Management Chapter 7: Foundations of Planning

Desired outcomes for individuals, groups, or entire organizations. They provide direction and evaluation performance criteria.

Documents that outline how goals are to be accomplished. They describe how resources are to be allocated and establish activity schedules.

They are related to the expected internal financial performance of the organization.

They are related to the performance of the firm relative to factors in its external environment (e.g., competitors).

They apply to the entire organization. They establish the organization’s overall goals. They seek to position the organization in terms of its environment. They cover extended periods of time.

They specify the details of how the overall goals are to be achieved. They cover a short time period.

Plans with time frames extending beyond three years

Plans with time frames of one year or less.

A primary managerial activity that involves defining goals, establishing a strategy to achieve them, and creating plans for organizational work activities. This includes setting specific, time-bound goals and creating written plans to guide the organization.

Formal planning involves creating concrete goals, specifying a defined timeframe to achieve those goals, and documenting those plans for all members of the organization to access.

Planning helps in defining a clear path for the organization, reducing uncertainty and ambiguity about future actions and outcomes.

Planning helps reduce uncertainty by analyzing potential future scenarios, developing contingency plans, and making better informed decisions in the face of unexpected events.

By clarifying goals and establishing a framework for operations, planning minimizes unnecessary duplication of effort, waste of resources, and inefficiencies.

Planning sets specific standards or targets against which performance can be measured and assessed. It helps identify deviations from goals and provides a basis for corrective actions.

Formal planning has been linked to positive financial results, such as higher profits and returns on assets. However, it is the quality of planning and implementation, not just the extent of planning, that drives performance.

The external environment can significantly impact the effectiveness of planning. Factors like market changes, technological advancements, or economic fluctuations can influence the effectiveness of plans.

A method of goal setting where broad goals are set at the top and broken down into sub-goals for each organizational level. It assumes top management knows best and goals are intended to guide and control from above.

A hierarchical network of goals where lower-level goals contribute to achieving higher-level goals. Think of a chain reaction: accomplishing one goal helps achieve the next.

A collaborative approach to performance management where specific goals are jointly set by employees and managers. Progress is reviewed periodically and rewards are based on goal achievement.

The tendency for goals to lose clarity and focus as lower-level managers try to interpret and define them for their specific areas.

The first step in a typical MBO program. It involves defining the organization's overall objectives and strategies.

The second step in a typical MBO program. Major objectives are distributed among different divisions and departments.

The third step in a typical MBO program. Unit managers work with their superiors to set specific objectives for their units.

The fourth step in a typical MBO program. Managers and employees within a department collaborate to set specific objectives for each individual.

Top management needs to be actively involved in defining and supporting MBO goals.

MBO can struggle in rapidly changing environments that require frequent goal adjustments.

Focusing solely on individual achievements can undermine teamwork.

When MBO becomes an annual paperwork exercise, it loses its purpose.

Goals should be clear, measurable, and have a defined timeline.

Goals must be challenging enough to motivate, but attainable to remain realistic.

Regularly reviewing and adjusting goals ensures they remain relevant and achievable.

Plans developed by members of different units across the organization and then coordinated with each other. Promotes collaboration and ensures alignment of goals and resources.

Planning doesn't account for constantly changing environments. Plans may become outdated and inflexible.

Formal plans cannot replace the insights and creativity of individuals. There is a need for a balance between structured plans and intuitive thinking.

Planning should focus on future challenges and industry trends, not just on the present competition. It involves looking beyond the immediate.

Plans should be flexible enough to adapt to changing circumstances while still providing direction. Planning is an ongoing process and not a one-time effort.

Hierarchical structures can stifle planning skills. Empowering employees at all levels to contribute to planning improves adaptability.

Consistent focus on planning benefits the company in the long run, even if it requires effort and resources. The commitment to planning pays off over time.

Planning requires more than just creating documents. It needs to be action-oriented and involve actively working towards achieving goals.