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©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 2
FUNDAMENTALS OF PLANNING
©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
• Discuss some of the more important points about planning
• Explain the steps involved in planning• Explain how planning differs at top, middle, and
supervisory management levels• Explain how the hierarchy of objectives works
LEARNING OBJECTIVES
2
©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
• Discuss some important guidelines in setting objectives
• Differentiate the various kinds of standing and single-use plans
• Apply scheduling techniques
LEARNING OBJECTIVES
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©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
• Routine and detailed• Scheduling work• Developing and living within budgets• Making job assignments
• Plan for major events that happen infrequently
SUPERVISORY PLANNING
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©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
EXHIBIT 2.1 - THE THREE PLANNING STEPS
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©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
STEPS TO ACHIEVE THE OBJECTIVE OR GOAL
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©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
STEPS IN CONTROLLING
Setting performance goals, or norms
Measuring performance
Comparing performance with goals
Analyzing results
Taking corrective action as needed
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©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
EXHIBIT 2.2 - THE NONPLANNER’S CYCLE
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©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
• Having anticipated solutions in advance for problems or changes that may arise
• Separates effective managers from ineffective ones
• Responds to the what if questions that describe serious events
CONTINGENCY PLANNING
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©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
• Anticipating alternative future situations and developing courses of action for each alternative
• Variation of contingency planning• Has a long-term focus• Associated with planning at upper levels within
organizations• Necessary tool for managers today
SCENARIO PLANNING
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©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
• Has longer time horizons• Affects the entire organization• Deals with the organization’s interaction with
its external environment
STRATEGIC PLANNING
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©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
• Mission: Defines the purpose the organization serves • Identifies the organization’s services, products,
and customers• Objectives: Purposes, goals, and desired results
for the organization and its parts• Strategies: Activities by which the organization
adapts to its environment to achieve its objectives
ELEMENTS OF STRATEGIC PLANS
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©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
• Consists of intermediate- and short-term planning
• Facilitates the achievement of the long-term strategic plans
OPERATIONAL PLANNING
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©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
• Goals that provide the desired purposes and results for an organization and its parts
• Serve as a stimulus for motivation and effort• Guides lower level managers to:
• Develop their own operational plans • Coordinate their own activities
• Hierarchy of objectives: Network with:• Broad goals at the top level of the organization • Narrower goals for individual divisions,
departments, or employees
OBJECTIVES
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©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
HIERARCHY OF OBJECTIVES FOR COMPUTRONIX
Organizational Level
Manager Objective
Corporation CEO • Increase profitability• Broaden market share
Division General Manager • Produce 50,000 units• Reduce production costs by
5%*
Department Maintenance DepartmentHead
• Complete cross-training of five technicians by year-end
Work Unit Preventive MaintenanceWork Unit Supervisor
• Improve turnaround time in servicing equipment by 15%*
Individual Worker Maintenance Mechanic • Attend 15 hours of advanced maintenance training*
*Objectives directly linked to improved cost effectiveness.
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©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
• Coordinating departments to ensure harmony• Important among departments or work units
where coordination is required • Lack of unified planning costs an organizations
its objectives
UNIFIED PLANNING
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©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
• Should be:• Set in selected, key performance areas• Specific• Challenging• Stated in measurable terms
• Objective areas should be balanced• Employees should be involved in setting
objectives• Supervisors should follow up on the results
GUIDELINES FOR SETTING OBJECTIVES
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©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
• Used repeatedly over a period of time• Types
• Policy• Rule• Procedure
STANDING PLANS OR REPEAT-USE PLANS
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©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
• Provides consistency among decision makers• Acts as a boundary on a supervisor’s freedom
of action• Role of supervisors in policy setting
• Implement organizational policies established by higher management
• Create policies within their departments as guides for their own work groups
• Management must reexamine the appropriateness of its policies from time to time
POLICY
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©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
• Policy that is invariably enforced• Inflexible requirements that are much stronger
than guidelines• Supervisors should know when they:
• Can be flexible in promoting the objectives • Have to enforce rules
• Overuse can lead to problems
RULE
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©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
• Steps to be performed when a particular course of action is taken
• Used when there is a requirement of a high degree of consistency in frequent activities
PROCEDURE
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©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
• Developed to accomplish a specific purpose • Discarded after use• Types
• Program• Project• Budget• Schedule
SINGLE-USE PLANS
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©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
• Program: Large-scale plan composed of a mix of objectives, policies, rules, and projects• Outlines:
• Specific steps to be taken to achieve its objectives • Time, money, and human resources required to
complete it
• Project: Distinct part of a program• Has its own objectives • Becomes the responsibility of personnel
assigned to oversee it
PROGRAM AND PROJECT
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©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
• Budget: Forecast of expected financial performance over time• Serves as a planning and a controlling tool
• Schedule: Plan of activities to be performed and their timing• Approaches
• Gantt chart • Critical path method
BUDGET AND SCHEDULE
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©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
EXHIBIT 2.6 - EXAMPLE OF GANTT CHART SHOWING ACTIVITIES NEEDED IN PRODUCTION START-UP
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©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
• Identifies the activities needed to complete a task or project
• Specifies the time each activity will take • Shows the relationships among the activities
• To determine the total completion time of the task or project
• Used on highly complex, one-time projects• Critical path: Series of activities that comprise
the longest route to complete the job• In terms of time
CRITICAL PATH METHOD
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©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
EXHIBIT 2.7 - CRITICAL PATH FOR COMPLETING MACHINE OVERHAUL
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©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
• Budget• Contingency planning• Critical path• Critical path method• Gantt chart• Hierarchy of objectives• Mission• Objectives• Operational planning• Policy• Procedure
• Program• Project• Rule• Scenario planning• Schedule• Single-use plans• Standing plans or repeat-use
plans• Strategic planning• Strategies• Unified planning
IMPORTANT TERMS
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