Planning allows managers to set objectives and determine how to accomplish them. Managers use different types of plans like strategic, operational, and single-use plans. Effective planning requires tools like forecasting, scenario planning, benchmarking, and techniques like management by objectives which involve jointly setting objectives and reviewing results.

1. Fundamentals of Planning

2. Chapter 2 Study Questions
 Why and how do managers plan?
 What types of plans do managers use?
 What are the useful planning tools and
techniques?
 How can plans be well implemented?
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3. Study Question 1: Why and how do managers plan?
 Planning
– The process of setting objectives and determining how to best
accomplish them.
 Objectives
– Identify the specific results or desired outcomes that one intends
to achieve.
 Plan
– A statement of action steps to be taken in order to accomplish the
objectives.
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4. Study Question 1: Why and how do managers plan?
 Steps in the planning process:
– Define your objectives.
– Determine where you stand vis-à-vis objectives.
– Develop premises regarding future conditions.
– Analyze and choose among action alternatives.
– Implement the plan and evaluate results.
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5. Figure 7.1 The roles of planning and controlling in the
management process.
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6. Study Question 1: Why and how do managers plan?
 Benefits of planning:
– Improves focus and flexibility.
– Improves action orientation.
– Improves coordination.
– Improves time management.
– Improves control.
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7. Study Question 1: Why and how do managers plan?
 Personal Time Management Tips:
– DO say “no” to requests that distract from
what you should be doing.
– DON’T get bogged down in details that can
be addressed later.
– DO screen telephone calls, emails, and
meeting requests.
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8. Study Question 1: Why and how do managers plan?
 Personal Time Management Tips:
– DON’T let drop-in visitors instant messaging
use up your time
– DO prioritize your important and urgent work
– DON’T become calendar bound by letting
others control your schedule
– DO follow priorities; do most important and
urgent work first.
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9. Study Question 2: What types of plans do managers use?
 Short-range and long-range plans
– Short-range plans = 1 year or less
– Intermediate-range plans = 1 to 2 years
– Long-range plans = 3 or more years
 People vary in their capability to deal effectively with different
time horizons.
 Higher management levels focus on longer time horizons.
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10. Study Question 2: What types of plans do managers use?
 Strategic and operational plans
– Strategic plans — set broad, comprehensive, and longer-term
action directions for the entire organization.
– Operational plans — define what needs to be done in specific
areas to implement strategic plans.
• Production plans
• Financial plans
• Facilities plans
• Marketing plans
• Human resource plans
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11. Study Question 2: What types of plans do managers use?
 Policies and procedures
– Standing plans
• Policies and procedures that are designed for repeated
use.
– Policy
• Broad guidelines for making decisions and taking action
in specific circumstances.
– Rules or procedures
• Plans that describe exactly what actions are to be taken
in specific situations.
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12. Study Question 2: What types of plans do managers use?
 Budgets and project schedules
– Single-use plans
• Only used once to meet the needs and objectives of a
well-defined situation in a timely manner.
– Budgets
• Single-use plans that commit resources to activities,
projects, or programs.
• Fixed, flexible, and zero-based budgets.
– Projects
• One-time activities that have clear beginning and end
points.
• Project management and project schedules.
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13. Study Question 3: What are the useful planning tools and
techniques?
 Forecasting
– Making assumptions about what will happen in the future.
– Qualitative forecasting uses expert opinions.
– Quantitative forecasting uses mathematical and statistical analysis.
– All forecasts rely on human judgment.
– Planning involves deciding on how to deal with the implications of
a forecast.
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14. Study Question 3: What are the useful planning tools and
techniques?
 Contingency planning
– Identifying alternative courses of action that
can be implemented to meet the needs of
changing circumstances.
– Contingency plans anticipate changing
conditions.
– Contingency plans contain trigger points.
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15. Study Question 3: What are the useful planning tools and
techniques?
 Scenario planning
– A long-term version of contingency planning.
– Identifying alternative future scenarios.
– Plans made for each future scenario.
– Increases organization’s flexibility and preparation
for future shocks.
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16. Study Question 3: What are the useful planning tools and
techniques?
 Benchmarking
– Use of external comparisons to better evaluate
current performance and identify possible actions
for the future.
– Adopting best practices of other organizations
that achieve superior performance.
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17. Study Question 3: What are the useful planning tools and
techniques?
 Use of staff planners
– Coordinating the planning function for the total
organization or one of its major components.
– Possible communication gaps between staff
planners and line management.
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18. Study Question 4: How can plans be well implemented?
 Project management…
Makes sure activities required to complete a
project are planned well and accomplished on
time and within budget
 Projects – one-time activities with many
component tasks that must be completed in
proper order and within budget
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19. Study Question 4: How can plans be well implemented?
 Gantt charts – graphic display of scheduled tasks
required to complete a project
 CPM/PERT – a combination of the critical path method
and the program evaluation and review technique
 Critical path – pathway from project start to finish that
involves activities with the longest completion times
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20. Study Question 4: How can plans be well implemented?
 Key issues and principles in the goal-setting
process:
– Set specific goals.
– Set challenging goals.
– Ensure goals are attainable.
– Goals must be timely.
– Make sure goals are measurable.
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21. Study Question 4: How can plans be well implemented?
 Goal-setting theory
– Participation in goal setting
• unlocks the motivational potential of goal setting.
• management by objectives (MBO) promotes
participation.
• when participation is not possible, workers will
respond positively if supervisory trust and support
exist.
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22. Figure 7.2 A sample hierarchy
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23. Study Question 4: How can plans be well implemented?
 Management by Objectives (MBO)
– A structured process of regular communication.
– Supervisor/team leader and workers jointly set
performance objectives.
– Supervisor/team leader and workers jointly review
results.
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24. Study Question 4: How does management by objectives
operate?
 MBO involves a formal agreement specifying …
– Workers’ performance objectives for a specific time period.
– Plans through which performance objectives will be accomplished.
– Standards for measuring accomplishment of performance
objectives.
– Procedures for reviewing performance results.
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25. Figure 7.3 Management by objectives as an integrated planning
and control framework.
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26. Study Question 4: How does management by objectives
operate?
 The MBO process:
– Supervisor and workers jointly set objectives,
establish standards, and choose actions.
– Workers act individually to perform tasks;
supervisors act individually to provide necessary
support.
– Supervisor and workers jointly review results,
discuss implications, and renew the MBO cycle.
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27. Study Question 4: How does management by objectives operate
 Types of MBO performance objectives
– Improvement
– Personal development
– Maintenance
 Criteria for effective performance objectives
– Specific
– Time defined
– Challenging
– Measurable
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28. Study Question 4: How does management by objectives
operate?
 Pitfalls to avoid in using MBO
– Tying MBO to pay.
– Focusing too much attention on easily quantifiable
objectives.
– Requiring excessive paperwork.
– Having managers tell workers their objectives.
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29. Study Question 4: How does management by objectives
operate?
 Advantages of MBO
– Focuses workers on most important tasks and
objectives.
– Focuses supervisor’s efforts on important areas of
support.
– Contributes to relationship building.
– Gives workers a structured opportunity to
participate in decision making.
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30. Study Question 4: How can plans be well implemented?
 Participation and involvement
– Participatory planning requires that the planning process
include people who will be affected by the plans and/or will
help implement them.
– Benefits of participation and involvement:
• Promotes creativity in planning.
• Increases available information.
• Fosters understanding, acceptance, and commitment to the
final plan.
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31. Figure 7.4 How participation and involvement help build
commitments to plans.
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