Introduction to Business

5th Week
Planning the Foundation of Successful Management

Dr.Erdem ERCIYES
 LEARNING OBJECTIVES
5.1 Discuss the role of strategic management.
5.2 Compare mission, vision, and value statements.
5.3 Discuss the types and purposes of goals and plans.
5.4 Describe SMART goals and their implementation.
5.5 Outline the planning/control cycle.
5.6 Describe how to develop the career readiness
competency of proactive learning orientation.

©McGraw-Hill Education.
 STRICTLY BUSINESS

Do you see any strategic planning in this video?

©McGraw-Hill Education.
 PLANNING, STRATEGY and
STRATEGIC MANAGEMENT
• Planning is the first of the four functions in the
management process.
• Planning involves setting goals and deciding how to
achieve them.
• It also involves ensuring the plans are linked to the
business strategy.

©McGraw-Hill Education.
 PLANNING: COPING with UNCERTAINTY
Three Definitions Two Examples
1. Planning is defined as 1. Business plan: A document
setting goals and deciding that outlines a proposed
how to achieve them. firm’s goals, the strategy for
2. Planning is also coping achieving them, and the
with uncertainty by standards for measuring
formulating future success.
courses of action to 2. Business model: Outlines
achieve specified results. the need the firm will fill,
3. A plan is a document that the operations of the
outlines how goals are business, its components
going to be met. and functions, as well as
the expected revenues and
expenses.
©McGraw-Hill Education.
 STRATEGY: SETTING LONG-TERM DIRECTION
Strategy or strategic plan
• A large-scale action plan that sets the long-term goals and
direction for an organization.
• Represents an “educated guess” about what must be done
in the long term for the survival or the prosperity of the
organization or its principal parts.
• Strategic plans generally reconsidered every year due to
everchanging business conditions.

©McGraw-Hill Education.
 STRATEGIC THINKING OR PLANNING?

©McGraw-Hill Education.
 STRATEGIC MANAGEMENT
Strategic management
• A process that involves managers from all parts of the
organization in the formulation and the implementation of
strategies and strategic goals.
• From top management to middle managers to line manager.

• Derives from an organization’s mission and vision.

©McGraw-Hill Education.
 WHY ARE PLANNING and STRATEGIC
MANAGEMENT IMPORTANT?

1. Provide direction and momentum.

2. Encourage new ideas.
3. Develop a sustainable competitive advantage.

©McGraw-Hill Education.
 PLANNING and STRATEGIC MANAGEMENT
These are the steps to planning and strategic
management.

©McGraw-Hill Education.
 PROVIDING DIRECTION and MOMENTUM
Why are direction and momentum important?
• Unless a plan is in place, managers may well focus on just
whatever is in front of them, just “putting out fires.”
• Managers might be so preoccupied with day-to-day
pressures that their organizations can lose momentum.
Examples to consider:
• What Amazon.com was to Borders bookstores.
• What Uber has been to taxicabs.
• What blogs and Internet news meant for newspapers.
• What microbreweries have been to Anheuser-Busch.

©McGraw-Hill Education.
 ENCOURAGING NEW IDEAS
Management scholar Gary Hamel says that companies
such as Apple have been successful because they have
been able to unleash the spirit of “strategy
innovation.”
Strategy innovation
• The ability to reinvent the basis of competition within
existing industries—“bold new business models that put
incumbents on the defensive.”

©McGraw-Hill Education.
 DEVELOPING a SUSTAINABLE COMPETITIVE
ADVANTAGE
Competitive advantage
• The ability of an organization to produce goods or services more
effectively than its competitors do, thereby outperforming them.

Sustainable competitive advantage

• Occurs when an organization is able to get and stay ahead in four
areas:
1. In being responsive to customers.
2. In innovating.
3. In quality.
4. In effectiveness.

©McGraw-Hill Education.
 MISSION, VISION, and VALUE STATEMENTS
Mission Statement
• Express the purpose of the organization.
• What is our reason for being?
• Why are we here?
Vision Statement
• A clear sense of the future and the actions needed to get there
• What do we want to become?
• Where do we want to go?
Value Statement
• What the company stands for: its core priorities, the values its employees
embody, and what its products contribute to the world
• What values do we want to emphasize?

©McGraw-Hill Education.
 FUNDAMENTALS of PLANNING

The approach to
planning can be
summarized in the
diagram, which shows
how an organization’s
mission becomes
translated into action
plans.

©McGraw-Hill Education.
 EXAMPLE: COCA-COLA
Here is an example of how a mission, vision, and
values statement work together to provide a
cohesive message to customers and employees
alike.
Mission Statement: Our Roadmap
starts with our mission, which is enduring.
It declares our purpose as a company and
serves as the standard against which we
weigh our actions and decisions.
1. To refresh the world….
2. To inspire moments of optimism and
happiness….
3. To create value and make a difference.
©McGraw-Hill Education.
 COCA-COLA: VISION STATEMENT
Vision Statement: Our vision serves as the framework for our
Roadmap and guides every aspect of our business by
describing what we need to accomplish in order to continue
achieving sustainable, quality growth.
People—Be a great place to work where people are inspired to be
the best they can.
Portfolio—Bring to the world a portfolio of quality beverage brands
that anticipate and satisfy people's desires and needs.
Partners—Nurture a winning network of customers and suppliers;
together we create mutual, enduring value.
Planet—Be a responsible citizen that makes a difference by helping
build and support sustainable communities.
Profit—Maximize long-term return to shareowners while being
mindful of our overall responsibilities.
Productivity—Be a highly effective, lean and fast-moving
organization.

©McGraw-Hill Education.
 COCA-COLA: VALUES
Vision Statement: Our values serve as a compass for
our actions and describe how we behave in the
world.
Leadership—The courage to shape a better future
Collaboration—Leverage collective genius
Integrity—Be real
Accountability—If it is to be, it’s up to me
Passion—Committed in heart and mind
Diversity—As inclusive as our brands
Quality —What we do, we do well

©McGraw-Hill Education.
 THREE TYPES of PLANNING for THREE LEVELS
of MANAGEMENT
There are three types of planning for three levels of management:
strategic planning, tactical planning, and operational planning.

©McGraw-Hill Education.
 QUESTION #1
Ersin is participating with other managers in a
discussion about what his organization's goals should
be for the next decade. He is participating in
A. strategic planning.
B. operational planning.
C. tactical planning.
D. controlling.

©McGraw-Hill Education.
 RESPONSE #1

The correct answer is A. strategic planning.

Strategic planning sets the long-term goals (10 years)

and direction of the organization.

©McGraw-Hill Education.
 LONG-TERM and SHORT-TERM GOALS
GOALS
A specific commitment to achieve a
measurable result within a stated
period of time.

SHORT-TERM GOALS LONG-TERM GOALS

• Sometimes referred to as tactical
or operational goals, or just plain
goals.
• Generally span 12 months and
connected to strategic goals in a
hierarchy known as a means-end
chain.
• Generally referred to as strategic
goals.
• Tend to span 1 to 5 years and
focus on achieving the strategies
identified in a company’s strategic
plan.

©McGraw-Hill Education.
 The OPERATING PLAN and ACTION PLAN
Operating plan
• A plan that breaks long-term output into short-term
targets or goals.
• Turns strategic plans into actionable short-term goals and
action plans.
Action plan
• Defines the course of action (the tactics) needed to
achieve a stated goal.
• Contains a projected date for completing the desired
activities for each tactic.

©McGraw-Hill Education.
 STANDING PLANS and SINGLE-USE PLANS
There is also a difference between standing plans and single-use
plans. You likely have work (or school) experience with these types
of plans.
PLAN DESCRIPTION
• Standing For activities that occur repeatedly over a period of time
Plan
• Policy Outlines general response to a designated problem or
situation
• Procedure Outlines response to particular problems or
circumstances
• Rule Designates specific required action
• Single-use For activities not likely to be repeated in the future
Plan
• Program Encompasses a range of projects or activities
• Project Has less scope and complexity than a program

©McGraw-Hill Education.
 SMART GOALS
The five characteristics of a good goal are represented by the acronym SMART.
Specific: Goals should be stated in specific rather than vague
terms.
Measurable: Whenever possible, goals should be
measurable, or quantifiable.

Attainable: Goals should be challenging, of course, but above

all they should be realistic and attainable.

Results-oriented: Only a few goals should be chosen—say,

five for any work unit. And they should be results-oriented—
they should support the organization’s vision.
Target dates: Goals should specify the target dates or
deadline dates when they are to be to be obtained.
©McGraw-Hill Education.
 RELATIONSHIP BETWEEN
GOAL DIFFICULTY and PERFORMANCE
If goals are too easy (as in “half the
flights should arrive on time”), goals
won’t impel people to make much
effort. If impossible (“all flights must
arrive on time, regardless of
weather”), employees won’t even
bother trying. Or they will try and
continually fail, which will end up
hurting morale. Or they will cheat. An
example was the unrealistic goal of
cutting wait times for appointments by
more than half at Veterans Affairs
hospitals, as revealed in ongoing
scandals in which VA administrators
were
Source: Adapted from E.A. Locke and G.P. Latham, A Theory of Goal Setting and found to have falsified figures.
Task Performance (Englewood Cliffs, NJ: Prentice Hall, 1990).
©McGraw-Hill Education.
 MANAGEMENT BY OBJECTIVES (MBO): THE
FOUR-STEP PROCESS for MOTIVATING
EMPLOYEES
1. Managers and employees
jointly set objectives for
the employee.
2. Managers develop action
plans.
3. Managers and employees
periodically review the
employee’s performance.
4. Managers make a
performance appraisal
and reward the employee
according to results.
©McGraw-Hill Education.
 THREE TYPES of OBJECTIVES USED in MBO
Performance Objectives
Focus Express the objective as an outcome or end-result. Examples:
“Increase sport utility sales by 10%.” “Reduce food spoilage by 15%.”

Behavioral Objectives
Focus Express the objective as the behaviors needed to achieve an outcome.
Examples “Greet all potential automobile customers with a smile and offer to assist.”
“Ensure food is stored in seal-proof containers.” “Attend five days of leadership
training.” “Learn basics of Microsoft Office software by June 1.”

Learning Objectives
Focus Express the objective in terms of acquiring knowledge or
competencies. Examples “Attend sales training class.” “Learn how the
features in our sports utility vehicles compare to competitors.”
Table 5.3
Source: These descriptions were based on G. Latham, G. Seijts, and J. Slocum, “The Goal Setting and Goal Orientation Labyrinth: Effective Ways for
Increasing Employee Performance,” Organizational Dynamics, October-December 2016, pp 271-277.

©McGraw-Hill Education.
 CASCADING GOALS: MAKING LOWER-LEVEL
GOALS ALIGN with TOP GOALS

For MBO goal-setting to be successful, the following

three things have to happen.
1. Top management must be committed to it.
2. Goals must be applied organizationwide.
3. Goals must “cascade”—be linked consistently down
through the organization.

©McGraw-Hill Education.
 QUESTION #2

Selma wants her employee, Mehmet, to turn in his

monthly sales report by the 5th of every month. This
meets the ____________ requirement of SMART goals.
A. specific
B. measurable
C. attainable
D. target dates

©McGraw-Hill Education.
 RESPONSE #2

The correct answer is D. target dates.

A SMART goal is one that is specific, measurable,

attainable, results-oriented, and has target dates.

©McGraw-Hill Education.
 The IMPORTANCE of DEADLINES
Deadlines can help
concentrate the mind.
Deadlines help you
ignore extraneous
matters in favor of
what’s important.
Deadlines provide a
mechanism for giving
ourselves feedback.

©McGraw-Hill Education.
 The PLANNING/CONTROL CYCLE

Figure 5.5
Source: Robert Kreitner, Management, 8th edition.

©McGraw-Hill Education.
 QUESTION #3
When outside production of batteries was slower than
desired, Tesla made the decision to bring this back in
house. This is an example of:
A. Make the plan.
B. Carry out the plan.
C. Take corrective action.
D. Document the plan.

©McGraw-Hill Education.
 RESPONSE #3
The correct answer is C. Take corrective action.

Rationale: Tesla took steps to correct a deviation in the

plan that affected production. This is the fourth step in
the planning/control cycle.

©McGraw-Hill Education.
 References
• E.A. Locke and G.P. Latham. (1990). A Theory of Goal Setting
and Task Performance (Englewood Cliffs, NJ: Prentice Hall).
• Ebert, R.J. And Griffin, R.W. (2020). Business Essentials,
12th Edition, Harlow: Pearson.
• Kinicki, W. and Williams, B. (2019). Management- A Practical
Introduction, 9th Edition, New York: McGraw-Hill Higher
Education.

©McGraw-Hill Education.