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Management Chap 02

The document discusses the foundations of planning including defining it as a primary managerial activity, describing types of planning and purposes of planning. It also examines the relationship between planning and performance, elements of planning including goals and plans, and different types of plans.

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3916-MUZAMMIL AHMED
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16 views

Management Chap 02

The document discusses the foundations of planning including defining it as a primary managerial activity, describing types of planning and purposes of planning. It also examines the relationship between planning and performance, elements of planning including goals and plans, and different types of plans.

Uploaded by

3916-MUZAMMIL AHMED
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Chapter No 02

Foundation of
Planning
 Planning
 A primary managerial activity that involves:
 Defining the organization’s goals
 Establishing an overall strategy for achieving those
goals
 Developing plans for organizational work activities.
 Types of planning
 Informal: not written down, short-term focus; specific
to an organizational unit.
 Formal: written, specific, and long-term focus, involves
shared goals for the organization.
 Purposes of Planning
 Provides direction
 Reduces uncertainty
 Minimizes waste and redundancy
 Sets the standards for controlling

7–3
 The Relationship Between Planning And
Performance
 Formal planning is associated with:
 Higher profits and returns on assets.
 Positive financial results.
 The quality of planning and implementation affects
performance more than the extent of planning.
 The external environment can reduce the impact of
planning on performance,
 Formal planning must be used for several years
before planning begins to affect performance.
 Elements of Planning
 Goals (also Objectives)
 Desired outcomes for individuals, groups, or entire
organizations
 Provide direction and evaluation performance criteria
 Plans
 Documents that outline how goals are to be
accomplished
 Describe how resources are to be allocated and
establish activity schedules

© 2007 Prentice Hall, Inc. All rights


reserved. 7–5
 Financial Goals
 Are related to the expected internal financial
performance of the organization.
 Strategic Goals
 Are related to the performance of the firm relative to
factors in its external environment (e.g.,
competitors).
 Stated Goals versus Real Goals
 Broadly-worded official statements of the
organization (intended for public consumption) that
may be irrelevant to its real goals (what actually goes
on in the organization).
 Strategic Plans
 Apply to the entire organization.
 Establish the organization’s overall goals.
 Seek to position the organization in terms of its
environment.
 Cover extended periods of time.
 Operational Plans
 Specify the details of how the overall goals are to be
achieved.
 Cover short time period.
 Long-Term Plans
 Plans with time frames extending beyond three years
 Short-Term Plans
 Plans with time frames on one year or less
 Specific Plans
 Plans that are clearly defined and leave no room for
interpretation
 Directional Plans
 Flexible plans that set out general guidelines, provide
focus, yet allow discretion in implementation.
 Single-Use Plan
 A one-time plan specifically designed to meet the
need of a unique situation.
 Standing Plans
 Ongoing plans that provide guidance for activities
performed repeatedly.
 Management By Objectives (MBO)
 Specific performance goals are jointly determined
by employees and managers.
 Progress toward accomplishing goals is periodically
reviewed.
 Rewards are allocated on the basis of progress
towards the goals.
 Key elements of MBO:
 Goal specificity, participative decision making, an
explicit performance/evaluation period, feedback
1. The organization’s overall objectives and strategies are
formulated.
2. Major objectives are allocated among divisional and departmental
units.
3. Unit managers collaboratively set specific objectives for their
units with their managers.
4. Specific objectives are collaboratively set with all department
members.
5. Action plans, defining how objectives are to be achieved, are
specified and agreed upon by managers and employees.
6. The action plans are implemented.
7. Progress toward objectives is periodically reviewed, and
feedback is provided.
8. Successful achievement of objectives is reinforced by
performance-based rewards.
 Reason for MBO Success
 Top management commitment and involvement
 Potential Problems with MBO Programs
 Not as effective in dynamic environments that
require constant resetting of goals.
 Overemphasis on individual accomplishment may
create problems with teamwork.
 Allowing the MBO program to become an annual
paperwork shuffle.
1. Review the organization’s mission statement.
Do goals reflect the mission?
2. Evaluate available resources.
Are resources sufficient to accomplish the mission?
3. Determine goals individually or with others.
Are goals specific, measurable, and timely?
4. Write down the goals and communicate them.
Is everybody on the same page?
5. Review results and whether goals are being met.
What changes are needed in mission, resources, or goals?
 Criticisms of Planning
 Planning may create rigidity.
 Plans cannot be developed for dynamic
environments.
 Formal plans cannot replace intuition and creativity.
 Planning focuses managers’ attention on today’s
competition not tomorrow’s survival.
 Formal planning reinforces today’s success, which
may lead to tomorrow’s failure.
 Effective Planning in Dynamic Environments
 Develop plans that are specific but flexible.
 Understand that planning is an ongoing process.
 Change plans when conditions warrant.
 Persistence in planning eventually pay off.
 Flatten the organizational hierarchy to foster the
development of planning skills at all organizational
levels.

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