CHAPTER 2

PLANNING AND GOAL SETTING

BDM 202 INTRODUCTION TO MANAGEMENT

 Introduction

Subtopics Planning

Why Planning is Important?

The Formal Planning Process

Type of Goals

Management by Objectives (MBO)

 2.1 INTRODUCTION

PLANNING PRIMARY MANAGEMENT FUNCTION

Through planning, managers attempt to look into the Planning thus serves as the primary management
future and make decisions that will facilitate goal function, setting the stage and providing a foundation for
accomplishment. the manager's efforts to organize, lead, and control.
2.2 PLANNING

Definition
Planning is a process that managers use to identify and
select appropriate goals and courses of action for an
organization.

It is concerned with ends (what is to be done) and with

means (how it is to be done)

Planning sets the stage for organizing, leading, and

controlling by providing direction.
Planning can be further defined in terms of whether it is informal or formal.

FORMAL INFORMAL

In formal planning, In informal planning, very

specific objectives are little, if anything, is
written and shared with written down.
organization members.

This means that management The writing is general and lacks

clearly defines the path it wants continuity.
to take and where it wants to
be.
2.3 WHY PLANNING IS IMPORTANT?
Set the standards to facilitate control

provide direction

reduce the impact of change

minimize waste and redudancy

 2.4 THE FORMAL PLANNING PROCESS
1.Setting goals
a.Starting at the top

2.Charting a course of action b.Bending in the middle

c.Finishing at the bottom

3.Implementation
1 . Setting Goals

Since planning involves choosing a goal and

developing a strategy to achieve the goal, the
first step in planning is to set goals. 
To direct behavior and increase effort, goals
need to be specific and challenging. 

For example, deciding to “increase sales this year” won’t direct and energize workers as much
as deciding to “increase sales by 4 percent in the next six months”
 1 . Setting Goals

Setting effective goals by using S.M.A.R.T. EXAMPLE

guidelines. Profitability objectives
to achieve a 20% return on investment by
S mart November 2007
Market share objectives
M easurable
to gain 25% of the market for sports shoes by
A ttainable October 2007
Promotional objectives
R ealistic
to increase awareness of the dangers of AIDS in
T imely Malaysia from 12% to 25% by June 2008.
Objectives for growth
to increase the size of our Hong Kong operation
from $400,000 in 2006 to $500,000 in 2007.
 Planning works best when the goals and action plans at the
2. bottom and middle of the organization support the goals and
action plans at the top of the organization.
In other words, planning works best when everybody pulls in the
same direction.
Tip: Good Plans
Start at the bottom
Bend in the middle
Finish at the bottom

Charting a
course of
action
Starting at the top
COMPANY VISION
Top managers create the organizational
vision and mission and long-term
strategic plans.
COMPANY MISSION
Strategic plans clarify how the
company will serve customers and
position itself against competitors
in the next two to five years. 
Vision is an inspirational
statement of an organization’s
purpose.
It should be brief – more than
two sentences. It answers the
question, “What do we want to
become?”
The mission is a more specific
statement of a company’s
overall goal that unifies
company-wide efforts
stretches and challenges the
organization, and possesses a
timeframe.
It answers the question,
“What is our business? / Why
do we exist?’’
 EXAMPLE

KELLOGG'S MISSION

KELLOGG'S VISSION
“Kellogg is a global company
committed to :
building long-term growth in
“To be the world’s leading
volume and profit and enhancing
provider of breakfast products
its worldwide leadership position
and convenience foods”.
by providing nutritious food
products of superior value.
Bending in the middle
Middle managers develop tactical plans and use
management by objectives (MBO) to motivate
employee efforts toward the overall vision and
mission.
Management by objectives (MBO) is a systematic
Tactical plans specify how a and organized approach that allows management to
company will use resources, focus on achievable goals and to attain the best
budgets, and people over the next possible results from available resources.
six months to two years to It aims to increase organizational performance by
accomplish specific goals within its aligning goals and subordinate objectives
mission. throughout the organization.
MBO
 TYPE OF OPERATIONAL PLAN

1 Single-use plans
Plans that cover unique, one-time-only events.
Eg: Single-day sales advertisement

2 Standing plans
Finishing at the Plans are used repeatedly to handle frequently
recurring events: there are 3 kinds of standing

bottom
Operational plans are day-to-day plans,
developed and implemented by lower-level
managers, for producing or delivering the
3 Budgets
organization's products and services over
a 30-day to 6-month period.
plans:
Policy - general course of action
Procedure - specific steps to take
Rules & regulations - particular action to be
performed
Quantitative planning through which managers
decide how to allocate available money to best
accomplishes company goals.
 Implementation involves defining:
3. tasks to be accomplished
assigning individual responsibilities to those tasks
managing individuals to ensure that the tasks are
appropriately completed

Means of implementation include:

Authority - formal power to get things done.
Persuasion - getting employees to “buy in”.
Policy - which defines appropriate and inappropriate
behaviors.
Implementation Feedback - mechanism learns from the bottom up
 STRATEGIC GOALS
Broad statements describing where the organization wants to be in the
future.

2.5 Pertain to the entire organization rather than to specific divisions or

departments.
Example: To improve market share from 15% to 20% over the next 3

TYPE OF years.

TACTICAL GOALS
GOALS The results that major divisions and departments within the organization
intend to achieve.
Tactical goals apply to middle management and describe what major
subunits must do in order for the organization to achieve strategic goals.

OPERATIONAL GOALS
The specific results are expected from departments, workgroups, and
individuals. Example: Sales department: Respond to customer inquiries
within 2 hours.
 MBO works from the bottom up as well as from the
bottom down. The result is a hierarchy that links
2.6 objectives at one level to those at the next level.
There are four ingredients common to MBO programs.
MANAGEMENT BY settings specific goals
realistic and acceptable goals
OBJECTIVES period to be completed (eg: three months, six
months, or a year).
feedback

MBO emphasizes converting

overall objectives into
specific objectives.
MBO makes objectives
operational by cascading
them down through the
organization.
ANY QUESTION?

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