UNIT 2: Planning The Planning Process and Types of Plans

Planning 

 Planning  The process of setting objectives and determining how to best accomplish them What is Planning?

Why is planning important?  It creates a solid platform for further managerial efforts like organizing, leading & controlling

 Focus - know where you want your business  Adaptability - Proactive not reactive as we look to future not past. Don’t look back, we’re not going there!  Increased Coordination - everyone pulling in the same direction  Control - this is what you will have over your life if you follow a plan.  Time Management  Motivation Benefits of planning:

What types of plans do managers use?  Short-range and long-range plans  Short-range plans = 1 year or less  Long-range plans = more than a year  Higher management levels focus on longer time horizons.

What types of plans do managers use?  Strategic and operational plans  Strategic plans — set broad, comprehensive, and longer-term action directions for the entire organization.  Operational plans — define what needs to be done in specific areas to implement strategic plans.  Production plans  Financial plans  Facilities plans  Marketing plans  Human resource plans

What types of plans do managers use?  Policies and procedures  Standing plans  Policies and procedures that are designed for repeated use.  Policy  Broad guidelines for making decisions and taking action in specific circumstances.  Rules or procedures  Plans that describe exactly what actions are to be taken in specific situations.

What types of plans do managers use?  Budgets and project schedules  Single-use plans  Only used once to meet the needs and objectives of a well-defined situation in a timely manner.  Budgets  Single-use plans that commit resources to activities, projects, or programs.  Fixed, flexible, and zero-based budgets.  Projects  One-time activities that have clear beginning and end points.  Project management and project schedules.

Why and how do managers plan?  Steps in the planning process: 1. Define your objectives. - specific desired outcomes of the path you’ve chosen 2. Determine where you stand vis-à-vis objectives. (SWOT) 3. Develop premises regarding future conditions. (BACKUP PLAN) 4. Analyze and choose among action alternatives. (steps needed to follow chosen path) 5. Implement the plan and evaluate results. (measure progress, revise plans.)

What are the useful planning tools and techniques?  Forecasting  Making assumptions about what will happen in the future.  Qualitative forecasting uses expert opinions.  Quantitative forecasting uses mathematical and statistical analysis.  All forecasts rely on human judgment.  Planning involves deciding on how to deal with the implications of a forecast.

What are the useful planning tools and techniques?  Contingency planning  Identifying alternative courses of action that can be implemented to meet the needs of changing circumstances.  Contingency plans anticipate changing conditions.  Contingency plans contain trigger points.

What are the useful planning tools and techniques?  Scenario planning  A long-term version of contingency planning.  Identifying alternative future scenarios.  Plans made for each future scenario.  Increases organization ’ s flexibility and preparation for future shocks.

What are the useful planning tools and techniques?  Benchmarking  Use of external comparisons to better evaluate current performance and identify possible actions for the future.  Adopting best practices of other organizations that achieve superior performance.

What are the useful planning tools and techniques?  Participation and involvement  Participatory planning requires that the planning process include people who will be affected by the plans and/or will help implement them.  Benefits of participation and involvement:  Promotes creativity in planning.  Increases available information.  Fosters understanding, acceptance, and commitment to the final plan.

Mission Statement 

Mission Statements  The reason for the company’s existence; its primary goal  Incorporates:  Products/services  Customers  Employees  Society

Mission Statements  Mission statements have:  Vision  Is realistic  Motivational  Short and concise  Easily understood  Broad

Mission Statement Examples  Kellogg’s  Kellogg is a global company committed to building long-term growth in volume and profit and to enhancing its worldwide leadership position by providing nutritious food products of superior value.  NIKE  To maximize profits to shareholders through products and services that enrich people’s lives.

Types of Strategic Plans  Growth Strategies  Market Development  Adding new consumers to current markets  Discovering new markets to sell current products  Examples—  E-Business  Expand operations by using the Internet  Examples—

Types of Strategic Plans  Growth Strategies  Product Development  Inventing new products or modifying existing ones  Examples—  Horizontal Integration  Expand company by buying or merging with other corporations in the same industry  Examples—

Types of Strategic Plans  Growth Strategies  Vertical Integration  Company buys its suppliers or distributors  Examples—  Strategic Alliances  Expand internationally by partnering with other companies in the other countries  Examples—

Retrenchment Strategies  Restructuring  Change operations to achieve efficiencies and increase performance  Examples—  Downsizing  Decreasing the size of the company  Laying off workers to reduce costs  Examples—

Retrenchment Strategies  Divestiture  Selling off part of the company  Examples—  Planned Bankruptcy  Business goes into chapter 11 protection to make better deals with unions, suppliers.  Examples-