1. Slide content created by Charlie Cook, The University of West Alabama Copyright © Houghton Mifflin Company. All rights reserved. Chapter Seven Basic Elements of Planning and Decision Making

2. Copyright © Houghton Mifflin Company. All rights reserved.7–2 The Planning Process

3. Copyright © Houghton Mifflin Company. All rights reserved.7–3 Organizational Goals Purposes of Goals –Provide guidance and a unified direction for people in the organization. –Strong affect on the quality of other aspects of planning. –Serve as a source of motivation for employees. –Provide a mechanism for evaluation and control of the organization.

4. Copyright © Houghton Mifflin Company. All rights reserved.7–4 Kinds of Goals By Level –Strategic goals –Tactical goals –Operational goals By Area –Different functional areas of the organization. By Time Frame –Long-term, intermediate-term, or short-term time

5. Copyright © Houghton Mifflin Company. All rights reserved.7–5 Kinds of Organizational Goals for a Regional Fast- Food Chain

6. Creating S.M.A.R.T. Goals S pecific – Be clear about what you want to accomplish. M easurable – Put in quantifiable terms to track your progress. A ttainable – Make it challenging, but attainable. R ealistic – Be willing and able to work toward. T imely – Include a time frame, have due dates for milestones. Copyright © Houghton Mifflin Company. All rights reserved.7–6

7. Strategic Plans (Top Management) –Broadest set of plans – primary objectives –Mission statement Tactical Plans (Middle Management) –Smaller scale – used to implement a strategy –Typically 1-3 year period Operational Plans (Supervisory Management) –Designed to implement tactical plans –Typically 1 year or less –Deals with the “how” in accomplishing specific objectives Contingency Plans (Any management level) –Alternative courses of action Kinds of Organizational Plans

8. Copyright © Houghton Mifflin Company. All rights reserved.7–8 Time Frames for Planning Long-range Plans –Cover present and future strategic issues extending beyond five years in the future. Intermediate Plans –Cover from 1 to 5 years and parallel tactical plans. –Are the principal focus of organizational planning efforts. Short-range Plans –Are action plans and reaction (contingency) plans that have a time frame of one year or less.

9. Copyright © Houghton Mifflin Company. All rights reserved.7–9 Table 7.1: Types of Operational Plans

10. Copyright © Houghton Mifflin Company. All rights reserved.7–10 Rule: No returns over $50 without a managers signature Policy: Accept customer returns Procedure: Outline steps to be followed in particular circumstances (SOPs- Standard Operating Procedures) Example of Policy, Rule, and Procedure

11. Copyright © Houghton Mifflin Company. All rights reserved.7–11 Barriers to Goal Setting and Planning

12. Copyright © Houghton Mifflin Company. All rights reserved.7–12 The Formal Goal-setting Process Management By Objectives (MBO) Goals are collaboratively set between managers and subordinates Evaluation and reward based on subordinate’s performance