1. PowerPoint slides by R. Dennis Middlemist Colorado State University Chapter 8 Planning

2. 2 ©2005 Prentice Hall Overview of Planning Objectives End states or targets Plans Means to hit the desired targets Planning Decision-making process focused on the future of an organization and how it will achieve its goals

3. 3 ©2005 Prentice Hall Types of Plans Strategic plans Broad future of the organization External environmental demands Internal resources Tactical plans Translate strategic plans into specific goals Specific parts of the organization

4. 4 ©2005 Prentice Hall Types of Plans Operational plans Translate tactical plans into specific goals and actions Small units of the organization Near term

5. 5 ©2005 Prentice Hall Time horizon Types of Plans Adapted from Exhibit 8.1: Types of Plans: Key Differences Strategic Plans Tactical Plans Operational Plans Scope Complexity Typically 3-5 yearsOften focused on 1-2 years in the future Usually focused on the next 12 months or less. Broadest,originating with a focus on the entire organization Rarely broader than a strategic business unit Narrower, usually cen- tered on departments or smaller units of the organization The most complex and general, because of the different industries and business potentially covered Somewhat complex but more specific, because of the more limited domain of application The least complex, because they usually focus on small homogenous units

6. 6 ©2005 Prentice Hall Impact Types of Plans Interdependence Have the potential to dramatically impact, both positively and negatively, the fortunes and survival of the organization Can affect specific businesses but generally not the fortunes or survivability of the entire organization Impact is usually restricted to specific department or organization unit High interdependence, must take into account the resources and capabilities of the entire organization and its external environments Moderate interdepen- dence, must take into account the resources and capabilities of several units within a business Low interdependence, the plan may be linked to higher-level tactical and strategic plans but is less interdependent with them Strategic Plans Tactical Plans Operational Plans Adapted from Exhibit 8.1: Types of Plans: Key Differences

7. 7 ©2005 Prentice Hall Organizational Levels Corporate level What industries should the firm be in? What markets should the firm be in? In which businesses should the firm invest money? Business level Who are our direct competitors? What are their strengths and weaknesses? What advantages do we have over them? What are our own strengths and weaknesses? What do customers value in our products/services?

8. 8 ©2005 Prentice Hall Organizational Levels Functional level What activities must my unit perform well in order to meet customer expectations? What information about competitors does my unit need in order to help the firm compete effectively? What are our unit’s strengths and weaknesses?

9. 9 ©2005 Prentice Hall Organizational Levels Brunswich MarineRecreationAstro/ProcraftSea RayU.S. Marine Finance department Human Resources department Marketing and Sales department Corporate Level Business Level (Strategic Business Units) Functional Level Adapted from Exhibit 8.2: Organizational Levels

10. 10 ©2005 Prentice Hall Business Plans and Levels Strategic PlansTactical PlansOperational PlansCorporate LevelBusiness LevelFunctional Level Organizational LevelsTypes of Plans Adapted from Exhibit 8.3: Interaction Between Business Plans and Levels

11. 11 ©2005 Prentice Hall Understanding the Environment Importance of the environment Types of environment Mega and task environment Environmental uncertainty Organizational response

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13. 13 ©2005 Prentice Hall TASK ENVIRONMENT THE ORGANIZATION org. culture TASK ENVIRONMENT Govnmt. Agencies Labor Supply Suppliers Competitors Customers TM 3-3 Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 1998

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15. 15 ©2005 Prentice Hall The Planning Process Analyzing the environment Forecasts Environmental uncertainty Contingency plans: identify key factors that could affect the desired results and specify what actions will be taken if key events change Benchmarking Investigation of the best results among competitors and noncompetitors and the practices that lead to those results Analyzing the Environment

16. 16 ©2005 Prentice Hall The Planning Process Analyze environment (forecasts, benchmarks, contingencies, competitor analysis, scenarios) Set objectives Determine requirements Assess resources Develop action plansImplement plansMonitor outcomes Feedback Adapted from Exhibit 8.4: Planning Process

17. 17 ©2005 Prentice Hall The Planning Process Setting objectives Priorities and multiple objectives Establish which objectives are most important and which have temporal priorities, Measuring objectives Setting Objectives Financial performance Profits relative to sales Profits relative to assets Many others Non-financial performance

18. 18 ©2005 Prentice Hall The Planning Process Determining requirements Assess current performance What will it take in order to get from current levels of performance to that level specified in the objectives? What drives market share? What capital will be required? Determining Requirements

19. 19 ©2005 Prentice Hall The Planning Process Assessing resources Resources required What resources are needed to achieve the stated objectives? Resources available Do we have the needed human talent to meet the requirements? Do we have the financial resources available? Do we have the required technology? Assessing Resources

20. 20 ©2005 Prentice Hall The Planning Process Developing action plans Sequence and timing Raw materials, manpower and components must be brought together in the right amounts and sequences Accountability Who is accountable for which actions? Developing Action Plans

21. 21 ©2005 Prentice Hall The Planning Process Implementing Plans Monitoring the implementation Monitor the progress of the plan and its implementation Monitor the level of support that the plan receives as it is being implemented Monitor the level of resistance Real-time adjustment Implementing Plans

22. 22 ©2005 Prentice Hall The Planning Process Monitoring outcomes Unanticipated consequences Negative unanticipated consequences Positive unanticipated consequences Feedback loop Apply what has been learned to modify and improve the planning process Monitoring Outcomes

23. 23 ©2005 Prentice Hall Goal Setting Attributes of effective goals Specific Measured Agreed Realistic Time bound