1. ©2008 by Nelson, a division of Thomson Canada Limited 1 Management Second Canadian Edition Chuck Williams Alex Z. Kondra Conor Vibert Slides Prepared by: Kerry Rempel, Okanagan College

2. ©2008 by Nelson, a division of Thomson Canada Limited 2 Chapter 4 Planning

3. ©2008 by Nelson, a division of Thomson Canada Limited 3 What Would You Do? To combat the rapid decline in market share, Air Canada launched two new discount airlines to compete directly with WestJet Initially this enabled the troubled carrier to turn a profit, however the profits did not continue With only 40 planes in Zip and Tango, what would you do?

4. ©2008 by Nelson, a division of Thomson Canada Limited 4 Learning Objectives: Planning After reading the next two sections, you should be able to: 1. discuss the costs and benefits of planning 2. describe how to make a plan that works

5. ©2008 by Nelson, a division of Thomson Canada Limited 5 Costs and Benefits of Planning Benefits of Planning Planning Pitfalls

6. ©2008 by Nelson, a division of Thomson Canada Limited 6 Benefits of Planning Intensified Effort Persistence Direction Creation of Task Strategies

7. ©2008 by Nelson, a division of Thomson Canada Limited 7 Planning Pitfalls Impede change and slow or prevent adaptation Create a false sense of security Detachment of planners

8. ©2008 by Nelson, a division of Thomson Canada Limited 8 How to Make a Plan That Works Exhibit 4.1

9. ©2008 by Nelson, a division of Thomson Canada Limited 9 Setting Goals Specific Measurable Attainable Realistic Timely

10. ©2008 by Nelson, a division of Thomson Canada Limited 10 Goal Commitment The determination to achieve a goal. Increased by: Setting goals participatively Making goals public Obtaining top management support

11. ©2008 by Nelson, a division of Thomson Canada Limited 11 Developing an Effective Action Plan For accomplishing a goal an action plan lists: Specific steps People Resources Time period

12. ©2008 by Nelson, a division of Thomson Canada Limited 12 Tracking Progress First method Set proximal (i.e., short-term) goals Set distal (i.e., long-term or primary) goals Second method Gather and provide feedback Make adjustments in effort, direction, and strategies

13. ©2008 by Nelson, a division of Thomson Canada Limited 13 Maintaining Flexibility Options-based planning keep options open through small, simultaneous investment in many options or plans Learning-based planning plans need to be continually tested, changed and improved encourages frequent reassessment and revision of goals

14. ©2008 by Nelson, a division of Thomson Canada Limited 14 Learning Objectives: Kinds of Plans After reading the next two sections, you should be able to: 3. discuss how companies can use plans at all management levels, from top to bottom 4. describe the different kinds of special- purpose plans that companies use to plan for change, contingencies, and product development

15. ©2008 by Nelson, a division of Thomson Canada Limited 15 Planning From Top to Bottom Exhibit 4.3

16. ©2008 by Nelson, a division of Thomson Canada Limited 16 Planning From Top to Bottom Exhibit 4.3

17. ©2008 by Nelson, a division of Thomson Canada Limited 17 Starting at the Top Vision statement of a company’s purpose brief, inspirational, clear, and consistent with company beliefs and values Mission flows from the vision specific, unifying goal that stretches and challenges the organization and has a finish line and a timeframe

18. ©2008 by Nelson, a division of Thomson Canada Limited 18 Planning Timeframes Exhibit 4.4

19. ©2008 by Nelson, a division of Thomson Canada Limited 19 Setting Missions Targeting setting a clear, specific target Common-enemy mission vowing to defeat a corporate rival Role-model mission emulating a successful company Internal-transformation mission aiming to achieve dramatic change to remain competitive

20. ©2008 by Nelson, a division of Thomson Canada Limited 20 Bending in the Middle Tactical Plans specify how a company will use resources, budgets, and people to accomplish goals Management by Objectives develop and carry out tactical plans four steps discuss goals participatively select goals jointly develop tactical plans meet to review performance

21. ©2008 by Nelson, a division of Thomson Canada Limited 21 Disadvantages of MBO May involve excessive paperwork Managers are reluctant to give employees feedback about their performance Managers and employees sometimes have difficulty agreeing on goals Employees may neglect important unmeasured parts of their jobs

22. ©2008 by Nelson, a division of Thomson Canada Limited 22 What Really Works Management by Objectives (MBO) Based on: goals participation Feedback Companies that use MBO are likely to outproduce companies that do not use it!

23. ©2008 by Nelson, a division of Thomson Canada Limited 23 Finishing at the Bottom Operational plans day-to-day plans Single-use plans deal with unique, one-time-only events Standing plans plans for recurring events three types Policies Procedures Rules and regulations Budgets

24. ©2008 by Nelson, a division of Thomson Canada Limited 24 Special-Purpose Plans Planning for Change Planning for Contingencies Planning for Product Development

25. ©2008 by Nelson, a division of Thomson Canada Limited 25 Planning for Change Stretch goals extremely ambitious goals that you don’t know how to reach Benchmarking identifying outstanding practices, processes, and standards in other companies adapting them to your company

26. ©2008 by Nelson, a division of Thomson Canada Limited 26 Planning for Contingencies: Scenario Planning 1. Define the scope of the scenario 2. Identify the major stakeholders 3. Identify environmental trends 4. Identify key uncertainties and outcomes 5. Using steps 1-4 create initial scenarios 6. Check each scenario for consistency and plausibility of facts 7. Create contingency plans from each scenario 8. Develop measures to indicate when scenario events are occurring

27. ©2008 by Nelson, a division of Thomson Canada Limited 27 Planning for Product Development Aggregate product plans: used to manage and monitor all new products indicate resources being used for each product indicate product’s place in company’s plans help avoid having too many products in development

28. ©2008 by Nelson, a division of Thomson Canada Limited 28 Product-development Process Four factors: cross-functional teams internal and external communication overlapping development phases frequent testing of product prototypes

29. ©2008 by Nelson, a division of Thomson Canada Limited 29 What Really Happened? Air Canada set specific goals that focused aggressive negotiating with it’s labour unions, changing its mix of planes and shut down Tango and Zip. They were able to lower labour costs, reduce aircraft and associated costs and restructured its debt.