MANAGEMENT

Business Shool
Lecturer ： LUO Qian

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 Chapter 4 Planning

4.1 The What and Why of Planning

4.2 Goals and Plans

4.3 Setting goals and develop plans

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 Chapter 4 Planning

4.1 The What and Why of Planning

(1).What is Planning
Planning means defining the organization’s goals, establishing strategies for
achieving those goals, and developing plans to integrate and coordinate work
activities.
 Planning is to make a plan about the things what happen in the future, not
now.

When people make plans, they need to do some analysis, design, scheme
work, and making decision.
A plan takes a lot of efforts! 3
(2) Why do managers plan?
Four reasons:

① Planning provides direction for organization to develop.

What’s your direction?

② Planning reduces uncertainty.

Question:Someone says that situation or environment often changes, so

making plans doesn’t work at all. Do you agree with this opinion?

③ Planning minimizes waste.

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Half work with double results
Penholder(3days) Spring(1day) Nib(2days) Pen cap(4days)

Lean Production (Just in Time)

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④ Planning establishes the goals or standards used in controlling.

This is why planning is the most important function and the first function.

(3) Planning and performance

Generally, formal planning is associated with positive financial results.

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4.2 Goals and Plans
Goals (Objectives) are desired outcomes or targets.

Plans are documents that outline how goals are going to be met.

Here plans are different from planning. Planning is a function of management.

Plans include resource allocations, schedules, and other actions to reach the
goals. .

Resource allocations means managers need to decide what resource

allocates to what department in an organization.

Schedules means when the first step begins, when the second step goes…

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(1) Types of goals

Financial goals are related to the financial performance, while Strategic goals
are related to all other areas of an organization's performance.

 E.g McDonald’s financial goals are 3-5% average annual sales and
revenue growth, 6-7% average annual operating income growth.

Stated goals are official statement of what an organization says, and what it
wants its various stakeholders to believe its goals are.

Real goals are goals that an organization actually pursues, as defined by

the actions of its members.

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 Financial goals
30% increase in annual revenues;
30% increase annually in earnings per share;
Profit margins of 15%;
10% return on capital employed;
…...

Strategic goals
Achieving lower overall costs than rivals;
Achieving technological leadership;
Strengthening company’s brand name appeal;
Having stronger national or global sales and distribution capabilities
than rivals;
……

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(2)Types of plans
① According to the scope and importance, there are strategic plans and
operational plans.

Strategic plans are plans that apply to the entire organization and establish
the organization’s overall goals.

how to enter into a new field, how to absorb another company, how to
adjust the organizational structure.

Operational plans are plans that encompass a particular operational area of the
organization.

Market plans, production plans, financial plans, etc...

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② According to the length of time, there are long-term plans and short-term
plans.

Long-term plans are plans with a time frame beyond three years.

3-year-plan or 5-year-plan, or several decades

‘Moon Landing Project’ Vs Forest planting

Short-term plans are plans covering one year or less.

So usually, long-time plans are strategic plans, and short-term plans are
operational plans.

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③ According to the specific degree, there are specific plans and
directional plans

Specific plans are plans that clearly defined and leave no room for
interpretation.

Specific figures; difficult to clarify the plan in all situations

Increase the productivity of one department to 8% higher than before in
the coming 12 months.

Directional plans are plans that are flexible and set out general guidelines. It
points out the direction and sets up general principles of organization.

First-class university; to be better and better; day day up

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④ According to frequency of use, there are single-use plans and standing
plans

Single-use plan is a one-time plan specifically designed to meet the needs of

a unique situation.

Projects, programs, budgets…

Yangzi River bridge; the second Yangzi River bridge, or the third Yangzi River
bridge
Standing plans are ongoing plans that provide guidance for activities
performed repeatedly.

Policies, rules, procedures

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4.3 Setting goals and develop plans

(1)Approaches to setting goals

① Traditional goal setting

What is Traditional goal setting? It is an approach to setting goals in which top

management set goals then flow down through the organization and become sub-goals
for each organizational area.

② Management by objectives (MBO)

Management by objectives, it is a process of setting mutually agree-upon

goals and using those goals to evaluate employees performance.

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Traditional goal setting

organizational goal

Unit’s goal

Department goals

Individual goals
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Management by Objectives

Organizational goals

Unit’s goals

Department goals

Individual goals

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 The features of MBO
a). a form of participative management
b). emphasizing ‘self-control’
c). prompting authority power down to the
lower level
d). Results oriented

(2)Developing plans

① Organizational level

② Environmental Uncertainty

③ length of commitments

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The commitment concept says that plans should extend far enough to
meet those commitments made when the plans were developed.