Introduction to Planning MGT 101 - Principles of Management and Business Introduction to Planning Faisal AlSager Week 5

Objectives To discuss the nature and purposes of planning To compare and contrast approaches to goal setting and planning To discuss contemporary issues in planning

Why Should Managers Formally Plan? Planning establishes coordinated effort By forcing managers to look ahead, anticipate change, consider the impact of change, and develop appropriate responses, planning reduces uncertainty Planning reduces overlapping and wasteful activities Planning establishes the goals or standards that facilitate control

Criticism of Formal Planning Planning may create rigidity Formal planning cannot replce intuition and creativity Planning focuses managers’ attention on today’s competition not tomorrow’s survival Formal planning reinforces success, which may lead to failure

Goals and Plans Goals (objectives): are desired outcomes or targets Plans: are documents that outline how goals are going to be met

Types of Goals Financial goals relates to the financial performance of the organization Strategic goals relates to all other areas of the organization’s performance

Stated and Real Goals Stated goals are official statements of what an organization says, and what it wants its stakeholders to believe, its goals are Real goals are those goals an organization actually pursues as shown by what the organization’s members are doing

Setting Goals Traditional goal setting: are goals set by top managers flow down through the organization and become subgoals for each organization area Means-End Chain: is an integrated network of goals in which higher-level goals are linked to lower-level goals, which serve as the means for their accomplishment Management by objectives (MBO): is a process of setting a mutually agreed-upon goals and using those goals to evaluate employee performance

Well-Written Goals Characteristics of well-written goals: Written in terms of outcomes rather than actions Measurable and quantifiable Clear as to time frame Challenging yet attainable Written down Communicated to all necessary organizational members

Steps in Goal Setting Managers have to follow six steps when setting goals: Review the organizations’s mission and the employee’s key job tasks. Evaluate available resources. Determine the goals individually or with input of others. Make sure goals are well-written and then communicate them to all who need to know. Build in feedback mechanisms to assess goal progress. Link rewards to goal attainment.

Types of Plans The most popular ways to describe plans are in terms of: breadth (strategic plans vs. tactical plans), time frame (long-term plans vs. short-term plans), specificity (specific plans vs. directional plans), and frequency of use (single use plans vs. standing plans)

Breadth Strategic plans are plans that apply to the entire organization and encompass the organization’s overall goals Tactical plans are plans that specify the details of how the overall goals are to be achieved

Time Frame Long-term plans are plans with a time frame beyond three years Short-term plans are plans with a time frame of one year or less

Specificity Specific plans are plans that are clearly defined and leave no room for interpretation Directional plans are plans that are flexible and set general guidlines

Frequency of Use Single-use plan is a one-time plan specifically designed to meet the needs of a unique situation Standing plans are plans that are ongoing and provide guidance for activities performed repeatedly

Contingency Factors in Planning Three contingency factors affect the choice of planning: Organizational level Degree of environmental uncertainty Length of future commitments

The Commitment Concept Definition The idea that plans should extend far enough to meet those commitments made when the plans where developed

Approaches to Planning Traditional approach: top managers develop plans with the assistance of a formal planning department Formal planning department a group of planning specialists whose sole responsibility is to help write the various organizational plans Another approach: involve more organizational members in the process

Planning in a Dynamic Environment Plans need to be specific and flexible Planning should be an ongoing process Managers need to stay alert to environmental changes Make the organizational hierarchy flatter

Environmental Scanning Environmental scanning: an analysis of the external environment that involves screening large amounts of information to detect emerging trends Competitive intelligence: a type of environmental scanning that gives managers accurate information about competitors

Learning Outcomes Planning is an essential element for the success of an organization There different types of goals and plans, and each serve different needs and work in different contexts Also, there different approaches to planning: top manager’s approach and integrated approach Managers are surrounded by dynamic environment where rigid plans will not be able to adapt