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Management, 10/e
John R. Schermerhorn, Jr.
Chapter 7:
Fundamentals of Planning

Prepared by: Jim LoPresti

University of Colorado, Boulder
Published by: John Wiley & Sons, Inc.

Planning Ahead Chapter 7 Study Questions

Why and how do managers plan?

What types of plans do managers
use?
What are the useful planning tools
and techniques?
How can plans be well implemented?

Management 10/e - Chapter7

Study Question 1: Why and how do managers plan?

Planning

Objectives

The process of setting objectives and

determining how to best accomplish them.
Identify the specific results or desired
outcomes that one intends to achieve.

Plan

A statement of action steps to be taken in

order to accomplish the objectives.

Management 10/e - Chapter7

Study Question 1: Why and how do managers plan?

Steps in the planning process:

Define your objectives.

Determine where you stand vis--vis

objectives.

Develop premises regarding future

conditions.

Analyze and choose among action

alternatives.

Implement the plan and evaluate results.

Management 10/e - Chapter7

Figure 7.1 The roles of planning and controlling in

the management process.

Management 10/e - Chapter7

Study Question 1: Why and how do managers plan?

Benefits of planning:
Improves

focus and flexibility.

Improves

action orientation.

Improves

coordination.

Improves

time management.

Improves

control.

Management 10/e - Chapter7

Study Question 1: Why and how do managers plan?

Personal Time Management Tips:

DO

say no to requests that distract

from what you should be doing.

DONT

get bogged down in details that

can be addressed later.

DO

screen telephone calls, emails, and

meeting requests.

Management 10/e - Chapter7

Study Question 1: Why and how do managers plan?

Personal Time Management Tips:

DONT

let drop-in visitors instant

messaging use up your time

DO

prioritize your important and urgent

work
DONT

become calendar bound by letting

others control your schedule

DO

follow priorities; do most important

and urgent work first.

Management 10/e - Chapter7

Study Question 2: What types of plans do managers

use?

Short-range and long-range plans

Short-range plans = 1 year or less

Intermediate-range plans = 1 to 2 years

Long-range plans = 3 or more years

People vary in their capability to deal

effectively with different time horizons.

Higher management levels focus on longer

time horizons.
Management 10/e - Chapter7

Study Question 2: What types of plans do managers

use?

Strategic and operational plans

Strategic plans set broad, comprehensive, and

longer-term action directions for the entire
organization.

Operational plans define what needs to be done

in specific areas to implement strategic plans.
Production plans
Financial plans
Facilities plans
Marketing plans
Human resource plans

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Study Question 2: What types of plans do managers

use?

Policies and procedures

Standing

plans

Policies and procedures that are designed

for repeated use.

Policy

Broad guidelines for making decisions and

taking action in specific circumstances.

Rules

or procedures

Plans that describe exactly what actions

are to be taken in specific situations.
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Study Question 2: What types of plans do managers

use?

Budgets and project schedules

Single-use

plans

Only used once to meet the needs and

objectives of a well-defined situation in a
timely manner.

Budgets

Single-use plans that commit resources to

activities, projects, or programs.
Fixed, flexible, and zero-based budgets.

Projects

One-time activities that have clear beginning

and end points.
Project management and project schedules.
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Study Question 3: What are the useful planning tools

and techniques?

Forecasting

Making assumptions about what will happen in

the future.

Qualitative forecasting uses expert opinions.

Quantitative forecasting uses mathematical

and statistical analysis.

All forecasts rely on human judgment.

Planning involves deciding on how to deal with

the implications of a forecast.

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Study Question 3: What are the useful planning tools

and techniques?

Contingency planning
Identifying

alternative courses of action

that can be implemented to meet the
needs of changing circumstances.

Contingency

plans anticipate changing

conditions.
Contingency

plans contain trigger points.

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Study Question 3: What are the useful planning tools

and techniques?

Scenario planning
A

long-term version of contingency

planning.
Identifying
Plans

alternative future scenarios.

made for each future scenario.

Increases

organizations flexibility and

preparation for future shocks.

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Study Question 3: What are the useful planning tools

and techniques?

Benchmarking
Use

of external comparisons to better

evaluate current performance and

identify possible actions for the future.
Adopting

best practices of other

organizations that achieve superior

performance.
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Study Question 3: What are the useful planning tools

and techniques?

Use of staff planners

Coordinating

the planning function for

the total organization or one of its

major components.
Possible

communication gaps between

staff planners and line management.

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Study Question 4: How can plans be well

implemented?

Project management
Makes sure activities required to complete
a project are planned well and
accomplished on time and within budget

Projects one-time activities with many

component tasks that must be completed
in proper order and within budget

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Study Question 4: How can plans be well

implemented?

Gantt charts graphic display of scheduled

tasks required to complete a project

CPM/PERT a combination of the critical

path method and the program evaluation
and review technique

Critical path pathway from project start

to finish that involves activities with the
longest completion times

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Study Question 4: How can plans be well

implemented?

Key issues and principles in the

goal-setting process:
Set

specific goals.
Set challenging goals.
Ensure goals are attainable.
Goals must be timely.
Make sure goals are measurable.

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Study Question 4: How can plans be well

implemented?

Goal-setting theory
Participation

in goal setting

unlocks the motivational potential of goal

setting.

management by objectives (MBO) promotes

participation.

when participation is not possible, workers

will respond positively if supervisory trust
and support exist.
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Figure 7.2 A sample hierarchy

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Study Question 4: How can plans be well

implemented?

Management by Objectives (MBO)

A

structured process of regular

communication.
Supervisor/team

leader and workers

jointly set performance objectives.

Supervisor/team

leader and workers

jointly review results.

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Study Question 4: How does management by

objectives operate?

MBO involves a formal agreement

specifying

Workers performance objectives for a specific

time period.

Plans through which performance objectives

will be accomplished.

Standards for measuring accomplishment of

performance objectives.

Procedures for reviewing performance results.

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Figure 7.3 Management by objectives as an

integrated planning and control framework.

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Study Question 4: How does management by

objectives operate?

The MBO process:

Supervisor

and workers jointly set

objectives, establish standards, and
choose actions.
Workers act individually to perform
tasks; supervisors act individually to
provide necessary support.
Supervisor and workers jointly review
results, discuss implications, and renew
the MBO cycle.

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Study Question 4: How does management by

objectives operate

Types of MBO performance objectives

Improvement
Personal development
Maintenance

Criteria for effective performance

objectives

Specific
Time defined
Challenging
Measurable

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Study Question 4: How does management by

objectives operate?

Pitfalls to avoid in using MBO

Tying

MBO to pay.

Focusing

too much attention on easily

quantifiable objectives.
Requiring
Having

excessive paperwork.

managers tell workers their

objectives.

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Study Question 4: How does management by

objectives operate?

Advantages of MBO
Focuses

workers on most important

tasks and objectives.
Focuses supervisors efforts on
important areas of support.
Contributes to relationship building.
Gives workers a structured opportunity
to participate in decision making.

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Study Question 4: How can plans be well

implemented?

Participation and involvement

Participatory planning requires that the planning

process include people who will be affected by the
plans and/or will help implement them.

Benefits of participation and involvement:

Promotes creativity in planning.

Increases available information.

Fosters understanding, acceptance, and

commitment to the final plan.

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Figure 7.4 How participation and involvement help

build commitments to plans.

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