PLANNING

• At the end of this module, you will be able to:

  • Define planning and goals
  • Explain the importance of planning and goal-setting to organizations
  • Discuss the types of plans according to breadth, time frame and frequency of use
  • Differentiate strategic plans from operational plans

  
• Planning


  Defining the organization's goals, establishing an overall strategy for achieving those goals and developing a comprehensive set of plans to integrate and coordinate organizational work
• Goals


  One of the two important elements of planning, along with plans
• Approaches to Goal-Setting


  • Traditional Goal-Setting
  • Management-by-Objectives
• Traditional Goal-Setting


  • Goals are set at the top of the organization, broken down into subgoals for each organizational level
  • Assumes that top managers know what is best because they see the "big picture"
  • Goals that are set and passed down to each succeeding level of the organization serve to direct and guide, and in some ways constrain, individual employees' work behaviors

  
• Downsides of Traditional Goal-Setting:

  • Translating corporate goals into departmental, team and, ultimately, individual objectives is difficult and potentially expensive, particularly for large global corporations
  • As goals make their way down from the top of the organization to the lower, they lose clarity and unity.
• Management-by-Objectives (MBO)


  A management system where specific performance goals are jointly determined by employees and their managers, progress towards accomplishing these goals is periodically reviewed, and rewards are allocated on the basis of this progress
• Elements of MBO


  • Goal specificity
  • Participative decision making
  • Explicit time period
  • Performance feedback
• Characteristics of a Well-Defined Goal

  • SMART: specific, measurable, achievable, realistic, and time-bound
  • FAST: frequently discussed, ambitious, specific and transparent
• Types of Plans According to Breadth

  • Strategic Plans
  • Operational Plans

  
• Strategic Plans


  Plans that apply to the entire organization, establish the organization's goals and seek to position the organization in terms of its environment. They tend to cover a longer time frame and a broader view of the organization.

  
• Operational Plans


  Plans that specify the details of how the overall goals are to be achieved. These are developed at the lower levels of the organization to specify action steps towards achieving operational goals.

  
• Types of Plans According to Time Frame


  • Long Term Plans (beyond 3 years)
  • Short Term Plans (1 year or less)

  
• Types of Plans According to Specificity


  • Specific Plans
  • Directional Plans

  
• Types of Plans According to Frequency of Use


  • Single-Use Plans
  • Standing Plans

  
• Single-Use Plans


  Plans developed to achieve objectives that are not likely to be repeated in the future
• Standing Plans


  Plans used to provide guidance for tasks that are performed repeatedly

  
• Contingency Factors in Planning

  • Level in the Organization
  • Level of Environmental Uncertainty
  • Length of Future Commitments
• Level of Environmental Uncertainty


  When environmental uncertainty is high, plans should be specific but flexible. Managers must be prepared to rework and amend plans as they are implemented.
• Length of Future Commitments


  The more that current plans affect future commitments, the longer the time frame for which managers should plan.
• Contemporary Issues in Planning

  • Planning may create rigidity
  • Plans cannot be developed for dynamic environment
  • Formal plans cannot replace intuition and creativity
  • Planning focuses manager's attention on today's competition, not on tomorrow's survival
  • Formal planning reinforces success which may lead to failure
  • Just planning is not enough
• Strategic Management


  The set of decisions and actions used to formulate and execute strategies that will provide a competitively superior fit between the organization and its environment so as to achieve organizational goals
• Strategic Management Process


  • Evaluate current organizational mission, goals and strategies
  • Scan the External Environment
  • Scan the Internal Environment
  • SWOT Analysis
  • Strategy Formulation
  • Strategy Execution and Strategy Evaluation
• SWOT Analysis


  An analysis of the organization's strengths, weaknesses, opportunities and threats
• Corporate Level Strategies


  • Growth
  • Stability
  • Renewal
• Growth Strategy


  When an organization expands the number of markets served or products offered, either through its current business(es) or through new business(es)
• Types of Growth Strategies

  • Concentration
  • Concentric Diversification
  • Conglomerate Diversification
  • Vertical Integration
  • Horizontal Integration
• Stability Strategy


  A corporate strategy in which an organization continues to do what it is currently doing
• Renewal Strategy

  A corporate strategy that a firm pursues in the face of challenges or to address declining performance
• Renewal Strategies


  • Retrenchment
  • Turnaround Strategy
• Business Level Strategies


  • Differentiation
  • Cost Leadership
• Differentiation


  A strategy that an organization uses to build competitive advantage by being unique in its industry or market segment along one or more dimensions
• Cost Leadership


  A strategy that an organization uses to build competitive advantage by being efficient and offering a standard, no frills product
• Functional Strategies


  • Pricing and promotion strategies
  • Use of innovation and automation
• Steps in Strategy Execution


  • Define strategic tasks
  • Assess organization capabilities
  • Develop an implementation agenda
  • Create an implementation plan
• Techniques for Assessing the Environment

  • Environmental Scanning
  • Forecasting
  • Competitor Intelligence
  • Benchmarking
• Techniques for Allocating Resources

  • Budget
  • GANTT Charts
  • Load Charts
  • Program Evaluation and Review Technique (PERT) Network
  • Break-Even Analysis
  • Linear Programming

  
• Contemporary Planning Techniques


  • Project Management
  • Scenario Planning
• Organizing


  The process of identifying activities to be done to accomplish a goal; Grouping these activities into meaningful units; and Assigning authority and responsibility to people for their accomplishments
• Importance of organizing


  • Divides work to be done into specific jobs and departments
  • Assigns tasks and responsibilities associated with individual jobs
  • Coordinates diverse organizational tasks
  • Clusters jobs into units
  • Establishes relationships among individuals, groups, and departments
  • Establishes formal lines of authority
  • Allocates and deploys organizational resources