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PART 2: PLANNING

CHAPTER 4 - FOUNDATIONS OF PLANNING

LEARNING OUTCOMES

After reading this chapter students should be able to:

1. Discuss the nature and purposes of planning.

2. Explain what managers do in the strategic planning process.

3. Compare and contrast approaches to goal setting and planning.

4. Discuss contemporar issues in planning.

Opening VignetteBi!"ing # Ft$e

SUMMAR%

Atlanta!based "abitat for "umanit is a nonprofit# ecumenical Christian housing ministr whose mission

is to $eliminate po%ert and homelessness from the world and to ma&e decent shelter a matter ofconscience and action.' (he organi)ation was founded b *illard and +inda ,uller in 1-/ in Americus#0eorgia. *ore than 3# "abitat houses ha%e been built# sheltering more than 1. million peoplearound the world. (hese houses can be found in all states of the nited tates# the District ofColumbia# 0uam# 5uerto 6ico# and more than - countries around the world. $(housands of low!incomefamilies ha%e found new hope in this form of affordable housing.' And "abitat7s approach is simple.,amilies in need of decent housing appl to local "abitat affiliates. (he organi)ation 8ust recei%ed 91million from a donor and the ha%e an opportunit to ma&e a deep impact in man li%es. (horough andeffecti%e planning will be essential to determine how# when and where the funds should be distributed.

Te#&'ing N(te):

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5art 2 ! 5lanning

De1e!(ping %($Business PlanningS6i!!

A7(t t'e S6i!!

Hne of the first steps in starting a business is to prepare a business plan. Fot onl does the business plan

aid ou in thin&ing about what ou7re going to do and how ou7re going to do itI it pro%ides a sound basisfrom which ou can obtain funding and resources for our organi)ation. n fact# a well!prepared businessplan can be submitted to a financial institution in its entiret as the basis for wh ou should get a loan tostart our business.

Step) in P$#&ti&ing t'e S6i!!

6e%iew the following steps of writing the business plan:

1. Describe our compan7s bac&ground and purpose.2. dentif our short! and long!term ob8ecti%es.3. 5ro%ide a thorough mar&et analsis.4. Describe our de%elopment and production emphasis.. Describe how ou7ll mar&et our product or ser%ice.

/. Establish our financial statements.. 5ro%ide an o%er%iew of the organi)ation and its management.. Describe the legal form of the business.-. dentif the critical ris&s and contingencies facing the organi)ation.1. 5ut the business plan together.

P$#&ti&ing t'e S6i!!

tudents ha%e come up with a great idea for a business and need to create a business plan to present to aban&. "a%e them choose one of the following products or ser%ices and draft the part of our plan thatdescribes how the7ll price and mar&et it @see tep ?.

1. "aircuts at home @the ma&e house calls?2. Hlmpic snowboarding computer game

3. Hnline apartment rental listing4. Ergonomic dental chair. oice!acti%ated house alarm/. Customi)ed running shoes

Fow ha%e them choose a different product or ser%ice from the list and identif critical ris&s andcontingencies @see tep -?.

Te#&'ing Tip):

1. f a multiple da exercise# ha%e students gather research for each element.2. Allow students to dream up their own startup business.3. f a class exercise# choose one tpe of business and brainstorm what the alread &now for each

categor.4. Close either tpe of exercise with student discussion of the effort in%ol%ed and what the disco%eredthe did not &now about the prospecti%e business.

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Chapter 4 ! ,oundations of 5lanning

. *HAT CONTEMPORAR% PLANNING ISSUES DO MANAGERS FACE+

#, H( C#n M#n#ge$) P!#n E//e&ti1e! in Dn#.i& En1i$(n.ent)+

1. *anagers should de%elop plans that are specific# but flexible.

a? *anagers need to sta alert to en%ironmental changes that ma impact implementation

and respond.b? A flatter organi)ational hierarch helps to effecti%el plan in dnamic en%ironments.

&, H( C#n M#n#ge$) U)e En1i$(n.ent#! Snning+

2. En%ironmental scanningscreening large amounts of information to detect emergingtrends and create a set of scenarios.

a? (here is some e%idence to indicate that companies that scan the en%ironment achie%ehigher profits and re%enue growth than companies that don7t.

b? (he importance of en%ironmental scanning was first recogni)ed @outside of nationalsecurit agencies such as the Central ntelligence Agenc or Fational ecuritAgenc? b firms in the life insurance industr in the late 1-s.

3. "ow is competiti%e intelligence useful)t /#)te$ t( t'e

en1i$(n.ent t'#n ($ &(.petit($) "(0? D( ( #g$ee ($ "i)#g$ee it' t'i) )t#te.ent+ E9p!#in

($ p()iti(n0

An)e$: Ne to this answer is the following facts. +ong!term success reBuires that the ad%antage besustainable. t must withstand both the actions of competitors and the e%olutionar changes.*anagers need to create barriers that ma&e imitation b competitors difficult or reduce thecompetiti%e opportunities.

8. Fi$)t e '#" t'e 7i$" /!0 N(< t'e H8N8 /! p#n"e.i& '#) 7een in t'e ne) $e&ent!0 H( &(!"

($g#ni3#ti(n) 7e p$ep#$e" /($ #n (t7$e#6 (/ H8N8 /! ($ )(.e ne n6n(n /! )t$#in ($

.e"i! &$i)i)+ *'#t tpe) (/ p!#nning (!" t'e nee" t( "(+ N(< t#6e # )pe&i/i& ($g#ni3#ti(n

@($ &(!!ege ($ ni1e$)it< ($ p!#&e (/ e.p!(.ent< ($ )(.e 7)ine)) ($g#ni3#ti(n, #n"

"e)&$i7e #!! t'e p())i7!e ($g#ni3#ti(n#! #$e#) t'#t .ig't 7e i.p#&te" #n" t'e p!#n) t'#t

($g#ni3#ti(n (!" nee" t( '#1e in p!#&e t( 7e p$ep#$e"0

An)e$: tudent answers will %ar. 5reparation howe%er# reBuires a strategic plan li&e a pandemic

preparedness plan that accounts for contingenc plans including absent emploees. *onitoring andconsulting the CDC and other medical authorities would help. Oou ma need a formal plan for short!term challenges and long!term.

Colleges would need to increase medical staff at the health center# attempt to secure additionalsupplies of %accines# etc.

9. D( # pe$)(n#! S*OT #n#!)i)0 A))e)) ($ pe$)(n#! )t$engt') #n" e#6ne))e) @)6i!!)< t#!ent)( "(ing+ N(t

en>( "(ing+ T'en< i"enti/ $ee$ (pp($tnitie) #n" t'$e#t) 7 $e)e#$&'ing >(7 p$()pe&t) in t'e

in")t$ (;$e inte$e)te" in0 L((6 #t t$en") #n" p$(>e&ti(n)0 %( .ig't #nt t( &'e&6 (t t'e

in/($.#ti(n t'e B$e# (/ L#7($ St#ti)ti&) p$(1i"e) (n >(7 p$()pe&t)0 On&e ( '#1e #!! t'i)

in/($.#ti(n< $ite # )pe&i/i& $ee$ #&ti(n p!#n0 Ot!ine /i1e-e#$ $ee$ g(#!) #n" '#t (

nee" t( "( t( #&'ie1e t'()e g(#!)0

An)e$: 6esponses will be specific to the respecti%e student.

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Chapter 4 ! ,oundations of 5lanning

UNDERSTAND %OURSELF

*'#t A$e M C($)e Pe$/($.#n&e G(#!)+

INSTRUMENT sing the following scale# select the answer for each of the 12 statements

that best expresses wh ou stud for a course.

8 P Fe%er2 P 6arel P ometimes4 P Hften P Alwas

stud because:

1. want to be praised b m professors and parents. 8 2 4

2. want to be noticed b m friends. 8 2 4

3. don7t want m classmates to ma&e fun of me. 8 2 4

4. don7t want to be disli&ed b a professor. 8 2 4

. want people to see how smart am. 8 2 4

/. wish to get better grades than m peers. 8 2 4

. want to get good grades. 8 2 4

. want to be proud of getting good grades. 8 2 4

-. don7t want to fail final exams. 8 2 4

1. wish to be admitted to graduate school. 8 2 4

11. want to get a good 8ob in the future. 8 2 4

12. want to attain status in the future. 8 2 4

SCORING E% (otal up the number of 4 and responses. (his will be between )ero and 12.

ANAL%SIS AND INTERPRETATION =hat dri%es ou to stud< =hat goals are ou tring toachie%e< (his Buestionnaire measures goal orientation as related to our course wor&. (here are no$right' goals. ;ut ha%ing clear goals can help ou better understand our studing beha%ior. f ou had noresponses in the 4 or categories# our course performance is li&el to suffer because ou ha%e no strongreasons for studing. (his suggests a need for ou to reassess our goals and consider what ou wantfrom our course wor&. f ou had a number of responses in the 4 or categories# ou appear to ha%especific goals that will moti%ate ou to stud and achie%e high performance.

O1e$1ie

0oal!setting theor states that intentionsexpressed as goalscan be a ma8or source of wor& moti%ation.=e can sa# with a considerable degree of confidence that specific goals lead to increased performanceIthat difficult goals# when accepted# result in higher performance than eas goalsI and that feedbac& leadsto higher performance than no feedbac&.

pecific hard goals produce a higher le%el of output than a generali)ed goal of $do our best.' (hespecificit of the goal itself acts as an internal stimulus. ,or instance# when a truc&er commits to ma&ingeighteen round!trip hauls between ;altimore and =ashington# D.C.# each wee this intention gi%es him aspecific ob8ecti%e to reach for. =e can sa that# all things being eBual# the truc&er with a specific goalwill outperform his counterpart who operates either with no goals or with the generali)ed goal of $do ourbest.'

f factors such as abilit and acceptance of the goals are held constant# we can also state that the moredifficult the goals# the higher the le%el of performance. Hf course# it is logical to assume that easier goals

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5art 2 ! 5lanning

are more li&el to be accepted. "owe%er# once an emploee accepts a hard tas he or she will exert ahigh le%el of effort to tr to reach it.

5eople will do better when the get feedbac& on how well the are progressing toward their goals becausefeedbac& helps to identif discrepancies between what the ha%e done and what the want to doI that is#feedbac& acts to guide beha%ior. "owe%er# not all feedbac& is eBuall potent. elf!generated feedbac&

for which the emploee is able to monitor his or her own progresshas been shown to be a morepowerful moti%ator than externall generated feedbac&.

Te#&'ing N(te)

f emploees ha%e the opportunit to participate in the setting of their own goals# will the tr harder

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