Elements of

Planning and Decision-Making

A Brief Review
Key Concepts for Strategic Thinking
1. Vision

2. Mission

3. Strategy

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Decision Making and the Planning Process
The Planning Process
The Environmental Context
The organizations mission
Purpose Premises Values Directions

Strategic goals Strategic plans

Tactical goals Tactical plans

Operational goals Operational plans

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Organizational Goals
Purposes of Goals
Provide guidance and a unified direction for

people in the organization.

Have a strong affect on the quality of other

aspects of planning.
Serve as a source of

motivation for
employees of the
organization.
Provide an effective

mechanism for evaluation

and control of the organization.
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Kinds of Goals
By Level
Mission statement is a statement of an organizations fundamental
purpose.
Strategic goals are goals set by and for top management of the
organization that address broad, general issues.
Tactical goals are generally set for middle managers; their focus is
on how to operationalize actions to strategic goals.
Operational goals set for lower level managers. Concerned with
shorter term issues associated with the tactical goals.
By Area
Goals set for the different functional areas of the organization.
By Time Frame
Goals may be set for long-term, intermediate-term, or short-term
time frames and for explicit time frames or open-ended.

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Organizational Goals
Kinds of Goals
for a Regional
Fast-Food
Vice president operations
Chain Open 150 new restaurants
during next ten years
Decrease food-container costs by
15 percent during next five years
Decrease average customer wait
by thirty seconds this year
Restaurant manager
Implement employee incentive
system within one year
Decrease waste by 5 percent this
year
Hire and train new assistant
Figure 7.2 manager
Mission: Our mission is to operate
a chain of restaurants that will
prepare and serve high-quality
food on a timely basis and at
reasonable prices.
Strategic Goals
President and CEO
Provide 14 percent return to
investors for at least ten years
Start or purchase new restaurant
chain within five years
Negotiate new labor contract
this year
Tactical Goals
Vice president marketing Vice president finance
Increase per store sales 5 percent
Keep corporate debt to no more
than 20 percent of liquid assets
per year for ten years
for next ten years
Target and attract two new market
Revise computerized accounting
segments during next five years
system within five years
Develop new promotional
Earn 9 percent on excess cash this
strategy for next year
year
Operational Goals
Advertising director Accounting manager
Develop regional advertising Split accounts receivable/payable
campaigns within one year functions from other areas within
Negotiate 5 percent lower two years
advertising rates next year Computerize payroll system
Implement this year
s for each restaurant this year
promotional strategy Pay all invoices within thirty days
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 Responsibilities of Setting Goals
Who Sets Goals?
All managers should be involved in the goal-setting
process.
Managerial responsibility for goal setting should
correspond to the managers level in the organization.
Managing Multiple Goals
Optimizing allows managers to balance
and reconcile inconsistent or
conflicting goals.
Managers can choose to pursue
one goal and exclude all
others or to seek a
mid-range goal.
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Kinds of Organizational Plans
Strategic Plans
A general plan outlining resource allocation,
priorities, and action steps to achieve strategic
goals. The plans are set by and for top
management.
Tactical Plans
A plan aimed at achieving the tactical goals set
by and for middle management.
Operational Plans
Plans that have a short-term focus.
These plans are set by and for
lower-level managers. 8
Time Frames for Planning
The Time Dimension of Planning
is based on the principle of commitment. Planning must provide
sufficient time to fulfill the managerial commitments involved.
Long-range Plans
cover present and future strategic issues; normally extend beyond
five years in the future.
Intermediate Plans
usually cover from 1 to 5 years and parallel tactical plans.
are the principal focus of organizational planning efforts.
Short-range Plans
have a time frame of one year or less.
include action plans and reaction (contingency) plans.
Action Plan: A plan used to operationalize any other kind of plan.
Reaction plan: A plan developed to react to an unforeseen
circumstances.
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 Responsibilities for Planning

Planning Staff (can be permanent or assigned)

Planning staff personnel gather information,
coordinate planning activities, and help collect
information for managerial review

Planning Task Force

Created when the organization wants
a special circumstance addressed.

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 Responsibilities for Planning
Board of Directors
Establishes/confirms/approves the organizations
policy, such as the corporate mission and strategy.

Chief Executive Officer

Has the lead role in the planning process and
oversees the implementation of strategy by
supervising department directors.

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Responsibilities for Planning (contd)
Executive Committee
Composed of top officers within

the organization. Meet when the Board is not scheduled

to meet to review progress of the strategic plans.
Line Management - Persons with formal authority and

responsibility for management of

the organization. Help to formulate
strategy by providing information.
Responsible for executing the plans
developed by top management.

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Contingency Planning
Contingency is the determination of alternative courses of
action to be taken if an intended plan is unexpectedly
disrupted or rendered inappropriate. These plans help
managers to cope with uncertainty and change.
Ongoing planning process

Action point 1 Action point 2 Action point 3 Action point 4

Develop plan, Implement plan and Specify indicators Successfully complete
considering formally identify for the contingency plan or contingency
contingency events contingency events events and develop plan
contingency plans for
each possible event

Monitor contingency event indicators and

implement contingency plan if necessary

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Tactical Planning
Developing and Executing Tactical Plans
Developing tactical plans
Recognize and understand
overarching strategic plans
Specify relevant resources and
time issues
Recognize and identify human
resource commitments
Executing tactical plans
Evaluate each course of action
in light of its objective
Obtain and distribute
information and resources
Monitor horizontal and vertical
communication and integration
of all activities/steps
Evaluate ongoing activities
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Types of Operational Plans
Plan Description

Single-use plan Developed to carry out a course of action not likely to

be repeated in the future
Program Single-use plan for a large set of activities
Project Single-use plan of less scope and complexity than a
program

Standing plan
Policy
Standard operating procedure
Rules and regulations
Developed for activities that recur regularly over a pe-
riod of time
Standing plan specifying the organizations general
response to a designated problem or situation
Standing plan outlining steps to be followed in particu-
lar circumstances
Standing plans describing exactly how specific activi-
ties are to be carried out

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 Barriers to Goal Setting and Planning
As part of managing the goal-setting and planning
process, managers must understand the barriers
that can disrupt implementation. Managers must
collaborate to overcome the obstacles.
Major Barriers Inappropriate goals
Improper reward system
Dynamic and complex environments (internal/external)
Resistance to change
Reluctant to establish goal
Constraints

Overcoming the Barriers Understanding the purposes of goals and planning

Communication and participation
Consistency, revision, and updating
Effective reward system
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 Using Goals to Implement Plans
A formal goal-setting process can be an effective technique
for integrating the ideas and expertise of staff. It provides
staff with a voice and promotes acceptance of what they
are expected to accomplish.

Starting Establishment Communicat-

Collaborative
the formal of organiza- ing organiza- Periodic Evaluation
goal setting
goal-setting tional goals tional goals review
and planning
program and plans and plans

Meeting

Verifiable
goals and
clear plans

Counseling

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Using Goals to Implement Plans:
The Effectiveness of Formal Goal Setting
Strengths for Success
Improved employee
motivation
Enhances communication
Fosters more objective
performance appraisals
Focuses attention on
appropriate goals and plans
Helps identify managerial
talent
Provides a systematic
management philosophy
Facilitates control of the
organization
Cause of Failure
Poor implementation of the
goal setting process
Lack of top-management
support for goal setting
Delegation of the goal-
setting process to lower
levels
Overemphasis on
quantitative goals
Too much paperwork and
record keeping
Managerial resistance to
goal setting
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The End

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