ORGANIZATION

AND
MANAGEMENT
 SUMMARY

Lesson 3: Planning at Different Levels in the Firm

 Different level in the firm are all engaged in Planning.
 The resulting plans must be related to one another and directed towards the same goals.

Bateman and Snell (2008) stated that an effective strategy provides a basis for answering 5 broad
questions about how organizations will meet its goals/objectives.
1. Where will be active?
2. How will we get there?
3. How will we win in the marketplace?
4. How fast will we move and in what sequence will we make changes?
5. How will we obtain financial return?

Top-Level Management Planning (Strategic Planning)

 Is top-level planning which involves making decisions about the organization’s long term goals.

Middle-Management Planning (Tactical Planning)

 Is middle-level management planning which refers to procedures and transformation of strategic
goals/plans with specific goals.

Frontline/Lower-Level Management Planning (Operational-Planning)

 Is lower-level management planning which involves routine tasks repeatedly done by the firm’s
lower level units.

Integrating Strategic, Tactical and Operational Planning

 Managers in different hierarchical levels of organization may contribute their ideas or suggestions
in developing the strategic plan.
 A task originally assigned to the senior executives.
Strategy Formula
 Frontline managers may make decisions that could influence strategy formulation in the
higher levels.
 All plans must be directed toward the achievement of the organization’s strategic goals.
 Communication Lines, Dissemination of Information and Awareness
 CEOs or company presidents must see that all communication lines in their organization
are open, excellent dissemination of information to all levels, and that they are aware of
everything that is happening in the firm.

Lesson 4: Planning Techniques and Tools and their Applications

 Making assumptions about what will happen in the future.
 Qualitative forecasting uses expert opinions.
 Quantitative forecasting uses mathematical and statistical analysis.
 All forecasts rely on human judgment.
 Planning involves deciding on how to deal with the implications of a forecast.

Contingency Planning
 Identifying alternative courses of action that can be implemented to meet the needs of changing
circumstances.
 Contingency plans anticipate changing conditions.
 Contingency plans contain trigger points.

Trigger Points - change in an attributer, condition, factor, parameter, or value that represents crossing a
threshold and actuates or initiates a mechanism or reaction that may lead to a radical different state of
affairs.

Scenario Planning
 A long-term version of contingency planning.

Benchmarking
 Planning technique that involves comparison of company’s practices/technologies with those of
other companies.

Use of staff planners

 Lead and coordinate the planning function
 Responsibilities include:
 Assisting line managers in preparing plans.
 Developing special plans.
 Gathering and maintaining planning information.
  Assisting in communicating plans.
 Monitoring plans in progress and suggesting changes.

Participation and Involvement

 Participatory planning requires that the planning process include people who will be affected by
the plans and/or will help implement them.
Benefits of participation and involvement:
 Promotes creativity in planning.
 Increases available information.
 Fosters understanding, acceptance, and commitment to the final plan.

How participation and involvement help build commitment to plans

Management by Objectives (BMO)

 A structured process of regular communication.
 Supervisor/team leader and workers jointly set performance objectives.
 Supervisor/team leader and workers jointly review results.

Management by objectives as an integrated planning and control framework

Management by objectives as an integrated planning and control framework

MBO involves a formal agreement specifying...
 Workers’ performance objectives for a specific time period.
 Plans through which performance objectives will be accomplished.
 Standards for measuring accomplishment of performance objectives.
 Procedures for reviewing performance results.

The MBO process:

 Supervisor and workers jointly set objectives, establish standards, and choose actions.
 Workers act individually to perform tasks;
 supervisors act individually to provide necessary support.
 Supervisor and workers jointly review results, discuss implications, and renew the MBO cycle.

Types of MBO performance objectives

 Improvement
 Personal development
 Maintenance

Criteria for effective performance objectives

 Specific
 Time defined
 Challenging
 Measurable

Advantages of MBO
 Focuses workers on most important tasks and objectives.
 Focuses supervisor’s efforts on important areas of support.
 Contributes to relationship building.
 Gives workers a structured opportunity to participate in decision making.