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© 2008 Thomson/South-Western© 2008 Thomson/South-Western All rights reserved. All rights reserved.

PowerPoint Presentation by Charlie CookPowerPoint Presentation by Charlie CookThe University of West AlabamaThe University of West Alabama

Part 2Planning and Organizing

Mosley Mosley • Pietri• Pietri

Chapter 2

Fundamentals of Planning

© 2008 Thomson/South-Western. All rights reserved. 2–2

Learning ObjectivesLearning Objectives

1.1. Discuss the important points about planning.Discuss the important points about planning.

2.2. Explain the steps involved in planning.Explain the steps involved in planning.

3.3. Explain how planning differs at top, middle, and Explain how planning differs at top, middle, and supervisory management levels.supervisory management levels.

4.4. Explain how the hierarchy of objectives works.Explain how the hierarchy of objectives works.

5.5. Discuss some important guidelines in setting Discuss some important guidelines in setting objectives.objectives.

6.6. Differentiate the various kinds of standing and single-Differentiate the various kinds of standing and single-use plans.use plans.

7.7. Draw a simple PERT chart.Draw a simple PERT chart.

After reading and studying this chapter, you should After reading and studying this chapter, you should be able to:be able to:


EXHIBIT 2.1 The Three Planning Steps

What is to be achieved?

What present and future variables could influence

what is to be achieved?

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

achieved?


Achieving Objectives or GoalsAchieving Objectives or Goals

4Implementing the plan(organizing, leading, staffing)

5Monitoring the plan’s implementation (controlling)

6Evaluating the plan’s effectiveness (controlling)


““Siamese Twins” of Management:Siamese Twins” of Management:Planning and ControllingPlanning and Controlling

Steps in ControllingSteps 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 corrective action as needed.


EXHIBIT 2.2 Lack of Planning


EXHIBIT 2.3 The Nonplanner’s Cycle


Contingency Planning Anticipates Contingency Planning Anticipates ProblemsProblems• Contingency PlanningContingency Planning

Thinking in advance about possible Thinking in advance about possible problems or changes that might problems or changes that might arise and having anticipated arise and having anticipated solutions available.solutions available.

The responses to the The responses to the “what if . . . ?”questions that “what if . . . ?”questions that describe serious events.describe serious events.

• Scenario PlanningScenario Planning Anticipating alternative future Anticipating alternative future

situations and developing courses situations and developing courses of action for each alternative.of action for each alternative.


Questions for Good Contingency Questions for Good Contingency PlannersPlanners1.1. What might happen that could cause problems What might happen that could cause problems

within my area of responsibility? within my area of responsibility?

2.2. What can I do to prevent these events from What can I do to prevent these events from happening?happening?

3.3. If these events do occur, what can I do to If these events do occur, what can I do to minimize their effect?minimize their effect?

4.4. Have similar situations occurred in the past?Have similar situations occurred in the past?If so, how were they handled?If so, how were they handled?


Strategic PlanningStrategic Planning• Strategic Planning by Top Managers Involves:Strategic Planning by Top Managers Involves:

1.1. Defining the missionDefining the mission——the purpose the organization the purpose the organization serves and identifies its services, products, and serves and identifies its services, products, and customers.customers.

2.2. Setting objectivesSetting objectives—t—the purposes, goals, and desired he purposes, goals, and desired results for the organization and its parts.results for the organization and its parts.

3.3. Developing strategiesDeveloping strategies—t—the activities by which the he activities by which the organization adapts to its environment in order to organization adapts to its environment in order to achieve its objectives.achieve its objectives.


Strategic and Operational PlanningStrategic and Operational Planning• Strategic PlanningStrategic Planning

Has a longer time horizon, affects the entire Has a longer time horizon, affects the entire organization, and deals with the organization’s organization, and deals with the organization’s interface to its external environment.interface to its external environment.

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

facilitates achievement of the long-term strategic facilitates achievement of the long-term strategic plans set at higher levels.plans set at higher levels.

Middle and supervisory level managers are more Middle and supervisory level managers are more concerned with operational planning.concerned with operational planning.


EXHIBIT 2.4 Planning at Three Management Levels

Level Planning Periods What Is Planned Top managers Strategic long-term Growth rate

intermediate-range plans Competitive strategies of 1 to 5 or more years New products

Capital investments Middle Intermediate- and short- How to improve scheduling managers range plans of 1 month and coordination

to 1 year How to exercise better control at lower levels

Supervisors Short-range plans of How to accomplish performance

1 day, 1 week, objectives 1 to 6 months How to implement new policies, work

methods, and work assignments How to increase efficiency (in costs,quality, etc.) Employee and supervisor vacations


Importance of Setting ObjectivesImportance of Setting Objectives• ObjectivesObjectives

Can by synonymous with goals (semantics).Can by synonymous with goals (semantics). Some say specific objectives support broader goals.Some say specific objectives support broader goals.

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

operational plans and coordinating activities.operational plans and coordinating activities.

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

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


EXHIBIT 2.5 Hierarchy of Objectives for Computronix

*Objectives directly linked to improved cost effectiveness.


Unified Planning through ObjectivesUnified Planning through Objectives• Unified PlanningUnified Planning

Facilitates coordinating departments to ensure Facilitates coordinating departments to ensure harmony rather than conflict or competition.harmony rather than conflict or competition.

Is important where coordination is required among Is important where coordination is required among departments or work units.departments or work units.


Guidelines for Setting Objectives Guidelines for Setting Objectives 1.1. Select key performance areasSelect key performance areas

for objectives.for objectives.

2.2. Be specific, if possible.Be specific, if possible.

3.3. Set challenging objectives.Set challenging objectives.

4.4. Keep objective areas in balance.Keep objective areas in balance.

5.5. Objectives should be measurable.Objectives should be measurable.

6.6. Involve employees in setting Involve employees in setting objectives.objectives.

7.7. Follow up on performance results.Follow up on performance results.


Types of PlansTypes of Plans• Standing (Repeat-Use) PlansStanding (Repeat-Use) Plans

Plans that are used repeatedly over a period of time.Plans that are used repeatedly over a period of time.• PolicyPolicy

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

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

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


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.”


Rules and ProceduresRules and Procedures• RuleRule

Is a final and definite policy that is invariably enforced Is a final and definite policy that is invariably enforced under threat of consequences (i.e., punishment).under threat of consequences (i.e., punishment).

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

application of a rule.application of a rule. Avoiding overmanagement of employees through the Avoiding overmanagement of employees through the

application of too many rules.application of too many rules.• ProcedureProcedure

Sets out the steps to be performed when a particular Sets out the steps to be performed when a particular course of action (e.g., application of a rule) is taken.course of action (e.g., application of a rule) is taken.


Types of Plans (cont’d)Types of Plans (cont’d)• Single-Use PlansSingle-Use Plans

Are developed to accomplish a specific purpose and Are developed to accomplish a specific purpose and then discarded after use.then discarded after use.

• Types of Single-Use PlansTypes of Single-Use Plans ProgramProgram—a—a large-scale plan composed of a mix of large-scale plan composed of a mix of

objectives, policies, rules, and projects.objectives, policies, rules, and projects. ProjectProject—a—a distinct part of a program. distinct part of a program. BudgetBudget——a forecast of expected financial performance a forecast of expected financial performance

over time.over time. ScheduleSchedule—a—a plan of activities to be performed and plan of activities to be performed and

their timing.their timing.


EXHIBIT 2.7 Example of Gantt Chart Showing Activities Needed in Production Start-Up

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


Program Evaluation and Review Program Evaluation and Review Technique Technique • Program Evaluation and Review Technique Program Evaluation and Review Technique

(PERT)(PERT) Is a management scheduling tool.Is a management scheduling tool. Shows relationships among a network of activities to Shows relationships among a network of activities to

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

requires the use of a computer.requires the use of a computer.• Critical PathCritical Path

The longest route in a PERT network that, in terms of The longest route in a PERT network that, in terms of time and required sequence of activities, is required time and required sequence of activities, is required to complete the job.to complete the job.


EXHIBIT 2.8 PERT Network for Completing Machine Overhaul


Important TermsImportant Terms

• budgetbudget• contingency planningcontingency planning• critical pathcritical path• Gantt chartGantt chart• hierarchy of objectiveshierarchy of objectives• missionmission• objectivesobjectives• operational planningoperational planning• policypolicy• procedureprocedure• programprogram• Program Evaluation and Program Evaluation and

Review Technique (PERT)Review Technique (PERT)

• projectproject• rulerule• scenario planningscenario planning• scheduleschedule• ““Siamese twins” of Siamese twins” of

managementmanagement• single-use planssingle-use plans• standing plans or repeat-use standing plans or repeat-use

plansplans• strategic planningstrategic planning• strategiesstrategies• unified planningunified planning

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