIVITY 2
Write your answer in a piece of yellow pad paper.
Supposed you are the general manager of a manufacturing or service company, how
will you plan the daily activities undertaken by your company?
CHAPTER QUIZ
I. Fill in the blanks. Write your answer in a piece of paper.
1. Is the output of planning.

2. Is the management function where the best alternative, in
anticipation of the future is selected with the objective of achieving the
desired result.
3. Refers to the process of determining the major goals of the
organization and the policies and strategies for obtaining.
4. Is designed to support the strategic plan.
5. Are precise statements of results sought, quantified in time
and magnitude, where possible.
6. Is a course of action aimed at ensuring that the organization
will achieve its objective.
7. Is a short-term action by management to adjust to negative
or external influence.
8. Is a written document that states the quantity of output a company
must produce in broad terms and by product family.
9. Are statements that either require or forbid a certain action.
10. Is a single use plan designed to coordinate a large set of activities.
II. Match Column A with column B.
A
1. the plan A. functional area plan
2. course of action B. time-horizon plan
3. strategic planning C. single-use plan
4. setting standards D. part of the strategic plan
5. strategies E. serves as a useful guide in

the implementation of activities
6. standard F. the means to realize the goal
7. marketing plan G. concern of top management
8. long-range plan H. step in the planning process
9. project I. the ways chosen to realize
the goals
10. objectives or goals J. a quantitative or qualitative
measuring device designed to
help monitor the performance of
people, capital goods, or
process.

Organization and Management Module 6

Uploaded by

Copyright:

Available Formats

Organization and Management Module 6

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Organization and Management Module 6

Uploaded by

Copyright:

Available Formats

Organization and Management (Quarter 1)

Making Planning Effective

1. Recognize the planning barriers

Planning Barriers According to Plunkett and Attner

DECISION-MAKING TECHNIQUES &

TOOLS MARGINAL ANALYSIS

Marginal analysis weighs the benefits of an input or

When you are planning to make a significant change

When you are dealing with multiple choices and

How to Create a Decision Matrix:

 List relevant factors as columns

 The option that scores the highest wins

An example of this principle applying to business management would be 80% of sales

1. Is the output of planning.

II. Match Column A with column B.

5. strategies E. serves as a useful guide in

You might also like