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Management 8e. - Robbins and Coulter


Title: Management 8e. - Robbins and Coulter Subject: Chapter 5 - Foundations of Planning Author: Edited by BobN Last modified by: IBM Created Date – PowerPoint PPT presentation

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Title: Management 8e. - Robbins and Coulter

(No Transcript)
What Is Planning?
  • Planning
  • A basic managerial function 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.

Types of planning
  • Informal planning
  • Not written down
  • Short-term goals
  • Done in small businesses or in single
    organizational units (little or no sharing of
    goals with others).
  • Formal planning
  • Written down
  • Clearly defined long-term goals
  • Goals are shared with other organizational

Why Do Managers Plan?
  • Four Purposes (reasons) of planning are
  • It Provides direction (a focus)
  • It Reduces uncertainty (being unsure)
  • It Minimizes waste, inefficiencies and redundancy
    (unnecessary actions)
  • It Sets the standards (criteria) for

Planning and Performance
  • Studies of the Relationship Between Planning And
    Performance have concluded that
  • Formal planning is associated with positive
    financial results
  • Higher profits.
  • Higher returns on assets.
  • The quality of planning and implementation is
    more closely linked to high performance than the
    extent (how wide) of planning.
  • The external environment (e.g. government
    regulations) constrains managers options
    (choices) and can reduce the impact (effect) of
    planning on performance.
  • Formal planning must be used for several years
    before it begins to positively affect performance.

How Do Managers Plan?
  • The Role of Goals and Plans in Planning
  • Goals or Objectives are desired outcomes for
    individuals, groups, or entire organizations.
  • They provide direction (focus) for plans and
  • They form the criteria for evaluating results.
  • Plans are documents that outline (describe) how
    goals are going to be met (accomplished).
  • They determine resource allocations
    (distribution), timetables and other necessary
    actions to accomplish the goals

Types of Goals
  • Financial Goals
  • Are related to the financial performance of the
  • Strategic Goals
  • Are related to the performance of the firm in
    connection with its external environment (e.g.
    customers, competitors).

Types of Goals
Real Goals The goals that an organization
actually pursues, as can be seen in the actions
of its members
Stated Goals Official statements from the
organization, saying what it wants its
stakeholders and the public to believe.
  • Knowing that an organizations stated and real
    goals are usually different is important to
    understand what seems to be management
    inconsistencies (contradictions).

Stated Objectives from Large U.S. Companies
  • Financial Objectives
  • Faster revenue growth
  • Faster earnings growth
  • Higher dividends
  • Wider profit margins
  • Higher returns on invested capital
  • Stronger bond and credit ratings
  • Bigger cash flows
  • A rising stock price
  • Recognition as a blue chip company
  • A more diversified revenue base
  • Stable earnings during recessionary periods
  • Strategic Objectives
  • A bigger market share
  • A higher more secure industry rank
  • Higher product quality
  • Lower costs relative to key competitors
  • Broader or more attractive product line
  • A stronger reputation with customers
  • Superior customer service
  • Recognition as a leader in technology and/or
    product innovation
  • Increased ability to compete in international
  • Expanded growth opportunities

Types of Plans
  • Strategic Plans
  • Establish the goals of the entire organization.
  • Cover long time periods.
  • Aim to position the organization in relation to
    its environment.
  • Operational Plans
  • Define the ways to achieve the goals by
    organizational members.
  • Cover short time periods.

Types of Plans
  • Long-Term Plans
  • Plans with a time frame of more than three years.
  • Short-Term Plans
  • Plans with a time frame of one year or less.

Types of Plans
  • Specific Plans
  • Plans that are clearly defined and leave no room
    for interpretation.
  • There is no ambiguity and no problem with
  • Directional Plans
  • Flexible plans that set out (indicate) general
    guidelines, provide focus, yet allow discretion
    (freedom) in implementation.
  • They dont force managers into specific courses
    of action.

Specific Versus Directional Plans
Types of Plans
  • Single-Use Plans
  • One-time plans that are specifically designed to
    meet the needs of a unique situation.
  • Standing Plans
  • Ongoing plans that provide guidance for
    activities performed repeatedly.
  • They include policies, rules and procedures.

Types of Plans
Approaches to Establishing Goals
  • Traditional Goal Setting
  • Broad (general) goals are set at the
    organizations top level and then split into sub
    goals for each lower level of the organization.
  • This approach assumes that top managers know
    whats best because they can see the big
  • The goals serve to direct, guide, and constrain
    from above.
  • Goals lose clarity and focus as lower-level
    managers apply their own interpretation
    (understanding) when defining and applying them
    to their areas of responsibility.

Traditional Objective Setting
Approaches to Establishing Goals
  • MeansEnds Chain
  • Establishing a clearly-defined hierarchy (order
    of accomplishment) of organizational goals that
    results in an integrated (complete) network
    (system) of goals.
  • Accomplishment of goals at a lower level is the
    means (instrument) by which the goals (ends) at
    the next higher level are achieved.

Approaches to Establishing Goals
  • Management By Objectives (MBO)
  • Specific performance goals are jointly (together)
    determined by employees and their managers.
  • Progress toward accomplishing goals is
    periodically checked.
  • Rewards are allocated (distributed) on the basis
    of progress.
  • Key elements of MBO
  • Specific goals employees motivation by
    participation in decisions explicit time period
    performance feedback/evaluation.

Steps in a Typical MBO Program
  1. The organizations overall objectives and
    strategies are formulated.
  2. Major objectives are allocated among divisional
    and departmental units.
  3. Unit managers collaboratively set specific
    objectives for their units with their managers.
  4. Specific objectives are collaboratively set with
    all department members.
  5. Action plans, defining how objectives are to be
    achieved, are specified and agreed upon by
    managers and employees.
  6. The action plans are implemented.
  7. Progress toward objectives is periodically
    reviewed, and feedback is provided.
  8. Successful achievement of objectives is
    reinforced by performance-based rewards.

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 will be
  • Clear as to time frame
  • Specify a time frame for accomplishment.
  • Challenging but attainable
  • Low goals do not motivate.
  • High goals motivate if they can be achieved.
  • Written down
  • Forces people to focus
  • Written goals become visible.
  • Communicated to all
  • Ensures that all members work in ways to secure
    accomplishment of goals.

Steps in Goal Setting
  1. Review the organizations mission statement.
  2. Does the goal reflect the purpose of the
  3. Evaluate available resources.
  4. Are resources sufficient to achieve the goal?
  5. Determine goals individually or with others.
  6. Does it conflict with other organizational goals?
  7. Write down the goals and communicate them.
  8. Is everybody on the same page?
  9. Review results and whether goals are being met.
  10. Are any changes needed?

Developing Plans
  • Contingency Factors in a Managers Planning
  • The managers level in the organization.
  • Higher levels of management Strategic planning
  • Lower levels of management Operational planning
  • The Degree of environmental uncertainty.
  • Stable environment Specific plans.
  • Dynamic environment Specific but flexible
  • The time frame for accomplishment.
  • The time frame should be long enough to allow
    fulfillment of all the commitments that are
  • Factors that have an effect on a managers

Planning in the Hierarchy of Organizations
Approaches to Planning
  • Establishing a formal planning department
  • A group of planning specialists who help to write
    organizational plans.
  • This approach can be effective only if managers
    are involved. Planning is a function of
    management, it should not be the sole (the only)
    responsibility of planners.
  • Involving organizational members in the process
  • Plans are developed by organizational members at
    various levels and then coordinated with other
    units across the organization.

Contemporary Issues in Planning
  • Criticisms of Planning
  • Planning may create rigidity In achieving
    specific goals, managers may not be able to cope
    with the changing environment.
  • Plans cannot be developed for dynamic
    environments These conditions may mean not
    being tied to formal plans.
  • Formal plans cannot replace intuition and
    creativity They may reduce intuition to
    programmed routine.
  • Planning focuses managers attention on todays
    competition not tomorrows survival They focus
    on existing business opportunities, not
  • Formal planning reinforces todays success, which
    may lead to tomorrows failure Successful plans
    provide a false sense of security than is
    warranted (justified, called for).

Contemporary Issues in Planning
  • Criticisms of Planning
  • How Valid are these criticisms?
  • They have some merit when plans are rigid and
    inflexible. However, in todays management
    effective planners should understand dynamic,
    uncertain environments.

Contemporary Issues in Planning
  • Effective Planning in Dynamic Environments
  • Develop plans that are specific but flexible.
  • Understand that planning is an ongoing process.
  • Make changes as needed if environmental
    conditions change.
  • Continue in formal planning even in uncertain
    environment to see any effect on performance.
  • Push the responsibility to lower organizational
    levels by training employees in setting goals and
    establishing plans.

C H A P T E R R E V I E W 1/3
  • What Is Planning? (slides 2, 3)
  • Define planning.
  • Differentiate between formal and informal
  • Why Do Managers Plan? (slides 4, 5)
  • Describe the purposes of planning.
  • Discuss the conclusions from studies of the
    relationship between planning and performance.
  • How Do Managers Plan? (slides 68)
  • Define goals and plans.
  • Describe the types of goals organizations might
  • Explain why its important to know an
    organizations stated and real goals.

C H A P T E R R E V I E W 2/3
  • How Do Managers Plan? (contd) (slides 1012, 14)
  • Describe each of the different types of plans.
  • Establishing Goals and Developing Plans (slides
    16, 18, 19, 21, 22, 23, 25)
  • Discuss how traditional goal setting works.
  • Explain the concept of the meansend chain.
  • Describe the management by objective (MBO)
  • Describe the characteristics of well-designed
  • Explain the steps in setting goals.
  • Discuss the contingency factors that affect
  • Describe the approaches to planning.

C H A P T E R R E V I E W 3/3
  • Contemporary Issues in Planning (Slides 2628)
  • Explain the criticisms of planning and whether or
    not theyre valid.
  • Describe how managers can effectively plan in
    todays dynamic environment.