Part 2: Planning

Lecture 6

Planning

PowerPoint Presentation by Charlie Cook

Copyright © 2004 Prentice Hall, Inc.
All rights reserved.
 Planning Defined
• Defining the organization’s objectives or goals
• Establishing an overall strategy for achieving
those goals
• Developing a comprehensive hierarchy of plans
to integrate and coordinate activities.
Planning is concerned with ends (what is to be
done) as well as with means (how it is to be done).
comprehensive - ব াপক
hierarchy – যাজকত
integrate - স ূণ
Coordinate - তু ল

Copyright © 2004 Prentice Hall, Inc. All rights reserved. 3–2

 Goals and Plans

• Goal - A desired future state that the organization

attempts to realize.
• Plan - A blueprint specifying the resource allocations,
schedules, and other actions necessary for attaining
goals
• Planning – determining the organization’s goals and
the means for achieving them
the most fundamental management function
the most controversial management function.

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Reasons for Planning
• Efficient Use of Resources
All organizations, large and small, have limited resources. The planning
process provides the information top management needs to make
effective decisions about how to allocate the resources in a way that will
enable the organization to reach its objectives. Productivity is maximized
and resources are not wasted on projects with little chance of success.
• Establishing Organizational Goals
Setting goals that challenge everyone in the organization to strive for better
performance is one of the key aspects of the planning process. Goals
must be aggressive, but realistic. Organizations cannot allow themselves
to become too satisfied with how they are currently doing – or they are
likely to lose ground to competitors. The goal setting process can be a
wake-up call for managers that have become complacent. The other
benefit of goal setting comes when forecast results are compared to
actual results. Organizations analyze significant variances from forecast
and take action to remedy situations where revenues were lower than
plan or expenses higher.
EXHIBIT 3.1
Copyright © 2004 Prentice Hall, Inc. All rights reserved. 3–4
 Reasons for Planning
• Managing Risk And Uncertainty
Managing risk is essential to an organization’s success. Even the largest
corporations cannot control the economic and competitive environment
around them. Unforeseen events occur that must be dealt with quickly, before
negative financial consequences from these events become severe. Planning
encourages the development of “what-if” scenarios, where managers attempt
to envision possible risk factors and develop contingency plans to deal with
them. The pace of change in business is rapid, and organizations must be
able to rapidly adjust their strategies to these changing conditions.
• Team Building and Cooperation
Planning promotes team building and a spirit of cooperation. When the plan is
completed and communicated to members of the organization, everyone
knows what their responsibilities are, and how other areas of the organization
need their assistance and expertise in order to complete assigned tasks.
They see how their work contributes to the success of the organization as a
whole and can take pride in their contributions. Potential conflict can be
reduced when top management solicits department or division managers’
input during the goal setting process. Individuals are less likely to resent
budgetary targets when they had a say in their creation.
 Reasons for Planning
• Creating Competitive Advantages
Planning helps organizations get a realistic view of their current
strengths and weaknesses relative to major competitors. The
management team sees areas where competitors may be
vulnerable and then crafts marketing strategies to take advantage of
these weaknesses. Observing competitors’ actions can also help
organizations identify opportunities they may have overlooked, such
as emerging international markets or opportunities to market
products to completely different customer groups.

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 Types of Plans

BREADTH TIME SPECIFICITY FREQUENCY OF USE

FRAME OF USE

Strategic Long term Directional Single use

Tactical Short term Specific Standing

EXHIBIT 3 .2
Copyright © 2004 Prentice Hall, Inc. All rights reserved. 3–7
 Strategic Planning
• Strategic plans
Plans that are organization-wide, establish overall objectives,
and position an organization in terms of its environment
Apply broadly to the entire organization
Establish the organization’s overall objectives
Seek to position the organization in terms of its
environment
Provide direction to drive an organization’s efforts to
achieve its goals.
Serve as the basis for the tactical plans.
Cover extended periods of time
Are less specific in their details

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 Tactical Planning

• Tactical plans (operational plans)

Plans that specify the details of how an organization’s
overall objectives are to be achieved
Apply to specific parts of the organization.
Are derived from strategic objectives
Specify the details of how the overall objectives are to
be achieved.
Cover shorter periods of time
Must be updated continuously to meet current
challenges

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 Planning: Focus and Time
• Short-term plans
Plans that cover less than one year
• Long-term plans
Plans that extend beyond five years

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 Specific and Directional Plans
• Specific plans
Plans that have clearly defined objectives and leave
no room for misinterpretation
❖ “What, when, where, how much, and by whom”
(process-focus)
• Directional plans
Flexible plans that set out general guidelines
❖ “Go from here to there” (outcome-focus)

Copyright © 2004 Prentice Hall, Inc. All rights reserved. 3–11

 Directional versus Specific Plans

EXHIBIT 3 .3
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 Single-Use and Standing Plans
• Single-use plans
A plan that is used to meet the needs of a particular
or unique situation
❖ Single-day sales advertisement
• Standing plan
A plan that is ongoing and provides guidance for
repeatedly performed actions in an organization
❖ Customer satisfaction policy

Copyright © 2004 Prentice Hall, Inc. All rights reserved. 3–13

 Levels of Goals/Plans & Their Importance

External Message
Legitimacy for
Mission
investors, customers,
Statement
suppliers, community

Strategic Goals/Plans
Senior Management
(Organization as a whole)
Internal Message
Legitimacy,
Tactical Goals/Plans motivation,
Middle Management guides,
(Major divisions, functions) rationale,
standards

Operational Goals/Plans
Lower Management
(Departments, individuals)

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 SWOT: Identifying
Organizational
Opportunities

SWOT analysis
Analysis of an organization’s strengths,
weaknesses, opportunities, and threats in
order to identify a strategic niche that the
organization can exploit
EXHIBIT 3.6
Copyright © 2004 Prentice Hall, Inc. All rights reserved. 3–15
 SWOT Analysis
• Strengths (strategic)
Internal resources that are available or things that an
organization does well
❖ Core competency: a unique skill or resource that
represents a competitive edge
• Weaknesses
Resources that an organization lacks or activities that it
does not do well
• Opportunities (strategic)
Positive external environmental factors
• Threats
Negative external environmental factors

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 Grand Strategies
• Growth strategy
A strategy in which an organization attempts to increase the
level of its operations;
• Retrenchment strategy
A strategy characteristic of a company that is reducing its
size, usually in an environment of decline
• Combination strategy
The simultaneous pursuit by an organization of two or more
of growth, stability, and retrenchment strategies
• Stability strategy
A strategy that is characterized by an absence of significant
change

Copyright © 2004 Prentice Hall, Inc. All rights reserved. 3–17

 Growth Strategies
• Merger
Occurs when two companies, usually of similar size,
combine their resources to form a new company
• Acquisition
Occurs when a larger company buys a smaller one
and incorporates the acquired company’s operations
into its own

Copyright © 2004 Prentice Hall, Inc. All rights reserved. 3–18

 Competitive Strategies
• Strategies that position an organization in such a
way that it will have a distinct advantage over its
competition
Cost-leadership strategy
❖ Becoming the lowest-cost producer in an industry
Differentiation strategy
❖ Attempting to be unique in an industry within a broad
market
Focus strategy
❖ Attempting to establish an advantage
(cost/differentiation) in a narrow market segment

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 Benchmarking
• Benchmarking
The search for the best practices among competitors
or noncompetitors that lead to their superior
performance
• ISO 9000 series
Standards designed by the International Organization
for Standardization that reflect a process whereby
independent auditors attest that a company’s factory,
laboratory, or office has met quality management
standards

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 Crisis Management Planning
Sudden - Devastating –Require Immediate Response

• Prevention
Build trusting relationship with key stakeholders
Open communication
• Preparation
Crisis Management Team
Crisis Management Plan
Establish an Effective Communications system
• Containment

Ethical Dilemma: Completing Project WebFirst

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 Planning for High Performance

• Central Planning = Traditional Department

Group of planning specialists who develop plans for the
organization as a whole and its major divisions and
departments and typically report directly to the
president or CEO

• Decentralized Planning = High-Performance

Managers work with planning experts to develop their
own goals and plans

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 Planning In The New Workplace

• Have a strong mission statement and vision

• Set stretch goals for excellence
• Establish a culture that encourages learning
• Embrace event-driven planning
• Utilize temporary task forces
• Planning still starts and stops at the top

Planning comes alive when employees are involved in

setting goals and determining the means to reach them
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