Professional Documents
Culture Documents
Planning in The Contemporary Organization
Planning in The Contemporary Organization
OF MANAGEMENT
Chapter
3
Planning in the
Contemporary
Organization
MGT 420
↓Top-Down Planning↓
Planning efforts begin with the board
of directors and top executives of the
firm
↑Bottom-Up Planning↑
Planning is initiated at the lowest level
in the organization
Top-Down Bottom-Up
Role of As the plan moves down the Units develop goals and plans. As plans
organizational hierarchy, units determine actions move up the hierarchy, they are evaluated
unit needed to support the plan. and adjusted for accuracy and feasibility.
Specificity Begins broad, becomes more Begins specific and probably fragmented;
of plan specific as it moves down the becomes cohesive and integrated as it
hierarchy. moves up the hierarchy.
Potential Plans are driven by top-level Those closest to customers, suppliers, and
advantages managers who are most operating systems provide focus of plans.
knowledgeable about all factors
affecting the organization.
4. Who plans? Board of Directors and very Lowest level of planning and
senior staff involves line managers down to
supervisory levels.
Corporate Strategy
• Diversification
An organization adding new products, services, or
businesses.
• Unrelated diversification
Adding products, services, or businesses that are
different from the ones an organization currently has.
• Related diversification
Adding products, services, or businesses that have
some relationship to the ones an organization
currently has or share a core competency.
Time
Focus Specificity Participants Horizon
Business To develop and maintain More specific Top-level executives 1–5 years
strategy a distinctive competitive than the Managers within the
advantage that will ensure corporate business unit
long-term profitability strategy
Functional To develop action plans Very specific Middle-level managers 1–2 years
strategy that ensure that corporate Lower-level managers
and business strategies
are implemented
Standing Plans
• Standing Plans
Designed to deal with organizational issues or
problems that recur frequently. They include:
Policies:general guidelines that govern how certain
organizational situations will be addressed.
Procedures: more specific and are designed to give
explicit instructions on how to complete a recurring
task.
Rules: provide detailed and specific guidelines and
limits for action.
Single-Use Plans
• Single-Use Plans
Are developed to address a specific organizational
situation. They include:
Programs: govern a relatively comprehensive set
of activities that are designed to accomplish a
particular set of goals.
Projects:direct the efforts of individuals or work
groups toward the achievement of specific, well-
defined objectives.
Budgets: specify how financial resources should be
allocated.
Source: K. Davis and J. Newstrom, Behavior at Work: Organizational Behavior (New York:
McGraw-Hill, 1989), 209. Reproduced with permission of the McGraw-Hill Companies.
MGT 420 5–27
Management by Objectives (MBO)
• A method for developing individualized plans
which guide the activities of individuals.
MBO benefits:
Provides
a foundation for a more integrated and
system-oriented approach to planning.
Requirescommunication between employees and
their managers since they must agree on the
performance goals outlined in the plan.
Creates a participatory work environment where
employees have a voice in the design of their jobs
and setting their performance targets.
Source: Adapted from J. Gordon et al., Management and Organizational Behavior (Boston: Allyn and Bacon, 1990).
MGT 420 5–30
The Balanced Scorecard (BSC)
• A system-wide performance measurement
process that aligns individual goals with the
strategic goals of the organization.
Allows an organization to translate strategy into
operational actions at every level.
Ensures employees that their individual action plans
and goals are consistent with the overall strategic
direction of the organization.
Source: J. Steele, “Transforming the Balanced Scorecard into Your Strategy Execution System,” Manage 53 (September/October 2001): 22–23.
MGT 420 5–32
Barriers to
Effective
Planning