1. 8 th edition Steven P. Robbins Mary Coulter

2. Page 99Slide 2 What Is Planning? Planning  A basic managerial function that involves:  Defining the organization’s goals.  Establishing an overall strategy for achieving those goals.  Developing a comprehensive set of plans to integrate and coordinate organizational work.

3. Page 99Slide 3 Types of planning  Informal planning:  Not written down  Short-term goals  Done in small businesses or in single organizational units (little or no sharing of goals with others).  Formal planning:  Written down  Clearly defined long-term goals  Goals are shared with other organizational members.

4. Page 100Slide 4 Why Do Managers Plan? Four Purposes (reasons) of planning are identified: 1.It Provides direction (a focus) 2.It Reduces uncertainty (being unsure) 3.It Minimizes waste, inefficiencies and redundancy (unnecessary actions) 4.It Sets the standards (criteria) for controlling

5. Page 100Slide 5 Planning and Performance Studies of the Relationship Between Planning And Performance have concluded that:  Formal planning is associated with positive financial results  Higher profits.  Higher returns on assets.  The quality of planning and implementation is more closely linked to high performance than the extent (how wide) of planning.  The external environment (e.g. government regulations) constrains managers’ options (choices) and can reduce the impact (effect) of planning on performance.  Formal planning must be used for several years before it begins to positively affect performance.

6. Page 101Slide 6 How Do Managers Plan? The Role of Goals and Plans in Planning  Goals or Objectives are desired outcomes for individuals, groups, or entire organizations.  They provide direction (focus) for plans and decisions.  They form the criteria for evaluating results.  Plans are documents that outline (describe) how goals are going to be met (accomplished).  They determine resource allocations (distribution), timetables and other necessary actions to accomplish the goals

7. Page 101Slide 7 Types of Goals Financial Goals  Are related to the financial performance of the organization. Strategic Goals  Are related to the performance of the firm in connection with its external environment (e.g. customers, competitors).

8. Page 102Slide 8 Types of Goals Knowing that an organization’s stated and real goals are usually different is important to understand what seems to be management inconsistencies (contradictions). Real Goals The goals that an organization actually pursues, as can be seen in the actions of its members Stated Goals Official statements from the organization, saying what it wants its stakeholders and the public to believe.

9. Page 102Slide 9 Stated Objectives from Large U.S. Companies Financial Objectives Faster revenue growth Faster earnings growth Higher dividends Wider profit margins Higher returns on invested capital Stronger bond and credit ratings Bigger cash flows A rising stock price Recognition as a “blue chip” company A more diversified revenue base Stable earnings during recessionary periods Strategic Objectives A bigger market share A higher more secure industry rank Higher product quality Lower costs relative to key competitors Broader or more attractive product line A stronger reputation with customers Superior customer service Recognition as a leader in technology and/or product innovation Increased ability to compete in international markets Expanded growth opportunities

10. Page 103Slide 10 Types of Plans Strategic Plans  Establish the goals of the entire organization.  Cover long time periods.  Aim to position the organization in relation to its environment. Operational Plans  Define the ways to achieve the goals by organizational members.  Cover short time periods.

11. Page 103Slide 11 Types of Plans Long-Term Plans  Plans with a time frame of more than three years. Short-Term Plans  Plans with a time frame of one year or less.

12. Page 104Slide 12 Types of Plans Specific Plans  Plans that are clearly defined and leave no room for interpretation.  There is no ambiguity and no problem with misunderstanding. Directional Plans  Flexible plans that set out (indicate) general guidelines, provide focus, yet allow discretion (freedom) in implementation.  They don’t force managers into specific courses of action.

13. Page 104Slide 13 Specific Versus Directional Plans

14. Page 104Slide 14 Types of Plans Single-Use Plans  One-time plans that are specifically designed to meet the needs of a unique situation. Standing Plans  Ongoing plans that provide guidance for activities performed repeatedly.  They include policies, rules and procedures.

15. Page 103Slide 15 Types of Plans

16. Page 105Slide 16 Approaches to Establishing Goals Traditional Goal Setting  Broad (general) goals are set at the organization’s top level and then split into sub goals for each lower level of the organization.  This approach assumes that top managers know what’s best because they can see the “big picture.”  The goals serve to direct, guide, and constrain from above.  Goals lose clarity and focus as lower-level managers apply their own interpretation (understanding) when defining and applying them to their areas of responsibility.

17. Page 105Slide 17 Traditional Objective Setting

18. Page 105Slide 18 Approaches to Establishing Goals Means–Ends Chain  Establishing a clearly-defined hierarchy (order of accomplishment) of organizational goals that results in an integrated (complete) network (system) of goals.  Accomplishment of goals at a lower level is the means (instrument) by which the goals (ends) at the next higher level are achieved.

19. Page 106Slide 19 Approaches to Establishing Goals Management By Objectives (MBO)  Specific performance goals are jointly (together) determined by employees and their managers.  Progress toward accomplishing goals is periodically checked.  Rewards are allocated (distributed) on the basis of progress. Key elements of MBO:  Specific goals; employees motivation by participation in decisions; explicit time period; performance feedback/evaluation.

20. Page 106Slide 20 Steps in a Typical MBO Program 1.The organization’s overall objectives and strategies are formulated. 2.Major objectives are allocated among divisional and departmental units. 3.Unit managers collaboratively set specific objectives for their units with their managers. 4.Specific objectives are collaboratively set with all department members. 5.Action plans, defining how objectives are to be achieved, are specified and agreed upon by managers and employees. 6.The action plans are implemented. 7.Progress toward objectives is periodically reviewed, and feedback is provided. 8.Successful achievement of objectives is reinforced by performance- based rewards.

21. Page 107Slide 21 Characteristics of Well-Designed Goals Written in terms of outcomes, not actions  Focuses on the ends, not the means. Measurable and quantifiable  Specifically defines how the outcome will be measured/evaluated. Clear as to time frame  Specify a time frame for accomplishment. Challenging but attainable  Low goals do not motivate.  High goals motivate if they can be achieved. Written down  Forces people to focus  Written goals become visible. Communicated to all  Ensures that all members work in ways to secure accomplishment of goals.

22. Page 107Slide 22 Steps in Goal Setting 1.Review the organization’s mission statement. 1.Does the goal reflect the purpose of the organization? 2.Evaluate available resources. 1.Are resources sufficient to achieve the goal? 3.Determine goals individually or with others. 1.Does it conflict with other organizational goals? 4.Write down the goals and communicate them. 1.Is everybody on the same page? 5.Review results and whether goals are being met. 1.Are any changes needed?

23. Page 109Slide 23 Developing Plans Contingency Factors in a Manager’s Planning *  The manager’s level in the organization.  Higher levels of management = Strategic planning  Lower levels of management = Operational planning  The Degree of environmental uncertainty.  Stable environment = Specific plans.  Dynamic environment = Specific but flexible plans.  The time frame for accomplishment.  The time frame should be long enough to allow fulfillment of all the commitments that are involved. * Factors that have an effect on a manager’s planning.

24. Page 109Slide 24 Planning in the Hierarchy of Organizations

25. Page 110Slide 25 Approaches to Planning Establishing a formal planning department  A group of planning specialists who help to write organizational plans.  This approach can be effective only if managers are involved. Planning is a function of management, it should not be the sole (the only) responsibility of planners. Involving organizational members in the process  Plans are developed by organizational members at various levels and then coordinated with other units across the organization.

26. Page 111Slide 26 Contemporary Issues in Planning Criticisms of Planning  Planning may create rigidity: In achieving specific goals, managers may not be able to cope with the changing environment.  Plans cannot be developed for dynamic environments: These conditions may mean not being tied to formal plans.  Formal plans cannot replace intuition and creativity: They may reduce intuition to programmed routine.  Planning focuses managers’ attention on today’s competition not tomorrow’s survival: They focus on existing business opportunities, not creativity.  Formal planning reinforces today’s success, which may lead to tomorrow’s failure: Successful plans provide a false sense of security than is warranted (justified, called for).

27. Page 112Slide 27 Contemporary Issues in Planning Criticisms of Planning How Valid are these criticisms? They have some merit when plans are rigid and inflexible. However, in today’s management effective planners should understand dynamic, uncertain environments.

28. Page 113Slide 28 Contemporary Issues in Planning Effective Planning in Dynamic Environments  Develop plans that are specific but flexible.  Understand that planning is an ongoing process.  Make changes as needed if environmental conditions change.  Continue in formal planning even in uncertain environment to see any effect on performance.  Push the responsibility to lower organizational levels by training employees in setting goals and establishing plans.

29. Slide 29 C H A P T E R R E V I E W 1/3 What Is Planning? (slides 2, 3) Define planning. Differentiate between formal and informal planning. Why Do Managers Plan? (slides 4, 5) Describe the purposes of planning. Discuss the conclusions from studies of the relationship between planning and performance. How Do Managers Plan ? (slides 6~8) Define goals and plans. Describe the types of goals organizations might have. Explain why it’s important to know an organization’s stated and real goals.

30. Slide 30 C H A P T E R R E V I E W 2/3 How Do Managers Plan? (cont’d) (slides 10~12, 14) Describe each of the different types of plans. Establishing Goals and Developing Plans (slides 16, 18, 19, 21, 22, 23, 25) Discuss how traditional goal setting works. Explain the concept of the means–end chain. Describe the management by objective (MBO) approach. Describe the characteristics of well-designed goals. Explain the steps in setting goals. Discuss the contingency factors that affect planning. Describe the approaches to planning.

31. Slide 31 C H A P T E R R E V I E W 3/3 Contemporary Issues in Planning (Slides 26~28) Explain the criticisms of planning and whether or not they’re valid. Describe how managers can effectively plan in today’s dynamic environment.