Planning and Goal Setting

Learning Objectives
Define goals and plans and explain the relationship between them. Explain the concept of organizational mission and how it influences goal setting and planning. Describe the types of goals an organization should have and why they resemble a hierarchy. Define the characteristics of effective goals. Describe the four essential steps in the MBO process. Explain the difference between single-use plans and standing plans. Describe and explain the importance of the three stages of crisis management planning.

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Learning Objectives (contd.)

Summarize the guidelines for high-performance planning in a fast-changing environment. Define the strategic planning process and SWOT analysis. Describe business-level strategies, including Porters competitive forces and strategies and partnership strategies. Explain the major considerations in formulating functional strategies. Discuss the organizational dimensions used for implementing strategy.

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Planning Is A Three Step Activity

DETERMINING THE ORGANIZATION'S MISSION AND GOALS

Define the business Establishing major goals

FORMULATING STRATEGY
Analyze current situation and develop strategies

IMPLEMENTING STRATEGY
Allocate resources and responsibilities to achieve goals

Goals and Plans

Goal - A desired future state that the organization attempts to realize Plan - A blueprint specifying the resource allocations, schedules, and other actions necessary for attaining goals Planning determining the organizations goals and the means for achieving them

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Levels of Goals/Plans

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Exhibit 5.1

Purpose of Goals and Plans

Legitimacy
What the organization stands for - reason for being Employees identify with purpose

Source of Motivation and Commitment

Employees identification with the organization Motivate by reducing uncertainty

Resource Allocation
Allocate employees, money, and equipment

Guides to Action
Provide a sense of direction; focus attention on specific targets 7/10/2011 Direct efforts toward important outcomes
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Purpose of Goals and Plans

Rationale for Decisions
Learn what organization is trying to accomplish Make decisions to ensure that internal policies, roles, performance, structure, products, and expenditures will be made in accordance with desired outcomes

Standard of Performance
Serve as performance criteria Provide a standard of assessment

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Organizational Mission
Mission - organizations reason for existing Mission Statement
Basic business scope Distinguishes it from other organizations
Our companys mission is to extend and enhance human life by providing the highest-quality pharmaceutical and related health care products.

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Strategic Goals and Plans

Strategic Goals
Future plans Plans for whole organization

Strategic Plans
Action Steps used to attain strategic goals Blueprint that defines the organizational activities and resource allocations Long-term
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Tactical Goals and Plans

Tactical Goals
Apply to middle management Goals that define the outcomes that major divisions and departments must achieve

Tactical Plans
Plans designed to help execute strategic plans Shorter time frame than strategic plans
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Operational Goals and Plans

Operational Goals
Specific, measurable results Expected from departments, work groups, and individuals

Operational Plans
Action steps toward operational goals Daily and weekly operations Schedules are an important component
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Goal Alignment

Means-end Chain Achievement of goals at lower levels permits the attainment of high-level goals.

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Hierarchy of Goals

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Exhibit 5.3

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Characteristics of Effective Goal Setting

Specific and measurable Challenging but realistic Defined time period Linked to rewards

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Single-Use Plans - Goals Not Likely To Be Repeated

A program is a complex set of objectives and plans to achieve an important, one-time organizational goal A project is similar to a program, but generally smaller in scope and complexity
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Standing Plans Tasks Performed Repeatedly

A policy is a general guide to action and provides direction for people within the organization Rules describe how a specific action is to be performed Procedures define a precise series of steps to be used in achieving a specific job
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Contingency Plans Unexpected Conditions

 Identify Uncontrollable Factors
Economic turndowns Declining markets Increases in costs of supplies Technological developments Safety accidents

 Flexible Plans  Multiple Future Alternatives

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Building Scenarios

Looking at trends and discontinuities and imagining possible alternative futures to build a framework within which unexpected future events can be managed.

Managers can rehearse mentally what they would do if their best-laid plans were to collapse.
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Planning for High Performance

 Less top-down management planning  Involve managers throughout the organization  Strategic thinking and execution is becoming job of all employees

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Planning In The New Workplace

Have a strong mission statement and vision Set stretch goals for excellence Establish a culture that encourages learning Embrace event-driven planning Utilize temporary task forces Planning still starts and stops at the top
Planning comes alive when employees are involved in setting goals and determining the means to reach them
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Strategic Management Process

Exhibit 5.10

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Organizations Mission & Vision

To determine organizations mission, managers must first: Ddefine the business Managers must ask 3 questions:

WHO are our customers? WHAT customer needs are being satisfied? HOW are we satisfying customer needs?
Answering these questions helps managers to identify: Customer needs they are satisfying now. Customer needs they should satisfy in the future. Who are their true competitors.
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SWOT Analysis

Strengths Weaknesses Opportunities Threats

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Questions For SWOT Analysis

POTENTIAL STRENGTHS Well-developed strategy? Strong product lines? Broad market coverage? Manufacturing competence? Good marketing skills? Good materials management systems? R & D skills and leadership? Human resource competencies? Brand-name reputation? POTENTIAL OPPORTUNITIES Expand core business? Exploit new market segments? Widen product range? Extend cost or differentiation advantage? Diversity into new growth business? Expand into foreign markets? Apply R&D skills in new areas? Enter new related businesses? POTENTIAL WEAKNESSES Poorly developed strategy? Obsolete, narrow product lines? Rising manufacturing costs? Decline in R&D innovations? Poor marketing plan? Poor materials management systems? Loss of customer goodwill? Inadequate human resources POTENTIAL THREATS Attacks on core business? Increase in domestic competition? Increase in foreign competition? Change in consumer tastes? Fall in barriers to entry? Rise in new or substitute products? Increase in industry rivalry? New forms of industry competition?

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Directional Strategies
External Growth Strategy Concentration Strategy

Downsizing

Internal Growth Strategy

Mergers and Acquisitions

Business-Level Strategy: Porters Five Forces

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Exhibit 5.12

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Porters Competitive Strategies

Differentiation Flexible, loose knit with strong coordination
Creative flair, thinks out of box Strong marketing abilities Rewards employee innovation Reputation for quality or technical leadership

Cost Central authority, tight cost controls Leadership Efficient procurement and distribution systems
Close supervision, finite employee empowerment

Focus Frequent, detailed control reports

Direct combination of policies to strategic target Values and rewards flexibility and customer intimacy Pushes empowerment to employees with customer 28 contact

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Porters Business Level Strategies

NUMBER OF MARKET SEGMENTS SERVED MANY Low-cost Focused low-cost Differentiation Focused differentiation     FEW

STRATEGY

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Partnership Strategies
Collaboration is an alternative form of strategy Competition and collaboration are often present at the same time. The Internet is driving and supporting more partnerships.

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Implementation During Turbulent Times

Three Key Issues:

Global Mind-Set Corporate Culture Information Technology

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Three Stages of Crisis Management

 Prevention
Build trusting relationship with key stakeholders Open communication

 Preparation
Crisis Management Team & Plan Establish an Effective Communications system

 Containment
Activate the crisis management plan. Get the awful truth out. Meet safety and emotional needs. Return to business.

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