1. F O U N D A T IO N O F
P L A N N IN G

2. P la n n in g
D e f in e d
• Defining the organization’s objectives or goals
• Establishing an overall strategy for achieving
those goals
• Developing a comprehensive hierarchy of plans
to integrate and coordinate activities
P la n n in g is c o n c e r n e d w it h
e n d s ( w h a t is t o b e d o n e ) a s w e ll
a s w it h m e a n s ( h o w it is t o b e
done ).

3. Planning and Performance
 The Relationship Between Planning And Performance
 Formal planning is associated with:
 Higher profits and returns on assets.
 Positive financial results.

4. Reasons Because of changes in environment
For Planing
Provides Reduces
direction Uncertainty
Managers
engage in
planing to
Sets the :
standards for Minimizes waste and
controlling redundancy

5. Ty p e s o f p la n n in g
I n f o r m a l : not written down, short-
term focus; specific to an
organizational unit.
F o r m a l : written, specific, and
long-term focus, involves shared
goals for the organization.

6. Forma l
P la n n in g :
• 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.

7. 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

8. Types of Goals
 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).

9. Types of Plans

10. P la n n in g :
F o c u s a n d Tim e
S t r a t e g ic p la n s
Plans that are organization-wide, establish overall
objectives, and position an organization in terms of its
environment
Ta c t i c a l p l a n s
Plans that specify the details of how an organization’s
overall objectives are to be achieved
S h o r t -t e r m p la n s
Plans that cover less than one year
L o n g -t e r m p la n s
Plans that extend beyond five years

11. Strategic Planning
 Strategic plans
 Apply broadly to the entire organization
 Establish the organization’s overall objectives
 Seek to position the organization in terms of its
environment
 Provide direction to drive an organization’s efforts to
achieve its goals.
 Serve as the basis for the tactical plans.
 Cover extended periods of time
 Are less specific in their details

12. Tactical Planning
 T a c t ic a l p la n s ( o p e r a t io n a l p la n s )
 Apply to specific parts of the organization.
 Are derived from strategic objectives
 Specify the details of how the overall objectives are to
be achieved.
 Cover shorter periods of time
 Must be updated continuously to meet current
challenges

13. Specific and Directional
Plans
 S p e c if ic p la n s
 Plans that have clearly defined objectives and leave no
room for misinterpretation
 “What, when, where, how much, and by whom” (process-
focus)
 D ir e c t io n a l p la n s
 Flexible plans that set out general guidelines
 “Go from here to there” (outcome-focus)

14. Directional versus Specific
Plans

15. Single-Use and Standing
Plans
 S in g le -u s e p la n s
 A plan that is used to meet the needs of a particular or
unique situation
 Single-day sales advertisement
 S t a n d in g p la n
 A plan that is ongoing and provides guidance for
repeatedly performed actions in an organization
 Customer satisfaction policy

16. Establishing Goals and
Developing Plans
 Traditional Goal Setting
 Broad goals are set at the top of the organization.
 Goals are then broken into sub-goals for each
organizational level.
 Assumes that top management knows best because
they can see the “big picture.”
 Goals are intended to direct, guide, and constrain from
above.
 Goals lose clarity and focus as lower-level managers
attempt to interpret and define the goals for their areas
of responsibility.

17. The Downside of Traditional
Goal Setting

18. Management by Objectives
 Management by Objectives (MBO)
 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.
 Links individual and unit performance objectives at all
levels with overall organizational objectives
 Focuses operational efforts on organizationally
important results.
 Motivates rather than controls

19. Cascading of Objectives

20. Elements of MBO
• Goal specificity
• Participative decision
making
• Explicit time period for
performance
• Performance
feedback

21. Does MBO Work?
 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.

22. Characteristics of Well-Designed
Goals
 Written in terms of outcomes,  Challenging yet attainable
not actions  Low goals do not motivate.
 Focuses on the ends, not the  High goals motivate if they can
means. be achieved.
 Measurable and quantifiable  Written down
 Specifically defines how the  Focuses, defines, and makes
outcome is to be measured goals visible.
and how much is expected.  Communicated to all
 Clear as to time frame necessary organizational
 How long before measuring members
accomplishment.  Puts everybody “on the same
page.”

23. S . M . A . R . T.
The acronym S.M.A.R.T.
outlines the set of criteria that
your goal must follow in order
for it to be a well- focused and
achievable goal.

24. Specific
S Do you know what you want to
accomplish with all the details?
Measurable Are you able to assess your
M progress?
Attainable
A Is your goal within your reach
given your current situation?
Relevant
R Is your goal relevant towards
your purpose in life?
T Time Sensitive
for completing your goal?
What is the deadline

25. Steps in Goal Setting
t R e v ie w t h e o r g a n iz a t io n ’ s m is s io n s t a t e m e n t .
D o g o a ls r e f le c t t h e m is s io n ?
E v a lu a t e a v a ila b le r e s o u r c e s .
A r e r e s o u r c e s s u f f ic ie n t t o a c c o m p lis h t h e
m is s io n ?
f D e t e r m in e g o a ls in d iv id u a lly o r w it h o t h e r s .
A r e g o a ls s p e c if ic , m e a s u r a b le , a n d t im e ly ?
i W r it e d o w n t h e g o a ls a n d c o m m u n ic a t e t h e m .
Is e v e r y b o d y o n t h e s a m e p a g e ?
t R e v ie w r e s u lt s a n d w h e t h e r g o a ls a r e b e in g m e t .
W h a t c h a n g e s a r e n e e d e d in m is s io n , r e s o u r c e s ,

26. Developing Plans
 Contingency Factors in A Manager’s Planning
 Manager’s level in the organization
 Strategic plans at higher levels
 Operational plans at lower levels
 Degree of environmental uncertainty
 Stable environment: specific plans
 Dynamic environment: specific but flexible plans

27. P la n n in g in t h e
H ie r a r c h y o f
O r g a n iz a t io n s

28. Strategic Management
 W h a t m a n a g e r s d o t o d e v e lo p t h e
o r g a n iz a t io n ’ s s t r a t e g ie s .
S t r a t e g ie s
 T h e d e c is io n s a n d a c t io n s t h a t
d e t e r m in e t h e lo n g -r u n
p e r f o r m a n c e o f a n o r g a n iz a t io n .

29. Strategic Management
 Strategic Management Process
 A nine-step process that involves strategic planning,
implementation, and evaluation
 The organization’s current identity
 Mission statement
 Defines the purpose of the organization
 Objectives
 Strategic plan
 A document that explains the business founders vision and
describes the strategy and operations of that business.

30. The Strategic Management
Process

31. Analyze the Environment
 Environmental scanning
 Screening large amounts of information to detect
emerging trends and create a set of scenarios
 Competitive intelligence
 Accurate information about competitors that allows
managers to anticipate competitors’ actions rather than
merely react to them

32. SWOT: Identifying
Organizational
Opportunities
 SWOT analysis
 Analysis of an organization’s
strengths, weaknesses,
opportunities, and threats in
order to identify a strategic
niche that the organization
can exploit

33. SWOT Analysis
Strengths Weaknesses Internal
Environment
External
Opportunities Treats Environment

34. SWOT Analysis
 S t r e n g t h s ( s t r a t e g ic )
 In t e r n a l r e s o u r c e s t h a t a r e a v a ila b le o r
t h in g s t h a t a n o r g a n iz a t io n d o e s w e ll
 C o r e c o m p e t e n c y : a u n iq u e s k ill o r
r e s o u r c e t h a t r e p r e s e n t s a c o m p e t it iv e
edge
We a k ne s s e s
 R e s o u r c e s t h a t a n o r g a n iz a t io n la c k s o r
a c t iv it ie s t h a t it d o e s n o t d o w e ll
 O p p o r t u n it ie s ( s t r a t e g ic )
 P o s it iv e e x t e r n a l e n v ir o n m e n t a l f a c t o r s
 Thre a ts
 N e g a t iv e e x t e r n a l e n v ir o n m e n t a l f a c t o r s

35. Grand Strategies
G ro w th s tra te g y
 A s t r a t e g y in w h ic h a n o r g a n iz a t io n
a t t e m p t s t o in c r e a s e t h e le v e l o f it s
o p e r a t io n s ;
R e tre nc hme nt s tra te g y
 A s t r a t e g y c h a r a c t e r is t ic o f a c o m p a n y
t h a t is r e d u c in g it s s iz e , u s u a lly in a n
e n v ir o n m e n t o f d e c lin e
 C o m b in a t io n s t r a t e g y
 T h e s im u lt a n e o u s p u r s u it b y a n
o r g a n iz a t io n o f t w o o r m o r e o f g r o w t h ,
s t a b ilit y , a n d r e t r e n c h m e n t s t r a t e g ie s
 S t a b ilit y s t r a t e g y
 A s t r a t e g y t h a t is c h a r a c t e r iz e d b y a n
a b s e n c e o f s ig n if ic a n t c h a n g e

36. Growth Strategies
 Merger
 Occurs when two companies, usually of similar size,
combine their resources to form a new company
 Acquisition
 Occurs when a larger company buys a smaller one and
incorporates the acquired company’s operations into its
own

37. Competitive Strategies
 Strategies that position an organization in such a way
that it will have a distinct advantage over its
competition
 Cost-leadership strategy
 Becoming the lowest-cost producer in an industry
 Differentiation strategy
 Attempting to be unique in an industry within a broad market
 Focus strategy
 Attempting to establish an advantage (cost/differentiation) in
a narrow market segment

38. Benchmarking
 Benchmarking
 The search for the best practices among competitors or
noncompetitors that lead to their superior performance
 ISO 9000 series
 Standards designed by the International Organization
for Standardization that reflect a process whereby
independent auditors attest that a company’s factory,
laboratory, or office has met quality management
standards

39. TH E E N D