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Chapter 4 Planning

What’s the planning of organizations?

Management by objectivesThe strategic management process

Benchmarking / ISO9000 series /six sigma

Entrepreneurship: a special case of strategic planning




The content of planning

Advantages and disadvantages of planning

Types of plans



Planning Encompasses:

Defining the organization’s objectives or goals.

Establishing an overall strategy for achievingthose goals.

Developing a comprehensive hierarchy of plans to

integrate and coordinate activities.



Advantages of Planning

It gives direction to managers and nonmanagers

alike.

Planning can reduce the impact of change.

It minimize waste and redundancy.

Planning establishes objectives or standards that

facilitate control.



Disadvantages of Planning Planning may create rigidity.

Plans can’t be developed for a dynamic

environment.

Formal plans can’t replace intuition and creativity.

Planning focuses managers’ attention on today’s

competition, not on tomorrow’s survival. Formal planning reinforces success, which may

lead to failure.



Exhibit 4-1 Types of Plans

Breadth Time frame Specificity Frequency of use

Strategic Long term Directional Single use

Tactical Short term Specific Standing



Strategic and Tactical Plans Strategic plans are plans that apply to the enti re organization ,

establish the organization’s overall objectives , and seek to

position the organization in terms of its environment.Tactical plans (sometimes referred to as operational plans )

specify the details of how the overall objectives are to be

achieved.

Strategic and tactical plans differ in three primary ways — their time frame, scope, and whether they include a known

set of organizational objectives.



Short-term and Long-term Plans Short-term plans are plans that cover less

than one year .

Long-term plans are plans that extend beyond five years .

Their differences lie in the length of future

commitments and the degree of variabi l i ty organizations face.



Specif ic and Directional Plans

Specific plans have clearly defined objectives

and leave no room for misinterpretation.

Directional plans are flexible plans that set

out general guidelines.



Single-use and Standing Plans

Single-use plans are used to meet the

needs of particular or unique situation.Standing plans are ongoing, and provide

guidance for repeatedly performed actions

in an organization.



Chapter 4 Foundation of Planning







Management by Organization

What is MBO?

The common elements in a MBO program

How does a manager set employee

objectives?

Potential problems



What I s MBO?

MBO is a system in which specific performance

objectives are jointly determined by subordinates

and their supervisors, progress toward objectives

is periodically reviewed, and rewards are

allocated on the basis of that progress.



Cascading of Objectives

Overall

organizational

objectives

Divisionalobjectives

Departmental

objectives

Individual

objectives



The Common Elements in a

MBO Program

Goal specificityParticipative decision making

An explicit time period

Performance feedback.



How does a manager set employee

objectives?

Identify an employee’s key job tasks.

Establish specific and challenging goals for each key task.

Allow the employee to actively participate.

Prioritize goals.

Build in feedback mechanism to assess goal

progress.

Link rewards to goal attainment.



Potential Problems Employees tend to focus on the goals by

which they will be judged .

Specific goals encourage individual

achievement rather than a team focus.

Specific goals may have a tendency to l imit

employees’ potential and discourage efforts for

continuous improvement .



Chapter 4 Foundation of Planning What’s the planning of organizations?






Identify the

organization’s

current mission,

objectives, andstrategies

Analyze theenvironment

Identify

opportunities

and threats

Analyze theorganization’s

resources

Identifystrengths and

weaknesses

Reassess the

organization’s

mission and

objectives

Formulate

strategies

Implement

strategies

Evaluate

results

The Strategic Management Process

1.

2. 3.

4. 5.

6.

7. 8. 9.



Environmental scanning refers to screening

large amounts of information to detect

emerging trends and create a set of scenarios. Competi tive intel l igence refers to accurate

information about competitors that allows

managers to anticipate competitors’ actions

rather than merely react to them.



SWOT Analysis Opportunities are positive external environmental

factors, and threats are negative ones.

Strengths are internal resources that are availableor things that the organization does well.

Weaknesses are those resources that anorganization lacks or activities that it does not do

well. Core competency refers to any of the strengths that represent unique skills or resources that candetermine the organization’s competitive edge.



Organization’s

resources

Opportunities

in the

environment

Organization’s

opportunities



1.The growth strategyA strategy in which an organization attempts too increase the

level of its operates; can take the form of increasing sales

revenue, number of employees, or market share.

2.The stability strategy

A strategy that is character ized by an absence of signi f icant

change.

3.Retrenchment strategy

A strategy is reducing i ts size, usually in an environment of

decline.

4.Combination strategy

A strategy that is the simultaneous pursui t by an organization of

two or more of growth, stabil i ty, and retrenchment strategies.

Grand Strategies



1. Cost leadership strategy(low-cost producer)

The strategy an organization follows when it wants to be

the lowest-cost producer in its industry.

2. Differentiation strategy The strategy an organization follows when it wants to be

unique in i ts industry within a broad market.

3.Focus strategy

The strategy an organization follows when i t wants to

establi sh an advantage in a narrow market segment.

Competitive strategies



Benchmarking involves the search for the

best practices among competitors or

noncompetitors that lead to their superior

performance. The basic idea underlying benchmarking is that management can

improve quality by analyzing and then

copying methods of the leaders in various fields.



What is entrepreneurship?Entrepreneurship is a process by which individuals pursue

opportunities , ful f i l l ing needs and wants through innovation ,

without regard to the resources they cur rentl y control.

The common characteristics of entrepreneurs

A high need for achievement; believing strongly that they can

contr ol their own destinies; and taking only moderate r isks.

How to write a business plan? Business plan is a document that explains the business

founder’s vision and describes the strategy and operations of

that business.



How to write a business plan?

Understand grand strategies and

competitive strategiesWhat’s SWOT analysis? What is itspurpose?

What’s the common elements in a MBOprogram? What we should avoid duringthe period of applying MBO?

Study & Practice

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