1. Planning Foundation What Is Planning?
Define planning, goals and plans and t their importance
Differentiate between formal and informal planning
Describe the purposes of planning
Describe the types of goals organizations might have
Relationship between planning and performance
2008 REI Supplementary PPT Presentation on Management for Doing Business

2. What Is Planning? Planning
A primary managerial activity that involves:
Defining the organization’s goals
Establishing an overall strategy for achieving those goals
Developing plans for organizational work activities.
Types of planning
Informal: not written down, short-term focus; specific to an organizational unit.
Formal: written, specific, and long-term focus, involves shared goals for the organization.
2008 REI Supplementary PPT Presentation on Management for Doing Business

3. Why Do Managers Plan? Purposes of Planning Provides direction
Reduces uncertainty
Minimizes waste and redundancy
Sets the standards for controlling
2008 REI Supplementary PPT Presentation on Management for Doing Business

4. Planning and Performance
The Relationship Between Planning And Performance
Formal planning is associated with:
Higher profits and returns on assets.
Positive financial results.
The quality of planning and implementation affects performance more than the extent of planning.
The external environment can reduce the impact of planning on performance,
Formal planning must be used for several years before planning begins to affect performance.
2008 REI Supplementary PPT Presentation on Management for Doing Business

5. How Do Managers Plan? Elements of Planning Goals (also Objectives)
Desired outcomes for individuals, groups, or entire organizations
Provide direction and evaluation performance criteria
Plans
Documents that outline how goals are to be accomplished
Describe how resources are to be allocated and establish activity schedules
2008 REI Supplementary PPT Presentation on Management for Doing Business

6. Types of Goals Financial Goals Strategic Goals
Are related to the expected internal financial performance of the organization.
Strategic Goals
Are related to the performance of the firm relative to factors in its external environment (e.g., competitors).
Stated Goals versus Real Goals
Broadly-worded official statements of the organization (intended for public consumption) that may be irrelevant to its real goals (what actually goes on in the organization).
2008 REI Supplementary PPT Presentation on Management for Doing Business

7. Types of Plans
2008 REI Supplementary PPT Presentation on Management for Doing Business

8. Types of Plans Strategic Plans Operational Plans
Apply to the entire organization.
Establish the organization’s overall goals.
Seek to position the organization in terms of its environment.
Cover extended periods of time.
Operational Plans
Specify the details of how the overall goals are to be achieved.
Cover short time period.
2008 REI Supplementary PPT Presentation on Management for Doing Business

9. Classification of Plans
Long-Term Plans
Plans with time frames extending beyond three years
Short-Term Plans
Plans with time frames on one year or less
Specific Plans
Plans that are clearly defined and leave no room for interpretation
Directional Plans
Flexible plans that set out general guidelines, provide focus, yet allow discretion in implementation.
2008 REI Supplementary PPT Presentation on Management for Doing Business

10. Exhibit 7–4 The Downside of Traditional Goal Setting
2008 REI Supplementary PPT Presentation on Management for Doing Business

11. Steps in Goal Setting Review the organization’s mission statement.
Do goals reflect the mission?
Evaluate available resources.
Are resources sufficient to accomplish the mission?
Determine goals individually or with others.
Are goals specific, measurable, and timely?
Write down the goals and communicate them.
Is everybody on the same page?
Review results and whether goals are being met.
What changes are needed in mission, resources, or goals?
2008 REI Supplementary PPT Presentation on Management for Doing Business

12. Exhibit 7–7 Planning in the Hierarchy of Organizations
2008 REI Supplementary PPT Presentation on Management for Doing Business

13. Tools and Techniques in Planning
Establishing a formal planning department
A group of planning specialists who help managers write organizational plans.
Planning is a function of management; it should never become the sole responsibility of planners.
Involving organizational members in the process
Plans are developed by members of organizational units at various levels and then coordinated with other units across the organization.
2008 REI Supplementary PPT Presentation on Management for Doing Business

14. Assessing the Environment (cont’d)
Forecasting
The part of organizational planning that involves creating predictions of outcomes based on information gathered by environmental scanning.
Facilitates managerial decision making.
Is most accurate in stable environments.
2008 REI Supplementary PPT Presentation on Management for Doing Business

15. Assessing the Environment (cont’d)
Forecasting Techniques
Quantitative forecasting
Applying a set of mathematical rules to a series of hard data to predict outcomes (e.g., units to be produced).
Qualitative forecasting
Using expert judgments and opinions to predict less than precise outcomes (e.g., direction of the economy).
Collaborative Planning, Forecasting, and Replenishment (CPFR) Software
A standardized way for organizations to use the Internet to exchange data.
2008 REI Supplementary PPT Presentation on Management for Doing Business

16. Sales force composition Customer evaluation
Quantitative
Time series analysis
Regression models
Econometric models
Economic indicators
Substitution effect
Qualitative
Jury of opinion
Sales force composition
Customer evaluation
2008 REI Supplementary PPT Presentation on Management for Doing Business

17. Making Forecasting More Effective
Use simple forecasting methods.
Compare each forecast with its corresponding “no change” forecast.
Don’t rely on a single forecasting method.
Don’t assume that the turning points in a trend can be accurately identified.
Shorten the time period covered by a forecast.
Remember that forecasting is a developed managerial skill that supports decision making.
2008 REI Supplementary PPT Presentation on Management for Doing Business

18. Benchmarking
The search for the best practices among competitors and non-competitors that lead to their superior performance.
By analyzing and copying these practices, firms can improve their performance.
2008 REI Supplementary PPT Presentation on Management for Doing Business

19. Benchmarking
Source: Based on Y.K. Shetty, “Aiming High: Competitive Benchmarking for Superior Performance,” Long Range Planning. February 1993, p. 42.
2008 REI Supplementary PPT Presentation on Management for Doing Business

20. Allocating Resources: Budgeting
Types of Resources
The assets of the organization
Financial: debt, equity, and retained earnings
Physical: buildings, equipment, and raw materials
Human: experiences, skills, knowledge, and competencies
Intangible: brand names, patents, reputation, trademarks, copyrights, and databases
Budgets
Are numerical plans for allocating resources (e.g., revenues, expenses, and capital expenditures).
Are used to improve time, space, and use of material resources.
Are the most commonly used and most widely applicable planning technique for organizations.
2008 REI Supplementary PPT Presentation on Management for Doing Business

21. Exhibit 9–3 Types of Budgets
Source: Based on R.S. Russell and B.W. Taylor III. Production and Operations Management (Upper Saddle River, NJ: Prentice Hall, 1995), p. 287.
2008 REI Supplementary PPT Presentation on Management for Doing Business

22. Allocating Resources: Charting
Gantt Chart
A bar graph with time on the horizontal axis and activities to be accomplished on the vertical axis.
Shows the expected and actual progress of various tasks.
Load Chart
A modified Gantt chart that lists entire departments or specific resources on the vertical axis.
Allows managers to plan and control capacity utilization.
2008 REI Supplementary PPT Presentation on Management for Doing Business

23. Allocating Resources: Analysis
Program Evaluation and Review Technique (PERT)
A flow chart diagram that depicts the sequence of activities needed to complete a project and the time or costs associated with each activity.
Events: endpoints for completion.
Activities: time required for each activity.
Slack time: the time that a completed activity waits for another activity to finish so that the next activity, which depends on the completion of both activities, can start.
Critical path: the path (ordering) of activities that allows all tasks to be completed with the least slack time.
2008 REI Supplementary PPT Presentation on Management for Doing Business

24. Developing a PERT Network
Identify every significant activity that must be achieved for a project to be completed.
Determine the order in which these events must be completed.
Diagram the flow of activities from start to finish, identifying each activity and its relationship to all other activities.
Compute a time estimate for completing each activity.
Using the network diagram that contains time estimates for each activity, determine a schedule for the start and finish dates of each activity and for the entire project.
2008 REI Supplementary PPT Presentation on Management for Doing Business

25. Allocating Resources: Analysis (cont’d)
Breakeven Analysis
Is used to determine the point at which all fixed costs have been recovered and profitability begins.
Fixed cost (FC)
Variable costs (VC)
Total Fixed Costs (TFC)
Price (P)
The Break-even Formula:
2008 REI Supplementary PPT Presentation on Management for Doing Business

26. Allocating Resources: Analysis
Linear Programming
A technique that seeks to solve resource allocation problems using the proportional relationships between two variables.
2008 REI Supplementary PPT Presentation on Management for Doing Business

27. Contemporary Planning Techniques
Project
A one-time-only set of activities that has a definite beginning and ending point time.
Project Management
The task of getting a project’s activities done on time, within budget, and according to specifications.
Define project goals
Identify all required activities, materials, and labor
Determine the sequence of completion
2008 REI Supplementary PPT Presentation on Management for Doing Business

28. Contemporary Planning Techniques (cont’d)
Scenario
A consistent view of what the future is likely to be.
Scenario Planning
An attempt not try to predict the future but to reduce uncertainty by playing out potential situations under different specified conditions.
Contingency Planning
Developing scenarios that allow managers determine in advance what their actions should be should a considered event actually occur.
Identify potential unexpected events.
Determine if any of these events would have early indicators.
Set up an information gathering system to identify early indicators.
Have appropriate responses (plans) in place if these unexpected events occur.
2008 REI Supplementary PPT Presentation on Management for Doing Business

29. Entrepreneurial ventures and small businesses.
What Is Entrepreneurship?
Entrepreneurship is the process of starting new businesses, generally in response to opportunities.
Entrepreneurial Ventures
Organizations that pursue opportunities, are characterized by innovative practices, and have growth and profitability as their main goals.
Small Business
A firm that is independently owned, operated, and financed; has fewer than 100 employees; doesn’t necessarily engage in new or innovative practices, and has relatively little impact on its industry.
2008 REI Supplementary PPT Presentation on Management for Doing Business

30. Why Is Entrepreneurship Important?
Innovation
Engage in the creative destruction process
Act as agents of change
Number of New Startups
Increasing numbers of new firms
Job Creation
New ventures create 60-80% of net new jobs
2008 REI Supplementary PPT Presentation on Management for Doing Business

31. The Entrepreneurial Process
Exploring the Entrepreneurial Context
Identifying Opportunities and Possible Competitive Advantages
Starting the Venture
Managing the Venture
2008 REI Supplementary PPT Presentation on Management for Doing Business

32. Potential Sources of Opportunity
The Unexpected
New Knowledge
The Incongruous
Environmental Context
Changes in Perception
The Process Need
Demographics
Industry and Market Structures
2008 REI Supplementary PPT Presentation on Management for Doing Business

33. Researching Competitors
Competitor Intelligence:
What types of products or services are competitors offering?
What are the major characteristics of these products or services?
What are their products’ strengths and weaknesses?
How do they handle marketing, pricing, and distributing?
What do they attempt to do differently from other competitors?
Do they appear to be successful at it? Why or why not?
What are they good at?
What competitive advantage(s) do they appear to have?
What are they not so good at?
What competitive disadvantage(s) do they appear to have?
How large and profitable are these competitors?
2008 REI Supplementary PPT Presentation on Management for Doing Business

34. Investing in Entrepreneurial Ventures
Venture Capitalists
External equity financing provided by professionally-managed pools of investor money.
Angel Investors
A private investor (or group of private investors) who offers financial backing to an entrepreneurial venture in return for equity in the venture.
Initial public offering (IPO)
The first public registration and sale of a company’s stock.
2008 REI Supplementary PPT Presentation on Management for Doing Business

35. Developing a Business Plan
A written document that summarizes a business opportunity and defines and articulates how the identified opportunity is to be seized and exploited.
Elements of a Business Plan
Executive summary
Analysis of opportunity
Analysis of context
Description of the business
Financial data and projections
Supporting documentation
2008 REI Supplementary PPT Presentation on Management for Doing Business

36. Human Resource Management Issues in Entrepreneurial Ventures
Employee Recruitment Concerns
Locating high potential employees who:
can perform multiple roles
are willing to “buy-in” (commitment)
Filling critical skill gaps
Employee Retention Issues
Potential for damage to client/customer relationships due to loss of employees
Need to offer desirable benefits
Compensation: base pay and incentives
2008 REI Supplementary PPT Presentation on Management for Doing Business

37. Leading Issues Personality Characteristics of Entrepreneurs
High level of motivation, abundance of self-confidence, ability to be involved for the long term, high energy level, persistent problem solver, high degree of initiative, ability to set goals, and moderate risk-taker.
Proactive personality
Individuals who are more prone to take actions to influence their environment—that is, they’re more proactive.
Motivating Employees Through Empowerment
Empowering Employees
Participative decision making; delegation; redesigning jobs
2008 REI Supplementary PPT Presentation on Management for Doing Business

38. Managing personal life choices and challenges
Controlling Issues
Managing Growth
Managing Downturns
Exiting the Venture
Managing personal life choices and challenges
2008 REI Supplementary PPT Presentation on Management for Doing Business

39. Managing Personal Life Choices and Challenges
Balancing Work and Personal Life
Become a good time manager
Seek professional business advice when needed
Deal with conflicts as they arise
Developing a network of trusted friends and peers
Recognize when personal stress levels are too high
2008 REI Supplementary PPT Presentation on Management for Doing Business