Planning in management
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Transcript of Planning in management
FOUNDATION OF PLANNING
Planning DefinedPlanning Defined• Defining the organization’s objectives or goals• Establishing an overall strategy for achieving those goals• Developing a comprehensive hierarchy of plans to integrate and coordinate activities
Planning is concerned with ends (what is to be done) as well as with means (how it is to be done).
Planning and PerformanceThe Relationship Between Planning And
PerformanceFormal planning is associated with:
Higher profits and returns on assets. Positive financial results.
Because of changes in environment
ManageManagers rs
engage engage in in
planing planing to :to :
Provides direction
Reduces Uncertainty
Minimizes waste and redundancy
Sets the standards for controlling
Reasons For
Planing
Types of planningTypes 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.
Criticisms Of Criticisms Of Formal Planning:Formal Planning:• Planning may create rigidity.• Plans can’t be developed for a dynamic environment.• Formal plans can’t replace intuition and creativity.• Planning focuses managers’ attention on today’s competition, not on tomorrow’s survival.• Formal planning reinforces success, which may lead to failure.
Elements of Planning
Goals (also Objectives) Desired outcomes for individuals, groups, or entire
organizations Provide direction and evaluation performance criteria
Plans Documents that outline how goals are to be
accomplished Describe how resources are to be allocated and establish
activity schedules
Types of GoalsFinancial Goals
Are related to the expected internal financial performance of the organization.
Strategic GoalsAre related to the performance of the firm
relative to factors in its external environment (e.g., competitors).
Types of Plans
Planning: Focus Planning: Focus and Time and Time Strategic plans
Plans that are organization-wide, establish overall objectives, and position an organization in terms of its environment
Tactical plansPlans that specify the details of how an organization’s overall objectives are to be achieved
Short-term plansPlans that cover less than one year
Long-term plansPlans that extend beyond five years
Strategic PlanningStrategic plans
Apply broadly to the entire organizationEstablish the organization’s overall objectivesSeek to position the organization in terms of its
environment Provide direction to drive an organization’s
efforts to achieve its goals.Serve as the basis for the tactical plans.Cover extended periods of timeAre less specific in their details
Tactical PlanningTactical plans (operational plans)
Apply to specific parts of the organization.Are derived from strategic objectivesSpecify the details of how the overall objectives
are to be achieved.Cover shorter periods of timeMust be updated continuously to meet current
challenges
Specific and Directional PlansSpecific plans
Plans that have clearly defined objectives and leave no room for misinterpretation “What, when, where, how much, and by whom”
(process-focus)
Directional plansFlexible plans that set out general guidelines
“Go from here to there” (outcome-focus)
Directional versus Specific Plans
Single-Use and Standing PlansSingle-use plans
A plan that is used to meet the needs of a particular or unique situation Single-day sales advertisement
Standing planA plan that is ongoing and provides guidance for
repeatedly performed actions in an organization Customer satisfaction policy
Establishing Goals and Developing PlansTraditional Goal Setting
Broad goals are set at the top of the organization.
Goals are then broken into sub-goals 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 from above.
Goals lose clarity and focus as lower-level managers attempt to interpret and define the goals for their areas of responsibility.
The Downside of Traditional Goal Setting
Management by ObjectivesManagement by Objectives (MBO)
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
Cascading of Objectives
Elements of MBO
• Goal specificity
• Participative decision making
• Explicit time period for performance
• Performance
feedback
Does MBO Work?Reason for MBO Success
Top management commitment and involvement
Potential Problems with MBO ProgramsNot 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.
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.
Challenging yet attainable Low goals do not motivate. High goals motivate if they
can be achieved. Written down Focuses, defines, and makes
goals visible. Communicated to all
necessary organizational members
Puts everybody “on the same page.”
S.M.A.R.T.S.M.A.R.T.The acronym S.M.A.R.T. outlines the set of criteria that your goal must follow in order for it to be a well- focused and achievable goal.
SpecificSpecific Do you know what you Do you know what you
want to accomplish with all the want to accomplish with all the details?details?
MeasurableMeasurable Are you able to assess Are you able to assess your progress?your progress?
AttainableAttainable Is your goal within your Is your goal within your
reach given your current situationreach given your current situation??
RelevantRelevant Is your goal relevant Is your goal relevant towards your purpose in life?towards your purpose in life?
Time SensitiveTime Sensitive What is the What is the deadline for completing your goal?deadline for completing your goal?
S
M
TRA
Steps in Goal Setting1. Review the organization’s mission statement.
Do goals reflect the mission?
2. Evaluate available resources.
Are resources sufficient to accomplish the mission?
3. Determine goals individually or with others.
Are goals specific, measurable, and timely?
4. Write down the goals and communicate them.
Is everybody on the same page?
5. Review results and whether goals are being met.
What changes are needed in mission, resources, or goals?
Developing PlansContingency 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
Planning in the Hierarchy of Organizations
Strategic ManagementWhat managers do to develop the
organization’s strategies.
StrategiesThe decisions and actions that determine
the long-run performance of an organization.
Strategic ManagementStrategic Management Process
A nine-step process that involves strategic planning, implementation, and evaluation
The organization’s current identity Mission statement
Defines the purpose of the organizationObjectivesStrategic plan
A document that explains the business founders vision and describes the strategy and operations of that business.
The Strategic Management Process
Analyze the EnvironmentEnvironmental scanning
Screening large amounts of information to detect emerging trends and create a set of scenarios
Competitive intelligenceAccurate information about competitors that
allows managers to anticipate competitors’ actions rather than merely react to them
SWOT: Identifying Organizational Opportunities
SWOT analysisAnalysis of an organization’s
strengths, weaknesses, opportunities, and threats in order to identify a strategic niche that the organization can exploit
WeaknessesStrengths
TreatsOpportunities
Internal Environment
External Environment
SWOT Analysis
SWOT AnalysisStrengths (strategic)
Internal resources that are available or things that an organization does well Core competency: a unique skill or resource that
represents a competitive edgeWeaknesses
Resources that an organization lacks or activities that it does not do well
Opportunities (strategic)Positive external environmental factors
ThreatsNegative external environmental factors
Grand StrategiesGrowth strategy
A strategy in which an organization attempts to increase the level of its operations;
Retrenchment strategyA strategy characteristic of a company that is
reducing its size, usually in an environment of decline
Combination strategyThe simultaneous pursuit by an organization of two
or more of growth, stability, and retrenchment strategies
Stability strategyA strategy that is characterized by an absence of
significant change
Growth StrategiesMerger
Occurs when two companies, usually of similar size, combine their resources to form a new company
AcquisitionOccurs when a larger company buys a smaller
one and incorporates the acquired company’s operations into its own
Competitive StrategiesStrategies that position an organization in
such a way that it will have a distinct advantage over its competitionCost-leadership strategy
Becoming the lowest-cost producer in an industryDifferentiation strategy
Attempting to be unique in an industry within a broad market
Focus strategy Attempting to establish an advantage
(cost/differentiation) in a narrow market segment
BenchmarkingBenchmarking
The search for the best practices among competitors or noncompetitors that lead to their superior performance
ISO 9000 seriesStandards designed by the International
Organization for Standardization that reflect a process whereby independent auditors attest that a company’s factory, laboratory, or office has met quality management standards
THE ENDTHE END