Foundations of Planning

PLANNING
Definition:
Planning encompasses defining the organizations objectives or goals, establishing an overall strategy for achieving those goals and developing a comprehensive hierarchy of plans to integrate and coordinate activities .

PLANNING
The Purpose of Planning:
Gives direction Establishes coordination Reduces uncertainty Reduces overlapping / wasteful action Establishes objectives or standards

Criticisms of Formal Planning

Planning may create rigidity. Plans cannot be developed for a dynamic environment. Formal plans cannot replace intuition and creativity. Planning focuses managers attention on todays competition, not on tomorrows survival Formal planning reinforces success, which may lead to failure
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Planning Increases Performance

Generally produces positive financial results Quality of the planning process and the implementation efforts are more important than the extent of planning Environmental change can strongly affect the impact of planning

Types of Plans
BREADTH TIME FRAME

FREQUENCY SPECIFICITY OF USE

Strategic
Tactical

Long-term
Short-term

Directional
Specific

Single use
Standing

Types of Plans
Strategic -- organization wide, overall
objectives, position firm in environment

Tactical -- specify the details of how

overall objectives are to be met

Short term -- less than a year long term -- beyond five years

Types of Plans
Specific -- clearly defined objectives Directional -- flexible plans setting out
general guidelines

Single use -- meets the needs of a unique

situation

Standing -- provides guidance for

repeatedly performed actions
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Clear

Specific Plans

Low

Flexibility

Objectives

General

Directional Plans

High
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Managerial Levels and Plans

Strategic Planning
Top Executives

Middle-level Managers

Operational Planning

First-level Managers

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Management By Objectives (MBO)

What is MBO ?
A system in which specific performance objectives are jointly determined by subordinates and their superiors, progress toward objectives is periodically reviewed and rewards are allocated on the basis of that progress.

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Management By Objectives
Common MBO elements
Identify key job tasks Set specific and challenging goals Encourage active participation Prioritize goals Build in feedback Link rewards to goal attainment
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Management By Objectives
Overall Organizational Objectives

Divisional Objectives

Departmental Objectives

Individual Objectives
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MBO Downside
Overly focussed on what is being measured rather than final result (quantity over quality) Individual rather than team focus Objectives become ceilings rather than floors -- decreases further motivation

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1. 4.

Identify Current Mission 2. Analyze the Environment 3. Opportunities & Threats

Analyze Resources 5. Strengths & Weaknesses 6.

Reassess Organizations Mission

7. 8. 9. Formulate Strategies Implement Strategies Evaluate Results

The Strategic Management Process

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The Strategic Management Process

Identify the current mission and goals Analyze the Environment Environmental Opportunities Threats Analyze the firms Resources and Skills Firms Strengths and weaknesses Reassess the mission and objectives Strategy Formulation Implement strategies Evaluation
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Mission
The fundamental purpose of an organization -- the definition of success

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SWOT: Identifying Organizational Opportunities

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Competitive Strategies
Cost-leadership Differentiation Focus

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Comparison: Entrepreneurs and Traditional Managers

Traditional Manager
Primary motivation Time orientation Activity Risk tendency View toward mistakes Corporate rewards Short-term goals Delegation Low Avoidance

Entrepreneur
Independence 5-10 year growth of business Direct involvement Moderate Acceptance

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Project Management and Process

Contemporary planning tool Is a process of quality control to ensure a projects activities are done on time, within budget, and according to specification Project is a one-time-only set of activities that has a definite beginning and ending point in time

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