Chapter 07

Management: Arab World Edition
Robbins, Coulter, Sidani, Jamali

Chapter 7: Foundations of Planning
Lecturer: [Dr Sally ]
Learning Outcomes
Follow this Learning Outline as you read and study this chapter.
7.1 Define the nature and purpose of planning
Define planning.
Describe the purposes of planning.
Explain what studies have shown about the relationship between
planning and performance.
Understand the dynamics of planning in Arab culture.
7.2 Goals And Plans
Define goals and plans.
Describe the types of goals organizations might have.
Describe each of the different types of plans.
7-3
Copyright 2011 Pearson Education
Learning Outcomes
7.3 Setting Goals and Developing Plans
Discuss how traditional goal setting and MBO work.
Describe well-written goals and explain how to set them.
Discuss the contingency factors that affect planning.
Describe the approaches to planning.
7.4 Contemporary Issues in Planning
Explain the criticisms of planning.
Describe how managers can effectively plan in todays
dynamic environment.
7-4
Define the nature and

purpose of planning
1. Define planning.
2. Describe the purposes of planning.
3. Explain what studies have shown about the relationship
between planning and performance.
4. Understand the dynamics of planning in Arab culture.
7-5
What Is Planning?
Planning
A primary managerial activity that involves:
Defining
the organizations goals
Establishing
Developing
It
an overall strategy for achieving those goals
plans for organizational work activities
is concerned with ends and means
Formal planning
7-6
Specific
goals covering a specific time period
Written
and shared with organizational members
Why Do Managers Plan?

Purposes of Planning
7-7
1.
Provides direction employees know what to accomplish and

avoid cross purpose compliance
2.
Reduces uncertainty look ahead and anticipate change
3.
Minimizes waste and redundancy lay off
4.
Sets the standards for controlling
Planning and Performance
7-8
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 amount of planning.
The external environment can reduce the impact of planning on

performance. Example government regulations
Formal planning is influenced by time and must be used for

several years before planning begins to affect performance.
Planning in Arab Culture
Planning is underdeveloped in Arab societies
Fatalism passivity
the belief in predestination, in the sense that a person has no

control over things that happen to him as things have already
been predestined from God.
This is a mistaken understanding of Qadar.
7-9
some attribute this to an Arab culture that is supposedly fixated

on the past and resists planning for the future.
Belief in Qadar does not mean that people should not plan.
Planning in Arab Culture (contd)
Early Arabs planned, which explains their successes.
Later, however, fatalism as a historic practice, not a religious

doctrine has displayed itself in their societies.
What is needed:
gradual development in value systems, leading to the notion that

planning is required to succeed and this is in fact in harmony
with religious teachings.
FAILING TO PLAN IS PLANNING TO FAIL
7-10
Planning in Arab Culture (contd)
Emergence of many successful Arab entrepreneurs and

managers.
They built their businesses on proper planning and adequate

organization.
This demonstrates that they have been progressively adopting

modern managerial standards.
7-11
Goals And Plans

1. Define goals and plans.
2. Describe the types of goals organizations might have.
3. Describe each of the different types of plans.
7-12
How Do Managers Plan?

Elements of Planning
A. Goals (also Objectives)
planning
SMART GOALS foundation of
Desired
outcomes for individuals, groups, or entire

organizations
Provide
direction and evaluation performance criteria
B. Plans
Documents
that outline how goals are to be accomplished
Describe
how resources are to be allocated and establish

activity schedules
7-13
Types of Goals
all organizations have multiple goals :example mosque / church
Financial Goals are related to the expected internal financial performance of

the organization. NOT ENOUGH
Strategic Goals are related to the performance of the firm relative to factors
in its external environment (e.g., competitors).
Example Macdonald financial goal is to increase sales by 3 % while Nissan

Strategic goals was to beat Porsche car
If managers emphasize only one goal, other goals necessary for long-term
success are ignored.
7-14
SMART Objectives
Specific
Measurable
Attainable
Relevant
Time bound
7-15
Types of Goals (contd)

a. Stated goals can be found in an organizations charter, annual
report, or public relations announcements, or in public statements
made by managers.
It must be relevant to what is actually the company is doing
Example EMMAR : become a whole life company covering leisure
and finance
These broadly-worded official statements of the organization
(intended for public consumption) that may be irrelevant to its
b. Real goals
real goals (what actually goes on in the organization).
What members are doing
7-16
Exhibit 71
7-17
Types of Plans
Types of Plans: Breadth

A. Strategic Plans
Apply to the entire organization.
Establish the organizations overall goals.
position the organization in terms of its environment.

Cover extended periods of time.
B. Operational Plans
Specify the details of how the overall goals are to be achieved.
Cover a short time period.
7-18
Types of Plans
Long-Term Plans
Plans with time frames extending beyond three years
Short-Term Plans
Plans with time frames of one year or less
Any time period in between is an intermediate plan
7-19
Types of Plans (contd)

Directional Plans
Flexible plans that set out general guidelines and provide focus,
yet allow discretion in implementation
are more preferable in unexpected changes
Specific Plans
Plans that are clearly defined and leave no room for interpretation
Example a manager wants to increase his unit out put by 8 %in 12

months
7-20
Exhibit 73
Specific Versus Directional Plans
721
7-21
2007
Types of Plans (contd)

Single-Use Plan
A one-time plan specifically designed to meet the need of a unique

situation
Example plan for opening new shops to increase life style
Standing Plans
7-22
Ongoing plans that provide guidance for activities performed

repeatedly
Setting Goals and

Developing Plans
1. Discuss how traditional goal setting and MBO work.
2. Describe well-written goals and explain how to set them.
3. Discuss the contingency factors that affect planning.
4. Describe the approaches to planning
7-23
Setting Goals and Developing Plans

1. Approaches to Setting Goals
Traditional goal setting
MBO
Characteristics of well-written goals
2. Developing Plans
7-24
Contingency factors in planning
Approaches to Planning
Traditional 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.
7-25
Traditional Goal Setting

Problems in traditional goal setting
Turning strategic goals to departmental and team is difficult
and frustrating
1.
2.Broad
term are used sufficient profits
3.Mangers
7-26
at each level put his interpretations
Exhibit 72 The Downside of Traditional Goal Setting
7-27
Maintaining the Hierarchy of Goals

MeansEnds Chain
The
integrated network of goals that results from establishing a

clearly-defined hierarchy of organizational goals.
Achievement
of lower-level goals is the means by which to reach

higher-level goals (ends).
7-28
Management By Objectives (MBO)
Specific performance goals are jointly determined by employees

and managers. Mangers sit down with his employees motivate
employees
Progress toward accomplishing goals is periodically reviewed.
Rewards are allocated on the basis of progress towards the

goals.
4 Key elements of MBO:

Goal
specificity, participative decision making, an explicit time

performance/evaluation period, feedback
7-29
Exhibit 73
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 performancebased rewards.
7-30
Does MBO Work?

Reason for MBO Success
Top management commitment and involvement
Potential Problems with MBO Programs
Not 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.
7-31
Exhibit 74
Written in terms of outcomes,

not actions
7-32
Specifically defines how

the outcome is to be
measured and how much
is expected.
Clear as to time frame
Focuses on the ends, not

the means.
Measurable and quantifiable
Well-Written Goals
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.
Steps in Goal Setting

1. Review the organizations mission statement.
Do goals reflect the mission?
2. Evaluate available resources.
Are resources sufficient to accomplish the mission?
Example a person annual income 50,000 and want to make
3. Determine goals individually or with others.
Comply with organization mission
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?
7-33
Developing Plans: Contingency Factors in

Planning
Three contingency factors affect the choice of plan
1. Managers level in the organization
Strategic plans at higher levels
Operational plans at lower levels
2. Degree of environmental uncertainty
7-34
Stable environment: specific plans
Dynamic environment: specific but flexible plans
Example in Lebanon you plan for 3 years to open a restaurant

but have to change because of war
Developing Plans: Contingency Factors in

Planning
3. Length of future commitments
7-35
Commitment Concept: current plans affecting future

commitments must be sufficiently long-term to meet those
commitments.
Example Savola co, for food plan to build a new factory so it

has to be committed to whatever future expenses
Exhibit 75 Planning in the Hierarchy of Organizations
7-36
Developing Plans: Approaches to Planning

1. Establishing a formal planning department traditional
approach
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.
2. Involving organizational members in the process
7-37
Plans are developed by members of organizational units at various

levels and then coordinated with other units across the
organization.
Example at gulf air , KPI screens are installed at the entrance of

the building showing daily operation
Contemporary Issues in
Planning
1. Explain the criticisms of planning.
2. Describe how managers can effectively plan in todays
dynamic environment.
7-38
Contemporary Issues in Planning

1. Criticisms of Planning
2. Effective Planning in Dynamic Environments
7-39
Criticisms of Planning
7-40
Planning may create rigidity. formal plan my lock org.to specific

time and goals
Plans cannot be developed for dynamic environments.
Formal plans cannot replace intuition and creativity. Example

apple company and Steve jobs
Planning focuses managers attention on todays competition

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

tomorrows failure. Stuck to previous plan especially if they are
successful
Just planning isnt enough. Start doing / implementing is

important
Effective Planning in Dynamic

Environments
7-41
Develop plans that are specific but flexible.
Understand that planning is an ongoing process.
Change plans when conditions warrant.
Persistence in planning eventually pay off.
Flatten the organizational hierarchy to foster the development

of planning skills at all organizational levels.it involves others
managers in planning
Example Abdul Hameed starting selling mobiles and and then sell
it to other countries and make profit of 2 billions
Terms to Know
planning
directional plans
goals
single-use plan
plans
standing plans
stated goals
traditional goal setting
real goals
means-ends chain
framing
strategic plans
management by objectives
(MBO)
operational plans
mission
long-term plans
commitment concept
short-term plans
formal planning department
specific plans
7-42
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7-43

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Management: Arab World Edition

Robbins, Coulter, Sidani, Jamali

Copyright 2011 Pearson Education

Copyright 2011 Pearson Education

Define the nature and

Copyright 2011 Pearson Education

the organizations goals

an overall strategy for achieving those goals

plans for organizational work activities

is concerned with ends and means

goals covering a specific time period

and shared with organizational members

Copyright 2011 Pearson Education

Why Do Managers Plan?

Provides direction employees know what to accomplish and

Reduces uncertainty look ahead and anticipate change

Minimizes waste and redundancy lay off

Sets the standards for controlling

Copyright 2011 Pearson Education

Planning and Performance

Formal planning is associated with:

Higher profits and returns on assets.

Positive financial results.

The quality of planning and implementation affects performance

The external environment can reduce the impact of planning on

Formal planning is influenced by time and must be used for

Planning in Arab Culture

Planning is underdeveloped in Arab societies

the belief in predestination, in the sense that a person has no

This is a mistaken understanding of Qadar.

some attribute this to an Arab culture that is supposedly fixated

Copyright 2011 Pearson Education

Planning in Arab Culture (contd)

Early Arabs planned, which explains their successes.

Later, however, fatalism as a historic practice, not a religious

gradual development in value systems, leading to the notion that

FAILING TO PLAN IS PLANNING TO FAIL

Copyright 2011 Pearson Education

Planning in Arab Culture (contd)

Emergence of many successful Arab entrepreneurs and

They built their businesses on proper planning and adequate

This demonstrates that they have been progressively adopting

Copyright 2011 Pearson Education

Goals And Plans

Copyright 2011 Pearson Education

How Do Managers Plan?

SMART GOALS foundation of

outcomes for individuals, groups, or entire

direction and evaluation performance criteria

that outline how goals are to be accomplished

how resources are to be allocated and establish

Copyright 2011 Pearson Education

all organizations have multiple goals :example mosque / church

Financial Goals are related to the expected internal financial performance of

Example Macdonald financial goal is to increase sales by 3 % while Nissan

Copyright 2011 Pearson Education

Copyright 2011 Pearson Education

Types of Goals (contd)

Copyright 2011 Pearson Education

Copyright 2011 Pearson Education

Types of Plans: Breadth

Apply to the entire organization.