1. Chapter 5 Planning

2. Setting goals and deciding how to achieve them. Coping with uncertainty by formulating future courses of action to achieve specified results. Planning is done at all levels (top management, middle management, first-line management)

3. Four benefits of planning Planning helps you check on your progress. Planning helps you to coordinate activities. A plan defines the responsibilities of various departments and coordinates their activity Planning helps you think ahead. Planning helps you cope with uncertainty.

4. Business Plan A document that outlines a proposed firm’s goals, the strategy for achieving them, and the standards for measuring success.

5. Business Model Outlines the need the firm will fill, the operations of the business, its components and functions, as well as the expected revenues and expenses.

6. Strategy A large-scale action plan that sets the direction for an organization. An educational guess about what must be done in the long term for the survival or the prosperity of the organization or its principal parts.

7. Strategic Management A process that involves managers from all parts of the organization in the formulation and the implementation of strategies and strategic goals.

8. Planning and Strategic Management 1. Establish the mission and vision 2. Assess the current reality 3. Formulate the grand strategy and strategic tactical and operational plans 4. Implement the strategy 5. Maintain strategic control

9. Why are planning and strategic management important? 1. Provide direction and momentum 2. Encourage new ideas 3. Develops a sustainable competitive advantage 1. The ability of an organization to produce goods or services more effectively than its competitors

10. Sustainable Competitive Advantage is able to get and stay ahead in four areas 1. In being responsive to customers 2. In innovating 3. In quality 4. In effectiveness

11. Mission Statement Vision Statement An organization’s mission is its purpose or reason for being. Mission Statement – expresses the purpose of the organization. A vision is a long-term goal describing what an organization wants to become. Vision Statement – long-term goal describing “what” a business wants to become. It is a clear sense of the future and the actions to get there.

15. Strategic Planning By top management Using their mission and vision statements, top managers do strategic planning They determine what the organization’s long-term goals should be for the next 1-5 years with the resources they expect to have available.

16. Tactical Planning By middle management The strategic priorities and policies are then passed down to middle managers who must do tactical planning. They determine what contributions their departments or similar work units can make with their given resources during the next 6 – 24 months.

17. Operational Planning By first-line management Determine how to accomplish specific task with available resources within the next 1 – 52 weeks.

18. Mission Statement Vision Statement Strategic Planning Tactical Planning Operational Planning

19. Goal (Objective) A specific commitment to achieve a measurable result within a stated period of time. Means-end chain: accomplishment of low-level goals is the means leading to the accomplishment of high- level goals. The goal should be followed by an action plan

20. Strategic Goals Set by and for top management and focus on objectives for the organization as a whole.

21. Tactical Goals Set by and for middle managers and focus on the actions needed to achieve strategic goals.

22. Operational Goals Set by and for first-line managers and are concerned with short-term matters associated with realizing tactical goals.

23. Action Plan: defines the course of action needed to achieve the stated goal. Operating Plan: typically designed for a one- year period. Defines how you will conduct your business based on the action plan: it identifies clear targets such as revenues, cash flow, and market share.

24. Operating Plan Typically designed for a 1-year period, defines how you will conduct your business based on the action plan; it identifies clear targets such as revenues, cash flow, and market share.

26. Standing Plans Plans developed for activities that occur repeatedly over a period of time.

27. Purpose of planning Set a goal – then formulate an action plan

28. Policy A standing plan that outlines the general response to a designated problem or situation

29. Procedure A standing plan that outlines the response to particular problems or circumstances.

30. Rule A standing plan that designates specific required action.

31. Single Use Plans: Plans developed for activities that are not likely to be repeated in the future.

32. Program A single-use plan encompassing a range of projects or activities US Government space program has several projects – Challenger project, Hubble Telescope project

33. Project A single-use plan of less scope and complexity then a program. Space shuttle, Discovery, is one project in the government’s space program.

34. SMART Goals S pecific M easurable A ttainable R esults-oriented T arget dates

35. Peter Drucker “Only a clear definition of the mission and purpose of the organization makes possible clear and realistic…objectives.”

36. Management by Objectives A four-step process in which 1. Managers and employees jointly set objectives for the employee 2. Managers develop action plans 3. Managers and employees periodically review the employee’s performance 4. Manager makes a performance appraisal and rewards the employee according to results

37. Purpose of the MBO is to motivate employees Performance that meets the objectives should be rewarded

38. Three types of objectives used in MBO Improvement objectives Personal development objectives Maintenance objectives

39. MBO works by cascading objectives down through the organizations. Objectives are structured in a unified hierarchy, becoming more specific at lower levels of the organization.

40. The Planning Control Cycle Two planning steps Two control steps

41. Planning Steps Make the plan Carry out the plan

42. Control Steps Control the direction by comparing results with the plan Control the direction by taking corrective action in two ways By correcting deviations in the plan being carried out By improving future plans

43. Project Planning The preparation of single-use plans, or projects. Planning is followed by project management, achieving a set of goals through planning,, scheduling, and maintaining progress of the activities that comprise the project.