FOUNDATION OF PLANNING

What Is Planning? A primary functional managerial activity that involves: Defining the organization’s goals Establishing an overall strategy for achieving those goals Developing a comprehensive set of plans to integrate and coordinate organizational work. Types of planning Informal: not written down, short-term focus; specific to an organizational unit. Formal: written, specific, and long-term focus, involves shared goals for the organization.

Why Do Managers Plan? Provides direction Reduces uncertainty Minimizes waste and redundancy Sets the standards for controlling

How Do Managers Plan? Elements of Planning Goals (also Objectives) Desired outcomes for individuals, groups, or entire organizations Provide direction and evaluation performance criteria Plans Documents that outline how goals are to be accomplished Describe how resources are to be allocated and establish activity schedules

Characteristics of Well-Designed Goals Written in terms of outcomes, not actions Focuses on the ends, not the means. Measurable and quantifiable Specifically defines how the outcome is to be measured and how much is expected. Clear as to time frame How long before measuring accomplishment. Challenging yet attainable Low goals do not motivate. High goals motivate if they can be achieved. Written down Focuses, defines, and makes goal visible. Communicated to all Puts everybody “on the same page.”

Example of Company’s Goals Example 1: Company’s goals for 2015 Become internationally recognized Improve product quality Increase revenue and profit Improve customer’s satisfaction Example 2: A production team Improve quality Improve productivity Ensure high safety level

Procter & Gamble’s OGSM Technique What needs to be done Objectives written statement of compelling business needs Goals numerical target and scorecard to track progress toward meeting objectives

Procter & Gamble’s OGSM Technique (cont.) How we will achieve our objectives Strategies written statement of specific actions that must be taken to meet objectives Measures numerical measures to track progress on executing specific actions

Balanced Goals from Different Perspectives Financial Perspective Profitability, Return on Investment Customer Perspective Satisfaction, market share, repeated customers Internal Perspective System, operation, capability Learning Perspective New technology, management, ideas,

Characteristics of Good Plan Prediction of environmental trends Scenarios Goals SMART: specific, measurable, attainable, realistic, and time Resources Feasible but stretching Actions Specific, clear, integrated, fit with goals Changes: flexible and creative

Example: A Business Plan Business objectives Functional objectives: Finance, marketing, HR, production, R&D, ... Resources Finance, HR, management, IT, ... Actions

Case: Bookstore From Management and Planning perspective, explain: Why the Bookstore succeeded in early days? Why did it fail later? What do you learn?

Team Project: Your Team’s Goals and Plans