FOUNDATIONS OF PLANNING

Are you a good planner?

Mostly True
1. I have clear, specific goals in several areas of my life. 2. I have a definite outcome in life I want to achieve. 3. I prefer general to specific goals. 4. I work better without specific deadlines. 5. I set aside time each day or week to plan my work

If you fail to plan, you plan to fail.

Mostly False

6. I am clear about the measures that indicate when I have achieved a goal.
7. I work better when I set more challenging goals for myself. 8. I help other people clarify and define their goals.

 Give yourself a point for each item you markes as Mostly true except items 3 & 4. A score of 5 or higher suggests a positive level of goal-setting behavior and good preparation for a new manager role in an organization. If you scored 4 or less you might want to evaluate and begin to change your goal-setting behavior.

Definition of Planning
Defining the organizations goals, establishing an overall strategy for achieving these goals, and developing plans for organizational work activities.
Planning is concerned with ends (what is to be done) as well as with means (how it is to be done).

How Do Managers Plan?

Elements of Planning
Goals
Desired outcomes for individuals, groups, or entire organizations Provide direction and performance evaluation criteria

Plans
Documents that outline how goals are to be accomplished Describe how resources are to be allocated and establish activity schedules

Reasons for Planning

Overview of Goals and Plans

A goal is a desired future state that the organization attempts to realize A plan is a blueprint for goal achievement There are different levels of planning and goals in an organization Goals at each level of the organization guide the organization

Why Planning Is Important?

Planning ascertains where the organization is now and deciding where it will be in the future.
Participation: all managers are involved in setting future goals. Sense of direction and purpose: planning sets goals and strategies for all managers. Coordination: plans provide all parts of the firm with understanding about how their systems fit with the whole. Control: Plans specify who is responsible for the accomplishment of a particular goal.

Criticism to Planning
Planning may create rigidity. Plans cant be developed for a dynamic environment. Formal plans cant replace intuition and creativity. Planning focuses managers attention on todays competition, not on tomorrows survival. Formal planning reinforces success, which may lead to failure.

Levels of Goals/Plans and their Importance

The Organizational Planning Process

 Goals
Desired outcomes Financial goals

Wider profit margins Higher returns on invested capital Rise in stock price Stable earnings Large market share High industry ranking Low costs related to customers Leader in technology and innovation

Strategic goals

Organizational Mission
A broad declaration of an organizations purpose that identifies the organizations products and customers and distinguishes the organization from its competitors. The mission statement is the reason the organization exists
Top of the goal hierarchy Describes the values, aspirations and reason for being A well-defined mission is the basis for all other goals

Mission statements outline the stated purpose and values to stakeholders

Examples of Mission Statements

How about identifying/defining Mission, Vision and Values based on the reading?

Hierarchy of Goals

Strategy
The cluster of decisions and actions that managers take to help an organization reach its goals.
COMPANY America Online Dell eBay STRATEGIC PRINCIPLE Consumer connectivity firstanytime, anywhere Be direct Focus on trading communities

General Electric

Be number one or number two in every industry in which we compete, or get out
Meet customers short-haul travel needs at fares competitive with the cost of automobile travel

Southwest Airlines

Vanguard
Wal-Mart

Unmatchable value for the investor-owner

Low prices, every day

Source: Arit Gadiesh and James Gilbert, Frontline Action, Harvard Business Review, May 2001, p. 74.

Types of Goals and Plans

Strategic Goals official goals, broad statements about the organization
Define the action steps the company intends to attain The blueprint that defines activities

Tactical Goals help execute major strategic plans

Specific part of the companys strategy Plans of the divisions and departments

Operational Goals results expected from departments, work groups, and individuals
Lower levels of the organization Specific action steps

Example of GM
Strategic Goals
Increasing U.S. Market Share to 20 percent

Tactical Goals
Enhance reputation of GMs most important brand Chevrolet
Chevy

moved from 9th to 4th position by 2010

Operational Goals
Chevrolets marketing dept. might have an operational goal of increasing customer visits to showroom by 10 percent by year end Transportation dept. may have the goal of improving ontime delivery of cars and trucks to dealers by 20 percent

Strategy Map: Aligning Goals into Hierarchy

Vision: By 2020, become the leading company in our industry

Goals should be consistent and mutually supportive The achievement of goals at low levels permits the attainment of highlevel goals Individuals, teams, and departments should be working in concert

Types of Plans

BREADTH OF USE

TIME FRAME

SPECIFICITY

FREQUENCY OF USE

Strategic Tactical

Long term Short term

Directional Specific

Single use Standing

Planning: Focus and Time

Strategic plans Plans that are organization-wide, establish overall objectives, and position an organization in terms of its environment Tactical plans Plans that specify the details of how an organizations overall objectives are to be achieved Short-term plans Plans that cover less than one year Long-term plans Plans that extend beyond five years

Strategic vs. Tactical Plans

Strategic plans
Apply broadly to the entire organization Establish the organizations overall objectives Seek to position the organization in terms of its environment Provide direction to drive an organizations efforts to achieve its goals. Serve as the basis for the tactical plans. Cover extended periods of time Are less specific in their details

Tactical plans
Apply to specific parts of the organization. Are derived from strategic objectives Specify the details of how the overall objectives are to be achieved. Cover shorter periods of time Must be updated continuously to meet current challenges

Directional vs. Specific Plans

Directional plans
Flexible plans that set out general guidelines
Go from here to there (outcome-focus)

Specific plans
Plans that have clearly defined objectives and leave no room for misinterpretation
What, when, where, how much, and by whom (process-focus)

Single-Use vs. Standing Plans

Single-use plans
A plan that is used to meet the needs of a particular or unique situation

Standing plan
A plan that is ongoing and provides guidance for repeatedly performed actions in an organization

Single-day sales advertisement

Programs: integrated plans achieving specific goals. Project: specific action plans to complete programs.

Customer satisfaction policy

Policies are general guides to action. Rules are formal written specific guides to action.

Single Use vs. Standing Plans

Contingency Factors in Planning

Degree of environmental uncertainty
Stable

environment: specific plans Dynamic environment: specific but flexible plans

Length of future commitments

Current

plans affecting future commitments must be sufficiently long-term to meet the commitments

Planning for a Turbulent Environment

Contingency Planning plans for emergencies, setbacks or unexpected conditions Building Scenarios visualizing future possibilities

Crisis Planning preparing to cope with unexpected events

A Well-Designed Goal
Written in terms of outcomes rather than actions Measurable and quantifiable Clear time frame Optimally challenging Written down Clearly communicated

Goal Setting: Management by Objectives

Management by Objectives (MBO)
Defined by management scholar Peter F. Drucker in his 1954 book, The Practice of Management A system in which specific performance objectives are jointly determined by subordinates and their supervisors, progress toward objectives is periodically reviewed, and rewards are allocated on the basis of that progress. Links individual and unit performance objectives at all levels with overall organizational objectives Focuses operational efforts on organizationally important results. Motivates rather than controls

Steps in a Typical MBO Program

Jointly Set Objectives

Develop Action Plans to Achieve Objectives

Review Objectives and Provide Feedback

Give Rewards for Achieved Objectives

Overall objectives and strategies of organization

Managers and employees work on action plans together

Objectives allocated to divisional and departmental units

Action plans implemented

Specific objectives collaboratively set with employees

MBO Benefits and Problems

Levels of Planning
Corporate-Level Plan
Top managements decisions pertaining to the organizations mission, overall strategy, and structure. Provides a framework for all other planning.

Corporate-Level Strategy
A plan that indicates in which industries and national markets an organization intends to compete.

Levels of Planning
Business-Level Plan
Divisional managers decisions pertaining to divisions long-term goals, overall strategy, and structure.
Identifies

how the business will meet corporate goals.

Business-Level Strategy
A plan that indicates how a division intends to compete against its rivals in an industry.
Shows

how the business will compete in market.

Levels of Planning
Functional-Level Plan
Functional managers decisions pertaining to the goals that they propose to pursue to help the division attain its business-level goals.

Functional Strategy
A plan that indicates how a functional department intends to achieve its goals.

Levels of Planning at General Electric