planning

©2004 by Nelson, a division of Thomson Canada Limited 1

Chapter 4

Planning


What Would You Do? In early 2000 Air Canada controlled

90% of the domestic market By early 2001 Air Canada’s share of

the market had dropped to 73% WestJet’s share had climbed to 14% WestJet had a significantly lower

cost structure than Air Canada What would you do?


Learning Objectives:Planning

After reading these next two sections, you should be able to:

1. discuss the costs and benefits of planning2. describe how to make a plan that works


Costs and Benefits of Planning

Benefits of Planning

Planning Pitfalls


Benefits of Planning

Intensified Effort Persistence Direction Creation of Task Strategies


Planning Pitfalls

Impede change and slow or prevent adaptation

Create a false sense of security Detachment of planners


How to Make a Plan That Works

Exhibit 4.1


Setting Goals

Specific Measurable Attainable Realistic Timely


Goal Commitment

The determination to achieve a goal.Increased by:

Setting goals participatively Making goals reasonable Making goals public Obtaining top management support


Developing an Effective Action Plan

For accomplishing a goal an action plan lists:

Specific steps People Resources Time period


Tracking Progress

First method Set proximal (i.e., short-term) goals Set distal (i.e., long-term or primary)

goals Second method

Gather and provide feedback Make adjustments in effort, direction,

and strategies


Maintaining Flexibility Options-based planning

keep options open through simultaneous investment

invest more in promising options Learning-based planning

plans need to be continually tested, changed and improved

encourages frequent reassessment and revision of goals


Learning Objectives:Kinds of Plans

After reading the next two sections, you should be able to:

3. discuss how companies can use plans at all management levels, from top to bottom4. describe the different kinds of special-purpose plans that companies use to plan for change, contingencies, and product

development


Planning From Top to Bottom

Exhibit 4.3


Starting at the Top Vision

statement of a company’s purpose brief, inspirational, clear, and consistent

with company beliefs and values Mission

flows from the vision specific, unifying goal that stretches

and challenges the organization and has a timeframe


Planning Timeframes

Exhibit 4.4


Setting Missions Targeting

setting a clear, specific target Common-enemy mission

vowing to defeat a corporate rival Role-model mission

emulating a successful company Internal-transformation mission

aiming to achieve dramatic change to remain competitive


Bending in the Middle Tactical Plans

specify how a company will use resources, budgets, and people to accomplish goals

Management by Objectives develop and carry out tactical plans four steps

discuss goals participatively select goals jointly develop tactical plans meet to review performance


What Really Works

Management by Objectives (MBO) Based on:

goals participation Feedback

Companies that use MBO are likely to outproduce companies that do not use it!


Finishing at the Bottom

Operational plans day-to-day plans

Single-use plans deal with unique, one-time-only events

Standing plans plans for recurring events three types

Policies Procedures Rules and regulations

Budgets


Special-Purpose Plans

Planning for Change

Planning for Contingencies

Planning for Product Development


Planning for Change

Stretch goals extremely ambitious goals that you

don’t know how to reach Benchmarking

identifying outstanding practices, processes, and standards in other companies

adapting them to your company


Planning for Contingencies:Scenario Planning Define the scope of

the scenario Identify the major

stakeholders Identify

environmental trends

Identify key uncertainties and outcomes

Using steps 1-4 create initial scenarios

Check each scenario for consistency and plausibility of facts

Create contingency plans from each scenario

Develop measures to indicate when scenario events are occurring


Planning for Product Development

Aggregate product plans: used to manage and monitor all new

products indicate resources being used for each

product indicate product’s place in company’s

plans help avoid having too many products in

development


Product-development Process

Four factors: cross-functional teams internal and external communication overlapping development phases frequent testing of product prototypes


What Really Happened?

Air Canada set specific goals Focused on cost structure Launched Tango and Zip Attempted to reduce labour costs Hit hard by SARS, Iraqi conflict and

a weakening economy Sought bankruptcy protection in

2003

planning

Business

scenario planning

change planning

contingencies planning

planning fromtop

specific goals

companys plans

kinds of plans

goals management