MGT 101 - Module 7

• Definition of Planning

  • defining the organization’s goals, establishing an overall strategy
  • developing a comprehensive set of plans
  • concerned with both ends and means
• Importance of Planning

  • Give the organization legitimacy
  • motivate and increase commitment
  • roadmaps or guides
  • basis for decision-making and reduces uncertainty
  • set of standard of performance
• Planning is often called...

  primary management function
• Goal


  desired future state
• Plan


  blueprint for goal acheivement
• Approaches to Goal Setting

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

  • Goals are set at the top of the organization
  • assumes that top managers know what is best
  • serve to direct and guide
  • Translating corporate goals is difficult and potentially expensive
  • as they make their way down, they lose clarity and unity
• Management-by-Objectives


  specific performance goals are jointly determined by employees and their managers
• Four Elements of Management by Objectives

  • Goal Specificity
  • Participative decision making
  • Explicit Time Period
  • Performance Feedback
• SMART

  • Specific
  • Measurable
  • Acheivable
  • Realistic
  • Time-bound
• But SMART Goals...

  • undervalue ambition
  • focus narrowly on individual performance
  • ignore the importance of discussing goals
• FAST

  • Frequently discussed
  • ambitious
  • specific
  • transparent
• Definition of Frequently Discussed


  embedded in ongoing discussion
• Definition of Ambitious


  difficult but not impossible
• Definition of Specific


  translated into concrete metrics
• Definition of Transparent


  made public for all employees
• Types of Plans

  • According to Breadth
  • According to Time Frame
  • According to Specificity
  • According to Frequency of Use
• According to Breadth

  • Strategic Plans
  • apply to the entire organization
  • broader view of the organization
  • operational Plans
  • specify the details of how the overall goals are to be achieved
  • developed at the lower levels of the organization
  • daily and weekly operations
• According to Time Frame

  • Long Term Plans
  • beyond three years
  • Short Term Plans
  • covering one year or less
• According to Specificity

  • Specific Plans
  • clearly defined and leave no room for interpretation
  • Directional Plans
  • flexible plans that set out general guidelines
• According to Frequency of Use

  • Single-Use Plans
  • developed to achieve objectives that are not likely to be repeated in the future
  • Standing Plans
  • provide guidance for tasks that are performed repeatedly
• Contingency Factors in Planning

  • Level in the Organization
  • operation planning = lower levels
  • strategical planning = higher levels
  • Level of Environmental Uncertainty
  • if high then plans should be specific but flexible
  • Length of Future Commitments
  • the more the current plans affect future commitments, the longer the time frame for which managers should plan
• Contemporary Issues in Planning

  • Criticism in planning
  • cannot be developed for dynamic environment
  • cannot replace intuition and creativity
  • focuses manager's attention on today's competition, not on tomorrow's survival
  • reinforces success which may lead to failure
  • just planning is not enough
• Strategic Management


  strategies that will provide a competitively superior fit between the organization and it environment
• Strategic Management Process

  1. Evaluate current organizational mission, goals, and strategies
  2. Scan for the External Environment
  3. Scan for the Internal Environment
  4. SWOT Analysis
  5. Strategy Formulation
  6. Strategy Execution and Strategy Evaluation
• Mission


  organization's basic purpose and scope of operations
• Scan the External Environment

  • macroeconomic conditions and industry environment
  • forecasting future trends
• Scan the Internal Environment

  • inventory of the organization's existing functions
  • benchmarking with other firms
• SWOT Analysis

  • exploit an organization's strengths and opportunities
  • buffer or protect the organization from threats
  • correct critical weaknesses
• Strategy Formulation

  • Corporate Level - What business are we in?
  • Business Level - How do we compete?
  • Functional Level - How do we support the business level
• Corporate Level Strategy


  • Growth Strategy
  • Concentration
  • Concentric Diversification
  • Conglomerate Diversification
  • Vertical Integration
  • Horizontal Integration
  • Stability Strategy
  • Renewal Strategy
  • Retrenchment
  • Turnaround Strategy
• Growth Strategy


  Organization expands the number of markets served or products offered
• Concentration


  Focuses on its primary line of business and increases the number of products offered
• Concentric Diversification


  Add new business that produce related products
• Conglomerate Diversification


  Add new businesses that are significantly different from one another
• Vertical Integration


  Acquisition or development of new businesses that produce parts or components
• Horizontal Integration


  Combining with competitors
• Stability Strategy


  Continues to do what it is currently doing
• Renewal Strategy


  Pursued to address declining performance
• Retrenchment


  Short-run renewal strategy