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Chapter 8 - Foundations of Planning

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947 views

Chapter 8 - Foundations of Planning

chapter 08

Uploaded by

shuvofindu
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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FOUNDATIONS OF

PLANNING
Chapter 8

WHAT IS PLANNING?

Planning
A

primary functional managerial activity that


involves:
Defining the organizations goals
Establishing an overall strategy for achieving those
goals
Developing a comprehensive set of plans to integrate
and coordinate organizational work.
Categories 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.

72

Copyright 2004 Prentice Hall,


Inc. All rights reserved.

WHY DO MANAGERS PLAN?

Purposes of Planning

Provides direction provides a clear sense of direction to the activities of the


organization and to the job behavior of managers and others..

Reduces uncertainty enables managers to look ahead, anticipate changes,


consider the impact of change, and develop appropriate responses.

Minimizes waste and redundancy when work activities are coordinated


around plans, inefficiencies become obvious and can be corrected or eliminated.

Establishes the goals or standards for controlling without planning, there


would be no goals against which to measure or evaluate work effort.

73

Copyright 2004 Prentice Hall,


Inc. All rights reserved.

PLANNING AND PERFORMANCE


Although most studies have shown generally positive relationship
between planning and performance, it cannot be said that organizations
that formally plan always outperform those that dont plan.
Formal planning is associated with:

Higher profits and returns on 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 of planning on


performance

Formal planning must be used for several years before planning begins to
affect performance.

GOALS AND PLANS


Goals

(also Objectives)

Desired outcomes for individuals, groups, or entire organizations


Provide direction and evaluation performance criteria
What should be the characteristics of a goal????

Plans

75

Documents that outline how goals are to be accomplished


Describe how resources are to be allocated and establish activity
schedules

Copyright 2004 Prentice Hall,


Inc. All rights reserved.

TYPES OF GOALS

Financial Goals
Are related to the expected financial performance of the organization.

Strategic Goals
Are related to all other areas of an organizations performance other
than financial.

Stated Goals versus Real Goals


Stated: official statements of what an organization says and what it
wants its stakeholders to believe its goals are.
Real: the goals that an organization actually pursues.

EXHIBIT 8-1 TYPES OF PLANS

77

Copyright 2004 Prentice Hall,


Inc. All rights reserved.

TYPES OF PLANS

1. Strategic plans
Apply to the entire organizational
Establish the organizations overall goals.
Seek to position the organization in terms of its
environment
The time horizon tends to be long 3 to 5 years or more.
2. Operational plans
Are the means devised to support implementation of
tactical plans and achievement of operational goals.
Operational plans spell out specifically what must be
accomplished to achieve operational goals.
The time horizon is relatively short-temusually less
than 1 year as a maximum.

TYPES OF PLANS (CONTD)

Long-Term Plans
Plans

with time frames extending beyond three

years

Short-Term Plans
Plans

with time frames on one year or less

Specific Plans
Plans

that are clearly defined and leave no room


for interpretation with clearly defined objectives

Directional Plans
Flexible

plans that set out general guidelines,


provide focus, yet allow discretion in
implementation.

79

Copyright 2004 Prentice Hall,


Inc. All rights reserved.

SPECIFIC VERSUS DIRECTIONAL PLANS

710

Copyright 2004 Prentice Hall,


Inc. All rights reserved.

TYPES OF PLANS (CONTD)

Single-Use Plan
A

one-time plan specifically designed to meet


the need of a unique situation.

Standing Plans
Ongoing

plans that provide guidance for


activities performed repeatedly.

711

Copyright 2004 Prentice Hall,


Inc. All rights reserved.

SETTING GOALS AND


DEVELOPING PLANS

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 from above.
Goals lose clarity and focus as lower-level
managers attempt to interpret and define the
goals for their areas of responsibility.
712

Copyright 2004 Prentice Hall,


Inc. All rights reserved.

EXHIBIT 8-2 THE DOWNSIDE OF TRADITIONAL GOAL SETTING

Exhibit 7.4
713

Copyright 2004 Prentice Hall,


Inc. All rights reserved.

SETTING GOALS AND DEVELOPING


PLANS

Maintaining the Hierarchy of Goals


MeansEnds

714

Chain

The integrated network of goals that results from a


establishing a clearly-defined hierarchy of organizational
goals.
Achievement of lower-level goals is the means by which to
reach higher-level goals (ends).

Copyright 2004 Prentice Hall,


Inc. All rights reserved.

SETTING GOALS AND DEVELOPING


PLANS

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, participative decision making, an explicit


performance/evaluation period, feedback

Studies have shown that MBO can increase employee performance and
organizational productivity.

DEVELOPING PLANS

Contingency Factors in A Managers Planning


Managers 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 commitments


Plans should extend far enough to meet the commitments
made when the plans were developed.
Planning for too long or too short a time period is
inefficient and ineffective.
716

Copyright 2004 Prentice Hall,


Inc. All rights reserved.

EXHIBIT 8-5 PLANNING AND ORGANIZATIONAL LEVEL


S trategic
Planning

Top
Executives

Middle-Level
Managers

Firs t-Level
Managers

Operational
Planning
17

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 in the process


Plans

are developed by members of organizational


units at various levels and then coordinated with
other units across the organization

18

CONTEMPORARY ISSUES IN
PLANNING

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 todays
competition, not tomorrows survival
Formal planning reinforces todays success,
which may lead to tomorrows failure

19

CONTEMPORARY ISSUES IN
PLANNING (CONTD)

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 pays off
Flatten the organizational hierarchy to foster the
development of planning skills at all
organizational levels

20

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