Part 3 PLANNING Chapter 6 PLANNING

Purposes and contents of plans Planning processes and five iterative tasks Gathering information Setting goals Deciding how to achieve them Implementing and monitoring Integrating themes Cases and examples Crossrail, Merck, Maersk, IKEA, Inamo, Terminal 5, M&S

An overview of planning Figure 6.1 An overview of the chapter

Why study planning? Despite uncertainty, managers spend time planning. Methods reflect beliefs about the process and context of managing. Knowledge enables us to question assumptions in a plan and the context alternative methods and outcomes limitations of a planning method.

Purposes of planning Clarify direction Motivate How best to contribute, cope with unexpected (SABMiller?). Motivate Knowing the wider picture helps commitment. Use resources effectively To reduce overlap, co-ordinate required tasks. To measure progress Goals, targets, times enable monitoring. As a ritual Gives appearance of being rational.

A universal activity, at all levels of formality The content of plans Plans can be: Corporate or business unit Strategic or operational (Volvo’s plan for survival) Long- or short-term Specific or directional. A universal activity, at all levels of formality

The process of planning Figure 6.3 Five iterative tasks in planning

Gathering information On competitive and general environments (Chapter 3) Competitive – five forces analysis General – PESTEL analysis. Internal sources Customer data from loyalty cards, etc. External sources Public (census analysis) and private (market research) Linked to organisational analysis – SWOT.

SWOT analysis Comprehensive picture of an organisation’s Strengths and Weaknesses (internal) and the Opportunities and Threats (external) it faces A subjective interpretation not an objective reality

Other planning techniques Critical success factors analysis What we must do well to satisfy customers. Forecasting Using past to predict future (‘planning fallacy’). Sensitivity analysis To test effects of change in a variable (e.g. tax rates). Scenario planning How alternative, plausible futures could affect business (e.g. a sustained increase in terrorism).

Setting goals (or objectives) – the ends Goals provide a reference point for other decisions Useful to relate goals in a hierarchy Balancing multiple goals Profits, quality, sustainability – e.g. Terminal 5 Criteria for assessing goals – SMART Specific, Measurable, Attainable, Rewarded, Timed Ensuring that goals are motivational Locke and Latham (2002) – difficult, specific, participative and feedback. c

Deciding how to achieve the goals – the means Planning involves specifying (as far as practical) the activities needed to meet the goals Figure 6.4 shows a specific hierarchical plan for IKEA Figure 6.5 shows the areas likely to need attention and communication.

A hierarchical plan at IKEA Figure 6.4 Developing a plan for IKEA (Japan)

Topics to cover in a plan Figure 6.5 Possible action areas in a plan

Implementing plans and monitoring progress Implementing the plan tests the accuracy of the assumptions and methods. Organisations slower to change than are plans to prepare. Miller et al. (2004) – implementation depends on managers’ experience of the issue; readiness of the organisation to change. Monitoring progress also critical – Figure 6.6.

Monitoring progress to be able to adapt Figure 6.6 A programme overview chart Source: Managing Information Systems: Strategy and Organisation, 3rd ed., FT/Prentice Hall, Harlow (Boddy, D., Boonstra, A., and Kennedy, G. 2009) p. 258, Figure 9.5, Copyright © earson Education Ltd. 2002, 2005, 2009.

Integrating themes Entrepreneurship Clear evidence that the discipline of a written plan supports new venture growth. Sustainability Reducing carbon emissions depends on detailed plans – M&S plan A. Internationalisation International managers balance planning for global integration or local diversity. Governance Projects like Crossrail rely on strong governance to manage diverse and changing interests.

Summary Uncertainty increases, rather than reduces, the need for planning. Planning involves people working iteratively through common tasks, though the content of plans will vary between levels of the organisation. A SWOT analysis integrates internal and external analysis. The planning processes managers use reflect their assumptions about managing and about the context. app