1 Foundations of Planning

2PLANNING Definition:Planning encompasses defining the organizations objectives or goals, establishing an overall strategy for achieving those goals and developing a comprehensive hierarchy of plans to integrate and coordinate activities .

3PLANNING The Purpose of Planning:Gives directionEstablishes coordinationReduces uncertaintyReduces overlapping / wasteful actionEstablishes objectives or standards

4Criticisms of Formal PlanningPlanning may create rigidity.Plans cannot be developed for a dynamic environment.Formal plans cannot replace intuition and creativity.Planning focuses managers attention on todays competition, not on tomorrows survivalFormal planning reinforces success, which may lead to failure

5Planning Increases PerformanceGenerally produces positive financial resultsQuality of the planning process and the implementation efforts are more important than the extent of planningEnvironmental change can strongly affect the impact of planning

6Types of PlansStrategic Long-term DirectionalSingle useTactical Short-term SpecificStanding FREQUENCYBREADTH TIME FRAME SPECIFICITY OF USE

7Types of PlansStrategic -- organization wide, overall objectives, position firm in environmentTactical -- specify the details of how overall objectives are to be metShort term -- less than a yearlong term -- beyond five years

BIMTECH FOUNDATION COURSE : PPM JUNE 20108Types of PlansSpecific -- clearly defined objectivesDirectional -- flexible plans setting out general guidelinesSingle use -- meets the needs of a unique situationStanding -- provides guidance for repeatedly performed actions

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10Managerial Levels and Plans

11Management By Objectives (MBO)What is MBO ?A system in which specific performance objectives are jointly determined by subordinates and their superiors, progress toward objectives is periodically reviewed and rewards are allocated on the basis of that progress.

12Management By ObjectivesCommon MBO elementsIdentify key job tasksSet specific and challenging goalsEncourage active participationPrioritize goals Build in feedbackLink rewards to goal attainment

13Management By Objectives

14MBO DownsideOverly focussed on what is being measured rather than final result (quantity over quality)Individual rather than team focusObjectives become ceilings rather than floors -- decreases further motivation

15The Strategic ManagementProcess

16The Strategic Management ProcessIdentify the current mission and goalsAnalyze the EnvironmentEnvironmental Opportunities ThreatsAnalyze the firms Resources and SkillsFirms Strengths and weaknessesReassess the mission and objectivesStrategy FormulationImplement strategiesEvaluation

17MissionThe fundamental purpose of an organization -- the definition of success

18SWOT: Identifying Organizational Opportunities

19Competitive StrategiesCost-leadershipDifferentiationFocus

20Comparison: Entrepreneurs and Traditional Managers

21Project Management and ProcessContemporary planning toolIs a process of quality control to ensure a projects activities are done on time, within budget, and according to specificationProject is a one-time-only set of activities that has a definite beginning and ending point in time

123510Managerial Levels and PlansThis CTR relates to the material on pp. 60-63 and corresponds to Exhibit 3-3 on p. 61.Contingency Factors in PlanningThe four contingency factors that affect planning are: 1. Level In the Organization.2. Life Cycle of the Organization.3. The Degree of Environmental Uncertainty.4. The Length of Future Commitments. This CTR presents the first contingency factor, with the other three covered on the following CTR.Level In the OrganizationThe figure on the CTR illustrates the general relationship between managerial level and the type of planning the managers does. Typically, operational planning dominates the planning activities of lower level managers. Top manager predominately engage in strategic planning.

Discussion note: The text observes that the small business owner must engage in both types of planning. As more and more jobs are being created in small businesses, ask students to elaborate on this observation. What are the special problems in planning facing the small business owner? If managers at large companies dont have time to plan, when does the small business owner get the time? Consider interjecting the role of software computer technology as an aid to small business planners. For reference, you may wish to view the promotional video, In Their Own Words: Small Business Owners Discuss Their Software Solutions, MicroSoft/Entrepreneur Magazine, 1993.111213Management By ObjectivesThis CTR relates to the material on pp. 63-65and corresponds to Exhibit 3-5 on p. 64.Management by ObjectivesManagement by Objectives (MBO) is a system in which specific performance objectives are jointly determined by subordinates and their superiors, progress toward objectives is periodically reviewed, and rewards are allocated on the basis of this progress. Goals are used for motivation, not control. Put another way, MBO seeks a proactive engagement of the individuals commitment to the organizations goals whereas traditional management often engages in reactive sanctioning for goals not met.Characteristics of MBO.Cascading Objectives. The overall appeal of MBO lies in its conversion of overall objectives into specific objectives for each level by the joint participation of members at each level. Top management does not impose specific objectives -- it works with each level to determine appropriate objectives. The cascade emphasizes that each level explicitly recognizes how its specific objectives connect with and contribute to the overall goals of the organization.Four Common Elements.Goal Specificity. Goals are specific, measurable, and objective.Participative Decision Making. The superior and the subordinate jointly choose the goals and agree on how they will be achieved.Explicit Time Period. Each goal has a concise time period to be achieved.Performance Feedback. A key aspect of success is constant feedback providing the subordinate a continuous flow of usable, relevant information in task-specific terms. Formal reviews additionally punctuate the feedback process.15The Strategic Management ProcessThis CTR relates to the material on pp. 66-69 and corresponds to Exhibit 3-6 on p. 67.9 Steps in the Strategic Management Process Include:Step 1: Identifying the Organizations Current Mission, Objectives, and Strategies. The mission is the purpose of the organization. Defining the mission forces management to identify the scope of its products carefully.Step 2: Analyzing the Environment. Management must have an accurate grasp of what is taking place in the environment, especially any important trends that might affect its operations.Step 3: Identifying Opportunities and Threats. Environmental analysis provides the information for evaluating which trends pose opportunities and which pose threats to the organization.Step 4: Analyzing the Organizations Resources. In this step management attempts to match the organizations capabilities, which are always finite, with the opportunities appropriate for its competitive position.Step 5: Identifying Strengths and Weaknesses. Here management attempts to identify its distinctive competence -- or the unique skills and resources that determine the organizations competitive weapons. Understanding of the organizations culture is crucial for assessing strengths and weaknesses.Step 6: Reassessing the Organizations Mission and Objectives. Merging steps 3 and 5 results in an assessment of opportunities called SWOT Analysis for Strengths, Weaknesses, Opportunities, and Threats. Discussion Note: SWOT analysis in step 6 recognizes that management learns something in the process of strategic planning, hence the need for reassessment.Step 7: Formulating Strategies. At this point, management must set strategies for the corporate, business, and functional levels.Step 8: Implementing Strategies. Success requires that management see that its strategy is carried out correctly.Step 9: Evaluating the Results. Control requires accurate assessment of outcomes relative to the organizations mission and objectives.16