1. Planning Ch. 5 Management A Practical Introduction
Angelo Kinicki &
Brian K. Williams

2. Learning objectives 1
Explain how planning can help managers deal with uncertainty
Argue the advantages and disadvantages of planning
Describe the three types of uncertainty
Describe the Miles and Snow model and its implications

3. Learning objectives 2 Define mission and vision statement
Explain the three different kinds of planning and how they are related to three levels of management
Define goals, objectives and means-end chain
Explain the three types of goal

4. Learning objectives 3
Define various kinds of plan and explain how they are being used
Define SMART
Describe the planning/control cycle
Define MBO and explain how it can be applied

5. 5.1 Planning & Uncertainty
HOW CAN PLANNING HELP MANAGERS DEAL WITH UNCERTAINTY?
Planning can be defined as setting goals and deciding how to achieve them
Planning also involves coping with uncertainty by formulating future courses of action to achieve specified results
Planning is used together with strategic management and evolves from the company’s mission and vision
Planning covers strategic planning (done by top managers, tactical planning (done by middle managers), and operational planning (done by first-line managers)
Lecture Note: it can be worthwhile to think of planning from the perspective of different type of organizations. For example, how might planning in a start-up differ from planning in a large, well-established multinational company? Are there any similarities?

6. 5.1 Planning & Uncertainty
Figure 5.1: Planning and Strategic Management

7. 5.1 Planning & Uncertainty
WHY NOT PLAN?
Managers need to be cautious when planning for two reasons:
1. Planning requires managers to set aside their regular responsibilities to develop plans
2. Managers need to be flexible enough to react to new events because there may not always be enough time to plan

8. 5.1 Planning & Uncertainty
HOW DOES PLANNING HELP?
There are four main benefits of planning:
1. Organizations can use plans to check their progress toward their goals
2. Plans define the responsibilities of a firm’s departments and coordinates their activities
3. Planning requires managers to consider what may happen in the future
4. Planning for unpleasant contingencies helps managers deal with uncertainty

9. 5.1 Planning & Uncertainty
There are three types of uncertainty:
1. When the environment is considered unpredictable there is state uncertainty
2. When the effects of environmental changes are unpredictable there is effect uncertainty
3. When the consequences of a decision are uncertain there is response uncertainty

10. 5.1 Planning & Uncertainty
Raymond E. Miles and Charles C. Snow suggested that firms will adopt one of four strategies to respond to uncertainty:
1. defenders are expert at producing and selling narrowly defined products or services
2. prospectors focus on developing new products or services and in seeking out new markets, rather than waiting for things to happen
3. analyzers let other organizations take the risk of product development and marketing and then imitate what seems to work best
4. reactors make adjustments only when finally forced to by environmental pressures

11. 5.1 Planning & Uncertainty
Miles and Snow also argued that firms continuously make decisions about three kinds of business problems:
1. entrepreneurial - selecting and making adjustments of products and markets
2. engineering - producing and delivering the products
3. administrative - establishing roles, relationships, and organizational processes

12. 5.2 Fundamentals Of Planning
WHAT IS INVOLVED WITH PLANNING?
Planning translates an organization’s mission (purpose or reason for being) into objectives
The mission statement answers the question “what is our reason for being?”
The vision statement answers the question “what do we want to become?”
Planning begins with the mission statement

13. 5.2 Fundamentals Of Planning
Figure 5.2: Making Plans

14. 5.2 Fundamentals Of Planning
Having clearly defined mission and vision statements allows three things to happen:
1. strategic planning by top management where long-term goals are determined and available resources are identified
2. tactical planning by middle management where contributions their departments or similar work units can make are determined
3. operational planning by first-line managers where how specific tasks will be accomplished using available resources is determined

15. 5.2 Fundamentals Of Planning
Figure 5.3: Three Levels of Management, Three Types of Planning

16. 5.2 Fundamentals Of Planning
The purpose of planning is to set goals and then formulate action plans
Specific commitments to achieve a measurable result within a stated period of time are known as goals or objectives
Goals are put in a means-end chain where the achievement of low-level goals is the means to achieve high-level goals or ends
Lecture Note: It can be useful to ask students to think about goal setting in terms of their own studies---what are their goals, when should they be accomplished, how should they be accomplished, etc.

17. 5.2 Fundamentals Of Planning
Strategic goals, set by and for top managers, focus on objectives for the organization as a whole
Tactical goals, set by and for mid-level managers, focus on the actions needed to achieve strategic goals
Operational goals, set by and for first-line managers, are concerned with short-term matters associated with realizing tactical goals

18. 5.2 Fundamentals Of Planning
Once goals are set, the firm makes an action plan which defines the course of action needed to achieve stated goals
An operating plan defines how the firm will conduct business based on the action plan - it identifies clear targets such as revenues, cash flow, and market share
Plans developed for activities that occur repeatedly over a period of time are called standing plans
Standing plans consist of policies (a standing plan that outlines the general response to a designated problem or situation), procedures (a standing plan that outlines the response to a particular problem or circumstance), and rules (a standing plan that designates specific required action)

19. 5.2 Fundamentals Of Planning
Plans developed for activities that are not likely to be repeated in the future are called single-use plans
Single-use plans can be either programs (encompass a range of projects or activities) or projects (have less scope and complexity than a program)

20. 5.2 Fundamentals Of Planning
WHAT ARE SMART GOALS?
Good goals are SMART:
they should be stated in specific terms
they should be measurable or quantifiable
they should be challenging but attainable
they should be results-oriented and support the organization’s vision
they should specify target dates by which they should be accomplished

21. 5.3 The Planning/Control Cycle
WHY HAVE PLANNING AND CONTROL?
Once an organization has a plan, it needs to make sure it stays on track
The planning/control cycle has two planning steps, and two control steps:
planning steps: make the plan, and carry out the plan
control steps: control the direction by comparing results with the plan, and control the direction by taking corrective actions

22. Figure 5.5: The Planning/Control Cycle
Chapter 5: Planning
Figure 5.5: The Planning/Control Cycle

23. 5.4 Promoting Goal Setting: Management By Objectives
HOW CAN MANAGERS PROMOTE GOAL SETTING?
Peter Drucker developed a system called Management by Objectives (MBO) designed to motivate employees to achieve goals
MBO has four steps:
1. Managers and employees jointly set objectives for the employee
Goals should include improvement objectives, personal development objectives, and maintenance objectives

24. 5.4 Promoting Goal Setting: Management By Objectives
2. Managers develop action plans
Action plans should be developed at each level describing how goals will be attained
3. Managers and employees periodically review the employee’s performance
Formal and informal meetings are used to review progress and provide feedback
4. The manager makes a performance appraisal and rewards the employee according to the results
Performance that meets objectives should be rewarded, and poor performance should be addressed

25. 5.4 Promoting Goal Setting: Management By Objectives
If MBO is to be successful, three things must occur:
1. Top management must be committed
Commitment translates to productivity gains
2. It must be applied organization-wide
To be successful, MBO must be applied in all divisions and departments
3. Objectives must cascade
MBO works by cascading objectives down through the organization

26. Key Terms 1 Analyzers Cascading Defenders Effect Uncertainty Feedback
Goals
MBO
Mean-end chain
Mission Statement
Objectives
Operating Plan
Operational Planning/Goals
Planning
Planning/Control Cycle
Policy
Program
Procedure
Prospectors
Reactors
Response Uncertainty
Results-oriented

27. Key terms 2 Rules Single-use Plans SMART goal Standing Plan
State Uncertainty
Strategic Planning/Goals
Tactical Planning/Goals
Uncertainty
Vision Statement