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im PLANNING

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imGoal, Plan And Planning

A desired future state that the organization attempts to realize.Goal

A blueprint specifying the resource allocations, schedule, and other actions necessary for attaining goals.Plan

The act of determining the organization’s goals and the means for achieving them.Planning

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imLevels Of Goals/Plans And Their Importance

Strategic

Goals/Plans

Senior Management

(Organization as a whole)

Operational Goals/Plans

Lower

Management

(Departments, in

divid

uals)

External MessageLegitimacy for investors,

customers, suppliers, community

Internal Message

Legitimacy, motivation,

guides, rationale, standards

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imLevels of Goal in Organizations

A broadly stated definition of the organization’s basic business scope and operations that distinguishes it from similar types of organizations

Mission Statement

Broad statements about the organization’s direction and future that pertain to the organization as a whole rather than to specific divisions or departments

Strategic Goals

The action steps by which an organization intends to attain its strategic goals

Strategic Plans

The organization’s reason for existenceMissions

Mission Statement

Strategic Goals

Strategic Plans

Missions

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imComponents of Mission Statement

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Customers : Who are the organization’s customers?

Products or services : What are the organization’s major products or services?

Location : Where does the organization compete?

Technology : What is the organization’s basic technology?

Concern for survival : What is the organization’s commitment to economic objectives?Philosophy : What are the beliefs, values, aspiration, and philosophical priorities of the organization?Self-concept : What are the organization’s major strengths and competitive advantage?Concern for public image : What are the organization’s public responsibilities, and what image is desired?Concern for employees : What is the organization’s attitude towards employees?

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imHierarchy of Goal

StrategicGoals

StrategicPlans

TacticalPlans

TacticalGoals

OperationalPlans

OperationalGoals

Top ManagementOrganization wide

perspective

Middle ManagementDepartment perspective

First-Level ManagementUnit / individual perspective

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imHierarchy of Goal

Plans developed at the organization’s lower levels that specify action steps towards achieving operational goals and that support tactical planning activities.

Operational Plans

Plans designed to help execute major strategic plans and to accomplish a specific part of the company’s strategy.

Tactical Plans

Specific, measurable results expected from departments, work groups, and individuals within the organization.

Operational Goals

Goals that define the outcomes that major divisions and departments must achieve in order for the organization to reach its overall goals.

Tactical Goals

The action steps by which an organization intends to attain its strategic goals.

Strategic Plans

Broad statements of where the organization wants to be in the future: pertain to the organization as a whole rather than to specific divisions or departments

Strategic goals

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imHierarchy of Goal

Manufacture both standard and custom metal products for various applications in the machine tool industry

PRESIDENT12% return on investment

5% growthNo employee layoffs

Excellent service to customers

FINANCE V.P.Keep outstanding accounts below

Rs.500,000Below borrowing below

Rs.1.250,000Provide monthly budget statements

for departments

PRODUCTION V.P.Manufacture 1,200,000 products at

average cost of Rs.19Scrap rate of 3% or less

Increase manufacturing productivity by 2%

Resolve employee grievances within 3 working days

Marketing V.P.Sell 1,200,000 units at average

price of Rs.27Introduce 1 new product line Increase sales by 5% in new

market areasOpen 1 new sales office

ACCOUNT RECEIVABLE MANAGER

Issue invoices within 5 days of saleCheck new customers’ credit within

1 working dayAllow no account to be overdue

more than 5 months

SUPERVISOR-AUTOMATIC MACHINES

Produce 150,000 standard units at average cost of Rs.16Have machine downtime of

less than 7%

SALES MANAGER-REGION 1Respond to customer inquiries

within 2 hoursMeet sales quotes of 120,600

unitsWork with salespeople to:

MISSION

Strategic Goals

Tactical Goals

Operational Goals

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imCriteria for Effective Goals

Linked to Rewards

Defined Time Period

Specific and Measurable

Challenging but Realistic

Cover Key Result Area

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imPlanning Types and Models

Management by Objectives

A method of management whereby managers and employees define goals for every department, project, and person and use them to monitor subsequent performance.

Single-Use Plans

Plans that are developed to achieve a set of goals that are unlikely to be repeated in the future.

Standing plans

Ongoing plans used to provide guidance for tasks performed repeatedly within the organization.

Shewhart Cycle

A planning cycle used in companies that have instituted quality management; also called PDCA – plan, do, check, act – Cycle.

Contingency plans

Plans that define company responses to specific situation, such as emergencies or set backs

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imManagement by Objectives (MBO)

Four major activities must occur in order for MBO to be successful

Set Goals

Appraise overall

performance

Develop action plan

Review progress

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imModel of the MBO Process

Corporate strategic goalsDepartmental goalsIndividual goals

Action Plan

Review Progress

Take Corrective Action

Appraise Performance

Step 1: Set GoalsStep 2: Develop Action Plan

Step 3: Review Progress

Step 4: Appraise Overall Performance

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imBenefits and Problems with MBO

1. Manager and employee efforts are focused on activities that will lead to goal attainment.

2. Performance can be improved at all company levels.

3. Employees are motivated.4. Departmental and individual goals

are aligned with company goals.

1. Constant change prevents MBO from taking hold.

2. An environment of poor employer-employee relations reduces MBO effectiveness

3. Strategic goals may be displaced by operational goals.

4. Mechanistic organizations and values that discourage participants can harm the MBO process.

5. Too much paperwork saps MBO energy.

Benefits of MBO Problems with MBO

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imMajor Types of Standing Plans

PolicyBroad in scope – a general guide to actionBased on organization's overall goals/strategic planDefines boundaries within which to make decisions

Examples:Drug-free workplace policiesContinuous improvementShewhart Cycle Rule Narrow in scope

Describes how a specific action is to be performedMay apply to specific setting

Examples:No-smoking rule in areas of plant where hazardous materials are stored

ProcedureSometimes called a standard operating procedureDefines a precise series of steps to attain certain goalsMay apply to specific setting

Examples:Procedures for issuing refundsProcedures for handling employee grievances

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imContingency Plans

When organizations are operating in a highly uncertain environment or dealing with long time horizons, sometimes planning can seem like a waste of time. In fact, strict plans may even hinder rather than help them form more flexible plans.

To develop contingency plans, planners indentify uncomfortable factors, such as recession, inflation, technological developments, or safety accidents. To minimize the impact of these potential factors, a planning team can forecast the worst-case scenarios.

Example:If sales fall 20% and prices drop 8%, what will the

company do?

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imShewhart Cycle of Continuous Improvement

4. ACTAnalyze results;

put learning into action

1. PlanDecide what changes are

desirable, and plan a change

or test

2. DoCarry out the change or test

3. CheckObserve the

results

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imPlanning Time Horizon

Short-TermPlanning

(Operational Goals)

Intermediate –Term Planning

(Tactical Golas}

Long-Term Planning(Strategic Planning}

Today 1 Year 2 Years 3 Years 4 Years Six Years & Beyond

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imThe New Planning Paradigm

Today, some companies are taking decentralized planning even further and involving workers at every level of the

organization in the planning process. In this new paradigm, a decentralized planning staff – made up of middle

managers and other planners – works with a planning task force of line managers and frontline workers to develop

dynamic plans that meet the organization’s needs .

Decentralized Planning StaffA group of planning specialists assigned to major departments and divisions to help managers develop their own strategic plans

Planning Task forceA temporary group consisting of line managers responsible for developing strategic plans

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imWhat is Strategic Management?

Strategic management is the set of decisions and actions used to formulate and implement strategies that will

provide a competitively superior fit between the organizations and its environment so as to achieve

organizational goals.

Essence of StrategyIs choosing to perform different activities differently than

competitors do.

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imStrategic Formulation versus Implementation

The final aspect of strategic management involves the stages of formulation and implementation.

Strategy formulation includes the planning and decision making that leads to the establishment of the firm’s goals and the development of

specific strategic plan. Strategic formulation may include external environment and internal

problems and integrating the results into goals and strategy.

Strategy implementation is the administration and execution of the strategic plan. Managers may use persuasion, new equipment ,

changes in organization structure , or a reward system to ensure that employees and resources are used to make formulated strategy a

reality.

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imThe Strategic Management Process

Evaluate CurrentMissionGoalsStrategies

Scan External EnvironmentNational Global

Identity strategic Factors:•Opportunities•Threats

Identify Strategic Factors:StrategiesWeaknesses

Scan internal EnvironmentCore CompetenceSynergyValue Creation

Define New:MissionGoalsGrand Strategy

Formulate Strategy:CorporateBusinessFunctional

Implement Strategy via Changes in:

Leadership/cultureStructureHuman ResourceInformation and control systems

SWOT

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imPorter’s Competitive Forces and Strategies

Potential New Entrants

Bargaining Power of Buyers

Bargaining Power of Suppliers

Threat of Substitute Products

Rivalry Among Competitors

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4

5

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imCompetitive Strategies

Differentiation

Cost Leadership

Focus

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imThank You

End of Planning