Managemnt Fom 03
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This document discusses the fundamentals of planning for organizations. It defines planning as setting objectives and strategies to achieve goals, and developing coordinated plans. Planning considers both ends (goals) and means (how to achieve them). The document outlines criticisms of formal planning and discusses how planning quality and implementation contribute more to performance than the extent of planning. It also describes different types of plans based on their focus, time horizon, intended use, and level of specificity. Management by objectives and analyzing the external environment are presented as important planning approaches.
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Managemnt Fom 03
- 1. © 2008 Prentice Hall, Inc. All rights reserved. PowerPoint Presentation by Charlie Cook The University of West Alabama C H A P T E R 3 Part II: Planning Fundamentals of Management Sixth Edition Robbins and DeCenzo with contributions from Henry Moon Foundations of Planning
- 2. © 2008 Prentice Hall, Inc. All rights reserved. 3–2 Planning DefinedPlanning Defined • Defining the organization’s objectives or goalsDefining the organization’s objectives or goals • Establishing an overall strategy for achievingEstablishing an overall strategy for achieving those goalsthose goals • Developing a comprehensive hierarchy of plansDeveloping a comprehensive hierarchy of plans to integrate and coordinate activitiesto integrate and coordinate activities Planning is concerned with ends (what is to bePlanning is concerned with ends (what is to be done) as well as with means (how it is to be done).done) as well as with means (how it is to be done).
- 3. © 2008 Prentice Hall, Inc. All rights reserved. 3–3 Criticisms Of Formal PlanningCriticisms Of Formal Planning • Planning may create rigidity.Planning may create rigidity. • Plans can’t be developed for a dynamicPlans can’t be developed for a dynamic environment.environment. • Formal plans can’t replace intuition andFormal plans can’t replace intuition and creativity.creativity. • Planning focuses managers’ attention onPlanning focuses managers’ attention on today’s competition, not on tomorrow’s survival.today’s competition, not on tomorrow’s survival. • Formal planning reinforces success, which mayFormal planning reinforces success, which may lead to failure.lead to failure.
- 4. © 2008 Prentice Hall, Inc. All rights reserved. 3–4 The Bottom Line: Does Planning ImproveThe Bottom Line: Does Planning Improve Organizational Performance?Organizational Performance? • Formal planning means higher profits, higherFormal planning means higher profits, higher return on assets, and other positive financialreturn on assets, and other positive financial results.results. • Planning process quality and implementationPlanning process quality and implementation contribute more to high performance than doescontribute more to high performance than does the extent of planning.the extent of planning. • When external environment restrictions allowedWhen external environment restrictions allowed managers few viable alternatives, planning didmanagers few viable alternatives, planning did not lead to higher performance.not lead to higher performance.
- 5. © 2008 Prentice Hall, Inc. All rights reserved. 3–5 Planning: Focus and TimePlanning: Focus and Time • Strategic PlansStrategic Plans Are organization-wide, establish overall objectives,Are organization-wide, establish overall objectives, and position an organization in terms of itsand position an organization in terms of its environment.environment. • Tactical PlansTactical Plans Specify the details of how an organization’s overallSpecify the details of how an organization’s overall objectives are to be achieved.objectives are to be achieved. • Short-term PlansShort-term Plans Cover less than one year.Cover less than one year. • Long-term PlansLong-term Plans Extend beyond five years.Extend beyond five years.
- 6. © 2008 Prentice Hall, Inc. All rights reserved. 3–6 Strategic PlanningStrategic Planning • Strategic PlansStrategic Plans Apply broadly to the entire organization.Apply broadly to the entire organization. Establish the organization’s overall objectives.Establish the organization’s overall objectives. Seek to position the organization in terms of itsSeek to position the organization in terms of its environment.environment. Provide direction to drive an organization’s efforts toProvide direction to drive an organization’s efforts to achieve its goals.achieve its goals. Serve as the basis for the tactical plans.Serve as the basis for the tactical plans. Cover extended periods of time.Cover extended periods of time. Are less specific in their details.Are less specific in their details.
- 7. © 2008 Prentice Hall, Inc. All rights reserved. 3–7 Tactical PlanningTactical Planning • Tactical Plans (Operational Plans)Tactical Plans (Operational Plans) Apply to specific parts of the organization.Apply to specific parts of the organization. Are derived from strategic objectives.Are derived from strategic objectives. Specify the details of how the overall objectives areSpecify the details of how the overall objectives are to be achieved.to be achieved. Cover shorter periods of time.Cover shorter periods of time. Must be updated continuously to meet currentMust be updated continuously to meet current challenges.challenges.
- 8. © 2008 Prentice Hall, Inc. All rights reserved. 3–8 Specific and Directional PlansSpecific and Directional Plans • Specific PlansSpecific Plans Clearly defined objectives and leave no room forClearly defined objectives and leave no room for misinterpretation.misinterpretation. ““What, when, where, how much, and by whom” (process-What, when, where, how much, and by whom” (process- focus)focus) • Directional PlansDirectional Plans Are flexible plans that set out general guidelines.Are flexible plans that set out general guidelines. ““Go from here to there” (outcome-focus)Go from here to there” (outcome-focus)
- 9. © 2008 Prentice Hall, Inc. All rights reserved. 3–9 Single-Use and Standing PlansSingle-Use and Standing Plans • Single-Use PlanSingle-Use Plan Is used to meet the needs of a particular or uniqueIs used to meet the needs of a particular or unique situation.situation. Single-day sales advertisementSingle-day sales advertisement • Standing PlanStanding Plan Is ongoing and provides guidance for repeatedlyIs ongoing and provides guidance for repeatedly performed actions in an organization.performed actions in an organization. Customer satisfaction policyCustomer satisfaction policy
- 10. © 2008 Prentice Hall, Inc. All rights reserved. 3–10 Management by ObjectivesManagement by Objectives • Management by Objectives (MBO)Management by Objectives (MBO) A system in which specific performance objectivesA system in which specific performance objectives are jointly determined by subordinates and theirare jointly determined by subordinates and their supervisors, progress toward objectives issupervisors, progress toward objectives is periodically reviewed, and rewards are allocated onperiodically reviewed, and rewards are allocated on the basis of that progress.the basis of that progress. Links individual and unit performance objectives atLinks individual and unit performance objectives at all levels with overall organizational objectives.all levels with overall organizational objectives. Focuses operational efforts on organizationallyFocuses operational efforts on organizationally important results.important results. Motivates rather than controls.Motivates rather than controls.
- 11. © 2008 Prentice Hall, Inc. All rights reserved. 3–11 Setting Employee ObjectivesSetting Employee Objectives • Identify an employee’s key job tasks.Identify an employee’s key job tasks. • Establish specific and challenging goals forEstablish specific and challenging goals for each key task.each key task. • Allow the employee to actively participate.Allow the employee to actively participate. • Prioritize goals.Prioritize goals. • Build in feedback mechanisms to assess goalBuild in feedback mechanisms to assess goal progress.progress. • Link rewards to goal attainment.Link rewards to goal attainment.
- 12. © 2008 Prentice Hall, Inc. All rights reserved. 3–12 The Organization’s Current IdentityThe Organization’s Current Identity • Mission StatementMission Statement Defines the present purpose of the organization.Defines the present purpose of the organization. • ObjectivesObjectives Are specific measures (milestones) for achievement,Are specific measures (milestones) for achievement, progress, and performance.progress, and performance. • Strategic PlanStrategic Plan Explains the business founders’ vision and describesExplains the business founders’ vision and describes the strategy and operations of that business.the strategy and operations of that business.
- 13. © 2008 Prentice Hall, Inc. All rights reserved. 3–13 Analyze the EnvironmentAnalyze the Environment • Environmental ScanningEnvironmental Scanning Involves screening large amounts of information toInvolves screening large amounts of information to detect emerging trends and create a set of scenariosdetect emerging trends and create a set of scenarios • Competitive IntelligenceCompetitive Intelligence Information about competitors that allows managersInformation about competitors that allows managers to anticipate competitors’ actions rather than merelyto anticipate competitors’ actions rather than merely react to themreact to them
- 14. © 2008 Prentice Hall, Inc. All rights reserved. 3–14 SWOT AnalysisSWOT Analysis • Strengths (Strategic)Strengths (Strategic) Internal resources that are available or things that anInternal resources that are available or things that an organization does well.organization does well. Core competency: a unique skill or resource that represents aCore competency: a unique skill or resource that represents a competitive edge.competitive edge. • WeaknessesWeaknesses Resources that an organization lacks or activities that it doesResources that an organization lacks or activities that it does not do well.not do well. • Opportunities (Strategic)Opportunities (Strategic) Positive external environmental factors.Positive external environmental factors. • ThreatsThreats Negative external environmental factors.Negative external environmental factors.
- 15. © 2008 Prentice Hall, Inc. All rights reserved. 3–15 Sustaining a Competitive AdvantageSustaining a Competitive Advantage • Competitive advantage counts for little if itCompetitive advantage counts for little if it cannot be sustained over the long-term.cannot be sustained over the long-term. Factors reducing competitive advantageFactors reducing competitive advantage Evolutionary changes in the industryEvolutionary changes in the industry Technological changesTechnological changes Customer preferencesCustomer preferences Imitation by competitorsImitation by competitors Defending competitive advantageDefending competitive advantage Patents, copyrights, trademarks, regulations, and tariffsPatents, copyrights, trademarks, regulations, and tariffs Competing on priceCompeting on price Long-term contracts with suppliers (and customers)Long-term contracts with suppliers (and customers)
- 16. © 2008 Prentice Hall, Inc. All rights reserved. 3–16 Quality as a Strategic WeaponQuality as a Strategic Weapon • BenchmarkingBenchmarking The search for the best practices among competitorsThe search for the best practices among competitors or noncompetitors that lead to their superioror noncompetitors that lead to their superior performance.performance. • ISO 9000 seriesISO 9000 series Quality management standards set by theQuality management standards set by the International Organization for Standardization (ISO)International Organization for Standardization (ISO) • ISO 14000ISO 14000 Companies achieving this certification will haveCompanies achieving this certification will have demonstrated that they are environmentallydemonstrated that they are environmentally responsible.responsible.
- 17. © 2008 Prentice Hall, Inc. All rights reserved. 3–17 Attaining Six Sigma QualityAttaining Six Sigma Quality • Six SigmaSix Sigma A philosophy and measurement process developedA philosophy and measurement process developed in the 1980s at Motorola.in the 1980s at Motorola. To design, measure, analyze, and control the input side of aTo design, measure, analyze, and control the input side of a production process to achieve the goal of no more than 3.4production process to achieve the goal of no more than 3.4 defects per million parts or procedures.defects per million parts or procedures. A philosophy and measurement process thatA philosophy and measurement process that attempts to design in quality as a product is beingattempts to design in quality as a product is being made.made.
Editor's Notes
- Planning is defining organizational goals, establishing a strategy for reaching those goals, and developing a comprehensive hierarchy of plans to integrate and coordinate activities. It can be either formal or informal, depending on the time frame and amount of documentation
- Planning may create rigidity. Assuming that conditions will remain relatively stable, formal plans lock organizational units into specific goals and time frames. Plans can’t be developed for a dynamic environment. Managing chaos and turning disasters into opportunities requires flexibility, not rigid, formal plans. Formal plans can’t replace intuition and creativity. Developing strategy depends as much on intuition and creativity as it does on formal analysis. Because most successful strategies are visions, not plans, merely following a systematic framework will not yield incisive thinking. Planning focuses a manager’s attention on today’s competition, not on tomorrow’s survival. Formal planning stresses capitalizing on existing opportunities, not reinventing or creating an industry. Formal planning reinforces success, which may lead to failure. Success can breed failure. Since change is motivated by problems, success may not motivate managers to challenge the status quo.
- The evidence is mostly positive and suggests several conclusions: Formal planning in an organization is frequently associated with positive financial results. In those organizations in which formal planning did not lead to higher performance, the environment was typically the culprit. The quality of the planning process and the implementation of the plans affect performance more than does the extent of the plans.
- The short-term covers less than one year, the intermediate-term covers one to five years, and the long-term is five years or more. The commitment concept is relevant to classifying plans because the more current plans affect future commitments, the longer the time frame for which managers must plan. The length of the planning horizon increases up the management hierarchy and decisions of top management imply greater commitments of resources than decisions of lower managers. With respect to the degree of variability, the greater the uncertainty, the more plans should be of the short-term variety. This is so because shorter-term plans allow for better accommodation of change by providing more flexibility.
- It appears intuitively correct that specific plans are always preferable to directional, or loosely guided plans. Specific plans have clearly defined objectives and leave no room for misinterpretation. However, specific plans are not without drawbacks. They require a clarify and predictability that often does not exist. When uncertainty is high and flexibility is needed, directional plans are preferable. Since directional plans identify general guidelines, they provide focus but do not lock managers into specific objectives or courses of action
- Some plans are meant to be used only once; others are used repeatedly. A single-use plan is used to meet the needs for a particular or unique situation. A standing plan is ongoing and guides for actions that are performed repeatedly in an organization.
- Management by objectives (MBO) emphasizes participation to set goals that are tangible, verifiable, and measurable. MBO’s appeal lies in its emphasis on converting overall organizational objectives into specific objectives for units and members of the organization.
- Employees should understand what they are trying to accomplish. Managers can help employees set work goals by using the following guidelines:
- First, management must identify the mission, objectives, and strategies of the organization. A mission statement defines an organization’s purpose and provides guidance to managers and employees. A clear mission statement forces management to identify the scope of its products or services carefully It answers questions such as the following: What business are we in? What are we trying to accomplish? All organizations have strengths and weaknesses.
- In step two, managers analyze the environment in which the organization operates: actions of competitors, pending government legislation, preferences of customers, and supply of labor. Managers use environmental scanning to anticipate and interpret environmental changes. The term refers to screening information to detect trends, monitor the actions of others, and create scenarios. This slide and the next one review four environmental-scanning techniques: competitive intelligence, scenario development, forecasting, and benchmarking. The seeking of basic information about competitors, competitive intelligence can allow managers to anticipate rather than react to the actions of competitors. Advertisements, promotional materials, press releases, governmental reports, annual reports, want-ads, newspaper articles, databases, trade shows, industry studies, and competitor’s products supply 95% of the data required for this technique to work.
- Management analyzes the internal resources of the organization, such as capital, skills of workers, or patents. These resources are the strengths of the organization. The strengths that represent unique skills or resources are called the organization’s distinctive competence. In contrast, weaknesses are resources that are lacking in the organization. Based on the results of the SWOT analysis, management must complete step six by assessing the opportunities that are available, reevaluating its missions and objectives, and making necessary changes.
- To sustain a competitive advantage, managers create barriers to competition through patents, copyrights, or trademarks; using economies of scale to reduce price to boost volume; locking up suppliers with exclusive contracts and lobbying for government policies to limit foreign competition.
- TQM focuses on quality and continuous improvement. If integrated into ongoing operations, incremental improvement can accumulate into a competitive advantage that others cannot steal. Benchmarking is the practice of using a measurable scale to compare key business operations with those of successful organizations. It involves four steps. (1) Form a team to identify the following: benchmarking targets, “best practices” of other organizations, and data collection methods. (2) Collect data from internal operations and external organizations. (3) Analyze data to identify performance gaps and determine their causes. (4) Prepare and implement an action plan to meet or exceed performance standards. To show that its products meet world standards for quality management, a company must gain ISO 9000 certification. The certificate attests that the company has met rigorous standards for quality and consistency as defined by the International Organization for Standardization in Geneva.
- The six sigma philosophy was developed in the 1980s at Motorola. Its premise is to “design, measure, analyze, and control the input side of a production process.” Rather than measuring the quality of a product after it is produced, six sigma uses statistical models, specific quality tools, high levels of rigor, and process improvement “know how” to design in quality as the product is being made. Accordingly, six sigma is designed to decrease defects to fewer than four per million items produced.