Chapter 5: Planning and Goal Setting

1
Chapter 5Planning and Goal Setting
0
2
Learning Objectives
0

• Define goals and plans and explain the
  relationship between them.
• Explain the concept of organizational mission and
  how it influences goal setting and planning.
• Describe the types of goals an organization
  should have and why they resemble a hierarchy.
• Define the characteristics of effective goals.
• Describe the four essential steps in the MBO
  process.
• Explain the difference between single-use plans
  and standing plans.
• Describe and explain the importance of the three
  stages of crisis management planning.

3
Learning Objectives (contd.)
0

• Summarize the guidelines for high-performance
  planning in a fast-changing environment.
• Define the strategic planning process and SWOT
  analysis.
• Describe business-level strategies, including
  Porters competitive forces and strategies and
  partnership strategies.
• Explain the major considerations in formulating
  functional strategies.
• Discuss the organizational dimensions used for
  implementing strategy.

4
Planning
Overview of Planning
Organizing

• Inputs from the environment
• Human resources
• Financial resources
• Physical resources
• Information resources

• Organizational
• Performance
• Products
• Services
• Goal Attainment

Leading
Controlling
Source Adapted from Griffin, 2001
5
Goals and Plans
0

• Goal - A desired future state that the
  organization attempts to realize
• Plan - A blueprint specifying the resource
  allocations, schedules, and other actions
  necessary for attaining goals
• Planning determining the organizations goals
  and the means for achieving them

6
0
Levels of Goals/Plans
Exhibit 5.1
7
Purpose of Goals and Plans
Internal and External Messages Goals and Plans
Send

• Legitimacy
• What the organization stands for - reason for
  being
• Employees identify with purpose
• Source of Motivation and Commitment
• Employees identification with the organization
• Motivate by reducing uncertainty
• Resource Allocation
• Allocate employees, money, and equipment
• Guides to Action
• Provide a sense of direction focus attention on
  specific targets
• Direct efforts toward important outcomes

8
Purpose of Goals and Plans
Internal and External Messages Goals and Plans
Send

• Rationale for Decisions
• Learn what organization is trying to accomplish
• Make decisions to ensure that internal policies,
  roles, performance, structure, products, and
  expenditures will be made in accordance with
  desired outcomes
• Standard of Performance
• Serve as performance criteria
• Provide a standard of assessment

9
Organizational Mission
0

• Mission - organizations reason for existing
• Mission Statement
• Basic business scope
• Distinguishes it from other
  organizations

Our companys mission is to extend and enhance
human life by providing the highest-quality
pharmaceutical and related health care products.
10
Mission and Vision Statements

• Examples from companies
• General Motors
• Our vision is to be the world leader in
  transportation products and related services.
• Ford Motor Company
• Our VisionOur vision is to become the worlds
  leading consumer company for automotive products
  and services.
• Our MissionWe are a global family with a proud
  heritage, passionately committed to providing
  personal mobility for people around the world. We
  anticipate consumer needs and deliver outstanding
  products and services that improve peoples
  lives.
• Our ValuesThe customer is Job 1. We do the right
  thing for our customers, our people, our
  environment and our society. By improving
  everything we do, we provide superior returns to
  our shareholders.

11
Mission and Vision Statements

• Examples from companies
• Toyota
• Mission
• Toyota seeks to create a more prosperous society
  through automotive manufacturing.
• Vision
• Toyota aims to achieve long-term, stable growth
  in harmony with the environment, the global
  economy, the local communities it serves, and its
  stakeholders.

12
Strategic Goals and Plans
0

• Strategic Goals
• Future plans
• Plans for whole organization
• Strategic Plans
• Action Steps used to attain strategic goals
• Blueprint that defines the organizational
  activities and resource allocations
• Long-term

13
Tactical Goals and Plans
0

• Tactical Goals
• Apply to middle management
• Goals that define the outcomes that major
  divisions and departments must achieve
• Tactical Plans
• Plans designed to help execute strategic plans
• Shorter time frame than strategic plans

14
Operational Goals and Plans
0

• Operational Goals
• Specific, measurable results
• Expected from departments, work groups, and
  individuals
• Operational Plans
• Action steps toward operational goals
• Daily and weekly operations
• Schedules are an important component

15
Goal Alignment
0

• Means-end Chain
• Achievement of goals at lower levels permits the
  attainment of high-level goals.

16
Hierarchy of Goals
Exhibit 5.3
17
Characteristics of EffectiveGoal Setting
0

• SMART acronym captures many of the essential
  features of effective goals
• Specific
• Measurable
• Achievable (but challenging)
• Relevant
• Timely (predetermined deadline)
• Also Written, Rewarded, Communicated

18
Management by Objectives
19
Management By Objective Process
0
Exhibit 7.5
Exhibit 5.5
20
MBO Benefits and Problems
0

• Benefits
• Manager and employee efforts are focused
• Performance can be improved
• Employees are motivated
• Departmental and individual goals are aligned

• Problems
• Constant change prevents MBO from taking hold
• Poor employer-employee relations reduces MBO
  effectiveness
• Strategic goals may be displaced by operational
  goals
• Mechanistic organizations and values that
  discourage participation
• Too much paperwork saps MBO energy

21
Single-Use Plans - Goals Not Likely To Be
Repeated
0

• A program is a complex set of objectives and
  plans to achieve an important, one-time
  organizational goal
• A project is similar to a program, but generally
  smaller in scope and complexity

22
Standing Plans Tasks Performed Repeatedly
0

• A policy is a general guide to action and
  provides direction for people within the
  organization
• Rules describe how a specific action is to be
  performed
• Procedures define a precise series of steps to be
  used in achieving a specific job

23
Types of Plans

• Business plan
• Marketing plan
• Succession plan
• Getting the right number of people
• with the right skills, experiences, and
  competencies
• in the right jobs
• at the right time.

24
Types of Plans

• Succession Planning

• Supply Analysis
• Workforce analysis and trends
• Employee competencies
• Workforce demographics
• Current workload analysis

• GAP Analysis
• Comparison of future workforce competencies with
  future needs
• Analysis of how workforce demographics will
  change
• ID of areas in which management action will be
  needed to reach workforce objectives

• Solution Analysis
• Planning workforce transition
• Employee development and retraining
• Changes in staffing patterns

• Demand Analysis
• Workforce knowledges, skills
• and abilities to meet projected need
• Staffing patterns
• Anticipated programs and workload
• changes

Source Adapted from www.afm.ars.usda.gov/events/
2001/AOConf2001/ Files/SuccessionPlanning.ppt
25
Types of Plans Succession Plans
Source Adapted from www.instruction.bus.wisc.edu/
rdunham/ MHR611/2004_PPT/planning.ppt
26
Types of Plans Financial Plans
Source Adapted from www.nacd.com/AnnualMeeting/p
resentations/Noon.ppt
27
Types of Plans Overlapping
Source Business Plan Pro, Palo Alto Software,
Palo Alto, CA.
28
Forecasting

• Forecasting is projecting, predicting, or
  estimating future events or conditions in an
  organizations environment.
• Forecasting deals with conditions or external
  events beyond the organizations control that are
  important to its survival.
• Sales forecast is the estimate of the firms sales
  or income for a specified future period
• Used for
• Production scheduling
• Financial planning
• Inventory planning
• Determination of personnel needs
• Virtually all plans

Source Adapted from www.edison.edu/distance_lear
ning/spring_2004/ mcnulty/2011_chap_6.ppt
29
Forecasting

• Quantitative forecasting employs statistical
  computations
• Trend analysis
• Computer simulations
• Qualitative forecasts are more subjective because
  they are based on opinion rather than historical
  data
• Salespeople
• Top executives
• Outside surveys

Source Adapted from www.edison.edu/distance_lear
ning/spring_2004/ mcnulty/2011_chap_6.ppt
30
Forecasting

• Decision support systems (DSS)
• http//www.vanguardsw.com/decisionpro/jforecast.ht
  m

31
Contingency PlansUnexpected Conditions
0

• Identify Uncontrollable Factors
• Economic turndowns
• Declining markets
• Increases in costs of supplies
• Technological developments
• Safety accidents
• Flexible Plans
• Multiple Future Alternatives

32
Criticisms of Formal Planning

• Planning may create rigidity
• Unwise to force a course of action when the
  environment is fluid
• Plans cant be developed for a dynamic
  environment
• Flexibility required in a dynamic environment
• Too many unknowns to be develop a formal plan
• Formal plans cant replace intuition and
  creativity
• Mechanical analysis reduces the vision to some
  type of programmed routine

Source Adapted from Robbins, 2001
33
Criticisms of Formal Planning

• Planning focuses managers attention on todays
  competition, not on tomorrows survival
• Plans concentrate on capitalizing on existing
  business opportunities
• Hinders managers who consider creating or
  reinventing an industry
• Formal planning reinforces success, which may
  lead to failure
• Success may breed failure in an uncertain
  environment

Source Adapted from Robbins, 2001
34
Planning and Organizational Performance

• Generally, formal planning is associated with
• Higher profits
• Higher return on assets
• The quality of the planning process contributes
  more to high performance than does the extent of
  planning
• External environment may undermine the effects of
  formal planning
• Planning/performance relationship is influenced
  by the planning time frame
• When external environment restrictions allowed
  managers few viable alternatives, planning did
  not lead to higher performance.

Source Adapted from Robbins, 2001, Robbins
DeCenzo, 2004
35
Building Scenarios
0

• Looking at trends and discontinuities and
  imagining possible alternative futures to build a
  framework within which unexpected future events
  can be managed.

Managers can rehearse mentally what they would do
if their best-laid plans were to collapse.
36
Three Stages of Crisis Management
0

• Prevention
• Build trusting relationship with key stakeholders
• Open communication
• Preparation
• Crisis Management Team Plan
• Establish an Effective Communications system
• Containment
• Activate the crisis management plan.
• Get the awful truth out.
• Meet safety and emotional needs.
• Return to business.

37
Planning for High Performance
0

• Planning has changed as the global environment
  has changed
• Less top-down management planning
• Involve managers throughout the organization
• Strategic thinking and execution is becoming job
  of all employees

38
Planning In The New Workplace
0

• Have a strong mission statement and vision
• Set stretch goals for excellence
• Establish a culture that encourages learning
• Embrace event-driven planning
• Utilize temporary task forces
• Planning still starts and stops at the top

Planning comes alive when employees are involved
in setting goals and determining the means to
reach them
39
Thinking Strategically

• Strategic management pertains to competitive
  actions in the marketplace
• Plan of action that describes resource allocation
  and activities

40
Strategic Emphasis
Value the combination of benefits received
and costs paid
Core Competence something the organization
does especially well in comparison to its
competitors
Synergy A joint effect that is greater than
the sum of the parts acting together
41
Strategic Management Process
Exhibit 5.10
42
SWOT Analysis

• Strengths
• Weaknesses
• Opportunities
• Threats

43
Business-Level Strategy Porters Five Forces
Exhibit 5.12
44
Porters Competitive Strategies
45
Partnership Strategies

• Collaboration is an alternative form of strategy
• Competition and collaboration are often present
  at the same time.
• The Internet is driving and supporting more
  partnerships.

46
Strategy Implementation and Control
Exhibit 5.15
47
Implementation During Turbulent Times

• Three Key Issues
• Global Mind-Set
• Corporate Culture
• Information Technology