2008 rei supplementary ppt presentation on management for doing business planning foundation what is...

2008 REI Supplementary PPT Presentation on Management for Doing Business

Planning Foundation Planning Foundation

What Is Planning?

• Define planning, goals and plans and t their importance

• Differentiate between formal and informal planning

• Describe the purposes of planning

• Describe the types of goals organizations might have

• Relationship between planning and performance


What Is Planning?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.

– 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.


Why Do Managers Plan?Why Do Managers Plan?

Purposes of Planning– Provides direction– Reduces uncertainty– Minimizes waste and redundancy– Sets the standards for controlling


Planning and PerformancePlanning and Performance

The Relationship Between Planning And Performance– Formal planning is associated with:

Higher profits and returns on assets. Positive financial results.

– The quality of planning and implementation affects performance more than the extent of planning.

– The external environment can reduce the impact of planning on performance,

– Formal planning must be used for several years before planning begins to affect performance.


How Do Managers Plan?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


Types of GoalsTypes of Goals

Financial Goals– Are related to the expected internal financial

performance of the organization.

Strategic Goals– Are related to the performance of the firm relative to

factors in its external environment (e.g., competitors).

Stated Goals versus Real Goals– Broadly-worded official statements of the organization

(intended for public consumption) that may be irrelevant to its real goals (what actually goes on in the organization).


Types of PlansTypes of Plans


Types of PlansTypes of Plans

Strategic Plans– Apply to the entire organization.

– Establish the organization’s overall goals.

– Seek to position the organization in terms of its environment.

– Cover extended periods of time.

Operational Plans– Specify the details of how the overall goals are to be

achieved.

– Cover short time period.


Classification of Plans Classification of Plans

Long-Term Plans– Plans with time frames extending beyond three years

Short-Term Plans– Plans with time frames on one year or less

Specific Plans– Plans that are clearly defined and leave no room for

interpretation

Directional Plans– Flexible plans that set out general guidelines, provide

focus, yet allow discretion in implementation.


Exhibit 7–4 The Downside of Traditional Goal SettingExhibit 7–4 The Downside of Traditional Goal Setting


Steps in Goal SettingSteps in Goal Setting

1. Review the organization’s mission statement.

Do goals reflect the mission?

2. Evaluate available resources.

Are resources sufficient to accomplish the mission?

3. Determine goals individually or with others.

Are goals specific, measurable, and timely?

4. Write down the goals and communicate them.

Is everybody on the same page?

5. Review results and whether goals are being met.

What changes are needed in mission, resources, or goals?


Exhibit 7–7 Planning in the Hierarchy of OrganizationsExhibit 7–7 Planning in the Hierarchy of Organizations


Tools and Techniques in PlanningTools and Techniques in Planning

Establishing a formal planning department

– A group of planning specialists who help managers write organizational plans.

– Planning is a function of management; it should never become the sole responsibility of planners.

Involving organizational members in the process

– Plans are developed by members of organizational units at various levels and then coordinated with other units across the organization.


Assessing the Environment (cont’d)Assessing the Environment (cont’d)

Forecasting

– The part of organizational planning that involves creating predictions of outcomes based on information gathered by environmental scanning.

Facilitates managerial decision making.

Is most accurate in stable environments.


Assessing the Environment (cont’d)Assessing the Environment (cont’d)

Forecasting Techniques– Quantitative forecasting

Applying a set of mathematical rules to a series of hard data to predict outcomes (e.g., units to be produced).

– Qualitative forecasting Using expert judgments and opinions to predict less than

precise outcomes (e.g., direction of the economy).

Collaborative Planning, Forecasting, and Replenishment (CPFR) Software– A standardized way for organizations

to use the Internet to exchange data.


• Quantitative

• Time series analysis

• Regression models

• Econometric models

• Economic indicators

• Substitution effect

• Qualitative

• Jury of opinion

• Sales force composition

• Customer evaluation


Making Forecasting More EffectiveMaking Forecasting More Effective

1. Use simple forecasting methods.

2. Compare each forecast with its corresponding “no change” forecast.

3. Don’t rely on a single forecasting method.

4. Don’t assume that the turning points in a trend can be accurately identified.

5. Shorten the time period covered by a forecast.

6. Remember that forecasting is a developed managerial skill that supports decision making.


BenchmarkingBenchmarking

The search for the best practices among competitors and non-competitors that lead to their superior performance.

By analyzing and copying these practices, firms can improve their performance.


BenchmarkingBenchmarking

Source: Based on Y.K. Shetty, “Aiming High: Competitive Benchmarking for Superior Performance,” Long Range Planning. February 1993, p. 42.


Allocating Resources: BudgetingAllocating Resources: Budgeting

Types of Resources

– The assets of the organization

Financial: debt, equity, and retained earnings

Physical: buildings, equipment, and raw materials

Human: experiences, skills, knowledge, and competencies

Intangible: brand names, patents, reputation, trademarks, copyrights, and databases

Budgets

– Are numerical plans for allocating resources (e.g., revenues, expenses, and capital expenditures).

– Are used to improve time, space, and use of material resources.

– Are the most commonly used and most widely applicable planning technique for organizations.


Exhibit 9–3 Types of BudgetsExhibit 9–3 Types of Budgets

Source: Based on R.S. Russell and B.W. Taylor III. Production and Operations Management (Upper Saddle River, NJ: Prentice Hall, 1995), p. 287.


Allocating Resources: ChartingAllocating Resources: Charting

Gantt Chart

– A bar graph with time on the horizontal axis and activities to be accomplished on the vertical axis.

– Shows the expected and actual progress of various tasks.

Load Chart

– A modified Gantt chart that lists entire departments or specific resources on the vertical axis.

– Allows managers to plan and control capacity utilization.


Allocating Resources: AnalysisAllocating Resources: Analysis

Program Evaluation and Review Technique (PERT)

– A flow chart diagram that depicts the sequence of activities needed to complete a project and the time or costs associated with each activity.

Events: endpoints for completion.

Activities: time required for each activity.

Slack time: the time that a completed activity waits for another activity to finish so that the next activity, which depends on the completion of both activities, can start.

Critical path: the path (ordering) of activities that allows all tasks to be completed with the least slack time.


Developing a PERT NetworkDeveloping a PERT Network

1. Identify every significant activity that must be achieved for a project to be completed.

2. Determine the order in which these events must be completed.

3. Diagram the flow of activities from start to finish, identifying each activity and its relationship to all other activities.

4. Compute a time estimate for completing each activity.

5. Using the network diagram that contains time estimates for each activity, determine a schedule for the start and finish dates of each activity and for the entire project.


Allocating Resources: Analysis (cont’d)Allocating Resources: Analysis (cont’d)

Breakeven Analysis– Is used to determine the point at which all fixed costs

have been recovered and profitability begins. Fixed cost (FC) Variable costs (VC) Total Fixed Costs (TFC) Price (P)

The Break-even Formula:

Costs Variable Unit-Price Unit

Costs Fixed TotalBreakeven :


Allocating Resources: AnalysisAllocating Resources: Analysis

Linear Programming– A technique that seeks to solve resource allocation

problems using the proportional relationships between two variables.


Contemporary Planning TechniquesContemporary Planning Techniques

Project

– A one-time-only set of activities that has a definite beginning and ending point time.

Project Management

– The task of getting a project’s activities done on time, within budget, and according to specifications.

Define project goals

Identify all required activities, materials, and labor

Determine the sequence of completion


Contemporary Planning Techniques (cont’d)Contemporary Planning Techniques (cont’d)

Scenario

– A consistent view of what the future is likely to be. Scenario Planning

– An attempt not try to predict the future but to reduce uncertainty by playing out potential situations under different specified conditions.

Contingency Planning Developing scenarios that allow managers determine in advance what their actions

should be should a considered event actually occur. Identify potential unexpected events. Determine if any of these events would have early indicators. Set up an information gathering system to identify early indicators. Have appropriate responses (plans) in place if these unexpected events occur.


Entrepreneurial ventures and small businesses.

Entrepreneurial ventures and small businesses.

What Is Entrepreneurship?– Entrepreneurship is the process of starting new

businesses, generally in response to opportunities.

Entrepreneurial Ventures– Organizations that pursue opportunities, are

characterized by innovative practices, and have growth and profitability as their main goals.

Small Business – A firm that is independently owned, operated, and

financed; has fewer than 100 employees; doesn’t necessarily engage in new or innovative practices, and has relatively little impact on its industry.


Why Is Entrepreneurship Important?Why Is Entrepreneurship Important?

Innovation– Engage in the creative destruction process– Act as agents of change

Number of New Startups– Increasing numbers of new firms

Job Creation– New ventures create 60-80% of net new jobs


The Entrepreneurial ProcessThe Entrepreneurial Process

Exploring the Entrepreneurial ContextExploring the Entrepreneurial ContextExploring the Entrepreneurial ContextExploring the Entrepreneurial Context

Identifying Opportunities and Identifying Opportunities and Possible Competitive AdvantagesPossible Competitive Advantages

Identifying Opportunities and Identifying Opportunities and Possible Competitive AdvantagesPossible Competitive Advantages

Starting the VentureStarting the VentureStarting the VentureStarting the Venture

Managing the VentureManaging the VentureManaging the VentureManaging the Venture


Potential Sources of OpportunityPotential Sources of Opportunity

Environmental Environmental ContextContext

Environmental Environmental ContextContext

The IncongruousThe IncongruousThe IncongruousThe Incongruous

The Process NeedThe Process NeedThe Process NeedThe Process Need

Industry and Industry and Market StructuresMarket Structures

Industry and Industry and Market StructuresMarket StructuresDemographicsDemographicsDemographicsDemographics

Changes in Changes in PerceptionPerception

Changes in Changes in PerceptionPerception

New KnowledgeNew KnowledgeNew KnowledgeNew Knowledge

The UnexpectedThe UnexpectedThe UnexpectedThe Unexpected


Researching CompetitorsResearching Competitors

Competitor Intelligence:

– What types of products or services are competitors offering?

– What are the major characteristics of these products or services?

– What are their products’ strengths and weaknesses?

– How do they handle marketing, pricing, and distributing?

– What do they attempt to do differently from other competitors?

– Do they appear to be successful at it? Why or why not?

– What are they good at?

– What competitive advantage(s) do they appear to have?

– What are they not so good at?

– What competitive disadvantage(s) do they appear to have?

– How large and profitable are these competitors?


Investing in Entrepreneurial Ventures Investing in Entrepreneurial Ventures

Venture Capitalists– External equity financing provided by professionally-

managed pools of investor money.

Angel Investors– A private investor (or group of private investors) who

offers financial backing to an entrepreneurial venture in return for equity in the venture.

Initial public offering (IPO)– The first public registration and sale of a company’s

stock.


Developing a Business PlanDeveloping a Business Plan

Business Plan– A written document that summarizes a business

opportunity and defines and articulates how the identified opportunity is to be seized and exploited.

Elements of a Business Plan– Executive summary– Analysis of opportunity– Analysis of context– Description of the business– Financial data and projections– Supporting documentation


Human Resource Management Issues inEntrepreneurial Ventures

Human Resource Management Issues inEntrepreneurial Ventures

Employee Recruitment Concerns– Locating high potential employees who:

can perform multiple roles are willing to “buy-in” (commitment)

– Filling critical skill gaps

Employee Retention Issues– Potential for damage to client/customer relationships

due to loss of employees– Need to offer desirable benefits– Compensation: base pay and incentives


Leading IssuesLeading Issues

Personality Characteristics of Entrepreneurs– High level of motivation, abundance of self-confidence,

ability to be involved for the long term, high energy level, persistent problem solver, high degree of initiative, ability to set goals, and moderate risk-taker.

Proactive personality– Individuals who are more prone to take actions to

influence their environment—that is, they’re more proactive.

Motivating Employees Through Empowerment Empowering Employees

– Participative decision making; delegation; redesigning jobs


Controlling IssuesControlling Issues

Managing GrowthManaging GrowthManaging GrowthManaging Growth

Managing DownturnsManaging DownturnsManaging DownturnsManaging Downturns

Exiting the VentureExiting the VentureExiting the VentureExiting the Venture

Managing personal life Managing personal life choices and challengeschoices and challenges

Managing personal life Managing personal life choices and challengeschoices and challenges


Managing Personal Life Choices and ChallengesManaging Personal Life Choices and Challenges

Balancing Work and Personal Life

– Become a good time manager

– Seek professional business advice when needed

– Deal with conflicts as they arise

– Developing a network of trusted friends and peers

– Recognize when personal stress levels are too high

2008 rei supplementary ppt presentation on management for doing business planning foundation what is...

Documents

elements of planning

performance formal planning

purposes of planning

informal planning

impact of planning

quality of planning

extent of planning

business planning foundation