UNIT 2

Managerial planning
Chapter Summary
• After reading this chapter , you will be able to understand
1. Planning process
2. Types of plans
3. Strategic vs operational plans
4. Model of strategic planning
5. Linking strategy to structure
 planning
• Planning includes all the activities that lead to the definition of
objectives and to the determination of appropriate courses of
action to achieve those activities
Steps in planning
4 major benefits
1. Planning forces managers to think ahead
2. It leads to development of performance standards that enable
more effective control
3. Having to formulate plans forces management to articulate
clear objectives
4. Enables an organization to be better prepared for sudden
developments.
The elements of planning
• Requires managers to make decisions about 4 fundamental
elements of plans:
1. Objectives
 Integral to plans because they specify future conditions that the planner deems
satisfactory
2. Actions
 Specified, preferred means to achieve the objectives
3. Resources
 Constraints on the courses of action.
4. Implementation
 Involves the assignment and direction of personnel to carry out the plan
7

Hierarchy of Goals

Traditional Responsibility Today

Mission

Top Strategic
Management Goals •Shrinking middle
management
Middle Tactical •Employee
Management Goals empowerment
1st-line
Management Operational
& Workers Goals Employees
Levels of goals/plans & their
importance
Mission
statement
Strategic goals/plans
Senior Management
(Organization as a
whole)
Tactical goals/plans
Middle Management
Major Divisions, functions
Operational Goals/Management
Lower Management
(Departments, Individuals)
 3

Types of Plans

BREADTH TIME SPECIFICITY FREQUENCY

OF USE FRAME OF USE

Strategic Long term Directional Single use

Tactical Short term Specific Standing

EXHIBIT 3 .2
Planning: Focus and Time
• Strategic plans
• Plans that are organization-wide, establish overall objectives, and position
an organization in terms of its environment
• Tactical plans
• Plans that specify the details of how an organization’s overall objectives
are to be achieved
• Short-term plans
• Plans that cover less than one year
• Long-term plans
• Plans that extend beyond five years
Single-Use and Standing Plans
• Single-use plans
• A plan that is used to meet the needs of a particular or unique situation
• Single-day sales advertisement

• Standing plan
• A plan that is ongoing and provides guidance for repeatedly performed
actions in an organization
• Customer satisfaction policy
12

Single-Use Plans
For Goals Not Likely To Be Repeated

● A program is a complex set of objectives and plans to

achieve an important, one-time organizational goal
● A project is similar to a program, but generally smaller in
scope and complexity
13

Standing Plans
For Tasks Performed Repeatedly

● A policy is a general guide to action and provides

direction for people within the organization
● Rules describe how a specific action is to be performed
● Procedures define a precise series of steps to be used in
achieving a specific job
 14

Model of the MBO Process

Step 1: Set Goals Step 2: Develop Action Plans
Corporate Strategic Goals
Departmental goals
Action Plans
Individual goals

Review Progress

Step 3:
Review Progress

Take Corrective Action

Appraise Performance
Step 4: Appraise Overall
Performance
15
MBO Benefits and Problems
Benefits of MBO
• Manager and employee efforts
are focused on activities that
will lead to goal attainment
• Performance can be improved
at all company levels
• Employees are motivated
• Departmental and individual
goals are aligned with
company goals
Problems with MBO
• Constant change prevents MBO
from taking hold
• An environment of poor employer-
employee relations reduces MBO
effectiveness
• Strategic goals may be displaced
by operational goals
• Mechanistic organizations and
values that discourage participation
can harm the MBO process
• Too much paperwork saps MBO
energy