1. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 1 Organizational Planning MANAGEMENT Meeting and Exceeding Customer Expectations EIGHTH EDITION Prepared by Deborah Baker Texas Christian University

2. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 2 learning objectives 1. Explain the importance of planning 2. Describe the importance of an organization’s mission statement 3. Discuss the purposes of strategic, tactical, operational, and contingency plans 4. Explain the relationships between strategic, tactical, and operational goals 5. List and explain the steps in a basic planning process 6. Discuss various ways to make plans effective 7. Describe the barriers to planning

3. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 3 Planning Preparing for tomorrow, today 1 1

4. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 4 Planning Responsibilities 1 1 1. Construct, review, and/or rewrite organization’s mission 2.Identify and analyze their opportunities 4.Identify, analyze, and select the course(s) of action required to reach goals 3.Establish the goals they wish to achieve 5.Determine resourced needed to achieve goals

5. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 5 Mission Statement 2 2 Mission Statement Mission Statement When a mission is formalized in writing and communicated to all organizational members

6. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 6 Mission Statement 2 2. Includes references to core values and principles. Serves as an operational and ethical guide. Serves as the foundation and coordinating device for the: –execution of management functions –behaviors of organizational members –shaping of the organization’s culture

7. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 7 Mission Statement Questions 2 2 What is our business? What should it be? From Peter Drucker

8. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 8 Rules for Mission Statements 2 2 Rule #1: Keep the statement simple; not necessarily short, but simple. Rule #2: Allow companywide input. Rule #3: Involve outsiders. They can bring clarity and a fresh perspective to the statement-writing process. Rule #4: Develop the wording and the tone to reflect the company’s personality or what the company would like to be. Rule #5: Share the mission statement in as many creative ways as possible and in as many languages as necessary. Keep it in front of people constantly. Rule #6: Rely on the mission statement for guidance. Challenge it continually, and judge employees by how well they adhere to its tenets. Management must say it and live it. Rule #1: Keep the statement simple; not necessarily short, but simple. Rule #2: Allow companywide input. Rule #3: Involve outsiders. They can bring clarity and a fresh perspective to the statement-writing process. Rule #4: Develop the wording and the tone to reflect the company’s personality or what the company would like to be. Rule #5: Share the mission statement in as many creative ways as possible and in as many languages as necessary. Keep it in front of people constantly. Rule #6: Rely on the mission statement for guidance. Challenge it continually, and judge employees by how well they adhere to its tenets. Management must say it and live it. Source: From Say it and Live It by Patricia Jones and Larry Kahaner. Copyright © 1995 by Kane Associates International, Inc. Used by permission of Doubleday, a division of Bantam Doubleday Dell Publishing Group, Inc.

9. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 9 Effective Goals and Objectives 2 2 CharacteristicExplanation Specific and measurable Not all objectives can expressed in numeric terms, but they should be quantified when possible. Realistic and challenging Impossibly difficult objectives demotivate people. Objectives should be challenging but attainable. Focused on key result areas Goals should focus on key results--sales, profits, production, or quality. Cover a specific period A measurable objective is stated in terms of the time in which it is to be completed. Short-term goals should complement long- term goals. Reward performance Objectives are meaningless if they are not directly related to rewards for performance. CharacteristicExplanation Specific and measurable Not all objectives can expressed in numeric terms, but they should be quantified when possible. Realistic and challenging Impossibly difficult objectives demotivate people. Objectives should be challenging but attainable. Focused on key result areas Goals should focus on key results--sales, profits, production, or quality. Cover a specific period A measurable objective is stated in terms of the time in which it is to be completed. Short-term goals should complement long- term goals. Reward performance Objectives are meaningless if they are not directly related to rewards for performance.

10. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 10 Plans 2 2 Plan The end result of the planning effort— Commits individuals, departments, entire organizations, and the resources of each to specific courses of action for days, months, and years into the future

11. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 11 Plans 2 2 What When Who Where How How much identifies the specific goals to be accomplished answers a question of timing identifies specific people who will perform tasks essential to the plan concerns the place(s) where the plan will be executed involves the specific actions to be taken to reach the goals is concerned with the expenditure of resources needed to reach the goals

12. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 12 Stretch Goals 2 2 The end result of the planning goals that require great leaps forward

13. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 13 Strategies and Tactics 2 2 Strategy A course of action created to achieve a long-term goal Tactic A course of action created to achieve a short-term goal —an objective

14. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 14 Determining Resource Requirements 2 2 People Money Facilities Information Supplies Equipment Technology

15. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 15 Types of Plans 3 3 Operational Plans Operational Plans Operational Objectives Tactical Plans Tactical Plans Tactical Objectives Strategic Plans Strategic Plans Strategic Goals Mission

16. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 16 Strategic Plans and Goals 3 3 Strategic Plans Contains the answers to who, what, when, where, how, and how much for achieving strategic goals Strategic Goals Long-term, companywide goals set by top-management strategic planning efforts. Focus on the changes desired in productivity, product innovation, and responsibilities to stakeholders

17. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 17 An Organization’s Mission and Level of Goals 3 3 Mission CEO and Board of Directors Strategic Goals Top-Level Management Tactical Objectives Middle-Level Management Operational Objectives First-Line Management

18. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 18 Tactical Plans and Objectives 3 3 Tactical Plan Developed by middle managers, this plan has more details, shorter time frames, and narrower scopes than a strategic plan Usually spans one year or less Tactical Objectives Short-term goals set by middle managers that must be achieved in order to reach top management's strategic goals and the short- and long-term goals of middle managers

19. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 19 Operational Plans and Objectives 3 3 Operational Plan The first-line manager’s tool for executing daily, weekly, and monthly activities Operational Objectives The specific results expected from first-level managers, work groups, and individuals Single-Use Plans Standing Plans

20. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 20 Operational Plans 3 3 Single-Use Plans. Programs. Budgets Standing Plans. Policies. Procedures. Rules

21. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 21 Unified Hierarchy of Goals 4 4

22. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 22 Contingency Plans 4 4 Contingency Plan Contingency Plan An alternative goal and course or courses of action to reach that goal if and when circumstances and assumptions change so drastically as to make an original plan unusable

23. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 23 Basic Planning Process 5 5 Setting Objectives Analyzing and Evaluating the Environments Evaluating the Alternatives Identifying the Alternatives Selecting the Best Solution Implementing the Plan Controlling and Evaluating the Results Step 1 Step 2 Step 4 Step 3 Step 5 Step 6 Step 7

24. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 24 Analyzing and Evaluating the Environment Internal Environment. Availability of resources. Needs of internal customers 5 5 External Environment. Strengths and weaknesses of suppliers and partners. Availability of labor and technology. Needs of external customers

25. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 25 Making Plans Effective 6 6 Basis for Planning. Assumptions. Forecasts

26. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 26 Making Plans Effective 6 6 Increasing the Probability of Success. Effective communication. Quality of information. Involvement of others

27. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 27 Planning Tools 6 6 Management by Objectives MBO A technique that emphasizes collaborative setting by managers and their subordinates Linear Programming Linear Programming A planning tool that can be used to determine the optimum combination of resources and activities

28. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 28 Barriers to Planning 7 7 Inability to plan Lack of commitment to the planning process Lack of focus on the long term Inferior information Overreliance on the planning department Overemphasis on controllable variables