Presentation on theme: "Management Thoughts & Practices"— Presentation transcript:
1 Management Thoughts & Practices MBA & BBALectures 7The Basics of PlanningBy: Farhan Mir
2 What Is Planning? Defining the organization’s goals Desired outcomes for individuals, groups, or entire organizationsEstablishing an overall strategy for achieving those goalsHow shall we achieve the goals?Developing a comprehensive set of plans to integrate and coordinate organizational workWho is going to do what?How will resources be allocated?
4 A Little History in the U.S. 1930’s federal planning in response to the Great DepressionU.S. strategic planning in World War IIIndustrial development after WW IIFrom 1960’s, Planning-Programming-Budgeting-System (PPBS) with systems approach, strategic planning used in governmentToday, wide-spread (universal?) use across all types of organizations
5 Purposes of Planning - Provides direction - Reduces uncertainty - Minimizes waste and redundancy- Sets the standards for controlling
7 Four Types of Planning Strategic Planning Long range, broad goals TacticalTo implement a strategic plan; shorter term and more specificOperationalCreating very specific policies and proceduresContingencyAlternative actions for unusual or crisis situations
8 Strategic vs. Operational Plans Strategic PlansApply to the entire organization.Establish the organization’s overall goals.Positions organization in terms of its environmentCover extended (longer) periods of time.Operational PlansAssumes objectives existSpecifies (for each operation) details of how overall goals will be achievedCover short time period
9 Specific vs. Directional Plans Specific PlansClearly definedNo room for interpretationDirectional PlansFlexible plansGeneral guidelinesProvide focus yet discretion in implementation.
11 Single-use vs. Standing Plans Single-Use PlanA one-time plan specifically designed to meet the need of a unique situation.Standing PlansOngoing plans that provide guidance for activities performed repeatedly.
12 Stated versus Real Goals Broadly-worded official statements of the organization (intended for public consumption) that may be irrelevant to its real goals (what actually goes on in the organization)!
13 Organizational Goals (cont’d) Accounting managerïSplit accounts receivable/payablefunctions from other areas withintwo yearsComputerize payroll systemfor each restaurant this yearPay all invoices within thirty daysAdvertising directorDevelop regional advertisingcampaigns within one yearNegotiate 5 percent loweradvertising rates next yearImplement this yearíspromotional strategyRestaurant managerImplement employee incentivesystem within one yearDecrease waste by 5 percent thisyearHire and train new assistantmanagerVice presidentñfinanceKeep corporate debt to no morethan 20 percent of liquid assetsfor next ten yearsRevise computerized accountingsystem within five yearsEarn 9 percent on excess cash thisPresident and CEOProvide 14 percent return toinvestors for at least ten yearsStart or purchase new restaurantchain within five yearsNegotiate new labor contractthis yearMission: Our mission is to operatea chain of restaurants that willprepare and serve high-qualityfood on a timely basis and atreasonable prices.marketingIncrease per store sales 5 percentper year for ten yearsTarget and attract two new marketsegments during next five yearsDevelop new promotionalstrategy for next yearoperationsOpen 150 new restaurantsduring next ten yearsDecrease food-container costs by15 percent during next five yearsDecrease average customer waitby thirty seconds this yearStrategic GoalsTactical GoalsOperational GoalsKinds of Goals for a Regional Fast-Food Chain say KFCFigure 7.2
14 Traditional Goal-Setting Broad goals set at the top of the organization.Goals broken into sub-goals for each org levelAssumes that top management knows best because they can see the “big picture.”Goals are intended to direct, guide, and constrain from above.Common Problem:Goals often ambiguous, lack clarityGoals become “reinterpreted” as flow down hierarchy
15 Problems With Traditional Objective Setting Exhibit 7.4
16 A Means-Ends Chain Illustrated We need to increase profits by 10%We need to reduce costs by 15%We need to reduce WIP by 10%I need to reduce defects at my work station by 10% and accelerate my assembly line by 10%
17 Management By Objectives (MBO) A method whereby managers and employees define objectives for every department, project, and person and use them to monitor subsequent performanceDivide problem into manageable, “bite-size” chunks
18 MBO Goes One Step Further… Establishes means-ends chain, but is also MOTIVATING, not just CONTROLLING!Four elements:Goal SpecificityParticipative decision-makingExplicit time periodPerformance feedbackHow it works:Specific performance goals are jointly determined by employees and managers (increases commitment)Progress toward accomplishing goals is periodically reviewed.Rewards are allocated on the basis of progress towards the goals
19 Essential Steps for MBO Set GoalsThe most difficult stepDevelop Action PlanFor both workgroups and individualsReview ProgressPeriodic during the yearAppraise Overall Performance.Review Annual Goals
20 MBO Pitfalls and Benefits Involves entire workforce in processBreaks goals into manageableTrack progressRe-assess and adjustLoss of big pictureLose focus of goalMicromanagementWho’s in charge?Decisions?
21 Managerial Issues How to plan in uncertainty How to plan when rate of change is high?Should the lower levels be involved in decision making?Planning about internal factors, specific environment, general environment, corporate social responsibility, ethics……