BUS 51 - Mosley7e ch02

Part 2

Planning and Organizing

Chapter 2

Fundamentals
of Planning

Mosley • Pietri
PowerPoint Presentation by Charlie Cook
The University of West Alabama

© 2008 Thomson/South-Western
All rights reserved.

Learning Objectives
Learning Objectives
After reading and studying this chapter, you should
be able to:
1. Discuss the important points about planning.
2. Explain the steps involved in planning.
3. Explain how planning differs at top, middle, and
supervisory management levels.
4. Explain how the hierarchy of objectives works.
5. Discuss some important guidelines in setting
objectives.
6. Differentiate the various kinds of standing and singleuse plans.
7. 2008 Thomson/South- chart.
© Draw a simple PERT
Western. All rights reserved.

2–2

EXHIBIT 2.1

The Three Planning Steps

What is to be
achieved?

What present and
future variables
could influence
what is to be
achieved?

© 2008 Thomson/SouthWestern. All rights reserved.

What, when, who,
where, and how
will the plan be
achieved?

2–3

Achieving Objectives or Goals

4

Implementing the
plan
(organizing,
leading, staffing)

5

Monitoring the
plan’s
implementation
(controlling)


6

Evaluating the
plan’s
effectiveness
(controlling)

2–4

“Siamese Twins” of Management:
Planning and Controlling
Steps in Controlling
Steps in Controlling
1. Setting performance goals or norms.
1. Setting performance goals or norms.
2. Measuring performance.
2. Measuring performance.
3. Comparing performance with goals.
3. Comparing performance with goals.
4. Analyzing performance results.
4. Analyzing performance results.
5.Taking corrective action as needed.
5.Taking
2008 Thomson/South-corrective action as needed.

©

2–5

EXHIBIT 2.2

Lack of Planning


2–6

EXHIBIT 2.3

The Nonplanner’s Cycle


2–7

Contingency Planning Anticipates
Problems

• Contingency Planning

 Thinking in advance about possible

problems or changes that might
arise and having anticipated
solutions available.
 The responses to the
“what if . . . ?”questions that
describe serious events.

• Scenario Planning
 Anticipating alternative future

situations and developing courses
of action for each alternative.

2–8

Questions for Good Contingency Planners
1. What might happen that could cause problems
within my area of responsibility?
2. What can I do to prevent these events from
happening?
3. If these events do occur, what can I do to
minimize their effect?
4. Have similar situations occurred in the past?
If so, how were they handled?

2–9

Strategic Planning
• Strategic Planning by Top Managers Involves:
1. Defining the mission—the purpose the organization

serves and identifies its services, products, and
customers.
2. Setting objectives—the purposes, goals, and desired

results for the organization and its parts.
3. Developing strategies—the activities by which the

organization adapts to its environment in order to
achieve its objectives.

2–10

Strategic and Operational Planning
• Strategic Planning
 Has a longer time horizon, affects the entire

organization, and deals with the organization’s
interface to its external environment.

• Operational Planning
 Consists of intermediate and short-term planning that

facilitates achievement of the long-term strategic
plans set at higher levels.
 Middle and supervisory level managers are more

concerned with operational planning.

2–11

EXHIBIT 2.4

Planning at Three Management Levels

Level

Planning Periods

What Is Planned

Top managers

Strategic long-term
intermediate-range plans
of 1 to 5 or more years

Growth rate
Competitive strategies
New products
Capital investments

Middle
managers

Intermediate- and shortrange plans of 1 month
to 1 year

How to improve scheduling
and coordination
How to exercise better control
at lower levels

Supervisors

Short-range plans of
1 day, 1 week,
1 to 6 months

How to accomplish performance
objectives
How to implement new policies, work
methods, and work assignments
How to increase efficiency (in costs,
quality, etc.)
Employee and supervisor vacations


2–12

Importance of Setting Objectives
• Objectives
 Can by synonymous with goals (semantics).


Some say specific objectives support broader goals.

 Answer the question “What do I want to accomplish?.”
 Serve as a stimulus for motivation and effort.
 Guide managers at lower levels in developing

operational plans and coordinating activities.

• Hierarchy of Objectives
 A network with broad goals at the top level of the

organization and narrower goals for individual
divisions, departments, or employees.

2–13

EXHIBIT 2.5

Hierarchy of Objectives for Computronix

© 2008 Thomson/South*Objectives directly linked to improved cost effectiveness.

2–14

Unified Planning through Objectives
• Unified Planning
 Facilitates coordinating departments to ensure

harmony rather than conflict or competition.
 Is important where coordination is required among

departments or work units.


2–15

Guidelines for Setting Objectives
1. Select key performance areas
for objectives.
2. Be specific, if possible.
3. Set challenging objectives.
4. Keep objective areas in balance.
5. Objectives should be measurable.
6. Involve employees in setting
objectives.
7. Follow up on performance results.


2–16

Types of Plans
• Standing (Repeat-Use) Plans
 Plans that are used repeatedly over a period of time.

• Policy
 Supports attainment of an organizational objective.
 Provides guidance for implementation consistency

among decision makers.
 Sets a boundary on a supervisor’s freedom of action.

• Role of Supervisors in Policy
 Implementing established policies.
 Creating policies within their organizational units.


2–17

EXHIBIT 2.6

Examples of Policies

Compensation policy: “This company shall establish and maintain
wages on a level comparable to those paid for comparable positions
in other firms in the community.”
Overtime policy: “Supervisors shall offer overtime opportunities first
to the most senior employees in the department.”
Grievance policy: “Each employee shall have an opportunity for due
process in all disciplinary matters.”
Purchasing policy: “Where feasible, several sources of supply shall
be utilized so as not to be solely dependent on one supplier.”
Supervisory policy: “Managers shall periodically hold group
meetings with employees for the purposes of discussing objectives,
explaining new developments that may affect employees,
responding to questions, and, in general, encouraging more
effective and accurate communications within the organization.”


2–18

Rules and Procedures
• Rule
 Is a final and definite policy that is invariably enforced

under threat of consequences (i.e., punishment).

• The Role of Supervisors in Rules
 Knowing when and how much flexibility there is in

application of a rule.
 Avoiding overmanagement of employees through the
application of too many rules.

• Procedure
 Sets out the steps to be performed when a particular

course of action (e.g., application of a rule) is taken.
2–19

Types of Plans (cont’d)
• Single-Use Plans
 Are developed to accomplish a specific purpose and

then discarded after use.

• Types of Single-Use Plans
 Program—a large-scale plan composed of a mix of

objectives, policies, rules, and projects.
 Project—a distinct part of a program.
 Budget—a forecast of expected financial

performance over time.
 Schedule—a plan of activities to be performed and

their timing.

2–20

EXHIBIT 2.7

Example of Gantt Chart Showing Activities Needed in Production Start-Up

Gantt Chart
A visual progress
report that identifies
work stages or
activities on a
vertical axis and
scheduled
completion dates
horizontally.


2–21

Program Evaluation and Review Technique
• Program Evaluation and Review Technique
(PERT)
 Is a management scheduling tool.
 Shows relationships among a network of activities to

determine the completion time of a project.
 Is used on highly complex, one-time projects and
requires the use of a computer.

• Critical Path
 The longest route in a PERT network that, in terms of

time and required sequence of activities, is required
to complete the job.
2–22

EXHIBIT 2.8

PERT Network for Completing Machine Overhaul


2–23

Important Terms
Important Terms
•
•
•
•
•
•
•
•
•
•
•
•

budget
contingency planning
critical path
Gantt chart
hierarchy of objectives
mission
objectives
operational planning
policy
procedure
program
Program Evaluation and
Review Technique (PERT)


•
•
•
•
•
•
•
•
•
•

project
rule
scenario planning
schedule
“Siamese twins” of
management
single-use plans
standing plans or repeat-use
plans
strategic planning
strategies
unified planning

2–24

BUS 51 - Mosley7e ch02

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