1. © Prentice Hall, 2002 6 - 1 Modern Management 9 th edition.

2. © Prentice Hall, 2002 6 - 2  Objectives A definition of planning and an understanding of the purposes of planning Insights into how the major steps of the planning process are related An understanding of the relationship between planning and organizational objectives A knowledge of the areas in which managers should set organizational objectives An appreciation for the potential of a management by objectives (MBO) program A knowledge of how the chief executive relates to the planning process An understanding of the qualifications and duties of planners and how planners can be evaluated.

3. © Prentice Hall, 2002 6 - 3 G ENERAL C HARACTERISTICS O F P LANNING Defining Planning Purposes of Planning Planning: Advantages and Potential Disadvantages Primacy of Planning.

4. © Prentice Hall, 2002 6 - 4 G ENERAL C HARACTERISTICS O F P LANNING Figure 6.1 Planning as the foundation for organizing, influencing, and controlling.

5. © Prentice Hall, 2002 6 - 5 S TEPS I N T HE P LANNING P ROCESS Figure 6.2 Elements of the planning process.

6. © Prentice Hall, 2002 6 - 6 T HE P LANNING S UBSYSTEM Figure 6.3 Relationship between overall management system and subsystem.

7. © Prentice Hall, 2002 6 - 7 T HE P LANNING S UBSYSTEM Figure 6.4 The planning subsystem.

8. © Prentice Hall, 2002 6 - 8 O RGANIZATIONAL O BJECTIVES: P LANNING’S F OUNDATION Definition of Organizational Objectives Lincoln Electric Company organizational objectives: The goal of the organization must be this— to make a better and better product to be sold at a lower and lower price. Profit cannot be the goal. Profit must be a by-product. This is a state of mind and a philosophy. Actually, an organization doing this job as it can be done will make large profits which must be properly divided between user, worker, and stockholder. This takes ability and character. John F. Mee (1956) : 1. Profit is the motivating force for managers 2. Service to customers justifies business's existence 3. Managers have social responsibilities.

9. © Prentice Hall, 2002 6 - 9 O RGANIZATIONAL O BJECTIVES: P LANNING’S F OUNDATION Figure 6.5 How an open management system operates to reach organizational objectives.

10. © Prentice Hall, 2002 6 - 10 O RGANIZATIONAL O BJECTIVES: P LANNING’S F OUNDATION Table 6.1 Examples of Statements of Organizational Purpose DuPont DuPont is a multinational, high-technology company that manufactures and markets chemically related products. It services a diversified group of markets in which proprietary technology provides the competing edge. Polaroid Polaroid manufactures and sells photographic products based on its inventions in the field of one-step instant photography and light-polarizing products. Utilizing its inventions in the field of polarized light, the company considers itself to be engaged in one line of business. Central Soya The basic mission of Central Soya is to be a leading producer and merchandiser of products for the worldwide agribusiness and food industry. General Portland Cement It has long been a business philosophy of Central Portland that “we manufacture and sell cement, but we market concrete.” The company sees its job as manufacturing top-quality cement and working with customers to develop new applications for concrete while expanding current uses..

11. © Prentice Hall, 2002 6 - 11 A REAS F OR O RGANIZATIONAL O BJECTIVES ----------------------- Peter F. Drucker's key areas ----------------------- for management system objectives: 1. Market standing 2. Innovation 3. Productivity 4. Physical and financial resources 5. Profitability 6. Managerial performance and development 7. Worker performance and attitude 8. Public responsibility.

12. © Prentice Hall, 2002 6 - 12 W ORKING W ITH O RGANIZATIONAL O BJECTIVES Organizational objectives: 1. Short-term 2. Intermediate-term 3. Long-term Developing a Hierarchy of Objectives Suboptimization.

13. © Prentice Hall, 2002 6 - 13 W ORKING W ITH O RGANIZATIONAL O BJECTIVES Figure 6.6 Hierarchy of objectives for a medium-sized organization.

14. © Prentice Hall, 2002 6 - 14 W ORKING W ITH O RGANIZATIONAL O BJECTIVES Guidelines for Establishing Quality Objectives 1.Let people responsible for attaining objectives help set them 2.State objectives as specifically as possible 3.Relate objectives to specific actions whenever necessary 4.Pinpoint expected results 5.Set goals high enough so employees will strive to meet them but not so high that they give up trying to meet them 6.Specify when goals are expected to be achieved 7.Set objectives only in relation to other organizational objectives 8.State objectives clearly and simply.

15. © Prentice Hall, 2002 6 - 15 M ANAGEMENT B Y O BJECTIVES (MBO) MBO strategy: 1. Assign individuals a specialized set of objectives 2. Conduct periodic performance reviews for goal attainment 3. Give rewards based on goals reached The MBO process: 1. Review organizational objectives 2. Set worker objectives 3. Monitor progress 4. Evaluate performance 5. Give rewards.

16. © Prentice Hall, 2002 6 - 16 M ANAGEMENT B Y O BJECTIVES (MBO) Figure 6.7 The MBO process.

17. © Prentice Hall, 2002 6 - 17 M ANAGEMENT B Y O BJECTIVES (MBO) ---------- Factors Necessary for a ---------- Successful MBO Program 1.Top management must be committed to the MBO process and set appropriate objectives for the organization 2.Managers and subordinates together must develop and agree on each individual’s goals 3.Employee performance should be conscientiously evaluated against established objectives 4.Management must follow through on employee performance evaluations by rewarding employees accordingly.

18. © Prentice Hall, 2002 6 - 18 M ANAGEMENT B Y O BJECTIVES (MBO) ------------ MBO Programs: ------------ Advantages and Disadvantages Advantages: 1. Emphasizes what to do to achieve goals 2. Secures employee commitment to attaining goals Disadvantages: 1. Development of objectives can be time-consuming 2. Requirements increase volume of paperwork.

19. © Prentice Hall, 2002 6 - 19 P LANNING A ND T HE C HIEF E XECUTIVE Final Responsibility As planners, chief executives ask: 1. In what direction should the organization be going? 2. In what direction is the organization going now? 3. Should something be done to change this direction? 4. Is the organization continuing in an appropriate direction? Planning Assistance.

20. © Prentice Hall, 2002 6 - 20 T HE P LANNER Qualifications of Planners 1. Considerable practical experience within their organization 2. Know how all parts of the organization function and interrelate 3. Expertise in social, political, technical, and economic trends 4. Work well with others.

21. © Prentice Hall, 2002 6 - 21 T HE P LANNER Evaluation of Planners Objective Indicators 1. Use of appropriate techniques 2. Degree of objectivity displayed Malik suggests planner is doing a reputable job if plan: 1. Is in writing 2. Is the result of all elements of the management team working together 3. Defines present and possible future business of the organization 4. Specifically mentions organizational objectives 5. Identifies future opportunities and suggests how to take advantage of them 6. Emphasizes both internal and external environments 7. Describes the attainment of objectives in operational terms 8. Includes both long- and short-term recommendations.

22. © Prentice Hall, 2002 6 - 22 Chapter Six Questions