Session - Foundations of Planning

7/31/2019 Session - Foundations of Planning

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FOUNDATIONS OF PLANNING


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Are you a good planner?

Mostly True Mostly False1. I have clear, specific goals in several

areas of my life.

2. I have a definite outcome in life I want to

achieve.

3. I prefer general to specific goals.

4. I work better without specific deadlines.

5. I set aside time each day or week to

plan my work

6. I am clear about the measures that

indicate when I have achieved a goal.

7. I work better when I set more

challenging goals for myself.

8. I help other people clarify and define

their goals.

If you fail to plan, you plan to fail.


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Give yourself a point for each item you markesas Mostly true except items 3 & 4.

A score of 5 or higher suggests a positive level

of goal-setting behavior and good preparation

for a new manager role in an organization.

If you scored 4 or less you might want to

evaluate and begin to change your goal-setting

behavior.


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Definition of Planning

Defining the organizations goals, establishingan overall strategy for achieving these goals,

and developing plans for organizational work

activities.

Planning is concerned with ends (what is to be done)

as well as with means (how it is to be done).


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How Do Managers Plan?

Elements of PlanningGoals

Desired outcomes for individuals, groups, or entire

organizations

Provide direction and performance evaluation criteriaPlans

Documents that outline how goals are to be accomplished

Describe how resources are to be allocated and establish

activity schedules


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Reasons for Planning


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Overview of Goals and Plans

A goal is a desired future state that theorganization attempts to realize

A plan is a blueprint for goal achievement

There are different levels of planning and goals

in an organization

Goals at each level of the organization guide the

organization


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Why Planning IsImportant?

Planning ascertains where theorganization is nowand decidingwhere it will be in the future.

Participation: all managers areinvolved in setting future goals.

Sense of direction and purpose:

planning sets goals and strategiesfor all managers.

Coordination: plans provide allparts of the firm with

understanding about how their

systems fit with the whole.

Control: Plans specify who isresponsible for theaccomplishment of a particular

goal.

Planning may create rigidity. Plans cant be developed for a

dynamic environment.

Formal plans cant replace intuition

and creativity.

Planning focuses managers

attention on todays competition,

not on tomorrows survival.

Formal planning reinforces

success, which may lead to failure.

Criticism to Planning


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Levels of Goals/Plans and their Importance


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The Organizational Planning Process


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Goals Desired outcomes

Financial goals

Wider profit margins

Higher returns on invested capital Rise in stock price

Stable earnings

Strategic goals

Large market share High industry ranking

Low costs related to customers

Leader in technology and innovation


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Organizational Mission

A broad declaration of an organizations purpose

that identifies the organizations products and

customers and distinguishes the organization

from its competitors. The mission statement is the reason the

organization exists

Top of the goal hierarchy

Describes the values, aspirations and reason for being

A well-defined mission is the basis for all other goals

Mission statements outline the stated purpose

and values to stakeholders


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Examples of Mission Statements


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How about identifying/defining Mission,Vision and Values based on thereading?


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Hierarchy of Goals


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Strategy

Source:Arit Gadiesh and James Gilbert, Frontline Action,Harvard Business Review, May 2001, p. 74.

COMPANY STRATEGIC PRINCIPLE

America Online Consumer connectivity firstanytime, anywhere

Dell Be direct

eBay Focus on trading communities

General Electric Be number one or number two in every

industry in which we compete, or get out

Southwest Airlines Meet customers short-haul travel needs at farescompetitive with the cost of automobile travel

Vanguard Unmatchable value for the investor-owner

Wal-Mart Low prices, every day

The cluster of decisions and actions that managers take

to help an organization reach its goals.


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Types of Goals and Plans

Strategic Goals official goals, broad statementsabout the organization

Define the action steps the company intends to attain

The blueprint that defines activities

Tactical Goals help execute major strategic plans

Specific part of the companys strategy

Plans of the divisions and departments

Operational Goals results expected fromdepartments, work groups, and individuals

Lower levels of the organization

Specific action steps


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Example of GM

Strategic Goals

Increasing U.S. Market Share to 20 percent

Tactical Goals

Enhance reputation of GMs most important brand

ChevroletChevy moved from 9th to 4thposition by 2010

Operational Goals

Chevrolets marketing dept. might have an

operational goal of increasing customer visits toshowroom by 10 percent by year end

Transportation dept. may have the goal of improvingontime delivery of cars and trucks to dealers by 20

percent


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Strategy Map: Aligning Goals into Hierarchy

Vision: By 2020, become the leading company in our industry

Goals should beconsistent andmutually supportive

The achievement ofgoals at low levelspermits theattainment of high-level goals

Individuals, teams,and departmentsshould be working inconcert


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Types of Plans

BREADTH TIME SPECIFICITY FREQUENCYOF USE FRAME OF USE

Strategic Long term Directional Single use

Tactical Short term Specific Standing


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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

organizations 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


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Strategic vs. Tactical Plans

Strategic plans Apply broadly to the entire

organization

Establish the organizations

overall objectives

Seek to position the organization

in terms of its environment

Provide direction to drive an

organizations efforts to achieve

its goals.

Serve as the basis for the tactical

plans.

Cover extended periods of time

Are less specific in their details

Tactical plans Apply to specific parts of the

organization.

Are derived from strategic

objectives

Specify the details of how the

overall objectives are to beachieved.

Cover shorter periods of time

Must be updated continuously

to meet current challenges


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Directional vs. Specific Plans

Directional plans

Flexible plans that set

out general guidelines

Go from here to there

(outcome-focus)

Specific plans Plans that have clearly defined

objectives and leave no room

for misinterpretation

What, when, where, how much,and by whom (process-focus)


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Single-Use vs. Standing Plans

Single-use plansA plan that is used to

meet the needs of a

particular or unique

situation

Single-day sales

advertisement

Programs: integrated

plans achieving specific

goals.

Project: specific actionplans to complete

programs.

Standing planA plan that is ongoing

and provides guidance

for repeatedly

performed actions in an

organization

Customer satisfaction

policy

Policies are generalguides to action.

Rules are formalwritten specific guides

to action.


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Single Use vs. Standing Plans


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Contingency Factors in Planning

Degree of environmental uncertaintyStable environment: specific plans

Dynamic environment: specific but flexible plans

Length of future commitmentsCurrent plans affecting future commitments must be

sufficiently long-term to meet the commitments


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Planning for a Turbulent Environment

Contingency Planning plans for emergencies,setbacks or unexpected conditions

Building Scenarios visualizing future

possibilities

Crisis Planning preparing to cope with

unexpected events


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A Well-Designed Goal

Written in terms of outcomes rather than actionsMeasurable and quantifiable

Clear time frame

Optimally challengingWritten down

Clearly communicated


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Goal Setting: Management by Objectives

Management by Objectives (MBO)Defined by management scholar Peter F. Drucker in

his 1954 book, The Practice of Management

A system in which specific performance objectives

are jointly determined by subordinates and theirsupervisors, progress toward objectives is periodically

reviewed, and rewards are allocated on the basis of

that progress.

Links individual and unit performance objectives at alllevels with overall organizational objectives

Focuses operational efforts on organizationally

important results.

Motivates rather than controls


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Steps in a Typical MBO Program

Specific objectivescollaboratively set

with employees

Objectives allocated to

divisional and

departmental units

Action plansimplemented

Give Rewards forAchieved Objectives

Jointly Set Objectives

Overall objectives

and strategies of

organization

Develop Action Plans

to Achieve Objectives

Managers andemployees work on

action plans together

Review Objectives andProvide Feedback


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MBO Benefits and Problems


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Levels of Planning

Corporate-Level PlanTop managements decisions pertaining to the

organizations mission, overall strategy, and structure.

Provides a framework for all other planning.

Corporate-Level Strategy

A plan that indicates in which industries and national

markets an organization intends to compete.


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Levels of Planning

Business-Level PlanDivisional managers decisions pertaining to divisions

long-term goals, overall strategy, and structure.

Identifies how the business will meet corporate goals.

Business-Level StrategyA plan that indicates how a division intends to

compete against its rivals in an industry.

Shows how the business will compete in market.


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Levels of Planning

Functional-Level PlanFunctional managers decisions pertaining to the

goals that they propose to pursue to help the division

attain its business-level goals.

Functional StrategyA plan that indicates how a functional department

intends to achieve its goals.


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Levels of Planning at General Electric