Copyright © 2004 Pearson Education Canada, Inc. All rights reserved.6–1 Introduction to Management Bob Fast Chapter 6 – The Planning Process Week 4A October Fall 2011

Copyright © 2004 Pearson Education Canada, Inc. All rights reserved.6–2 Road map for tonight…. Hand in Reading Assessment #1 Ch 6 – The Planning Process Ch 7 – Strategic Management Case Study 7-1 “More Upheaval in the Airline Industry” (p. 224) - please ensure you have read this before class.

PowerPoint Presentation by Clive Cook and Dale Dilamarter Gary Dessler Frederick A. Starke Gary Dessler Frederick A. Starke Principles and Practices for Tomorrow’s Leaders Second Canadian Edition Principles and Practices for Tomorrow’s Leaders Second Canadian Edition Management Copyright © 2004 Pearson Education Canada, Inc. All rights reserved. The Planning Process The Planning Process 6 CHAPTER

Copyright © 2004 Pearson Education Canada, Inc. All rights reserved.6–4 Chapter Objectives After studying this chapter and the case exercises at the end, you should be able to: 1.Use the steps in the planning process to develop a workable plan for an organization. 2.Outline the required overall business plan and provide examples of its component functional plans. 3.Express the plans in descriptive, graphical, and financial formats. 4.Explain what a manager did right (and wrong) with respect to setting goals for subordinates. 5.Explain the forecasting tools you think a manager should use, and why.

Copyright © 2004 Pearson Education Canada, Inc. All rights reserved.6–5 The Nature and Purpose of Planning Plan  A method for doing or making something, consisting of a goal and a course of action. Goal  A specific result to be achieved; the end result of a plan. Objectives  Specific results toward which effort is directed.

Copyright © 2004 Pearson Education Canada, Inc. All rights reserved.6–6 The Nature and Purpose of Planning (cont’d) Planning  The process of setting goals and courses of action, developing rules and procedures, and forecasting future outcomes. What Planning Entails  Choosing goals and courses of action and deciding now what to do in the future to achieve those goals.  Assessing today the consequences of various future courses of action.

Copyright © 2004 Pearson Education Canada, Inc. All rights reserved.6–7 What Planning Accomplishes Allows decisions to be made ahead of time. Anticipates the consequences. Provides direction and a sense of purpose. Provides a unifying framework; avoiding piecemeal decision-making. Helps identify threats and opportunities and reduces risks. Facilitates managerial control through the setting of standards for monitoring and measuring performance.

Copyright © 2004 Pearson Education Canada, Inc. All rights reserved.6–8 The Management Planning Process Hierarchy of Plans  A set of plans that includes the company-wide plan and the derivative plans of subsidiary units required to help achieve the enterprise-wide plan.  Top management approves a long-term plan; and each department creates its own budgets The Planning Hierarchy  Top management formulates its plans based on upward feedback from the departments, and the departments in turn draft plans that make sense in terms of top management’s plan.

Copyright © 2004 Pearson Education Canada, Inc. All rights reserved.6–9 Hierarchy of Goals FIGURE 6-2

Copyright © 2004 Pearson Education Canada, Inc. All rights reserved.6–10 Checklist 6.1 How to Develop a Plan  Set an objective.  Develop forecasts and planning premises.  Determine your options.  Evaluate alternatives.  Choose your plan, and implement it.  Go to Level 2. Plans tend to be multilayered.

Copyright © 2004 Pearson Education Canada, Inc. All rights reserved.6–11 Who Does the Planning? Small businesses:  Entrepreneurs do most of the planning. Large firms:  Traditional:  A central corporate planning group works with top management and each division to solicit, challenge, and refine the company’s plan.  Current:  Planning is decentralized and includes the firms’ product and divisional managers, aided by small headquarters advisory groups.

Copyright © 2004 Pearson Education Canada, Inc. All rights reserved.6–12 The Business Plan and Its Components Description of the business (including ownership and products or services) Marketing plan Financial plan Management and/or personnel plan.

Copyright © 2004 Pearson Education Canada, Inc. All rights reserved.6–13 FIGURE 6-3 Outline of a Marketing Plan Source: Source: Adapted from Philip Kotler and Gary Armstrong, Principles of Marketing (Upper Saddle River, NJ: Prentice Hall, 2001), p. 70.

Copyright © 2004 Pearson Education Canada, Inc. All rights reserved.6–14 FIGURE 6–4 Acme’s Potential Market Segments Source: Business Plan Pro, Palo Alto Software, Palo Alto, CA.

Copyright © 2004 Pearson Education Canada, Inc. All rights reserved.6–15 FIGURE 6–5 Product, Pricing, and Sales’ Forecasts Source: Business Plan Pro, Palo Alto Software, Palo Alto, CA.

Copyright © 2004 Pearson Education Canada, Inc. All rights reserved.6–16 FIGURE 6–6 Personnel Plan Source: Business Plan Pro, Palo Alto Software, Palo Alto, CA.

Copyright © 2004 Pearson Education Canada, Inc. All rights reserved.6–17 FIGURE 6–7 Sales Forecast by Service: Two-Month Sales Plan for Acme Consulting, 2003

Copyright © 2004 Pearson Education Canada, Inc. All rights reserved.6–18 FIGURE 6–8 Gantt Scheduling Chart for Acme Strategic Report Projects, January 1–15, 2003

Copyright © 2004 Pearson Education Canada, Inc. All rights reserved.6–19 FIGURE 6–9 Acme Consulting Profit and Loss Source: Business Plan Pro, Palo Alto Software, Palo Alto, CA.

Copyright © 2004 Pearson Education Canada, Inc. All rights reserved.6–20

Copyright © 2004 Pearson Education Canada, Inc. All rights reserved.6–21

Copyright © 2004 Pearson Education Canada, Inc. All rights reserved.6–22

Copyright © 2004 Pearson Education Canada, Inc. All rights reserved.6–23 Checklist 6.2 Principles of Goal-Setting  Set SMART goals—make them specific, measurable, attainable, relevant, and timely.  Assign specific goals.  Assign measurable goals.  Assign doable but challenging goals.  Encourage participation.  Use management by objectives.

Copyright © 2004 Pearson Education Canada, Inc. All rights reserved.6–24 Management by Objectives (MBO) Used to create an integrated hierarchy of goals throughout an organization Organization-wide goal-setting facilitated by managers Supervisors and subordinates jointly set goals that fit with organization goals and periodically assess progress Think of MBO as a philosophy, rather than a rigid sequence of steps.

Copyright © 2004 Pearson Education Canada, Inc. All rights reserved.6–25 Developing Planning Premises Businesses base their plans on premises or assumptions they make about the future Typical techniques include:  Forecasting  Marketing research  Competitive research