Lecture 5 Foundation of Planning

Copyright © 2012 Pearson Education, Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter Inc. Publishing as Education, Inc. publishing as Prentice Hall...

Copyright © 2012 Pearson Education, Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter Inc. Publishing as Education, Inc. publishing as Prentice Hall ©2012 Pearson 8-1 Prentice Hall What Is Planning? Planning - a primary managerial activity that involves: – Setting the organization’s goals – Establishing strategies for achieving those goals – Developing plans to integrate and coordinate work activities of individuals Copyright © 2012 Pearson Education, Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter Inc. Publishing as Education, Inc. publishing as Prentice Hall ©2012 Pearson 8-2 Prentice Hall Why Do Managers Plan? Purposes of Planning – Provides direction – Reduces uncertainty – Minimizes waste and redundancy – Sets the standards for controlling Copyright © 2012 Pearson Education, Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter Inc. Publishing as Education, Inc. publishing as Prentice Hall ©2012 Pearson 8-3 Prentice Hall Types of Goals Stated Goals -official statements of what an organization says, and what it wants its stakeholders to believe, its goals are. Real Goals - those goals an organization actually pursues, as defined by the action of its members. Copyright © 2012 Pearson Education, Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter Inc. Publishing as Education, Inc. publishing as Prentice Hall ©2012 Pearson 8-4 Prentice Hall Types of Plans Copyright © 2012 Pearson Education, Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter Inc. Publishing as Education, Inc. publishing as Prentice Hall ©2012 Pearson 8-5 Prentice Hall Types of Plans Informal: not written down, short-term focus, specific to an organizational unit Formal: written, specific, and long-term focus, involves shared goals for the organization Financial goals are related to the expected internal financial performance of the organization Copyright © 2012 Pearson Education, Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter Inc. Publishing as Education, Inc. publishing as Prentice Hall ©2012 Pearson 8-6 Prentice Hall Types of Plans Strategic Plans: applies to the entire organization and guides the organization’s overall goal. (Broad) Operational Plans: encompasses a particular operational area of the organization. (Narrow) Copyright © 2012 Pearson Education, Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter Inc. Publishing as Education, Inc. publishing as Prentice Hall ©2012 Pearson 8-7 Prentice Hall Types of Plans Long-Term Plans – Time frames extending beyond 3 years. But this number varies from industry, country, manager etc. Open to interpretation. (Burger King’s plan for Bangladesh) Short-Term Plans – Time frames of one year or less. – Also open for interpretation by organizations – Any timeframe in between would be intermediate plan. (Plan for special occasion) Copyright © 2012 Pearson Education, Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter Inc. Publishing as Education, Inc. publishing as Prentice Hall ©2012 Pearson 8-8 Prentice Hall  Types of Plans Specific Plans: Plans that are clearly defined and leave no room for interpretation. States words in such a way that ambiguity is reduced.(increase sales by 5% in the next 6 months by establishing a new skincare product line targeted towards a niche market) Directional Plans: Flexible plans that set out general guidelines and provide focus, yet allow discretion in implementation.(Increase revenue, employ great artists) Copyright © 2012 Pearson Education, Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter Inc. Publishing as Education, Inc. publishing as Prentice Hall ©2012 Pearson 8-9 Prentice Hall  Types of Plans Single-Use Plan: A one-time plan specifically designed to meet the need of a unique situation. (The Body Shop wants to enter into Bangladeshi market) Standing Plans: Ongoing plans that provide guidance for activities performed repeatedly.(HR policies, rules, employee handbook) Copyright © 2012 Pearson Education, Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter Inc. Publishing as Education, Inc. publishing as Prentice Hall ©2012 Pearson 8-10 Prentice Hall Management By Objectives (MBO) Instead of using traditional goal setting, many organizations use management by objectives (MBO). It is a process of collaboratively setting specific mutually agreed-upon goals. Those goals are used to evaluate performance. Progress toward accomplishing goals is periodically reviewed. Feedback is provided from those reviews. Performance-based rewards are provided upon successful completion of those agreed upon goals. Copyright © 2012 Pearson Education, Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter Inc. Publishing as Education, Inc. publishing as Prentice Hall ©2012 Pearson 8-11 Prentice Hall Management By Objectives (MBO) MBO has 4 key elements: – goal specificity – participative decision making – an explicit performance/evaluation period – Performance Feedback Copyright © 2012 Pearson Education, Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter Inc. Publishing as Education, Inc. publishing as Prentice Hall ©2012 Pearson 8-12 Prentice Hall  Establishing Goals and Developing Plans Approaches to Planning Traditional, top-down approach –Planning done by top manager –Formal planning department – specialists whose sole responsibility is to help to write organizational plans –Plans float down to lower levels Tailored to particular needs at each lower level –Most effective if plan is a workable document used by organizational members for direction and guidance Inclusive approach –Employees at each level develop plans suited to their needs –Employees acquire greater sense of the importance of planning when they participate in the process –Plans more likely to be used in directing and coordinating work Copyright © 2012 Pearson Education, Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter Inc. Publishing as Education, Inc. publishing as Prentice Hall ©2012 Pearson 8-13 Prentice Hall  Contemporary Issues in Planning Criticisms of Planning 1. Planning may create rigidity unwise to force a course of action when the environment is fluid 2. Plans can’t be developed for a dynamic environment flexibility required in a dynamic environment can’t be tied to a formal plan 3. Formal plans can’t replace intuition and creativity mechanical analysis reduces the vision to some type of programmed routine 4. Planning focuses managers’ attention on today’s ⃰ competition, not on tomorrow’s survival ⃰ plans concentrate on capitalizing on existing business opportunities hinders managers who consider creating or reinventing an industry 5. Formal planning reinforces success, which may lead to ⃰ failure success may breed failure in an uncertain environment Copyright © 2012 Pearson Education, Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter Inc. Publishing as Education, Inc. publishing as Prentice Hall ©2012 Pearson 8-14 Prentice Hall Developing Plans There are 3 contingency factors needed to be considered while developing plans 1. Manager’s level in the organization – Strategic plans at higher levels – Operational plans at lower levels 2. Degree of environmental uncertainty – Stable environment: specific plans – Dynamic environment: flexible plans Copyright © 2012 Pearson Education, Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter Inc. Publishing as Education, Inc. publishing as Prentice Hall ©2012 Pearson 8-15 Prentice Hall Contingency Factors in Planning 3. Timeframe of Plans -resources should be allocated for long enough to meet those commitments made when the plans were developed. (Walmart planned to increase number of stores, however they laid off staff ) Copyright © 2012 Pearson Education, Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter Inc. Publishing as Education, Inc. publishing as Prentice Hall ©2012 Pearson 8-16 Prentice Hall  Contemporary Issues Improve external environmental factor scanning Detect emerging trends Gather competitor intelligence (However be careful of material theft, stealing trade secrets) Use updated digital tools to collect, visualize, analyze and understand data Copyright © 2012 Pearson Education, Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter Inc. Publishing as Education, Inc. publishing as Prentice Hall ©2012 Pearson 8-17 Prentice Hall