Chapter 5 Organisational goals, plans and strategies © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus by Bartol et al.

Lecture outline The overall planning process The nature of organisational goals How goals facilitate performance Linking goals and plans Management by objectives Page 140 © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al.

Lecture outline The concept of strategic management The role of competitive analysis in strategy formulation Formulating functional-level strategy Strategy implementation Page 140 © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al.

The overall planning process Mission - The organisation’s purpose or fundamental reason for existence Goal - Future target or end result an organisation wishes to achieve Plan - Means devised for attempting to reach a goal It is important to an organisation’s success to have a good idea of its overall mission, as well as more specific, written goals and carefully developed plans. Further discussion can be found on page 143. © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al.

The overall planning process Goal attainment (organisational efficiency & effectiveness) mission goals plans Page 143 © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al.

The overall planning process ‘Setting goals and developing plans leads to goal attainment and, ultimately, to organisational efficiency and effectiveness.’ Without planning, organisations are driven by the winds of environmental change, unable to use the currents to choose their own direction. Thus the management function of planning, setting goals and deciding how best to achieve them is crucial to organisational survival. Further discussion can be found on page 143. © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al.

Organisational mission ‘Essentially, planning builds on the organisation’s mission, the organisation’s purpose or fundamental reason for existence.’ A mission statement is a broad statement distinguishing the organisation from others of its type by its unique purpose and scope of operations. Further discussion can be found on page 143. © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al.

Organisational mission A mission statement may: be unwritten address customers, products/services, location, technology, concern for survival, philosophy, self-concept, concern for public image, concern for employees (David 1989). For managers, the mission statement is a benchmark to evaluate success. For employees, a mission statement defines common purpose, nurtures organisational loyalty, and fosters a sense of community. Further discussion can be found on pages 143-4. © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al.

The nature of organisational goals Benefits of goals Increase performance Clarify expectations Facilitate control Increase motivation Levels of goals Operational goals (base) Tactical goals (mid) Strategic goals (top) Organisational goals are a major element in the overall planning process and differ by organisational level—operational, managerial and executive. Further discussion can be found on pages 145-6. © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al.

Levels of goals Top managers Middle managers 1st level managers Organisational perspective Middle managers Departmental perspective 1st level managers Unit/individual perspective strategic goals ↔ strategic plans ↕ ↕ tactical goals tactical plans ↔ ↕ ↕ operational goals operational plans ↔ Pages 145-7 © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al.

How goals facilitate performance Key aspects: Goal content Goal commitment Work behaviour Other process components Potential problems with goals To use goals effectively, managers must understand how performance can be facilitated by goals (see Figure 5.4 on page 148). Further discussion can be found on page 148-152. © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al.

How goals facilitate performance Goal content Should be: Challenging Attainable Specific and measurable Time-limited Relevant In channelling effort to achievement at strategic, tactical and operational levels, effective goals have the five major attributes shown in this slide. Further discussion can be found on pages 148-9. © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al.

How goals facilitate performance Goal commitment Influenced by: Supervisory authority Peer and group pressure Public display Expectations of success Incentives and rewards Participation A critical element in effective use of goals is getting individuals and/or work groups to be committed to the goals they must carry out. Goal commitment is one’s attachment to, or determination to reach, a goal. Further discussion can be found on pages 149 and 151. © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al.

How goals facilitate performance Work behaviour Goals and commitment affect work behaviour via: Direction Effort Persistence Planning. Page 151 © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al.

How goals facilitate performance Other process components Job process components affect performance through: Job knowledge and ability Task complexity Situational constraints. Pages 151-2 © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al.

How goals facilitate performance Potential problems with goals: Excessive risk-taking Increased stress Undermined self-confidence Ignored non-goal areas Excessive short-run thinking Dishonesty and cheating Although goal use in organisations can yield many positive results, pitfalls exist. These problems and their solutions are summarised in Figure 5.3 (on page 152). © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al.

Linking goals and plans Levels of plans Plans according to extent of recurring use Time horizons of goals and plans Promoting innovation Potential obstacles to planning Goals and plans are closely related. An organisation may set strategic, tactical and operating goals that are meaningless unless the actual process is considered. While goals are desired ends, plans are the means to achieve them. Further discussion can be found on pages 152-7. © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al.

Linking goals and plans Levels of plans: Strategic Tactical Operational Plans according to extent of recurring use: Single-use Standing plans: policies, procedures, rules Pages 152-5 © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al.

Linking goals and plans Time horizons of goals and plans: Short Intermediate Long range Promoting innovation using: Mission statement Goal content and process Planning content and process Pages 155 and 157 © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al.

Potential obstacles to planning Environmental change Manager hostility Pressure of day-to-day work Low levels of manager skill and knowledge The ability to develop effective plans has several potential obstacles. These may originate in either (or both) the external and internal environment of the organisation. Further discussion can be found on page 157. Domination by specialists © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al.

Reducing planning obstacles Use of planning staff Small group that assists managers in planning Use contingency planning Development of alternative plans Page 157 © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al.

Management by objectives ‘A process where specific goals are set collaboratively for the whole organisation and every unit and individual within it. The goals are then used for planning, managing organisational activities, and assessing and rewarding contributions.’ Organisations use the Management By Objectives (MBO) process as a means to help link goals with plans. MBO has been used by many firms to aid coordination of goal-setting and planning processes at all levels so that members’ collective efforts ultimately support organisational goals. Further discussion can be found on page 158. © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al.

Management by objectives Steps in the MBO process: Develop organisational goals Establish specific goals for departments Formulate action plans Implement and maintain self-control Review progress periodically Appraise performance Pages 158-9 © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al.

Management by objectives Strengths: Helps link goals and plans Clarifies priorities and expectations Fosters organisational communication Builds member motivation Weaknesses: Needs strong, enduring commitment Requires training of managers May be misused (i.e. for punishment) Risk of dominance of quantitative goals Pages 159-160 © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al.

Management by objectives Assessing MBO: Can heighten organisational performance Short-term focus of US, Australian and NZ organisations limits application 20–25% success rate By one estimate, almost half the Fortune 500 companies have used MBO, but only about 20-25% successfully. MBO system failures seem to stem from a lack of top-management support and poor goal-setting and communication skills among managers. Hence, how managers implement MBO impacts its effectiveness. Further discussion can be found on page 160. © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al.

The concept of strategic management ‘A process through which managers formulate and implement strategies geared to optimising strategic goal achievement, given available environmental and internal conditions.’ Strategic management is important because it helps management develop a competitive advantage, directs organisation members where to put their efforts, and shows the need for innovation. Further discussion can be found on pages 160-1. © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al.

The concept of strategic management The strategic management process Strategy formulation Strategy implementation Importance of strategic management Competitive advantage Levels of strategy Corporate level Business level Functional level Coordinating strategy levels Pages 160-2 © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al.

Competitive analysis in strategy formulation SWOT analysis–strengths (S), weaknesses (W), opportunities (O), threats (T)–relies upon: Environmental assessment Porter’s five competitive forces model Organisational assessment Organisational resources & capabilities Distinctive competencies Before an effective strategy for getting a competitive edge can be devised, managers must analyse a firm’s competitive situation. This means assessing environmental and organisational factors influencing ability to compete. This assessment can be done through SWOT analysis. Further discussion can be found on page 163. © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al.

Formulating functional-level strategy Functional level strategies spell out how functional areas can bolster business-level strategy. Example: An R&D department might accelerate innovation to provide new products before competitors. Page 166 © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al.

Strategy implementation Carrying out strategic plans Technology Human resources Reward systems Decision processes Structure Maintaining strategic control Monitoring environment Assessing effects of actions Monitoring results While strategy formulation is important to strategic management, strategies will not have the intended impact unless implementation is effective. Strategy implementation involves management activities to put the strategy in place, set up strategic controls to monitor progress, and ultimately achieve organisational goals (see Figure 5.10 on page 166). Further discussion can be found on page 166-7. © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al.

Lecture summary The nature of organisational goals The planning process Major components Organisational mission statement The nature of organisational goals Benefits of goals Levels of goals Goals and performance Goal content Goal commitment Work behaviour Other work processes Possible problems with goals Page 172 © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al.

Lecture summary How goals facilitate performance Direction, effort, persistence and planning Linking goals and plans Levels, recurrent use, time spans, promoting innovation Possible obstacles to planning Management by objectives (MBO) The key steps in MBO process Strengths and weaknesses Page 172 © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al.

Lecture summary Concept of strategic management The strategic management process Importance of strategic management Levels of strategy Role of competitive analysis in strategy formulation SWOT analysis Page 172 © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al.

Lecture summary Formulating functional level strategy Strategy implementation Carrying out strategic plans Maintaining strategic control Page 172 © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al.