Organization And Management Module 6

ACEBA Systems Technology Institute Inc. Senior High School Organization and Management (Quarter 1) Academic Track

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 decisionmaking. 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 noneconomic 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:

Prepared by: Rea Mariz I. Jordan/ Gumaca SHS-Teacher / 09.07.2020

ACEBA Systems Technology Institute Inc. Senior High School Organization and Management (Quarter 1) Academic Track

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.

Prepared by: Rea Mariz I. Jordan/ Gumaca SHS-Teacher / 09.07.2020

ACEBA Systems Technology Institute Inc. Senior High School Organization and Management (Quarter 1) Academic Track

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.

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Weaknesses: Where can your company improve? Try to take a neutral approach and consider what factors may be hurting your business.

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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.

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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

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Establish a consistent scale to assess the value of each combination of alternatives and factors

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Determine how important each factor is towards making your final decision and assign weights accordingly

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Multiply your original ratings by the weighted rankings

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Add up the factors under each decision alternative

Prepared by: Rea Mariz I. Jordan/ Gumaca SHS-Teacher / 09.07.2020

ACEBA Systems Technology Institute Inc. Senior High School Organization and Management (Quarter 1) Academic Track

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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.

Prepared by: Rea Mariz I. Jordan/ Gumaca SHS-Teacher / 09.07.2020

ACEBA Systems Technology Institute Inc. Senior High School Organization and Management (Quarter 1) Academic Track

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. 2.

Is the output of planning. 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 2. course of action 3. strategic planning 4. setting standards

A. functional area plan B. time-horizon plan C. single-use plan D. part of the strategic plan

Prepared by: Rea Mariz I. Jordan/ Gumaca SHS-Teacher / 09.07.2020

ACEBA Systems Technology Institute Inc. Senior High School Organization and Management (Quarter 1) Academic Track

5. strategies 6. standard 7. marketing plan 8. long-range plan 9. project 10. objectives or goals

E. serves as a useful guide in the implementation of activities F. the means to realize the goal G. concern of top management H. step in the planning process I. the ways chosen to realize the goals J. a quantitative or qualitative measuring device designed to help monitor the performance of people, capital goods, or process.

Prepared by: Rea Mariz I. Jordan/ Gumaca SHS-Teacher / 09.07.2020