1. Managerial Planning and Goal Setting
Chapter 5
Managerial Planning and Goal Setting 1

2. The Importance of Goals and Plans
What do an organization’s goals and plans communicate to external and internal audiences?
Legitimacy to external audiences such as:
Investors
Customers
Suppliers
A source of motivation and guidance for internal audiences
Help employees identify with the organization
Reduce uncertainty and clarify what employees should accomplish
Help minimize wasted resources 4

3. Common Criticisms of Planning
Creates rigidity
Doesn’t work in dynamic environment
Can’t replace intuition and creativity
So, Should Organizations Plan?
Most orgs. do better by planning – Should match degree and frequency of planning to rate of change in the environment
Andy Grove (CEO of INTEL) plans “like a fire department plans”

4. Organizational Mission
Most general purposes, goals, plans
Long run vision, values
What distinguishes it from other organizations
Focus on items such as:
Market and customers
Product quality
Location of facilities
Attitude toward employees 7

5. Mgmt. Levels and Planning
Top Management
“Strategic” Goals/Plans
Whole Organization
Plan for Several years
Middle Management
“Tactical” Goals/Plans
Major Units of the Org.
Plan for up to Two years
Lower Management
“Operational” Goals/Plans
Departments, Individuals
Plan mostly for under One year

6. Criteria for Effective Goals
Specific
Measurable
Attainable (and challenging)
Relevant (Key result areas)
Time-based
Rewards for achievement 12

7. Management by Objectives
Setting goals
Developing action plans
Reviewing progress
Appraising overall performance. 14

8. Benefits of MBO Clarity (goal known) Commitment (improves motivation)
Coordination (people work toward same things)
Fairness (objective evaluations) 15

9. Criticisms of MBO Difficulty choosing relevant, measurable goals
Rigidity (sometimes need to change goals)
Costs Involved
People skills required
Time required
Paperwork
Frequently sold as a cure-all
Can stress goals at expense of ethics (cf. Mgmt. by Means) 16

10. PLANS ACCORDING TO USE Single-Use Plans
Aim at achieving a specific, non-recurring goal (e.g., programs, projects)
Standing Plans
Provide ongoing guidance for recurring activities (e.g., policies, rules, procedures) 6 6 6

11. Contingency Plans
Define company responses to be taken in case plan first implemented does not work as expected (i.e., go to “Plan B”)
Usually, contingency plans are for crises, emergencies or setbacks, but could be for unexpected positive results, also. 20

12. SWOT Analysis and the World Football League
Overestimated STRENGTHS
(e.g., Time of Year, Locations)
Underestimated WEAKNESSES
(e.g., Lack of Talent, Finances)
Overestimated OPPORTUNITIES
(e.g., Demand for Product, NFL’s Weaknesses)
Underestimated THREATS
(e.g., NFL’s ability to compete, other activities of Summer and early Fall)

13. Levels of Strategic Planning
CORPORATE Level
What business(es) are we in?
Growth, Retrenchment, or Stability?
Portfolio Strategy
BUSINESS Level
How do we compete?
Porter’s Competitive Forces and Strategies
Partnership Strategies
FUNCTIONAL Level
How do we support the above?
See “Putting Strategy into Action” in text

14. Boston Consulting Group (BCG Matrix)1

15. Business-Level Strategy Porter’s Competitive Strategies
Low Cost
Differentiation
Low-Cost
Differentiation
Many
Number of
market segments
Focused
Low-Cost
Focused
Differentiation
Few

16. Porter’s Competitive Strategies
Differentiation (Maytag, Mary Kay, Perdue, L.L. Bean, Nike)
Cost Leadership(Wal-Mart, Southwest Air, Gallo Wine, Motel 6)
Focused Differentiation (Stouffer’s Lean Cuisine, Mercedes, Rolex)
Focused Cost Leadership (Ft. Howard Paper, ARCO Gasoline)