1. Chapter 7
FOUNDATIONS
OF PLANNING
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2. Explain why managers plan Describe what role goals play in planning
Learning Objectives
You should learn to:
Define planning
Explain why managers plan
Describe what role goals play in planning
Distinguish among the different types of plans
Tell how goals are established
Describe the characteristics of well-designed goals
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3. Learning Objectives (cont.)
You should learn to:
Identify three contingency factors in planning
Explain the approaches to developing plans
Discuss the criticisms of planning
Describe what it takes to effectively plan in a dynamic environment
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4. Answer the questions on chapters, 2 and 7. Three weeks from today.
Homework
Answer the questions on chapters, 2 and 7.
Three weeks from today.
Research.
Write an operational plan to company\ institute. Try to be practical not theoretical.
Go and visit the company you would conduct the plan to.
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5. Case study
In 2003 it was announced that British Airways (BA) would install 190 IBM self service kiosks at Heathrow Airport and all British Airways destination airports across Europe. The Kiosks are designed to make check in faster and more convenient, whilst optimizing space at airports. Customers can use the touch sensitive screens to check in, select seats and ask for upgrades without having to queue at desks. The new system was expected to reduce check in queues, providing a major boost to the volume of passengers that BA could handle at peak times. This was part of transportation strategy that BA could handle at peak times. The new strategy will change how customers do business with the Airline. BA expected to achieve 50% self service check in by the new service would improve customer service and high efficiency.
1- Explain the objectives that BA may have had in its transportation strategy?
2- what is the strategy used by BA?
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6. What Is Planning? Planning
involves defining the organization’s goals, establishing an overall strategy, and developing a comprehensive set of plans to integrate and coordinate organizational work
informal planning - nothing is written down
little or no sharing of goals
general and lacking in continuity
Exist in small and large businesses.
formal planning – written
defines specific goals
specific action programs exist to achieve goals
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7. Why Do Managers Plan? Purposes of Planning
planning is the primary management function that establishes the basis for all other management functions
planning establishes coordinated effort
planning reduces uncertainty
planning reduces overlapping and wasteful activities
planning establishes goals and standards used in controlling
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8. Why Do Managers Plan? (cont.)
Planning and Performance
formal planning is associated with:
higher profits
higher return on assets
quality of the planning process and the appropriate implementation of the plans probably contribute more to high performance than does the extent of planning
external environment may undermine the effects of formal planning
planning/performance relationship is influenced by the planning time frame. It takes at least 4 years before performance is impacted.
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9. How Do Managers Plan? goals - desired outcomes
Planning is called the primary management function. Why?
The Role of Goals and Plans in Planning
goals - desired outcomes
provide direction for all management decisions
represent the criteria against which actual work accomplishments can be measured
plans - outline how goals are going to be met
Types of Goals
all organizations have multiple objectives
no single measure can evaluate whether an organization is successful
financial goals - relate to financial performance
strategic goals - relate to other areas of performance
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10. Stated Objectives From Large US Companies
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11. Write down some of the university goals?
Group work
Write down some of the university goals?
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12. How Do Managers Plan? (cont.)
The Role of Goals and Plans in Planning (cont.)
Types of Goals (cont.)
stated goals - official statements of the organization’s goals. They reflect what society (stakeholders) believes organization should do.
Ex. Growing our customer base, building market leadership, increasing profitability. These quite irrelevant and vague.
2. real goals - those goals that an organization actually pursues. Ex. Limiting class size.
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13. How Do Managers Plan? (cont.)
The Role of Goals and Plans in Planning (cont.)
Types of Plans
First: by breadth:
strategic plans - apply to the entire organization
establish organization’s overall goals
seek to position the organization in terms of its environment.
Covers a longer time frame.
2. operational plans - specify the details of how the overall goals are to be achieved
tend to cover short time periods
Short-term 1 year or less.
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14. Types Of Plans Frequency of Use Single use Standing Breadth Strategic
Operational
Time Frame
Long term
Short term
Specificity
Directional
Specific
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15. How Do Managers Plan? (cont.)
The Role of Goals and Plans in Planning (cont.)
Types of Plans (cont.)
Second: by time frame:
long-term plans - time frame beyond three years. Definition of long term has changed with increasingly uncertain organizational environments.
short-term plans - cover one year or less.
Third: by specificity:
specific plans - clearly defined with little room for interpretation. Required clarity and predictability often do not exist, because of environment dynamic. Ex. (setting a plan with specific objective, procedures, budgets and time frame.
directional plans - flexible plans that set out general guidelines
provide focus without limiting courses of action. It is flexible to respond to unexpected change.
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16. Specific Versus Directional Plans
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17. How Do Managers Plan? (cont.)
The Role of Goals and Plans in Planning (cont.)
Types of Plans (cont.)
Fourth: by frequency of use:
single-use plans - one-time plans specifically designed to meet the needs of a unique situation. Ex. Setting a plan to introduce a new service.
standing plans - ongoing plans that provide guidance for activities performed repeatedly
include policies, procedures, and rules
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18. How Do Managers Plan? (cont.)
Establishing Goals
Approaches to Establishing Goals
traditional goal setting - overall goals established at the top of the organization. overall goals are broken down into sub-goals for each level of the organization.
higher-level goals must be made more specific at lower levels.
network of goals creates a means-ends chain.
Sub-goals constrain subordinates’ behavior.
assumes that top managers know what is best for the organization
Achieving the goals at a low level becomes the means to reach the goals at the next level.
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19. Traditional Objective Setting
Individual
Employee’s
Objective
Top
Management’s
Department
Manager’s
Division
“Increase profits, regardless
of the means”
“I want to see a
significant improvement
in this division’s profits”
“We need to improve
the company’s performance”
“Don’t worry about
quality: just work fast”
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20. How Do Managers Plan? (cont.)
Approaches to Establishing Goals (cont.)
management by objectives (MBO) - specific performance goals are jointly determined by employees and their managers
progress toward accomplishing these goals is periodically reviewed
rewards are allocated on the basis of this progress
MBO consists of four elements :
goal specificity
participative decision making
explicit time period
performance feedback
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21. Steps in a Typical MBO Program
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22. How Do Managers Plan? (cont.)
Approaches to Establishing Goals (cont.)
management by objectives (cont.)
Benefits:
increases employee performance and organizational productivity
depends on support of top managers for MBO
problems with MBO
can be useless in times of dynamic change
overemphasis on personal rather than organizational goals
may be viewed simply as an annual exercise in paperwork
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23. Characteristics of Well-Designed Goals
should be written in terms of outcomes
should be measurable and quantifiable
should be clear as to a time frame
should be challenging but attainable
should be written down
should be communicated to all organization members who need to know the goals
SMART: Specific, Measurable, Attainable. Realistic, Timing.
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24. Steps in Goal Setting 1 - Review the organization’s mission
2 - Evaluate available resources
3 - Determine the goals individually or with input from others. -should be congruent with the organizational mission and goals in other organizational areas
4 - Write down the goals and communicate them to all who need to know them
5 - Review results and whether goals are being met
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25. Write down some of specific objectives”
Group work
Write down some of specific objectives”
Ex. Improving company market share. (goal)
Increasing company market share by 10% in the year (objective)
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26. Three Contingency Factors affect Planning:
Developing Plans
Three Contingency Factors affect Planning:
1- level in the organization
operational planning dominates managers’ planning efforts at lower levels
strategic planning more characteristic of planning at higher levels
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27. Planning In The Hierarchy Of Organizations
Strategic
Planning
Operational
Top
Executives
Middle-Level
Managers
First-Level
Managers
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28. Developing Plans (cont.)
Contingency Factors in Planning (cont.)
2- degree of environmental uncertainty
when uncertainty is high, plans should be specific, but flexible.
3- length of future commitments
commitment concept - plans should extend far enough to meet those commitments made when the plans were developed
the more that current plans affect future commitments, the longer the time frame for which managers should plan
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29. Approaches to Planning
traditional, top-down approach
planning done by top managers
formal planning department - specialists whose sole responsibility is to help to write organizational plans
plans flowed down to lower levels
tailored to particular needs at each lower level
most effective if plan is a workable document used by organizational members for direction and guidance
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30. Approaches to Planning (cont.)
inclusive approach:
employees at each level develop plans suited to their needs
employees acquire greater sense of the importance of planning when they participate in the process
plans more likely to be used in directing and coordinating work
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31. Contemporary Issues In Planning
Criticisms of Planning
Planning may create rigidity
unwise to force a course of action when the environment is fluid
2. Plans can’t be developed for a dynamic environment
flexibility required in a dynamic environment
can’t be tied to a formal plan
3. Formal plans can’t replace intuition and creativity
mechanical analysis reduces the vision to some type of programmed routine
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32. Contemporary Issues In Planning (cont.)
Criticisms of Planning (cont.)
4. Planning focuses managers’ attention on today’s competition, not on tomorrow’s survival
plans concentrate on capitalizing on existing business opportunities
hinders managers who consider creating or reinventing an industry
5. Formal planning reinforces success, which may lead to failure
success may breed failure in an uncertain environment
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33. Contemporary Issues In Planning (cont.)
Effective Planning in Dynamic Environments
develop plans that are specific, but flexible
recognize that planning is an ongoing process
change directions if environmental conditions warrant
stay alert to environmental changes
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34. Operational plan for the faculty of commerce
The goal: Promote quality of graduates.
Objective: Develop skills and knowledge of staff
Strategies\ activities
Who is responsible
Date
Evaluation
cost
Strategy: Train staff on different skills
Activities: Two Training courses for all staff on teaching skills
Deputy dean
March- May 2008
Report, Questionnaire results
2000$
Two training courses in English
June- July 2008
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