Chapter4
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| Planning | A primary functional managerial activity that involves:
*Defining the organization’s goals
*Establishing an overall strategy for achieving those goals
*Developing a comprehensive set of plans to integrate and coordinate organizational work.
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| Types of planning | *Informal: not written down, short-term focus; specific to an organizational unit.
*Formal: written, specific, and long-term focus, involves shared goals for the organization
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| Purposes of Planning | -Provides direction
-Reduces uncertainty
-Minimizes waste and redundancy
-Sets the standards for controlling
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| The Relationship Between Planning And Performance | -Formal planning is associated with:
*Higher profits and returns of assets.
*Positive financial results.
-The quality of planning and implementation affects performance more than the extent of planning.
-The external environment can reduce the impact
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| Elements of Planning | Goals
plan
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| Goals (also Objectives) | -Desired outcomes for individuals, groups, or entire organizations
-Provide direction and evaluation performance criteria
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| Plans | -Documents that outline how goals are to be accomplished
-Describe how resources are to be allocated and establish activity schedules
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| Types of Goals | Financial Goals
Strategic Goals
Stated Goals versus Real Goals
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| Financial Goals | Are related to the expected internal financial performance of the organization.
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| Strategic Goals | Are related to the performance of the firm relative to factors in its external environment (e.g., competitors).
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| Stated Goals versus Real Goals | Broadly-worded official statements of the organization (intended for public consumption) that may be irrelevant to its real goals (what actually goes on in the organization).
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| State Goals | official statements of what an organization says and what it wants it various stakeholders to believe its goals are.
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| Real Goals | goals that an organization actually pursues as defined by the actions of its members.
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| Strategic Plans | Apply to the entire organization.
Establish the organization’s overall goals.
Seek to position the organization in terms of its environment.
Cover extended periods of time.
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| Operational Plans | Specify the details of how the overall goals are to be achieved.
Cover short time period
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| Long-Term Plans | Plans with time frames extending beyond three years
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| Short-Term Plans | Plans with time frames on one year or less
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| Specific Plans | Plans that are clearly defined and leave no room for interpretation
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| Directional Plans | Flexible plans that set out general guidelines, provide focus, yet allow discretion in implementation.
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| Single-Use Plan | A one-time plan specifically designed to meet the need of a unique situation.
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| Standing Plans | Ongoing plans that provide guidance for activities performed repeatedly.
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| Traditional Goal Setting | Broad goals are set at the top of the organization.
Goals are then broken into subgoals for each organizational level.
Assumes that top management knows best because they can see the “big picture.”
Goals are intended to direct, guide, and constrain fro
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| Management By Objectives (MBO) | Specific performance goals are jointly determined by employees and managers.
Progress toward accomplishing goals is periodically reviewed.
Rewards are allocated on the basis of progress towards the goals.
Key elements of MBO:
Goal specificity, partici
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| Steps in a Typical MBO Program | The organization’s overall objectives and strategies are formulated.
Major objectives are allocated among divisional and departmental units.
Unit managers collaboratively set specific objectives for their units with their managers.
Specific objectives
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| Reason for MBO Success | Top management commitment and involvement
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| Potential Problems with MBO Programs | Not as effective in dynamic environments that require constant resetting of goals.
Overemphasis on individual accomplishment may create problems with teamwork.
Allowing the MBO program to become an annual paperwork shuffle.
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| Characteristics of Well-Designed Goals | Written in terms of outcomes, not actions
Focuses on the ends, not the means.
Measurable and quantifiable
Specifically defines how the outcome is to be measured and how much is expected.
Clear as to time frame
How long before measuring accomplishment
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| Steps in Goal Setting | Review the organization’s mission statement.
Do goals reflect the mission?
Evaluate available resources.
Are resources sufficient to accomplish the mission?
Determine goals individually or with others.
Are goals specific, measurable, and timely?
Wri
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| Contingency Factors in A Manager’s Planning | Manager’s level in the organization
Strategic plans at higher levels
Operational plans at lower levels
Degree of environmental uncertainty
Stable environment: specific plans
Dynamic environment: specific but flexible plans
Length of future commitmen
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| Approaches to Planning | Establishing a formal planning department
A group of planning specialists who help managers write organizational plans.
Planning is a function of management; it should never become the sole responsibility of planners.
Involving organizational members i
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| Criticisms of Planning | Planning may create rigidity.
Plans cannot be developed for dynamic environments.
Formal plans cannot replace intuition and creativity.
Planning focuses managers’ attention on today’s competition not tomorrow’s survival.
Formal planning reinforces tod
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| Effective Planning in Dynamic Environments | Develop plans that are specific but flexible.
Understand that planning is an ongoing process.
Change plans when conditions warrant.
Persistence in planning eventually pay off.
Flatten the organizational hierarchy to foster the development of planning
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