PLANNING

Overview of Goals and Plans A desired future state that the organization attempts to realize. PLAN A blueprint specifying the resource allocations, schedules, and other actions necessary for attaining goals. Planning The act of determining the organization’s goals and the means for achieving them.

Purposes of Goals and Plans Legitimacy. An organization’s mission describes what the organization stands for and its reason for existence. It symbolizes legitimacy to external audiences such as investors, customers, and suppliers. Source of motivation and commitment. Goals and plans facilitate employees’ identification with the organization and help motivate them by reducing uncertainty and clarifying what they should accomplish. Resource allocation. Goals help managers decide where they need to allocate resources, such as employees, money, and equipment.

Guides to action. Goals and plans provide a sense of direction Guides to action. Goals and plans provide a sense of direction. They focus attention on specific targets and direct employee efforts toward important outcomes. Rationale for decisions. Through goal setting and planning, managers learn what the organization wants to accomplish. They can make decisions to ensure that internal policies, roles, performance, structure, products, and expenditures will be made in accordance with desired outcomes. Standard of performance. Because goals define desired outcomes for the organization, they serve as performance criteria. They provide a standard of assessment.

Levels of Goals/ Plans and Their Importance

Organizational Mission The organization’s reason for existence. MISSION STATEMENT A broadly stated definition of the organization’s basic business scope and operations that distinguishes it from similar types of organizations.

Goals and Plans STRATEGIC GOALS Broad statements of where the organization wants to be in the future; pertaining to the organization as a whole rather than to specific divisions or departments. STRATEGIC PLANS The action steps by which an organization intends to attain strategic goals.

TACTICAL GOALS Goals that define the outcomes that major divisions and departments must achieve for the organization to reach its overall goals. TACTICAL PLANS Plans designed to help execute major strategic plans and to accomplish a specific part of the company’s strategy.

OPERATIONAL GOALS Specific, measurable results expected from departments, work groups, and individuals within the organization. OPERATIONAL PLANS Plans developed at the organization’s lower levels that specify action steps toward achieving operational goals and that support tactical planning activities.

Criteria for Effective Goals Specific & Measurable (SMART) Covered Key Result Areas Challenging But Realistic Defined Time Period Linked To Rewards

Planning Types Managers use strategic, tactical, and operational goals to direct employees and resources toward achieving specific outcomes that enable the organization to perform efficiently and effectively. Managers use a number of planning approaches. Among the most popular are management by objectives (MBO), single-use plans, standing plans, and contingency plans.

Management By Objectives (MBO) A method of management whereby managers and employees define goals for every department, project, and person and use them to monitor subsequent performance.

MBO Benefits and Problems

SINGLE-USE PLANS Plans developed to achieve a set of goals unlikely to be repeated in the future. STANDING PLANS Ongoing plans used to provide guidance for tasks performed repeatedly within the organization.

CONTINGENCY PLANS Plans that define company responses to specific situations, such as emergencies, setbacks, or unexpected conditions. To develop contingency plans, managers identify important factors in the environment, such as possible economic downturns, declining markets, increases in cost of supplies, new technological developments, or safety accidents. Managers then forecast a range of alternative responses to the most likely high-impact contingencies, focusing on the worst case.

The Strategic Management Process Strategy formulation May include assessing the external environment and internal problems and integrating the results into goals and strategy. Strategy implementation The use of managerial and organizational tools to direct resources toward accomplishing strategic results.

Strategic management The set of decisions and actions used to formulate and implement strategies that will provide a competitively superior fit between the organization and its environment so as to achieve organizational goals.

The Strategic Management Process

SITUATION ANALYSIS Typically includes a search for strengths, weaknesses, opportunities, and threats (SWOT) that affect organizational performance.

Checklist for Analyzing Organizational Strengths and Weakness

Formulating Business-Level Strategy-p-186 The Five Forces Affecting Industry Competition

Organizational Characteristics of Porter’s Competitive Strategies

DIFFERENTIATION An attempt to distinguish the firm’s products or services from others in the industry. The organization may use advertising, distinctive product features, exceptional service, or new technology to achieve a product perceived as unique.

COST LEADERSHIP STRATEGY Aggressively seeking efficient facilities, pursues cost reductions, and uses tight cost controls to produce products more efficiently than competitors.

FOCUS STRATEGY Concentrating on a specific regional market or buyer group. The company will use a differentiation or lowcost approach, but only for a narrow target market.

A Continuum of Partnership Strategies

Tools for Putting Strategy into Action

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