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Managing Organization ABE Graduate Diploma (QCF Level -6)

Prepared & Presented

By

Pyi Kyaw LynnB.A (English), Yangon University

M.B.A (Finance), Assumption University of Thailand

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CHAPTER [III]

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Organizational Direction

The Planning Process

TODAY’S AGENDA

A. Missions, Goals &

Policies

B. Strategic & Operational

Planning

C. Objectives

D. Influences on Strategy &

Planning

E. Unitary & Pluralistic

Perspectives

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[A] DEFINING OVERARCHING INTENT: MISSION, GOALS & POLICIES

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Policies : The

ways things are

done in the Biz

Mission : What biz are we in ?

philosophy ,culture,

purpose &

direction !!

Goa

ls :

Ope

ratio

nal

Non

ope

ratio

nal

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Mission Statements

State the direction the firm is going.

Communicate the principles of firms in corporate publicity.

Objectives can be communicated through MS

Viewed as public relations tool with no real commitment.

If not effectively communicated, staff will not be engaged.

MS take time & effort to prepare. Once MS established , action

plans & objectives can be set. 18/1/2015

Clarify “ Why does the firm exist?”

Keeps staff focus on the realistic goals of the firm.

Describe main activities & the position it wish to get in the industry.

“To refresh the world - in mind, body and spirit”

State the key values of the firm : attitudes & commitment towards stakeholders.

“To offer a high quality with reasonable prices.”

CONTENT & MEANING VALUE

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Goals & Policies

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Missions set parameters in which goals, strategies & objectives are defined.

Operational goals : expressed in quantified form & measured.

E.g., 5% increase in market share.

Non-operational goals : qualitative & not specific. E.g., To meet the needs of

customers. To focus the after sales services

& quality

Laid down formally the ways thing are done in biz.

Specify “HOW” managers should behave & related to the culture.

Act as guidelines within which decisions taken procedures set up.

Ensure consistency of decision making. E.g., travel policy of staff for taking standard class on trips of less than two hours.

Ensure compliance with regulations. E.g., wearing hats at work place by safety policy.

GOALS POLICIES

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Strategic Management by Wheelen & Hunger

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Strategic Planning

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6

Identify current mission and strategic goals

Conduct competitive analysis:•strengths•weakness•opportunity•threats

Develop specific strategies:•corporate•business•functional

carry out strategic plans

maintain strategic control

assess organisational factors

assess environmental factors

Strategy implementationStrategy formulation

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[B] STRATEGIC & OPERATIONAL PLANNING

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FEEDBACK

MISSION GOALS

STRATEGY

OBJECTIVES

TACTICAL PLANS

OPERATIONAL PLANS

PERFORMANCE

Wheelen & Hunger’sThe Planning Process

Decisions at the top Missions & goals are translated into strategies & objectives Cascaded via

downward communications channels to the lowest level of the staff.

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Planning Process by Whellen & Hunger

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Mission

Narrow or Wide Scope E.g., Bank with only savings & loan facilities for a location

& Bank providing world wide financial services. Too narrow > limit the scope & restrict for growth. Effective MS : to have unique purpose, to identify the

scope of operations, to provide a unifying theme to its activities

E.g., To produce superior financial returns for our shareholders as we serve our customers with the highest quality transportation, logistics, and e-commerce

Goals

Different from objectives Open-ended statements Not quantifiable or no time limits/timescales. E.g., Achieve excellence in the delivery of service in

banking industry to gain customer’s satisfaction .

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Planning Process (Cont’d)

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Strategy

Chandler’s definition “ The determination of basic long –term goals &

objectives of an enterprise, and the adoption of action, and the allocation of resources necessary for carrying out these goals”

Tactical Plans

Derive from objectives & drawn up by department managers Different from strategic planning in terms of scope & time. More specific than SP & focus on measurable outcome. Shorter timescale [1~ 5 years], flexible for resource

allocations.

Objectives

An expression of agreed strategy in terms of exactly “what is to be accomplished & by when” Quantitative or Qualitative & to be synchronized objectives

of all levels. By June 30, 2015, achieve 75% rating on the Service

Evaluation Index from all stakeholders.

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Planning Process (Cont’d)

Operational Plans

Performance

Feedback

Derive from tactical plans & drawn up by managers at functional level [unit or section] for actions taken. Single use plan & controlled by budget for type of operation.

Different from tactical plan in terms of scope & time scale. [< 1year]

The performance of team or individual regularly monitored through supervision arrangements, if necessary, followed by progress or follow up meeting.

Evaluation may be measured in quantitative & qualitative. E.g., staff of call center > evaluated by no of calls answered.

Top-down : decisions cascaded down to managers & staffs at lower level & role of feedback > evaluation & control.

Bottom-up : greater autonomy for setting objectives at lower level of management > fed back up to the top for decisions.

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HAX’s 6 Different Dimensions on Strategy

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A coherent, unifying & integrative pattern of decisions for the organization as a whole

A means of establishing an organization’s purpose in terms of its long term goals

Large organizations have explicit strategies set out formally.

E.g., merger & acquisitions of new product lines.

Strategy to be linked between goals & objectives.

To take necessary actions to ensure that purposes are fulfilled.

Small organization are implicit & not always articulated apart from top level management.

Implicit strategies to be identified via actions taken. E.g., approval of projects and source of financing.

Resource allocation : how resources : labor & capital to be allocated during a timescale for implementation.

Timescale for strategic planning : 5 years or longer

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Cont’d

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To have clear understanding of the external environment, identifying opportunities & threats from changing conditions

The key purpose of STRATEGY : To achieve long term competitive advantage over competitors.

A definition of an organization’s competitive domain

Strategic Planning [what biz are we in or

intends to be in] Strategic

Implementation [taking actions step by

step].

Strategy to address : Growth : extension of current

capacity & diversification into new product lines.

Divestment : shut down of production facilities & downsizing or laid off

A means of maximizing competitive advantage & minimizing competitive

disadvantage

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Cont’d

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A logical system for differentiating managerial tasks at corporate, business & functional levels

A definition of the contribution the organization intends to make to its stakeholders

The stakeholder concept’s been important as an element of implementing strategy because of increasing emphasize on CSR

Corporate : defining overall mission, goals & objectives. Highest decisions making. E.g. merger & acquisition

Business level : planning within department. E.g., new product development Functional level : operational planning & implementation. E.g. setting production targets.

Strategy formulation process determine the direction of the organization.

Strategic planning to be focused on external conditions & internal context of the firm, such as resources, policies & practices.

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[C] OBJECTIVES

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SPECIFIC

SIGNIFICANT STRETCHING

MEASURABLE

MEANINGFUL MOTIVATIONAL

ACHIEVABLE

ACCEPTABLE ACTION-

ORIENTED

REALISTIC

RELEVANT REASONABLE REVIEWABLE REWARDING

TIMED

TIMELY TANGIBLE TRACKABLE

Characteristics of Objectives : SMART

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SMART

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SPECIFIC

MEASURABLE

ACHIEVABLE

REALISTIC

TIMED

Objectives has to be unambiguous confusion & misinterpretation Significant for staff’s motivation in terms of their contribution. Stretching some areas of the tasks need additional efforts.

Objectives to be quanti/quallifiable for measuring efficiency & effectiveness. Meaningful & motivational : for self-worth of staffs role in the department

Training & support of manager for achievements. Performance management & feedback process to be set up. To be acceptable & action-oriented for decision making process & for

measurement of outcomes.

Objectives to be relevant to the job role. Rewarding to be intrinsic in a sense that the staff’s job satisfaction & self-

esteem to be recognized.

Definite date to be decided & to be time-based. Timely to be in line with other objectives of the team. Tangible in a sense that they can be assessed and meaningful. Monitoring & review must be carried out on a regular basis and remedial

action to be taken, rewritten or amended to meet new circumstances.

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[D] INFLUENCES ON STRATEGY & PLANNING

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Factors interacting with Strategies & Goals

Shareholders interest : quick ROI Director interest :

market growth staff : long term

employment Strategy to

reconcile different interests !!

External Environment PESTL 5 forces Internal

Environment Structure Culture Resources SWOT

7s Framework

Structure Systems Style Staff Skills Strategy Super

ordinate Goals

Environmental analysisStakeholder

analysis

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SWOT ANALYSIS [ consumer goods firm ]

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STRENGTHS High level of staff

competence. Positive public image Good customer

service Strong research Good financial

control systems

WEAKNESSES High wage levels Old building &

equipment Strong trade unions Slow decision making Slow implementing

for change

OPPORTUNITIES Rising consumer

prosperity Expanding marketing

worldwide Diversify into other

products

THREATS Low-cost

competitors Demographic

changes Changing consumer

tastes New legislative

requirement.

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The 7S Framework by Waterman, Peters & Philips

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Strategy Skills

SystemsStaff

Super ordinate

Goals

Structure

Style

Strategy A set of actions that you start with and must maintain

Structure How people and tasks / work are organised

Systems All the processes and information flows that link the organization together

Style How managers behave

Staff How you develop managers (current and future)

Superordinate Goals

Longer-term vision, and all that values stuff, that shapes the destiny of the organization

Skills Dominant attributes or capabilities that exist in the organization

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7S

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Style

Structure

Staff

Strategy

Systems

Skills

Shared values

The way managers collectively behave with respect to use of time, attention & actions

Capabilities possessed by the organization as a whole as distinct from the individuals. Some companies perform extraordinary with ordinary people

Those ideas of what is right and desirable (in corporate and/or individual behavior)which are typical of theorganization and commonto most of its members

The processes & procedures through which things get donefrom day-to-dayThe organization chart

that show who reports to whom and how tasks are both divided up and integrated

The people in theorganization, considered in terms of corporate demographics, notindividual personalities

A coherent set of actions aimed at gaining a sustainable advantage over competition

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7S Framework

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Structure follow strategy Diversified activities call for decentralized structures Changes in strategy create mgt difficulties E.g., The current structure not inline with the new strategies. Functional structures : finance, production, marketing When firms diversify into other Bizs, SBUs are created Purpose : to assign strategic goals to each SBU 3 Characteristics of SBUs by Kotler !! single biz or group of related biz units each belongs to own competitors each unit has manager for strategic planning & performance

All the procedures within an organization [formal & informal] Important for strategy development & implementation e.g., Budgetary systems, financial control systems, rewards

systems, MIS, SOP [ Standard Operation Procedures ] Portfolio management require current SBUs analysis of a firm.

Structure

Systems

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Cont’d

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Culture of an organization : values, beliefs & norms shared by its members.

Culture shaped by Top management – through formal statements & via their actions for particular events.

Conflicts occur when firms with traditionally dominant culture [risk- averse] difficult for significant change.

Organizational Paradigm by Johnson & Scholes : “ take it for granted” long tradition manner in which firms

sees itself & its environment , creating a particular cultural frame of reference.

e.g., banks & financial institutions. Manager may be locked by firm’s history and accepted beliefs

to introduce strategic change. Strategic Drift : Small & incremental changes are more

suitable for staffs rather than immediate or outright change. Strategic change : to be accompanied by culture change. Cultural change at individual level : by Salancik Least effective way : to attack the attitudes & behavior directly More effective way : to encourage & reward for new behaviors.

Style

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Cont’d

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Skills

Strong links between Staffs & Skills Staff’s skills but also the distinctive competences & capabilities

of a firm. E.g., project management skills, after sales service. Specific skills acquired recruitment or equipping current staffs

with new skills. Performance mgt continuous development of the core

competences of the firm & capabilities of staffs & teams. Managers need to know strengths, triggers of the strengths &

learning style of each member of staff.

Strong links between Staff & Style In the past employees regarded as factors of production,

managing through rewards & appraisal systems. Nowadays, HRM developed & staffs recognized as important

contribution for organizational success. Strategic HRM to be linked to Corporate Strategy by

implementing policies & procedures , such as P Mgt. Recruitment & rewards systems strong impact on attitudes &

behaviors of staffs

Staff

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[E] UNITARY & PLURALISTIC PERSPECTIVES BY Robbins & Fox

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• Organizations are harmonious in that there is cooperation between the employer & employee.

• Only one single source of authority : management

Teamwork

• It is expected that no conflict would occur because of same goals from employer & staffs.

No conflict

• Ignore the potential conflict between employer and staffs.

• E.g., employer expectation is highest profit or service whereas staff expect personal gain [pay, career development, work-life balance]

Weakness

• Goals & Mission will be accepted because of team is harmonious.• Resistance to mission only due to misunderstanding or poor communication• Cause of the resistance will be searched & eliminated.

Unitary Perspective Impact on Goals & Strategy

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Cont’d

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• Conflict occur in organizations .• It is natural & inevitable and it has

to be accepted.• Some level of conflict is healthy & it

can lead to debate, challenge & to change.

Conflict of Interests

• Management responsible for harnessing the differences between groups.

Different Interests

•Conflicts can be resolved through compromise.

•Acceptable & workable solution can be found for everyone.

Compromise & Solution

• Different departments have different interests.• So missions & goals will be interpreted differently.• Management responsible for conflicts & compromise.• Conflict create performance & drive for change.

Pluralistic PerspectiveImpact on Goals &

Strategy

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Thank You !!

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Q & A 1. The establishment and achievement of objectives at all levels is critical

to organizational success.Analyze the ways in which an organization can ensure it achieves its objectives. [15 marks]

2. For organizations to be successfully they need to develop strategies. Explain what is meant by “strategy” and explain what organizations need to consider in making these strategies successful. Use relevant theory and workplace examples to support your answer. [15 marks]

3. Define and discuss the term “organizational goals”, and explain how organizations set them. Refer to relevant theory and give examples from the workplace to support your answer. [9 marks]

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