1. Chapter 5 Planning - To Set Direction
Planning Ahead
What is business planning?
What types of plans are used by managers?
How does planning utilize general decision making model?
What planning tools and techniques are available?
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2. Schermerhorn - Chapter 5
Planning as a Management Function Organizing, Leading and Controlling are other business functions.
To plan is to decide what to accomplish and how to do it
define objectives for plan
evaluate accomplishments relative to objectives
develop premises regarding future conditions
analyze possible action alternatives
implement plan and evaluate results
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3. Schermerhorn - Chapter 5
An organization’s Mission, Goals and Objectives are types of plans which help to define the whole organization.
Goals is a term to use if you are talking about individuals attaining outcomes.
Objectives is a term to use if you are talking about organizations attaining outcomes.
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4. Each of the terms below are types of plans.
Mission: Tells us what purpose of organization is.
Objectives: Tells us what outcomes or results we have and when we intend to accomplish outcomes.
Budget: Tells us what resources we are committing to project/programs (time, $’s, people)
Program or Project plan: A single use plan for accomplishing group of tasks. (e.g. marketing or financial plan)
Policy: Communicates a type of plan that gives us a broad guideline for decision making.
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5. Planning as a Management Function
Benefits of Planning
more focus (career goals focus
students on their careers and they
are more likely to attain them)
and flexibility
Contingency planning: based on possible changes in environ.
action orientation (ready, fire, aim)
improved coordination
better control (e.g. an objective of 10% ROI
Is easily use as a control number)
better time management (schedule and prioritize actions.
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6. Types of Plans in Organizations
Short-Range and Long-Range Plans
Short-range = 1 year or less
Intermediate-range plans = 1-2 years
Long-range = 3 or more years
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7. Types of Plans in Organizations
Strategic and Operational Plans
Strategic plans
address long-term needs
set comprehensive action directions for an organization
responsibility of top management
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8. Types of Plans in Organizations
Program Plans are intermediate plans doing the same things as operational plans. Intermediate Program plans are set by mid-level managers for 1-2 years.
Financial program
Facilities program
Marketing program
Human resources program
Operational Plans are usually set by lower management levels for one year or less
Operational plans will be specific plans set to support the Program plans above ( Financial, Facilities, Marketing, HRM, etc)
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9. Types of Plans in Organizations
Policies and Procedures
standing plans
policy is a broad guideline for making decisions and taking action in specific circumstances
procedures are plans that describe exactly what actions are to be taken in very specific circumstances. –It’s the detail!
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10. Schermerhorn - Chapter 5
Budgets and Schedules
Single-use plans
budgets
commit resources to activities, projects or programs
help clarity and reinforce action priorities
facilitate the evaluation and control of results
types are fixed, flexible and zero-based
Schedules put dates to a budget in time.
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11. Schermerhorn - Chapter 5
Budgets and Schedules
Fixed budget
allocates resources on a single estimate of costs
Flexible budget
allows allocation of resources to vary in proportion with various levels of activity
Example is as air fares go up the budget has to be increase a like amount.
Zero-based
project is budgeted as if it were brand new
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12. Schermerhorn - Chapter 5
PRIORITIES .
Zero base budgeting In zero base budgeting, instead of getting a 10% increase in budget over last period, all items are prioritized and budgeted. You set high, medium, and low priority items in your budget. Mainly the first two priorities are funded unless there is plenty of extra (slack) resources.
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13. Schermerhorn - Chapter 5
PRIORITIES
Priorities: Ranking goals, objectives, or activities in order of importance.
A priorities: “Must do” objectives are critical to successful performance.
B priorities: “Should do” objectives are necessary for improved performance.
C priorities: “Nice to do” objectives are desirable for improved performance.
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14. Planning As Problem Solving
difference between actual and desired situation
performance deficiency
performance opportunity
Problem solving
process of identifying a discrepancy and taking action
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15. Schermerhorn - Chapter 5
Question:
How do You make a decision for which jobs you will apply after next year?
Come up with a general model for making decisions.
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16. Planning as Problem Solving
Types of Managerial Problems (structured, unstructured and crises)
Structured
familiar, straightforward
programmed decisions can be developed
solutions readily available
Raising retail price the same amount as a new wholesale cost automatically solves problem – what should we charge for this product.
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17. Planning as Problem Solving
Types of Managerial Problems
unstructured
involve ambiguity and information deficiencies
Unanticipated
Almost all strategic plans are unstructured and not programmable
Non-programmed, programmed decisions can’t be made.
specially tailored to particular situation
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18. Planning as Problem Solving
Types of Managerial Problems
crisis
unexpected problem that can lead to disaster
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19. Planning as Problem Solving
Problem Environments
certainty
risk
uncertainty
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20. The Decision-Making Process
Typical Approach -
Get Facts, be aware of past, present and possible futures
identify and define problem
generating and evaluating possible solutions
choosing a solution and conduct ethics double check
implement solution
evaluate results
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21. The Decision-Making Process
Step 1: Identify and Define Problem
avoid the following
defining problem too broadly or narrowly
focus on symptoms
choose wrong problem
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22. The Decision-Making Process
Step 2: Generate and Evaluate Possible Solutions (use a decision tree or an evaluation matrix.)
Criteria
benefits
costs
timeliness
acceptability
ethical soundness
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23. The Decision-Making Process
Step 3: Choose Solution and Conduct Ethics Double Check
Use evaluation matrix.
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24. The Decision-Making Process
Step 3: Choose Solution and Conduct Ethics Double Check
Escalating commitment
increase effort and resources to a course of action that is not working
Satisficing (this is spelled correctly) Because of limited time you pick the first solution that seems to satisfy your needs. You don’t have time to look at every possible solution!)
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25. The Decision-Making Process
Step 4: Implement the Solution
Establish appropriate action plans
Implement with Programs, Operational, Budgets, and Schedules Plans
For example: An Advertising Operational plan Budgeted at $1M , Scheduled to be complete in next six months
Avoid lack-of-participation error (those affected by a plan (workers, customers, suppliers can be participants in plan.
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26. Planning Tools and Techniques
Participation and Involvement
Participative planning requires that workers who will be affected should be included in the planning and/or implementation
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27. Planning Tools and Techniques
Use Benchmarking when you make plan and use benchmarks when you are controlling plans.
Benchmarking is:
use of external comparisons to better evaluate one’s current performance
identify possible actions for the future
incorporate successful ideas into one’s own organization
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28. The Decision-Making Process
Step 5: Evaluate Results
Form of managerial control
Easier if solution has measurable targets and timetables
Examine positive and negative consequences
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29. Planning Tools and Techniques
Forecasting
making assumptions about what will happen in the future
ultimately relies on human judgment (your going to have to use experience and intuition and most useful quantitative methods as possible.
Types of Forecasting
qualitative
quantitative
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30. Planning Tools and Techniques
Contingency Planning
identifying alternative courses of action if and when original plan is inadequate
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31. Planning Tools and Techniques
Use of Scenarios
identifying alternative future states of affairs
plans made for each scenario
increases organization’s flexibility
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