Managing the Planning Process 1

____ is a system designed to identify objectives and to structure the major tasks of the organization to accomplish them A) Formal planning B) Opportunistic planning C) Tactical planning D) Action planning 2

What is planning? The management function that:  assesses the management environment to set future objectives; and  maps out activities necessary to achieve those objectives. Planned actions require careful resource allocation. Plans must be accompanied by implementation guidelines. 3

Key Elements to a Plan Objectives Actions Resource Implementation 4

Benefits of Planning Assessment of external forces Develop a sense of direction and purpose Identifying the factors that affect the organization Encouraging participation Coordination of efforts Establishment of priorities Focusing attention on different time horizons 5

Benefits of planning (continued) Understanding circumstances contributing to past success or failure Ensuring the availability of adequate resources Establishing performance standards Supporting organizational control systems Developing “what if” scenarios Management development 6

The Pitfalls of Planning Poor forecasts of future conditions Plans imposed from above Planning as a self-contained activity Extensive bureaucratization Inflexible adherence to objectives and processes 7

Keys to Successful Planning Decentralizing the planning powers Using both numerical and judgmental methods Viewing planning as continuous and capable of adapting to change Avoiding paralysis of the analysis Concentrating on a manageable set of issues 8

Good and Bad Planning GOOD Decentralize planning process Use numerical and judgmental methods Assess external forces Develop a sense of direction and purpose Identify factors that affect the organization Encourage participation Coordinate efforts Establish priorities BAD Poor forecast of future conditions Plans imposed from poor forecasts Planning as self-contained activity 9

Formal Planning and Opportunistic Planning Formal planning systems are designed to:  Identify objectives; and to  Structure the major tasks of the organization to accomplish them. Opportunistic planning involves:  Programmatic actions triggered by unforeseen circumstances.  It can coexist with formal planning and can help the formal plan function more smoothly. 10

Wal – Mart’s Public Image Campaign What is the objective of Wal-Mart’s current campaign? What is the desired change? What is the Wake-Up Wal-Mart campaign? What is the desired change? What are some of the benefits of planning that Wal-Mart is enjoying at this point in time? Consider external forces, and direction & purpose 11

When Wal-Mart responded to Hurricane Katrina with relief and support for the victims, it represented on the part of the company’s managers. A) Quality assurance B) Opportunistic planning C) Formal planning D) Administrative planning 12

The Formal Planning Process Involves Setting objectives Charting a course of action to meet the objectives Implementation 13

Setting Objectives Setting Objectives Objectives are more general at the top and become more specific at the lower level Overall objectives of the organization reflect its mission Objectives should be specific and measurable. Objectives should be challenging and achievable Objectives should specify a timetable or deadline for accomplishment. Objectives should be prioritized. 14

JOE-TO-GO 15 Planning programs identify what the organization wants to accomplish and how. What three areas are cited in the video as central to planning?

Key Steps of the MBO Cycle 4. Formally Evaluate Extent to Which Objectives Were Met or Exceeded 2. Develop Action Plan to Accomplish Objectives 1. Establish Mutually Agreed Objectives between Employee and Supervisor 3. Monitor Progress toward Achievement of Objectives (Ongoing) 16

Charting a Course of Action Strategic Action Plans Tactical Action Plans Operational Action Plans 17

To be effective, a strategic action plan should meet the following criteria: Proactively – The degree to which the strategic action plan takes a long-term view of the future. Congruency – The extent to which the strategic action plan fits with organizational characteristics and the external environment. Synergy – The integration of the efforts of various organizational subunits to better accomplish corporate-wide business objectives. 18

Two important aspects of tactical action plans: Division of Labor – The formal assignment of authority and responsibility to job holders.  Helps ensure that tasks of jobholders are appropriate for accomplishing the department’s tactical action plan, which in turn should support the organization’s strategic action plan. Budgeting – Controlling and allocating funds.  Variable budgeting  Moving budgeting 19

A Typical Operating System Feedback Loop Control InputsTransformationOutcome 20

Benefits of Operational Planning The opportunity to use feedback for continued incremental learning. The ability to visualize alternative types of operations – that is, alternative ways to use resources to create a product or service. The ability to predict the effects of modifications in operations on the efficiency of operations. The ability to evaluate the effectiveness of operations. 21

A Six-Stage Approach to Facilitate Organizational Problem Solving Identify performance gaps. Identify tasks and work processes necessary for accomplishing the plan. Check for organizational congruence. If any in-congruencies or inconsistencies are found, intervene to create alignment in order to effectively implement the plan. Execute the plan. Learn from the consequences. 22

Mechanisms to Deal with Organizational Change Deal with power and politics Reduce individual anxiety and resistance Maintaining control during the transition period 23

As a Manager Engaged in Planning You Should: Keep a pulse for what customers want and be on the lookout for changing consumer desires. Ensure that planning in your area of responsibility is closely linked with the rest of the organization. Establish an effective goal-driven plan. Ensure that planning does not become a straightjacket. Engage others in plan design and implementation. 24

Company leaders must be ___ if they are to respond appropriately and effectively to changes in the external environment A) Flexible B) Organized C) Committed D) Controlled 25

MINICASE 5.1 With a partner discuss the questions at the end of the case. Be prepared to discuss your answers. 26

Discussion Questions 1. What do you think accounts for the trend of declining sales among newspapers? Could they have planned for this? 2. What should firms do when they realize that their customer base, such as subscribers and advertisers in the case of newspapers, seem to be dwindling year after year? Can you think of another industry where a similar situation is occurring? 27

3. What should firms do when they realize that their customer base, such as subscribers and advertisers in the case of newspapers, seem to be dwindling year after year? Can you think of another industry where a similar situation is occurring? 28