Management Principles and

Practices
---Ricky W. Griffin, 12/E

Chapter-07

Basic Elements of Planning and

Decision Making

Md. Mizanur Rahman

Professor of Marketing
Dhaka University

7-1
 What is Planning?

• Planning is deciding in • Planning involves:

advance…. ̶ Defining the
̶ What to do organization’s goals
̶ How to do it ̶ Establishing an overall
̶ When to do it, and strategy for achieving
̶ Who to do it. those goals
̶ Developing plans for
organizational activities

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7-2
 Purpose of Planning

• Provides direction

• Reduces uncertainty

• Minimizes waste and

redundancy
• Sets the standards for
controlling

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7-3
 Elements of Planning

• Goals (Objectives)
̶ Desired outcomes for individuals,
groups, or entire organizations • Plans
̶ Provide direction and evaluation of ̶ Spell out the course of
performance criteria action to achieve goals
and objectives
• Strategies
̶ Deal with activity
̶ Game plan for achieving goals and
objectives schedules

̶ Deal with resource allocation and

broader directions

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 The Planning Process

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7-5
 Organizational Goals

• Goals serve four important purposes:

̶ Provide guidance and a unified direction
̶ Affect other aspects of planning.
• Effective goal setting promotes good planning
• Good planning facilitates future goal setting
̶ Specific and moderately difficult goals can motivate
employees
̶ Provide an effective mechanism for evaluation and
control

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 Characteristics of Well-Designed Goals

• Written in terms of • Challenging yet

outcomes, NOT actions attainable
̶ Focuses on the ends, not the ̶ Low goals do not motivate
means ̶ High goals motivate if they
can be achieved
• Measurable and
quantifiable • Written down
̶ Specifically defines how the ̶ Focuses, defines, and
outcome is to be measured makes goals visible
and how much is expected
• Communicated to all
• Clear as to time frame necessary members
̶ How long before measuring ̶ Puts everybody “on the
accomplishment same page”

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 Figure
Figure7.2:
7.2:Kinds
Kinds
of
ofOrganizational
Organizational
Goals
Goalsfor
foraa
Regional
RegionalFast-
Fast-
Food
FoodChain
Chain

Goals vary by
level, area, and
time frame.

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7-8
 Kinds of Goals—Level

• Set for and by different levels

̶ A mission statement states an organization’s
fundamental purpose
̶ A strategic goal is set by/for top management
 Focus is on broad, general goals
̶ A tactical goal is set by/for middle managers.
 Focus is on actions necessary to achieve strategic
goals
̶ An operational goal is set by/for lower-level
managers
 Focus is on short-term issues associated with
tactical goals

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 Kinds of Goals—Areas and Time Frames

• Area
̶ Organizations set goals for different areas
 Operations, marketing, finance, quality control,
productivity, human resources

• Time Frame
̶ Organizations set goals across different time
frames
 Long-term, intermediate-term, and short-term goals

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7-10
 Organizational Goals

• Responsibilities for setting goals

̶ Who sets goals?
 All managers
 Managers are responsible for setting goals that
correspond to their level in the organization.

• Managing multiple goals

̶ Sometimes goals conflict
 Optimizing involves balancing and reconciling
possible conflicts among goals

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 Steps in Goal Setting

1. Review the organization’s 4. Write down the goals

mission statement and communicate them
̶ Do goals reflect the mission? ̶ Is everybody on the same
page?
2. Evaluate available
resources 5. Review results and see
̶ Are resources sufficient to whether goals are
accomplish the mission? being met
̶ What changes are
3. Determine goals needed in mission,
individually or with others resources, or goals?
̶ Are goals specific,
measurable, and timely?

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7-12
 Approaches to Goal Setting

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 Organizational Planning

This section identifies:

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 Kinds of Organizational Plans

• Strategic plan
– A general plan outlining decisions of overall goals,
scope, resource allocation, priorities, and action
steps necessary to reach strategic goals

• Tactical plan
– A plan aimed at achieving tactical goals, developed
to implement parts of a strategic plan

• Operational plan
– Focuses on carrying out tactical plans to achieve
operational goals

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7-15
 Time Frames for Planning

• Long-range plan
– Covers many years, perhaps decades, commonly
five years or more

• Intermediate plan
– Generally covers from one to five years

• Short-range plan
– Covers a span of one year or less
– An action plan operationalizes any other plan
– A reaction plan reacts to unforeseen events

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 Responsibilities for Planning

• Planning staff
– Coordinates planning and provides tools
– Takes a broad view and crosses departments

• Planning task force

– Line managers grouped for a specific task

• Board of directors
– Establishes mission and strategy

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 Responsibilities for Planning

• CEO
– Major roles in planning and implementation

• Executive committee
– Top management provide input to the CEO and
reviews strategic plans

• Line management
– Provide valuable inside information and execute the
plans developed by top management

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7-18
 Contingency Planning and Crisis
Management

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7-19
 Contingency Planning Figure 6.3

Action points determine which plan managers should use

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 Tactical Planning

Tactical plans are to battle as strategy is to

war

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 Developing and Executing Tactical Plans

Figure 6.4

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 Types of Operating Plans Table 6.1

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 Barriers to Goal Setting Table 6.2

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7-24
 Managing Goal-Setting and Planning
Processes

Using goals to implement plans

– Management by objectives (MBO)
 A formal goal-setting process involving collaboration
between managers and subordinates
 The extent to which goals are accomplished is a major
factor in evaluating and rewarding subordinates’
performance.

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7-25
 Formal Goal-Setting Process

• The purpose of formal goal

setting is to give and to clarify what
subordinates a voice in the they are to
goal-setting and planning accomplish in a
processes given time span.

Figure 6.5
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7-26
Planning Process

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 Planning Process

Analyze Opportunities
̶ An essential pre-step of planning
̶ Make SWOT analysis

Setting Goals/Objectives
̶ Real starting point of planning
̶ Consider org. resources and opportunities
 Set SMART goals/objectives

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7-28
 Planning Process

Determination of Premises
̶ Assumptions about the future in which the planning is
implemented
̶ Provide environment and boundaries for the implementation
of plan
̶ Could be:
 Tangible: Capital investment, unit of production, cost per unit
 Intangible: Employees’ morale, goodwill, motivation, etc.
 Internal: Money, materials, machines, managements, etc.
 External: Competitors’ strategy, technological change,
government policy, social and cultural beliefs, etc.

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7-29
 Planning Process

Determination of Alternatives
̶ Identify all possible hidden objectives
 Use primary and secondary sources

̶ Get support of experienced and intellectual experts

̶ Search for the best alternative

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7-30
 Planning Process

Evaluation of Alternatives
̶ Evaluate alternatives using cost and benefit criteria
̶ In evaluation, consider risk, responsibility, planning premises,
resources, technology, etc.

Selecting a Course of Action

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7-31
 Planning Process

Formulation of Derivative Plans

̶ Formulate action (secondary) plans which help in the
achievement of main plan
̶ Involves formulation of policies, rules, schedule, and
budget to achieve defined objectives
̶ Difficult to implement main plan without these plans

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 Planning Process

Implementation of Plans
̶ Bringing all the procedures of plan into action
̶ Management takes some steps:
 Communicate with subordinates who initiate to plan into
action
 Provide necessary instructions and guidance
 Make arrangement of all resources
 Make timely supervision and control over subordinates

Reviewing the Planning Process

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 Criticisms of Planning

• May create rigidity

• Cannot be developed for dynamic
environments
• Formal plans cannot replace intuition and
creativity
• Focuses managers’ attention on today’s
competition not tomorrow’s survival
• Reinforces today’s success, which may
lead to tomorrow’s failure

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 Key Terms

• Mission • Intermediate plan

• Strategic goal • Short-range plan
• Tactical goal • Crisis management
• Operational goal • Single-use plan
• Optimizing • Program
• Strategic plan • Project
• Tactical plan • Standing plan
• Operational plan • Policy
• Reaction plan • Rules and regulations
• Long-range plan

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 THANK
THANK YOU
YOU

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