NPC ONLINE COURSE GUIDE FOR AY 2022-2023

Course Title: Bachelor of Science in Business Administration

Section:
Schedule:
Name of Faculty: Dr. Rachelle M. Santos

Module Number: 5&6PLANNING, ORGANIZING, AND STAFFING

Lesson Title/Topic: Planning and Decision-Making

Week Number: 5&6

Objectives

At the end of the lesson, the students will be able to:

1. discuss the nature of planning,

2. explain the significance of vision and mission statements and goals or objectives in planning,

3. enumerate and discuss the different types of plans,

4. describe the planning process and planning at different levels in the firm,

5. apply the appropriate planning techniques and tools in business situations,

6. identify the different decision models

7. identify common errors in decision making, and

8. conduct planning and organizing based on specific situations.

Let’s Examine

Recall the things you do to prepare yourself for a day in school. Answer the following questions.

1. What are the first things you prepare when packing your bag for school?

2. Why are these things important for your day in school?

3. What activities do you look forward to in school?

4. How do you prepare for these activities?

5. Aside from school activities, what other tasks or activities do you prepare for?

6. Do you believe that planning and organizing your activities for the day is beneficial for you?

Let’s Discuss
THE NATURE OF PLANNING

Planning – is a primary management function. It involves setting the direction and goals of an
organization, establishing a system that will define the activities of the organization, and formulating a
plan to ensure that the system works toward achieving the goals of the organization.

Planning by nature is by an intellectual exercise.Because decision making is very crucial part in

planning, metriculous deliberation is required. Planning is also a continous process. Strategies may be
revised and changed depending on the circumstances, and these changes have an impact on the
operations of the company.

VISION AND MISSION STATEMENTS

A vision statement describes what the company wants to achieve and where it wants to go in the
future. Below are the characteristics of effectively worded vision statements.

1. Graphic – The vision projects to the market the kind of company that the management wants to create
and the kind of company it aspires to be.

2. Directional – It describes the path where the company wants to go and presents specific plans to move
forward in the future.

3. Focused – The vision is very specific so managers are properly guided on what to do in terms of
resources and strategies.

4. Flexible – Although the vision should be focused, it allows room for managers to change based on the
market situations, technological advancements, and customer preferences.

5. Feasible – The vision is achievable and realistic.

6. Desirable – The vision is clear on why the path is practically sensible and serves the interests of
members in the long run.

7. Easy to communicate – The vision is easy to understand, articulated, and can be simplified into a
powerful slogan.

A mission statement describes a company’s reason for its existence . It answers the questions why the
company exists. A good mission statement identifies the company’s products and services; the
customer’s needs that the company seek to satisfy customer’s needs; and the target markets that it
wants to serve.

GOALS AND OBJECTIVES

Goals are specific accomplishments or action plans that are usually attained after a long period. These
are broader in scope because the intentions are more general and involve outputs that are tangible and
non-measurable.

Objectives refer to action plans that involve shorter periods and more measurable ouputs. These tend to
be more specific and result in tangible outcomes.

TYPES OF PLANS

There are three main types of plans that a manager uses in devising strategies to achieve company goals.

1. Strategic Plans – These plans are designed by the top management such as the CEO or President.
These are usually broad plans based on the company’s visions, mission and values, and address the
company as whole.

2. Tactical Plans – While strategic plans involve the company as a whole, tactical plans create specific
plans for a specific areas of the company. The plans translate broader plans into functional goals for
each or department.

3. Operational Plans – These are specific procedures and processes made by frontliner or low-level
managers. Operational plans often involve specific events such as marketing campaigns, campus
recruitment, and others. Ongoing plans can be in any of the following forms:
a. Policy – a set of principles that guide managers in addressing a particular issue

b. Rule – a regulation which describes and regulates the functions of an organization

c. Procedure – a step-by-step process in accomplishing a task or achieving an objective.

CONTINGENCY PLANNING

A contingency plan is a special plan created for unexpected scenarios or changes. It is part of a
manager’s job to always be ready with alternative courses of action in case the original does not work
out. One of the common types of contingency plans is a crisis management plan. It is a plan made in
preparation for any kind of crisis such as industrial disasters like fire, or natural disasters like an
earthquake or a typhoon.

Scenario Planning is another form of contingency planning. The company formulates plans for both
positive and negative scenarios that may arise from the implementation of plans.The possible outcomes
for each scenario are analyzed in formulating plans and appropriate steps are identified to address
them.

THE PLANNING PROCESS

There are five steps involved in planning process:

 However, there are certain factors that must be considered to ensure that the planning process
goes smoothly. First, it must be align to its mission and vision. Environment Scanning is done as it
provides esential information that will guide planners. The resources needed in implementing the plans
should also be identified. A lack of resources will make the accomplishment of plans difficult or
impossible.

PLANNING AT DIFFERENT LEVELS IN THE FIRM

Top Level Management Planning

The corporate strategy is usually conceptualized by the chief executive officer and other
members of the top management. The top management also formulates the general business strategy.

Middle Level Management Planning

A functional strategy determines a particular function or process and is formulated by middle-

level management officers.

Low Level Management Planning

An operational strategy is a narrower and more focused strategy formulated by low-level

managers or fronliners. It requires the identification of resources such as human resources or
employee’s skills; financial resources or the capital or investment of the company; and physical
resources that include production facilities, distribution channels, and information technology.
PLANNING TECHNIQUES AND TOOLS

Planning requires managers to develop and propose alternative courses of action. There are there
qualitative techniques that can be used in planning. These are:

1. Brainstorming – This is a common technique used by groups of planners in selecting a common

solution for a problem. It stimulates thinking and allows the group to work together in generating ideas.

2. Nominal group technique - This is a highly structured method that allows members to give their own
inputs based on an agenda.

3. Delphi technique - This is also a highly structured technique similar to the nominal group technique.
However, the difference lies in the means of formulating courses of actions. This technique doesn’t
require meetings rather, the group leader collects ideas by distributing questionnaires to members.

Apart from qualitative techniques, maangers can also employ quantitative tools in planning and
decision making. These are:

1. Decision Tree – is an excellent tool for weighing different alternatives. It consists of a graph showing
potential and alternative decision paths for the proposed plan.
2. Payback Method – this method is used in evaluating alternatives in purchasing equipment, furniture,
and fixture. Usually, managers choose the alternative that results in the quickest payback of the initial
cost.

DECISION MAKING AND THE COMMON TYPES OF DECISION MODELS

Rational or Logical Decision Model

This process involves a logical step-by-step analysis of several possible contributing factors in
making the decision.
Intuitive Decision Model

In this method, managers do not use objective methods in decision making but instead use their
“gut feeling” and instincts. This model is suited for managers who have several years of managerial
experience.

Predisposed Decision Model

In this model, once the manager decides on a solution, it will no longer look for another
alternative solutions. The chosen solution is considered the most acceptable and effective solution.
COGNITIVE BIASES

Cognitive bias refers to the tendency to look at a situations based on subjective standards or
perspectives. It often lead managers to make wrong, illogical conclusions regarding certain situations
and people.

1. Escalating Commitment - this type of error happens when a manager, despite his or her knowledge of
a project’s failure, continues to acquire more resources to pursue the project instead of abandoning it.

2. Prior hypothesis bias – this happens when a manager holds on to his or her prior belief that a project
will succeed even when evidence to the contrary has been provided.

3. Representativeness – it is the tendency to make generalizations based on a small sample or a single

experience.

4. Reasoning by analogy – it refers to the tendency to conclude that the results of one situation can be
repeated in a similar situation.

5. Illusion of control – it is a type of error that many top-level managers commit when they become
overconfident regarding their ability to solve problems.

6. Framing Bias - this kind of bias correlates the outcomes with how a problem or decision is framed. In
business, the wrong framing of a simple aspect of a business can result in problems that will cost a
company in profits.
7. Availability error – this error is committed by managers when they immediately use available
resources on a project that is expected to immediately provide profit, rather than holding off and
waiting for a later opportunity that will generate even greater profit.

CONTEMPORARY STRUCTURED DECISION-MAKING MODELS

Kepner-Tregoe Matrix Model

Following are the four basics steps Kepner-Trigoe Matrix Model

1. Situation Analysis – in a assessing the situation, the manager clarifies aspects of the scenario and
outline’s possible causes.

2. Problem Analysis - the root cause of the problem is identified. Also the manage analyzes how the
cause brought about the problem.

3. Decision Analysis – various solutions and courses of action are identified and evaluated by conducting
risk analysis.

4. Potential Problem Analysis – a possible final decision is determined and carefully scrutinized. The
pros and cons on implementing the choses alternative are identified. From the results, appropriate
actions are proposed to minimize the identified risk.

Observe – Orient – Decide – Act ( OODA ) Loop Model

This model was brought about by the application of military tactics in business situations. The OODA
Loop Model was developed by US Airforce as a decision making model for air combat. According to him,
decision-making is essentially a cycle of actions that an individual is in quick succession to address a
situation.

Vroom-Yetton-Jago Decision Model

This model is originally developed by Victor Vroom and Philip Yetton in 1973. This model focuses not on
identifying possible decisions but on selecting the best leadership style suited for planning and decision
making.

Learning Tasks

Fill in each blank with the correct answer.

1. It is the setting of direction for an organization, establishing a system and ensuring

that the system follows that direction.

2. It describes a company’s reason for existence.

3. They are specific accomplishments or action plans that are usually attend after a
longer period.

4. It describes the direction where the company is going.

5. This are plans made up by top management.

B. Match Column A with Column B. Write the letter of the correct answer in the space provided before
each number.

Column A Column B
1. In this technique, the group of planners a. Intuitive Decision Model
generates several ideas and select a solution based b. Vroom-Yetton-Jago Decision
Model on them. c. Delphi Technique
d. Nominal Group
Technique

2. It is an error that occurs when manager become e. Illusion of Control

overconfident in their ability to solve problems. f. Kepner-Trigoe Matrix Model

3. It is a decision model where manager decide g. Brainstorming

using their gut feeling. h. Predisposed Decision Model

4. It is a contemporary decision model that offers i. Escalating Commitment

a systematic and rational process of evaluating j. Prior hypothesis bias
alternatives removing pressures from planners and k. OODA Loop Model
minimizing the risks of choses alternatives.

5. It is a contemporary decision model that applies l. Representativeness

military tactics to business scenarios.

6. It is an excellent tool for weighing different m. Cognitive Bias

alternatives and uses a graph showing potential and n. Decision Tree
alternative decision paths for the proposed plan.

7. It is a cognitive bias wherein a manager holds on his o. Rule of Thumb

or her prior belief that a project will succeed even when
evidence has been provided otherwise.

8. It is a highly structured planning technique which

allows members to give their inputs based on an agenda

9. This contemporary decision model focuses on identifying the appropriate leadership style for
a certain situation.

10. It is another term for decision heuristics.

MANAGERS IN ACTION

Answer briefly the following questions.

1. Why is planning considered a primary management function?

2. How can a company benefit from having a good vision and mission statement?

3. Why are contingency plans important for an organization?

4. Why do you think managers are prone to commit cognitive biases in decision-making? How can they
avoid them?

NPC ONLINE COURSE GUIDE FOR AY 2022-2023

Course Title: Bachelor of Science in Business Administration

Section:
Schedule:
Name of Faculty: Lee D. Carinan, MAEM
Emy E. Corpuz, MBA
Ronalyn F. Leongson, MBA
Ruben Jose Sanchez, MBA
Module Number: 5&6 PLANNING, ORGANIZING, AND STAFFING

Lesson Title/Topic: Nature and Structure of an Organization

Week Number: 5&6

Objectives

At the end of the lesson, the students will be able to:

1. discuss the nature of organizations and the organizing process,

2. identify the types of organizational design,

3. distinguish the various types of organization structures,

4. apply the organization theories in analyzing businesses and other organizations,

5. identify the different elements of delegation, and

6. differentiate formal from informal organization.

Let’s Discuss

NATURE OF ORGANIZATIONS
Configuration and Elements of Organizational Structure
Simple Organizational Structure

The disadvantage of this structure is that it is heavily reliant on the business owner.

Functional Organizational Structure

 The functional organizational structure emphasizes hierarchy and specialization among
departments. A functional organizational structure enables a company to establish clear
professional identities among its employees since they are given position and ranks in line with
their areas of expertise or specialization.

Divisional Organizational Structure

 One of the advantage of a divisional structure is that it allows employees in each division to
concentrate on their own division’s performance. Employee supervision and issue handling are more
specific because these are concentrated in a particular division.

MULTI-FOCUSED GROUPING

Matrix Organizational Structure

The matrix organizational structure combines features of functional and divisional structure is
often used in larger companies and is set up as a grid where employees have dual reporting relationship.
Horizontal Grouping or Structure

5. The PERFECT MANAGER – is open to change and personal growth. He or She just concentrates on
facts and figures.

6. The PASSIVE MANAGER – wants to please everyone and makes the team members happy, crowd

Horizontal grouping eliminates the complexities of hierarchy or divisions. Instead, it establishes

structure with little or no levels between employees, middle managers, and top management.
Employees are organized into general core process or operations and all departments in the company
work together in all tasks.
Team-based Organizational Structure

A team-based organizational structure is a horizontal design that organizes employees into

teams whose members perform varied functions. Employees work together in accomplishing various
task, seeking solutions to problems, and identifying and engaging in business opportunities.

Virtual Network Grouping

 This is the latest approach to organizational design that takes advantage of the latest advances
in information and communication technology. The company is structured as a group of departments
that are loosely connected through electronic means.

Network Organizational Structure

OTHER TYPES OF ORGANIZATION ( Henry Mintzberg on Management )

1. Entrepreneurial Organization – the power in this type of organization is focused on the chief excutive.

2. Machine Organization – decision-making is centralized and there is a distinction between line and
staff.

3. Diversified Organization – the central administration is called headquarters and there is a set of semi-
autonomous units of division under a central administrative structure.

4. Professional Organization – this type of organization has standardized products and services and
employees do routine work. Example: hospital, universities, and public agencies

5. Innovative Organization – this system is considered as a modern organization which is flexible and
does not utilize planning and control system.

6. Missionary Organization – the mission is the main focus of this type of organization. This mission is
clear, distinct, and inspiring.

ORGANIZATION THEORIES

Bureaucracy
Scientific Management

Systems Theory
Contigency Theory

Learning Tasks

Fill in each blank with the correct answer.

1. This organizational theory was developed by Frederick Taylor when he made

innovations in industrial engineering particularly the time and motion study.

2. It is a type of organizational structure wherein a firm relies on other companies to do

most of its function.

3. It define as a social group that is well coordinated process and activities for the
purpose of achieving the company’s objectives. It is connected to the
environment where it exists.
 4. It is a type of structural design which employs technology in sharing information and
completing tasks.

5. It is a type of organizational structure which is used when both technical expertise

and product innovation are crucial in meeting organizational goals.

6. It is a structural design that combines two organizational structures; a matrix

structure is an example.

7. It is an element of delegation described as the power to give orders to subordinates.

8. It is the act of a manager to exercise authority at different levels by assigning tasks to

employees, with the trust that they will help in achieving the goals of the
organization.

MANAGER IN ACTION

Answer briefly the following questions.

1. How do formal and informal organizations contribute to the success of a company? What challenges
do they pose?

2. How does the organizational structure of a business help in achieving its vision, mission, and goals?
3. Is empowerment better than delegation of authority? Why or why not?

4. How do the three elements of delegation define the relationship between manager and employees?

5. Which among the organization theories is the most applicable in today’s business environment? Why?