Planning is a primary managerial activity that involves defining goals, establishing strategies, and developing plans. There are different levels and types of planning including strategic, operating, tactical, and unit plans. The benefits of planning include providing direction, allocating resources, determining budgets, assigning roles and responsibilities, and enabling better control. The strategic planning process involves analyzing the internal and external environment, formulating strategies, developing action plans, implementation, and review. Mission, vision, values and goals set the context for planning by describing the organization's purpose and desired future state.

1. chapter
5
Planning and
Decision Making
McGraw-Hill/Irwin
Principles of Management

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What Is 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

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Step in Planning
• Choose goals
• Identify actions
• Allocate responsibility
• Review Performance
• Make adjustments

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Unit plans (heads of departments, teams, individuals
Levels of Planning
Operating plans (heads of functions)
Business-level strategic plan
(heads of businesses)
Shapedbyinput
Setsthecontextfor
Corporate-level
Strategic plan (CEO)

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Formal Planning
• Formal planning
- Specific goals covering a specific time period
- Written and shared with organizational members
• Informal planning

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The Benefits of
Planning
• Planning gives direction and purpose to an organization; it is a
mechanism for deciding the goals of the organization.
• Planning is the process by which management allocates scarce
resources, including capital and people, to different activities.
• Planning drives operating budgets-strategic, operations, and
unit plans determine financial budgets for the coming year.
• Planning assigns roles and responsibilities to individuals and
units within the organization.
• Planning enables managers to better control the organization.

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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

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Types of Plans
• Strategic plans: A plan that outlines the major goals of an
organization and the organizationwide strategies of attaining
those goals.
• Operating plans: Plans that specify goals, actions, and
responsibility for individual functions.
• Tactical plans: The action managers adopt over the short to
medium term to deal with a specific opportunity or threat that
has emerged.
• Unit plans: Plans for departments within functions, work
teams, or individuals.

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Types of Plans
• Single-use plans: Plans that address unique events that do
not reoccur.
• Standing plans: Plans used to handle events that reoccur
frequently.
• Contingency plans: Plans formulated to address specific
possible future events that might have a significant impact on
the organization.
• Crisis management planning: Plan formulated specifically
to deal with possible future crises.
• Scenario planning: Plans that are based on “what if”
scenarios about the future.

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The Strategic Planning
Process
Feedback
Mission, vision,
values, and goals
SWOT analysis
formulate strategies
Draft action plans
Implement
Review progress
against plan
External
analysis
(opportunities and
threats)
Internal
analysis
(strengths and
weaknesses)
Assign subgoals,
roles,
responsibilities,
timelines,
and budgets

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Setting the Context:
Mission, Vision, Values, and
Goals
•Vision: A desired future state.
• Mission: The purpose of an organization.
• Values: The philosophical properties to which
managers are committed.
• Goals: A desired future state that an organization
attempts to utilize.

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Question
• In describing the purpose of the organization, _____
should be _______-oriented.
a. mission; customer
b. vision; product
c. values; product
d. goals; customer

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Decision Making
• Decision - making a choice from two or more alternatives.
• Problem - an obstacle that makes it difficult to achieve a
desired goal or purpose.

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The Rational
Decision-Making Model
Identify the
problem
Identify
decision
criteria
Weight
criteria
Generate
alternative
courses of
action
Choose one
alternative
Implement
alternative
Continue with course of action
Evaluate
outcome
Does not meet
expectations
Meets
expectations

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Decision-Making Process

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Important Decision Criteria

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Possible Alternatives

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Evaluation of Alternatives

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Bounded Rationality
and Satisficing
• Bounded rationality: Limits in human ability to
formulate complex problems, to gather and process the
information necessary for solving those problems, and
thus to solve those problems in a rational way.
• Satisfice: Aiming for a satisfactory level of a
particular performance variable rather than its
theoretical maximum.