PowerPoint Presentation by Charlie Cook The University of West Alabama © 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Learning Objectives 1.Summarize the function of decision making and the planning process. 2.Discuss the purpose of organizational goals, identify different kinds of goals, discuss who sets goals, and describe how to manage multiple goals. 3.Identify different kinds of organizational plans, note the time frames for planning, discuss who plans, and describe contingency planning. 4.Discuss how tactical plans are developed and executed. 5.Describe the basic types of operational plans used by organizations. 6.Identify the major barriers to goal setting and planning, how organizations overcome those barriers, and how to use goals to implement plans. 7–2 © 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Decision Making and the Planning Process Decision MakingDecision Making  Is the cornerstone of planning.  Is the catalyst that drives the planning process.  Underlies every aspect of setting goals and formulating plans. PlanningPlanning  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. © 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 7–3

© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 7–4 7.1 The Planning Process

Organizational Goals Guidance and unified direction Promotion of good planning Source of motivation Evaluation and control Purposes of Goals © 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 7–5

Kinds of Goals By Level Mission statement Strategic goals Tactical goals Operational goals By Area Operations Marketing Finance Production Time Frame Long-term goals Intermediate goals Short-term goals Explicit goals Open-ended goals Setting Organizational Goals © 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 7–6

© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 7–7 Kinds of Organizational Goals for a Regional Fast-Food Chain 7.2

Responsibilities of Setting Goals Who Sets Goals?Who Sets Goals?  All managers  Managerial responsibility for goal setting should correspond to the manager’s level in the organization. Managing Multiple GoalsManaging Multiple Goals  Optimizing allows managers to balance and reconcile inconsistent or conflicting goals.  Managers can pursue one goal and exclude all others or to seek a mid-range goal. 7–8 © 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Kinds of Organizational Plans Strategic Plans (upper management) Tactical Plans (middle management) Operational Plans (lower-level managers) © 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 7–9

Time Frames for Planning The Time Dimension of PlanningThe Time Dimension of Planning  Planning must provide sufficient time to fulfill the managerial commitments involved. Long-range (strategic) plans of 5 or more years Short-range (operational) action and reaction plans of 1 year or less Intermediate-range (tactical) plans of 1–5 years 1510 © 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 7–10

Responsibilities for Planning Planning StaffPlanning Staff  Gather information, coordinate planning activities, and take a broader view than individual managers. Planning Task ForcePlanning Task Force  Created when the organization wants a special circumstance addressed. Board of DirectorsBoard of Directors  Establishes corporate mission and strategy.  May engage in strategic planning. Chief Executive OfficerChief Executive Officer  May serve as president or board chair; has a major role in planning and implementing the strategy. © 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 7–11

Responsibilities for Planning (cont’d) Executive CommitteeExecutive Committee  Is composed of top executives.  Meets regularly with the CEO to review strategic plans. Line ManagementLine Management  Have formal authority and responsibility for management of the organization.  Help to formulate strategy by providing information.  Are responsible for executing the plans of top management. © 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 7–12

Contingency Planning and Crisis Management Contingency PlanningContingency Planning  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 ManagementCrisis Management  The set of procedures the organization uses in the event of a disaster or other unexpected calamity. 7–13 © 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Ongoing planning process Action point 1Action point 2Action point 3Action point 4 Develop plan, considering contingency events Implement plan and formally identify contingency events Specify indicators for the contingency events and develop contingency plans for each possible event Successfully complete plan or contingency plan Monitor contingency event indicators and implement contingency plan if necessary © 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 7– Contingency Planning

Management Challenge Question What effects does an organization’s culture have on its contingency planning?What effects does an organization’s culture have on its contingency planning? On its management of a crisis?On its management of a crisis? © 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 7–15

Developing tactical plans Recognize and understand overarching strategic plans and tactical goals Specify relevant resource and time issues Recognize and identify human resource commitments Executing tactical plans Evaluate each course of action in light of its goal Obtain and distribute information and resources Monitor horizontal and vertical communication and integration of activities Monitor ongoing activities for goal achievement © 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 7– Developing and Executing Tactical Plans

Plan TypeDescription Single-use plans Developed to carry out a course of action not likely to be repeated in the future ProgramSingle-use plan for a large set of activities ProjectSingle-use plan of less scope and complexity than a program Standing plans Developed for activities that recur regularly over a period of time PolicyStanding plan specifying the organization’s general response to a designated problem or situation Standard operating procedure Standing plan outlining steps to be followed in particular circumstances Rules and regulationsStanding plans describing exactly how specific activities are to be carried out © 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 7– Types of Operational Plans

Managing Goal-Setting and Planning Processes Barriers to Goal Setting and PlanningBarriers to Goal Setting and Planning  As part of managing the goal-setting and planning process, managers must understand the barriers that can disrupt them.  Managers must also know how to overcome them. 7–18 © 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Major barriersInappropriate goals Improper reward system Dynamic and complex environment Reluctance to establish goals Resistance to change Constraints Overcoming the barriers Understanding the purposes of goals and planning Communication and participation Consistency, revision, and updating Effective reward system © 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 7– Barriers to Goal Setting and Planning

Using Goals to Implement Plans Management by Objectives (MBO)Management by Objectives (MBO)  Is a technique for integrating formal goal setting and planning by giving subordinates a voice and clarifying what they are expected to accomplish.  Is frequently tailored to the special circumstances of firms which may use a special term or name for it. 7–20 © 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

7– The Formal Goal-setting Process

The Effectiveness of Formal Goal Setting Strengths (Success)Strengths (Success)  Improved employee motivation  Enhances communication  Fosters more objective performance appraisals  Focuses attention on appropriate goals and plans  Helps identify managerial talent  Provides a systematic management philosophy  Facilitates control of the organization Weaknesses (Failure)Weaknesses (Failure)  Poor implementation of the goal setting process  Lack of top-management support for goal setting  Delegation of the goal- setting process to lower levels  Overemphasis on quantitative goals  Too much paperwork and record keeping  Managerial resistance to goal setting 7–22 © 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

KEY TERMS missionmission strategic goalstrategic goal tactical goaltactical goal operational goaloperational goal optimizingoptimizing strategic planstrategic plan tactical plantactical plan operational planoperational plan reaction planreaction plan long-range planlong-range plan intermediate planintermediate plan short-range planshort-range plan crisis managementcrisis management single-use plansingle-use plan programprogram projectproject standing planstanding plan policypolicy rules and regulationsrules and regulations management by objectives (MBO)management by objectives (MBO) 7–23 © 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.