Management, Hitt, Black, Porter, Vahdi Boydaş, Mensur Boydaş

PowerPoint slides by

Susan A. Peterson, Scottsdale Community College

PowerPoint slides by

Susan A. Peterson, Scottsdale Community College

Chapter 6:

Planning

Chapter 6:

Planning

m a n a g e m e n t 2eH i t t / B l a c k / P o r t e r

m a n a g e m e n t 2eH i t t / B l a c k / P o r t e r

© 2008 Prentice-Hall Business Publishing 2

Learning ObjectivesLearning Objectives

After studying this chapter, you should be able to:

Define planning and explain its purpose

Differentiate between strategic, operational, and tactical plans

Describe the interrelationship between an organization’s types of plans and the levels at which they are developed

Explain the planning process

After studying this chapter, you should be able to:

Define planning and explain its purpose

Differentiate between strategic, operational, and tactical plans

Describe the interrelationship between an organization’s types of plans and the levels at which they are developed

Explain the planning process


Learning ObjectivesLearning Objectives

Discuss budgeting as a planning tool

List and explain the five characteristics of effective goals

Discuss budgeting as a planning tool

List and explain the five characteristics of effective goals


Overview of PlanningOverview of Planning

Objectives

End states or targets

Plans

Means to hit the desired targets

Planning

Decision-making process focused on the future of an organization and how it will achieve its goals

Objectives

End states or targets

Plans

Means to hit the desired targets

Planning

Decision-making process focused on the future of an organization and how it will achieve its goals


Types of PlansTypes of Plans

STRATEGIC PLANS• Broad future of the organization• External environmental demands• Internal resources

STRATEGIC PLANS• Broad future of the organization• External environmental demands• Internal resources

TACTICAL PLANS• Translate strategic plans into specific goals• Specific parts of the organization

TACTICAL PLANS• Translate strategic plans into specific goals• Specific parts of the organization

OPERATIONAL PLANS• Translate tactical plans into specific goals and actions• Small units of the organization • Near term

OPERATIONAL PLANS• Translate tactical plans into specific goals and actions• Small units of the organization • Near term


Types of PlansTypes of Plans

Complexity

Typically 3-5 years Often focused on 1-2 years in the future

Usually focused on the next 12 months or less

Broadest,originating with a focus on the entire organization

Rarely broader than a strategic business unit

Narrower, usually centered on departments or smaller units of the organization

The most complex and general, because of the different industries and business potentially covered

Somewhat complex but more specific, because of the more limited domain of application

The least complex, because they usually focus on small homogenous units

STRATEGICPLANS

TACTICALPLANS

OPERATIONALPLANS

Scope

TimeHorizon

Adapted from Exhibit 6.1


Types of Plans (continued)Types of Plans (continued)

Interdepen-dence

Have potential to dramatically impact the fortunes and survival of the organization

Can affect specific businesses but generally not the fortunes or survivability of the entire organization

Impact is usually restricted to specific department or organization unit

High interdependence, must take into account the resources and capabilities of the entire organization and its external environments

Moderate interdependence, must take into account the resources and capabilities of several units within a business

Low interdependence, the plan may be linked to higher-level tactical and strategic plans but is less interdependent with them

STRATEGICPLANS

TACTICALPLANS

OPERATIONALPLANS

Impact



Organizational LevelsOrganizational Levels

CORPORATE LEVEL• What industries should the firm be in?• What markets should the firm be in?• In which businesses should the firm invest money?

BUSINESS LEVEL• Who are our direct competitors?• What are their strengths/weaknesses? What advantages do we have over them?• What are our own strengths and weaknesses?• What do customers value in our products/services?

FUNCTIONAL LEVEL• What activities must my unit perform well to meet customer expectations?• What competitor information do we need compete effectively?• What are our unit’s strengths and weaknesses?


Organizational LevelsOrganizational Levels

Brunswich

Recreation Marine

U.S. Marine Sea Ray Astro/Procraft

Marketing andSales Dept.

Human ResourcesDept.

FinanceDept.

CorporateLevel

BusinessLevel

FunctionalLevel


Interaction Between Plans and LevelsInteraction Between Plans and Levels

Strategic PlansStrategic Plans Corporate LevelCorporate Level

Tactical PlansTactical Plans Business LevelBusiness Level

Operational PlansOperational Plans Functional LevelFunctional Level


Types of Plans Organizational Levels


The Planning ProcessThe Planning Process


Analyze theExternal Environment

Analyze Resources

Set Objectives

Develop Action Plans

Monitor Outcomes


The Planning Process: Analyzing the External EnvironmentThe Planning Process: Analyzing the External Environment

Forecasts

Environmental uncertainty

The more uncertainty, the more flexible the plans

Contingency plans

Benchmarking Investigating the best

practices by competitors and noncompetitors and comparing your practices

Forecasts

Environmental uncertainty

The more uncertainty, the more flexible the plans

Contingency plans

Benchmarking Investigating the best

practices by competitors and noncompetitors and comparing your practices


The Planning Process: Assessing Internal ResourcesThe Planning Process: Assessing Internal Resources

Resources available

Human capital

Financial resources

Technology

Resources available

Human capital

Financial resources

Technology


The Planning Process:Setting ObjectivesThe Planning Process:Setting Objectives

Priorities and multiple objectivesEstablish which objectives are

most important

Measuring objectives Financial performance

Profits relative to sales Profits relative to assets Many others

Non-financial performance

Priorities and multiple objectivesEstablish which objectives are

most important

Measuring objectives Financial performance

Profits relative to sales Profits relative to assets Many others

Non-financial performance


The Planning Process: Developing Action PlansThe Planning Process: Developing Action Plans

Sequence and timing

Gantt charts

Accountability

Who is accountable for which actions?

Sequence and timing

Gantt charts

Accountability

Who is accountable for which actions?


Gantt ChartGantt Chart

May June July Aug Sep Oct Nov

Contact clients

Obtain contract specs

Submit bid

Receive feedback

Revise bid

Submit revised bid

Final approval or rejection

Complete bid review



The Planning Process: Implementing PlansThe Planning Process: Implementing Plans

Monitoring the implementation includes monitoring:

Progress of the plan and its implementation

Level of support for the plan and implementation

Level of resistance

Real-time adjustment

Monitoring the implementation includes monitoring:

Progress of the plan and its implementation

Level of support for the plan and implementation

Level of resistance

Real-time adjustment


The Planning ProcessMonitoring OutcomesThe Planning ProcessMonitoring Outcomes

Unanticipated consequences Negative unanticipated

consequences Positive unanticipated

consequences Feedback loop

Apply what has been learned to modify and improve the planning process

Unanticipated consequences Negative unanticipated

consequences Positive unanticipated

consequences Feedback loop

Apply what has been learned to modify and improve the planning process


Planning Tools: BudgetsPlanning Tools: Budgets

Budgets quantify and allocate resources

Capital expenditure budget Specifies amount of money to

be spent on specific items that have long-term use

Expense budget Includes primary activities on

which a unit or organization plans to spend money and the amount allocated for the upcoming year

Budgets quantify and allocate resources

Capital expenditure budget Specifies amount of money to

be spent on specific items that have long-term use

Expense budget Includes primary activities on

which a unit or organization plans to spend money and the amount allocated for the upcoming year


Planning Tools: BudgetsPlanning Tools: Budgets

Proposed budget Provides a plan for how much

money is needed, and is submitted to a superior or budget review committee

Approved budget Specifies what the manager is

actually authorized to spend money on and how much

Proposed budget Provides a plan for how much

money is needed, and is submitted to a superior or budget review committee

Approved budget Specifies what the manager is

actually authorized to spend money on and how much


Planning Tools: Budgeting ApproachesPlanning Tools: Budgeting Approaches

Incremental budgeting From the approved budget of

the previous year present arguments for why the upcoming budget should be more or less

Zero-based budgeting approach Justify all allocations of

funds from zero each year

Incremental budgeting From the approved budget of

the previous year present arguments for why the upcoming budget should be more or less

Zero-based budgeting approach Justify all allocations of

funds from zero each year


Goal SettingGoal Setting

Attributes of effective goals:

Specific

Measurable

Committed

Realistic

Time bound

Attributes of effective goals:

Specific

Measurable

Committed

Realistic

Time bound

Management, Hitt, Black, Porter, Vahdi Boydaş, Mensur Boydaş

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Transcript of Management, Hitt, Black, Porter, Vahdi Boydaş, Mensur Boydaş