Lesson 5

Natures of Planning
and Types of Plan

Benjamin S. Mangabat
writer
Hello, I am Teacher Ben. I am here to help you in your journey of learning about

the nature of planning and types of plan. Have you experienced making a plan

or business plans? Those are some examples which are related to your lessons in

this module. I am here to guide you throughout the lesson.

The module discusses Lesson 5 with topic such as:

Definition and Nature of Planning

Types of Plans

After going through this module, you are expected to:

1. discuss the nature of planning (ABM_AOM11-Ie-g-10)

2. compare and contrast the different types of plans (ABM_AOM11-Ie-g-11)

3. describe planning at different levels in the firm (ABM_AOM11-Ie-g-12)

What do you think of this famous quotation?

“By failing to prepare, you prepare to fail.”

Benjamin Franklin

Matching Type
Match the items in Column 1 to items in Column 2. Answer in letters corresponding
to the correct answer. Write the chosen letter on a separate sheet of paper.
Column 1 Column 2

_____1. cover one year or less a. Directional plans

_____2. apply to a particular unit area only b. Standing plans
_____3. refers to completeness of planning coverage c. Long-term plans
_____4. clearly stated in understandable language d. Short-term plans
_____5. states organization’s over-all goals e. Specific plans
_____6. stated once only f. Strategic plans
_____7. number of months or years covered g. Operational plans
_____8. gives general guidelines h. Single-use plans
_____9. on-going plans i. Comprehensiveness
_____10. go beyond three years j. Time frame

Identification: Choose the letter of the best answer. Write the chosen letter on a
separate sheet of paper.
a Goals g Importance of planning
b planning steps h CEOs/Presidents
c effective planning I planning types
d steps in decision making process j decision making
e Decisions k decision maker
f Plans l Planning
_______1. 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.
_______2. it provides direction to all of the organization’s human resources:
managers and employees; and it reduces uncertainty and minimizes wastes of
time, effort, and resources.
_______3. 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.
_______4. Plans are best described in terms of their comprehensiveness, time
frame, specificity, and frequency of use.
_______5. It includes the following: strategic, tactical, operational, long term, short
term, directional, specific, single use, and standing plans.
_______6. It includes: 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, if needed.
_______7. they must see to it that all communication lines in their organization are
open to ensure excellent dissemination of information to all levels.
_______8. must make use of the following: forecasting, contingency factors that
make use of alternative courses of action when things go wrong; scenario
planning that consider future states of affair; benchmarking which compare
company practices and technologies with those of other companies considered
as industry leaders; and participatory planning which includes, in all planning
steps, all the people affected by the plan and those who will be asked to
implement them.
_______9. is the choosing of the appropriate alternative.
_______10. these are: a) identification of the problem, b) identification of the
decision criteria, c) allocation of weights to the criteria, d) development of
alternatives, e) analysis of alternatives, f) selection of an alternative, g)
implementation of the alternative chosen, and h) evaluation of decision
effectiveness
_______11. may be done under a) certainty conditions and b) uncertainty/risk
conditions.
_______12. In risk or uncertainty conditions, the _________ is compelled to do
estimates regarding the possible occurrence of certain outcomes that may affect
his or her chosen solution.
 Lesson
5

Definition and Nature of Planning

Planning is the conscious, systematic process of making decision about

goals and activities that an organization will pursue in the future. Planning is the

process of thinking before doing. In other words, 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. Planning is done at different

levels in the firm, but all these must be integrated and directed towards the

achievement of the organization’s goals.

A plan is a pre-determined course of action. Planning is essentially a process

to determine and implement actions to achieve organizational objectives

Planning involves the task of deciding in advance:

What to do?

How to do?

When to do it?

Who will do it?

A manager has to answer four basic questions while formulating a plan:

1. Where are we now realistic assessment of current situation?

2. Where do we want to be?

3. Gap between where we are and where we want to be?

4. How do we get there?

Planning is the most basic of all managerial functions. It is the process by

which managers establish goal, define methods and think of strategies by which

these goals are to be attained. According to some authors:

 According to Weihrich and Koontz, “Planning involves selecting mission and

objectives and the actions to achieved them, it requires decision making, which

is choosing from among future alternative course of actions.”

According to Mary Cushing Niles, “Planning is the conscious selection and

developing the best course of action to accomplish an objective. It is the basis

from which the future management action spring”.

According to George R. Terry, “Planning is the selecting and relating of

facts and the making and using of assumptions regarding the future in the

visualization and formulation of proposed activities, believed necessary to

achieve the desired results.

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

by looking ahead into the future, by estimating and evaluating the future

behavior of the environment.

Plans have two basic components; goals and action plans. Goals represent

an end statement, the targets, and results that managers hope to achieve. While

the action plan, represent the means by which an organization goes ahead to

attain its goals.

Planning is not an easy task; it involves intellectual thinking, and mental

activity to be able to plan effectively. The nature of planning can be highlighted

as follows:
Planning is goal oriented

Plans arise from objectives.

Objectives provide guidelines for
planning.

A manager cannot do planning

unless the goal is specified. Every
step specifies an action plan to be
able to attain the desire goal.

Planning is futuristic in nature

Planning means looking ahead.

Planning means looking ahead and

preparing for the future. It involves
analysis of the future needs and
requirements of the business and
preparing for it.

Planning exists in all managerial

activities

It is the primary function of

managers at all levels.

Planning provides the basis

foundation from which all future
management function arises.

It is required at all levels of

management. It is not an exclusive
function of any management level
or department. Managers have to
plan for every change that occurs
in an organization. However, the
scope of planning differs at all
levels and among different
department.
 It is essentially a choice among
various alternative course of action.
A manager has to select the best
alternative after careful analysis
and evaluation.

Planning is not a guess word

It is based on facts and information

Planning is a mental process

involving–imagination, foresighted-
ness and sound judgment. Plans
are based on careful analysis of
internal and external factors
influencing business activities. It is
carried out in a logical and
systematic.

Planning is flexible

It is dynamic in a process capable

of adjustments by the need and
requirement of the situation.

Planning is based on future forecast

of events and situations. Since
future is uncertain, plans also
flexible enough to adapt with
future change of events.

It is an ongoing process of adopting

the organization with the changes
in business environment. Since a
business exist in a dynamic
environment it is necessary to
continuously plan based on
changing business needs and
situations.
PURPOSE OF PLANNING In organizations, planning can

become a management process,

concerned with defining goals for a

future direction and determining on

the missions and resources to achieve

those targets. To meet the goals,

managers may develop plans such as

a business plan or a marketing plan.

Planning always has a purpose.

My dear learners you don’t need to make an essay using pen and paper. You just

need to select from the given “purpose of planning text” and identify the clipart/

pictures which symbolizes or represent purpose of planning listed below to get the

answer. Supply your answer at the blank line provided for you.

1 Reduces Uncertainty 9 Minimizes waste and redundancy

2 Adoption to change in work environment 10 Sets standards for controlling
3 Helps to achieve objectives 11 Improves morale
4 Provides basis for teamwork 12 Creates competitive advantages
5 Reduces business-related risks 13 Motivates personnel
6 Facilitates decision making 14 Aids in organizing
7 Encourages creativity and innovation 15 Provides direction
8 Facilitates proper coordination
a. _____________________ b. _____________________ c. _______________________
_____________________ _____________________ _______________________

d. ______________________ e. _______________________ f. _________________________

______________________ _______________________ _________________________

g. ____________________ h. _______________________ i. _________________________

____________________ _______________________ _________________________

j. ______________________ k. _______________________ l. _________________________

______________________ _______________________ _________________________

m. ______________________ n. _______________________ o. _________________________

______________________ _______________________ _________________________
 Notes to the Teacher
Kindly guide the Students in using this module. Remind them to
read each part carefully with understanding and do the activities
provided in the module. Help the Students in obtaining the goal
for each lesson and correct them if they have misconception on
the concept.
After doing the above activity let’s try to answer the questions below.

1. How do you find the activity? ______________________________________________

_______________________________________________________________.

2. Were you able to easily determine the equivalent clipart or pictures which

signifies or identifies purpose of planning? ______________________________________

_______________________________________________________________.

3. What planning concept/s do you have in mind to easily connect purpose of

planning with pictures/clipart? ________________________________________________

_______________________________________________________________.

4. What realization did you have with this activity? ______________________________

_______________________________________________________________.
Hello there! Study the sequence of Planning Process below.

Planning Process

1. Formulating derivative plans

2. Securing cooperation and participation

3. Developing premises

4. Establishment of Objectives

5. Review and follow up

6. Evaluating and selection of alternatives

The proper sequence of planning process should be: (write the corresponding

number inside the box:

1 2 3 4 5 6
Planning Process:

1. Establishment of Objectives – it involves identification of goals and objectives

of the organization by carefully examining the internal and external

environment affecting the business

2. Developing premises – Premises are assumptions about the environment in

which plans are made and implemented. Thus assumptions about market

demand, cost of raw material, technology to be used, population growth,

government policy etc. are to be made while formulating a plan.

3. Evaluating and selection of alternatives – Changes in the external environment

pose different alternatives for organizations to carry out a particular task.

Different alternatives are evaluated against factors like costs, risks and benefits

involved in following a specific course of action and the best alternative is

chosen

4. Formulating derivative plans – Derivative plans are secondary plans

formulated to support the basic plan. E.g. Detailed plans formulated for various

departments, units, activities etc. Derivatives plans indicate the time schedule

and sequence of performing various tasks.

5. Securing cooperation and participation – Manager must involve people from

various departments and take their suggestions and criticisms to rectify the

defects in the plan if any. Participation of employees in formulation of plans

motivates them to carry out the plan with best of their abilities.
6. Providing for follow-up – Plans are constantly reviewed to ensure their

relevance and effectiveness with the changing dynamics in the business

environment. It helps to develop sound plans for the future and avoiding

mistakes that surface after or while implementing a plan.

Since you already learned about planning, nature of planning, and the

importance of planning, let us try to answer the activities below.

A. Choose and encircle the best answer:

1. This plan is the foundational basis of the organization and will form part of the

long-term decision.

a) Strategic plan c. Tactical plan

b) Operational plan d. contingency plan

2. This plan describes the tactics the organization plans to use to achieve the

ambitions outlined in the strategic plan.

a. Strategic plan c. Tactical plan

b. Operational plan d. contingency plan

3. This plan describes the day to day running of the company.

a. Strategic plan c. Tactical plan

b. Operational plan d. contingency plan

4. These managers are responsible for controlling and overseeing the entire

organization.
 a. Top-level managers c. Middle-level managers

b. Low-level managers d. Part-time managers

5. Which management function involves setting goals and objectives and

creating specific plans for completing them?

a. Planning b. Controlling c. Organizing d. Leading

B. Managers Position, Function/Duties

Put tick mark ( ) on the appropriate box.

MANAGERS
Function/Position/Duties Top- Middle- Lower-
level level level
Corporate head
General Manager
Board of Director
Plant Manager
First-line managers or supervisors
Responsible for controlling and overseeing the entire
organization.
Execute organizational plans in conformance with
the company policies and objectives.
Office Manager
Responsible for setting goals for their department
and other business units.
Play a significant role in the mobilization of outside
resources.
Focus on controlling and directing
Regional & Division Manager
Chief Operational Officer
These manager that most employees interact with
on a daily basis.
Cascade the goals among their subordinate to be
carried out specifically.
Types of Plan

Planning is a part of management concerned with creating procedures, rules and

guidelines for achieving a stated objective. Planning is carried out, and managers

need to create broad objectives and mission statements as well.

Below are the three (3) types of plans used by management in order it out within

an organization framework:

1. Strategic Plan – a strategic plan is a high-level overview of the entire business,

its vision, mission, corporate objectives, and values. This plan is the foundational

basis of the organization and will form part of the long-term decision. The

scope of the plan can be two, three, five or even ten years.

Managers at every level will turn to the strategic plan to guide their decisions.

It will also influence the culture within an organization and how it interacts with

customers. Thus, the strategic plan must be forward looking and flexible. This

answer the question “what”.

The components of a strategic plan are:

Vision - Where does the organization want to be five years from now?

This is how the company wants to be envisioned.

Mission – is a more realistic overview of the company’s aim and

ambitions. Why does the company exist? What does it aim to achieve?

Values – How do you want to inspire the world? How do you want to be

known?
2. Tactical Plan – describes the tactics the organization plans to use to achieve

the ambitions outlined in the strategic plan. It is a short range, say less than one

year, a low-level document that breaks own broader mission statements into

smaller, actionable chunks. This answers the question “how”.

The tactical plan specifically focuses on coming out with specific deadlines,

timetables, budget, the resources, the person responsible for the project and

marketing, funding, etc.

3. Operational Plan – the operational plan describes the day to day running of

the company. The operational plan charts out a roadmap to achieve the

tactical goals within the timeframe. This plan is highly specific with an emphasis

on short-term objectives.

Creating the operational plan is the responsibility of the low-level managers

and supervisors. An operational plan can be either single use or ongoing:

Single Use Plans – created or events/activities with a single occurrence,

such as sales rally, marketing campaign, and recruitment drive, etc. Single

use plans tend to be highly specific.

Ongoing Plans – These plans can be used in multiple settings on an ongoing

basis. It could be a policy, set of rules or procedures. Ongoing plans can be

changed or repeated as required.

Planning at Different Levels in the Firm

An organization can have many different managers, across different levels,

positions, levels of authority and hierarchy. In any organization, managers are on

top of their subordinates. They carry our plans through the support of their staffs.

Here we will discuss planning at different levels in the firm.

Most organizations have three management levels:

Top – level managers

Middle – level manager

Los – level managers

These managers perform different tasks by their level of authority in the

organization hierarchy. In many organizations, the number of managers in every

level resembles a pyramid.

Top – Level Managers

Top – level managers are the chairperson, board of director, president, CEO

(Chief Executive Officer), CFO (Chief Financial Officer), COO (Chief Operational

Officer), Vice-president and Corporate head. These managers are responsible for

controlling and overseeing the entire organization. They are the ones who the fire.

They play a significant role in the mobilization of outside resources.

Top-level managers have a great deal of managerial experience, most of

them have an advanced degree such as Masters in Business Administration,

others have been groomed and trained, moved up from the ranks and are part

of the succession planning for high potential management trainees.

Top managers do not direct the day-to-day activities of the firm, rather they

set goals, leads the entire company to achieve the goals set. The goals, mission,
vision of the firm is apparently set to the entire firm as a guide in achieving the set

goal.

Middle-level Managers

Middle-level managers, or middle managers are those in the level below

top managers. Their job titles include: General Manager, Regional Manager,

Division Manager, Plant Manager.

Middle manager are responsible for carrying out the goals set by top

management. They do so by setting goals for their departments and other

business units. Middle managers motivate and assist first-line managers to achieve

business objectives. Middle managers may communicate upward, by offering

suggestions and feedback to top executives Because middle managers are more

involved in the day-to-day working of a company, they may provide valuable

information to top managers to help improve the organization’s bottom line.

Middle managers execute organizational plans in conformance with the

company policies and objectives. They define and discuss information from top

management to lower management and motivates guides low-level managers

towards better performance. In planning, they implement effective group

intergroup work and information systems. They monitor group-level performance

indicators, diagnose and resolve problems within and among work groups. They

design and implement reward systems.

Lower-level Managers

Lower-level managers also called first-line managers or supervisors. These

managers have job titles such as Office Manager, Department Manager, Store

Manager, Supervisor. These managers focus on controlling and directing. They

are responsible for the daily management of line workers or the employees.

Although lower-level managers do not set management goals for the

organization, they have an unyielding influence on the company. These are the

managers that most employees interact with on a daily basis if the managers’

performance is poor; employees may also perform poorly.

Lower-level managers cascade the goals among their subordinate to be carried

out specifically. It is at this level of management wherein daily activities is being

supervised and monitored, ensuring the quality of work and production is being

done, and evaluation is implemented.