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to Accompany
Management, 8/eJohn R. Schermerhorn, Jr.
Chapter 8:
Prepared by: Jim LoPresti
University of Colorado, Boulder
Published by: John Wiley & Sons, Inc.
Chapter 8: Planning – Processes and Techniques
Planning Ahead — Chapter 8 Study Questions
�Why and how do managers plan?
�What types of plans do managers use?
What are the useful planning tools
Management 8/e - Chapter 8 2
�What are the useful planning tools and techniques?
�How does management by objective operate?
Study Question 1: Why and how do managers plan?
� Planning� The process of setting objectives and
determining how to best accomplish them.
� Objectives
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� Identify the specific results or desired outcomes that one intends to achieve.
� Plan� A statement of action steps to be taken in
order to accomplish the objectives.
Study Question 1: Why and how do managers plan?
� Steps in the planning process:
� Define your objectives.
� Determine where you stand vis-à-vis objectives.
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� Develop premises regarding future conditions.
� Analyze and choose among action alternatives.
� Implement the plan and evaluate results.
Figure 8.1 The roles of planning and controlling in
the management process.
Management 8/e - Chapter 8 5
Study Question 1: Why and how do managers plan?
� Benefits of planning:
� Improves focus and flexibility.
� Improves action orientation.
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� Improves action orientation.
� Improves coordination.
� Improves time management.
� Improves control.
Figure 8.2 A sample means-ends chain for total
quality management.
Management 8/e - Chapter 8 7
Study Question 2: What types of plans do managers
use?
� Short-range and long-range plans� Short-range plans = 1 year or less
� Intermediate-range plans = 1 to 2 years
Management 8/e - Chapter 8 8
years
� Long-range plans = 3 or more years
� People vary in their capability to deal effectively with different time horizons.
� Higher management levels focus on longer time horizons.
Study Question 2: What types of plans do managers
use?
� Strategic and operational plans� Strategic plans — set broad, comprehensive, and
longer-term action directions for the entire organization.
� Operational plans — define what needs to be done in specific areas to implement strategic plans.
Management 8/e - Chapter 8 9
in specific areas to implement strategic plans.� Production plans
� Financial plans
� Facilities plans
� Marketing plans
� Human resource plans
Study Question 2: What types of plans do managers
use?
� Policies and procedures� Standing plans
� Policies and procedures that are designed for repeated use.
Management 8/e - Chapter 8 10
for repeated use.
� Policy
� Broad guidelines for making decisions and taking action in specific circumstances.
� Rules or procedures
� Plans that describe exactly what actions are to be taken in specific situations.
Study Question 2: What types of plans do managers
use?
� Budgets and project schedules� Single-use plans
�Only used once to meet the needs and objectives of a well-defined situation in a timely manner.
Budgets
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� Budgets� Single-use plans that commit resources to activities, projects, or programs.
� Fixed, flexible, and zero-based budgets.
� Projects� One-time activities that have clear beginning and end points.
� Project management and project schedules.
Study Question 3: What are the useful planning tools
and techniques?
� Forecasting
� Making assumptions about what will happen in
the future.
� Qualitative forecasting uses expert opinions.
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Qualitative forecasting uses expert opinions.
� Quantitative forecasting uses mathematical
and statistical analysis.
� All forecasts rely on human judgment.
� Planning involves deciding on how to deal with
the implications of a forecast.
Study Question 3: What are the useful planning tools
and techniques?
� Contingency planning
� Identifying alternative courses of action
that can be implemented to meet the
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needs of changing circumstances.
� Contingency plans anticipate changing
conditions.
� Contingency plans contain trigger points.
Study Question 3: What are the useful planning tools
and techniques?
� Scenario planning
� A long-term version of contingency
planning.
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planning.
� Identifying alternative future scenarios.
� Plans made for each future scenario.
� Increases organization’s flexibility and
preparation for future shocks.
Study Question 3: What are the useful planning tools
and techniques?
� Benchmarking
� Use of external comparisons to better
evaluate current performance and
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evaluate current performance and
identify possible actions for the future.
� Adopting best practices of other
organizations that achieve superior
performance.
Study Question 3: What are the useful planning tools
and techniques?
�Use of staff planners
� Coordinating the planning function for
the total organization or one of its
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the total organization or one of its
major components.
� Possible communication gaps between
staff planners and line management.
Study Question 3: What are the useful planning tools
and techniques?
� Participation and involvement� Participatory planning requires that the planning
process include people who will be affected by the
plans and/or will help implement them.
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plans and/or will help implement them.
� Benefits of participation and involvement:
� Promotes creativity in planning.
� Increases available information.
� Fosters understanding, acceptance, and
commitment to the final plan.
Figure 8.3 How participation and involvement help
build commitments to plans.
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Study Question 4: How does management by
objectives operate?
�Management by Objectives (MBO)
� A structured process of regular
communication.
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communication.
� Supervisor/team leader and workers
jointly set performance objectives.
� Supervisor/team leader and workers
jointly review results.
Figure 8.4 Management by objectives as an
integrated planning and control framework.
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Study Question 4: How does management by
objectives operate?
� MBO involves a formal agreement
specifying …
� Workers’ performance objectives for a specific
time period.
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time period.
� Plans through which performance objectives
will be accomplished.
� Standards for measuring accomplishment of
performance objectives .
� Procedures for reviewing performance results.
Study Question 4: How does management by
objectives operate?
� The MBO process:� Supervisor and workers jointly set objectives, establish standards, and choose actions.
Workers act individually to perform
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� Workers act individually to perform tasks; supervisors act individually to provide necessary support.
� Supervisor and workers jointly review results, discuss implications, and renew the MBO cycle.
Study Question 4: How does management by
objectives operate
� Types of MBO performance objectives� Improvement
� Personal development
� Maintenance
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� Criteria for effective performance objectives� Specific
� Time defined
� Challenging
� Measurable
Study Question 4: How does management by
objectives operate?
� Pitfalls to avoid in using MBO
� Tying MBO to pay.
� Focusing too much attention on easily
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� Focusing too much attention on easily
quantifiable objectives.
� Requiring excessive paperwork.
� Having managers tell workers their
objectives.
Study Question 4: How does management by
objectives operate?
� Advantages of MBO� Focuses workers on most important tasks and objectives.
� Focuses supervisor’s efforts on
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� Focuses supervisor’s efforts on important areas of support.
� Contributes to relationship building.
� Gives workers a structured opportunity to participate in decision making.
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