Basic Elements of Planning and Decision Making Chapter 7 Basic Elements of Planning and Decision Making

Learning Objectives After studying this chapter, you should be able to: Summarize the function of decision making and the planning process. Discuss the purpose of organizational goals, identify different kinds of goals, discuss who sets goals, and describe how to manage multiple goals. Identify different kinds of organizational plans, note the time frames for planning, discuss who plans, and describe contingency planning. Discuss how tactical plans are developed and executed. Describe the basic types of operational plans used by organizations.

Decision Making and the Planning Process Is the cornerstone of planning. Is the catalyst that drives the planning process. Underlies every aspect of setting goals and formulating plans. Planning All organizations plan, but not in the same fashion. All planning occurs within an environmental context. All goals require plans to guide in their achievement. All goals are tied higher goals and plans

The Planning Process

The Planning Process The planning process takes place within an environmental context. Managers must develop a complete and thought understanding of this context to determine the organization’s mission and develop its strategic , tactical and operational goals and plans.

Organizational Goals Purposes of Goals Provide guidance and a unified direction for people in the organization. Strongly affect on the quality of other aspects of planning. Serve as a source of motivation for employees. Provide a mechanism for evaluation and control of the organization.

Kinds of Goals By Level By Area By Time Frame Mission statement Strategic goals Tactical goals Operational goals By Area Different functional areas of the organization. By Time Frame Long-term, intermediate-term, or short-term time frames and explicit time frames or open-ended.

Kinds of Organizational Goals for a Regional Fast-Food Chain

Learning topics Responsibilities for planning Goals: responsibilities and optimizing Plans Timeframe Types Tactical planning Development Execution Operational Planning Contingency planning Definition Crisis Management Responsibilities for planning

Responsibilities of Setting Goals Who Sets Goals? All managers: managerial responsibility for goal setting should correspond to the manager’s level in the organization.

Responsibilities of Setting Goals Managing Multiple Goals Optimizing allows managers to balance and reconcile conflicting goals Managers can choose to pursue one goal and exclude all others or to seek a mid-range goal.

Time Frames for Planning Long-range Plans Cover present and future strategic issues extending beyond five years in the future. Intermediate Plans Cover from 1 to 5 years and parallel tactical plans. Are the principal focus of organizational planning efforts. Short-range Plans Are operational (action) and contingency (reaction) plans that have a time frame of one year or less.

Action Plan Reaction Plan Operationally any other kind of plan A plan designed to allow the company to react to unforeseen circumstance

Kinds of Organizational Plans Strategic Plans A general plan set by and for top management that outlines resource allocation, priorities, and action steps to achieve strategic goals. Tactical Plans A plan aimed at achieving the tactical goals set by and for middle management. Operational Plans Short-term focus plans that are set by and for lower-level managers.

Planning in more details .. Tactical Planning Operational Planning Contingency Planning

Tactical Planning Developing TP Executing TP Copyright © Houghton Mifflin Company. All rights reserved.

Developing and Executing Tactical Plans

Developing TP Plan Goals Resources Commitment

Developing TP Plan Goals Resources Commitment Strategic Tactical Human, Financial, Physical and Information Commitment Human resources

Information & Resources Developing TP Executing TP Evaluate Information & Resources Monitor Communication Plan Strategic Goals Tactical Resources Human, Financial, Physical and Information Commitment Human resources

Information & Resources Developing TP Executing TP Evaluate On-ongoing activities for goal achievement Information & Resources Evaluate actions in light of goals Monitor Obtain and distribute Communication Horizontally and vertically Plan Strategic Goals Tactical Resources Human, Financial, Physical and Information Commitment Human resources

Operational Planning - Types Single Use Plans Standing plans Program Project Policy Standard Operating Procedure Rules and regulations Copyright © Houghton MifflinCompany. All rights reserved. 7–22

Types of Operational Plans

Contingency Planning Contingency is the determination of alternative courses of action to be taken if an intended plan is unexpectedly disrupted or rendered inappropriate. These plans help managers to cope with uncertainty and change. Crisis Management: managing crisis (disasters) by following a set of procedures

Responsibilities for Planning

Responsibilities of Planning Identify BOD and explain their role in planning. Identify CEO and explain what is her/his role in the planning process. Identify the Executive Committee and explain what is their planning role. What is the difference between a line and a staff managers? What is the planning role of the line managers Explain the planning role of “Planning Manager”. Are all planning committees permanent Can organization's create a planning committee for a specific purpose which will be eliminated when the plans are executed? If yes, what will it be called?

Responsibilities of Planning Line Management Chief Executive Office Board of Directors Planning Staff Planning Task Force Line Managers The only function of this team is to plan. They are responsible to gather information, coordinate planning activities between the different part of the organization. As they are experts in planning, they take a broader view of planning than individual managers This body is created when the organization wants to address special circumstances. For example to explore how to expand to Europe the team will include representatives from each of the major units within the company, the corporate planning staff, and the management team that would run the European operation. Once the plan for entering the European market was formulated and implemented, this team will be eliminated. This body is responsible to establish corporate mission and strategy and to govern the overall corporation. Nowadays, this body is more active in the planning process. Plays a major role in the complete planning process and is responsible for the implementation of the strategy. This body is usually composed of the top executives in the organization working together as a group. The members usually provide input to the CEO on the proposals that effect their own unit and to review the various strategic plans that develop from this input. This body plays an important role in an organization’s planning process for two reasons. First, they are a valuable source of inside information for other managers as plans are formulated and implemented. Second, they must executed plans formulated by higher level managers.

Responsibilities of Planning Executive Committee Chief Executive Office Board of Directors Planning Staff Planning Task Force Planning staff The only function of this team is to plan. They are responsible to gather information, coordinate planning activities between the different part of the organization. As they are experts in planning, they take a broader view of planning than individual managers Planning Task Force This body is created when the organization wants to address special circumstances. For example to explore how to expand to Europe the team will include representatives from each of the major units within the company, the corporate planning staff, and the management team that would run the European operation. Once the plan for entering the European market was formulated and implemented, this team will be eliminated. BOD This body is responsible to establish corporate mission and strategy and to govern the overall corporation. Nowadays, this body is more active in the planning process. CEO Plays a major role in the complete planning process and is responsible for the implementation of the strategy. Executive Committee This body is usually composed of the top executives in the organization working together as a group. The members usually provide input to the CEO on the proposals that effect their own unit and to review the various strategic plans that develop from this input. Line Management This body plays an important role in an organization’s planning process for two reasons. First, they are a valuable source of inside information for other managers as plans are formulated and implemented. Second, they must executed plans formulated by higher level managers.

Board of Directors Establishes corporate mission and strategy. May engage in strategic planning.

CEO Has a major role in planning and implementing the strategy.

Executive Committee Top executives within the organization Frequent input to the CEO Review strategic plans

Planning Staff Planning staff personnel gather information, coordinate planning activities, and take a broader view than individual managers.

Line Managers Providers of Information Responsible for executing the plans developed by top management.

Planning Task Force Created when the organization wants a special circumstance addressed.

Key Terms mission strategic goal tactical goal operational goal optimizing strategic plan tactical plan operational plan reaction plan long-range plan intermediate plan short-range plan crisis management single-use plan program project standing plan policy rules and regulations