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Management Ch 8: Foundations of Planning

defining the organization’s goals, establishing strategies for achieving those goals, and developing plans to integrate and coordinate work activities; it is concerned with both ends (what) and means (how)
Formal Planning
planning = formal planning; it has specific goals covering a specific time period; and written and shared goals that are shared with organizational members to reduce ambiguity and create a common understanding about what needs to be done; specific plans exist for achieving these goals
Reasons for Planning
-Provides direction
-Reduces uncertainty
-Minimizes waste and redundancy
-Sets the standard for controlling
Providing direction
helps managers and non-managers alike with the employees to know their organization in accomplishing goals, they can coordinate their activities, cooperate with each other, and do what it takes to accomplish those goals
Reducing uncertainty
by forcing managers to look ahead, anticipate change, consider the impact of change, and develop appropriate responses, planning will not eliminate uncertainty, managers plan so they can respond effectively
Minimizing waste and redundancy
Work activities are coordinated around plans, inefficiencies become obvious and can be corrected or eliminated
Sets the standards for controlling
when managers plan, they develop goals and plans, when they control they see whether the plans have been carried out and the goals met
Positive financial results
higher profits, higher return on assets, and so forth
The quality of planning and implementation affects….
performance more than the extent of planning
External Environment
can reduce the impact of planning on performance; when external forces — think government regulations and powerful labor unions — constrain managers options, it reduces the impact planning has on a organizations performance
Planning-performance relationship
influenced by the planning time frame, it seems that at least four years of formal planning is required before it begins to affect performance
Goals (objectives)
desired outcomes or targets; they guide management decisions and form the criterion against which work results are measured, they are the essential elements of planning.
documents that outline how goals are going to be met; they usually include resource allocations, schedules, and other necessary actions to accomplish the goals, as managers plan they develop both goals and plans
Financial Goals
related to the expected internal financial performance of the organization
Strategic Goals
related to the performance of the firm relative to factors in its external environment (e.g. competitors)
Stated Goals
official statements of what an organization says, and what it wants its various stakeholders to believe its goals are; they can be found in an organization’s charter, annual report, public relations announcements, or in public statements made by managers– they are often conflicted and influenced by what the stakeholders think organizations should do
Real Goals
goals that an organization actually pursues, as defined by the actions of its members; actions defined priorities
Strategic plans
plans that apply to the entire organization and establish the organization’s overall goals = broad
Operation plans
plans that encompass a particular operation area of the organization = narrow
Types of plans
(1) Long-term
(2) Short-term
(3) Specific
(4) Directional
(5) Strategic
(6) Operational
(7) Single use
(8) Standing
Long-term plans
plans with a time frame beyond three years
Short-term plans
plans covering one year or less
Intermediate plans
any time frame in between one year and three years (between long and short term)
Specific plans
plans that are clearly defined and leave no room for interpretation
Directional plans
plans that are flexible and set out general rules
Single-use plan
a one-time plan specifically designed to meet the needs of a unique situation
Standing plans
on going plans that provide guidance for activities performed repeatedly (include policies, rules, and procedures)
Traditional goal-setting
an approach to setting goals in which top managers set goals that then flow down through the organization and become subgoals for each organizational area
Means-ends chain
an integrated network of goals in which the accomplishment of goals at one level serves as the means for achieving the goals, or ends, at the next level;
higher level goals (or ends) are linked to lower level goals which serve as the means for their accomplishment
Downside of traditional goal setting
top managers define organizational goals in broad terms which creates ambiguous goals and managers at each level then have to apply their own interpretation and biases as they make the goals more specific
Management by objectives (MBO)
a process of setting mutually agreed upon goals and using those goals to evaluate employee performance; they have four elements: goal specificity, participative decision making, an explicit time period, and performance feedback
Steps of a traditional MBO
(1) The organizations *overall objectives* and *strategies* are formulated
(2) Major objectives are allocated among *divisional and departmental units*
(3) Unit managers *collaboratively set specific objectives* for their units with their managers
(4) Specific objectives are collaboratively set with *all department members*
(5) *Action plans*, defining how objectives are to be achieved, are specified and agreed upon by managers and employees
(6) The action plans are *implemented*
(7) Progress toward objectives is *periodically reviewed*, and *feedback is provided*
(8) Successful achievement of objectives is reinforced by *performance-based rewards*
Steps in Goal-Setting
(1) Review the organization’s *mission*, or purpose
(2) Evaluate available resources
(3) Determine the goals individually or with input from others
(4) Write down the goals and communicate them to all who need to know
(5) Review results and whether goals are being met
is a broad statement of an organization’s purpose that provides an overall guide to what organizational members think is important, goals reflect mission
Characteristics of a “well-written” goal
-Written in terms of outcomes rather than actions
-Measurable and quantifiable
-Clear as to a time frame
-Challenging yet attainable
-Written down
-Communicated to all necessary organizational members
Contingency factors:
organizational level, degree of environmental uncertainty, and length of future commitments
Commitment Concept
current plans affecting future commitments must be sufficiently long-term in order to meet those commitments
Environmental Uncertainty
when uncertainty is high, plans should be specific, but flexible; managers must be prepared to change or amend plans as they’re implemented; at times they may even have to abandon the plans
In the traditional approach, planning is done entirely by ___________________ who are often assisted by a _________________________
top-level managers; formal planning department
Formal Planning Department
a group of planning specialists who sole responsibility is helping to write organizational plans
How can managers plan effectively in dynamic environments?
-in an uncertain environment, managers should develop plans that are specific, but flexible
-managers need to recognize that planning is an ongoing process
Environmental Scanning
screening information to detect emerging trends
Competitor intelligence
one of the fastest-growing forms of environmental scanning; gathering information about competitors that allows managers to anticipate competitors actions rather than merely react to them

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