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FOUNDATION OF PLANNING

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What Is Planning?

A primary functional managerial activity that involves: Defining the organization’s goals Establishing an overall strategy for achieving those goals Developing a comprehensive set of plans to integrate and

coordinate organizational work. Types of planning

Informal: not written down, short-term focus; specific to an organizational unit.

Formal: written, specific, and long-term focus, involves shared goals for the organization.

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Why Do Managers Plan?

Provides direction Reduces uncertainty Minimizes waste and redundancy Sets the standards for controlling

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How Do Managers Plan?

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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Characteristics of Well-Designed Goals Written in terms of

outcomes, not actions Focuses on the ends, not

the means. Measurable and

quantifiable Specifically defines how the

outcome is to be measured and how much is expected.

Clear as to time frame How long before measuring

accomplishment.

Challenging yet attainable Low goals do not motivate. High goals motivate if they

can be achieved. Written down

Focuses, defines, and makes goal visible.

Communicated to all Puts everybody “on the

same page.”

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Example of Company’s Goals

Example 1: Company’s goals for 2015 Become internationally recognized Improve product quality Increase revenue and profit Improve customer’s satisfaction

Example 2: A production team Improve quality Improve productivity Ensure high safety level

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Procter & Gamble’s OGSM Technique

What needs to be done Objectives

written statement of compelling business needs Goals

numerical target and scorecard to track progress toward meeting objectives

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Procter & Gamble’s OGSM Technique (cont.)

How we will achieve our objectives Strategies

written statement of specific actions that must be taken to meet objectives

Measures numerical measures to track progress on executing

specific actions

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Balanced Goals from Different Perspectives Financial Perspective

Profitability, Return on Investment Customer Perspective

Satisfaction, market share, repeated customers Internal Perspective

System, operation, capability Learning Perspective

New technology, management, ideas,

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Characteristics of Good Plan

Prediction of environmental trends Scenarios

Goals SMART: specific, measurable, attainable, realistic,

and time Resources

Feasible but stretching Actions

Specific, clear, integrated, fit with goals Changes: flexible and creative

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Example: A Business Plan

Business objectives Functional objectives:

Finance, marketing, HR, production, R&D, ... Resources

Finance, HR, management, IT, ... Actions

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Case: Bookstore

From Management and Planning perspective, explain:

Why the Bookstore succeeded in early days? Why did it fail later? What do you learn?

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Team Project: Your Team’s Goals and Plans