CHAPTER 7

Basic Elements of Planning and Decision Making

Subject: Principles of Management Presented to: Mr. Tasman Pasha Presented by: Hassan Tahir Sial Roll no: 109-11003 BBA (Hons) nd Semester 2

The Planning Process

The Environmental Context

Organizational Goals
Goals are critical to organizational effectiveness, and they serve a number of purposes.

Purposes of Goals

Goals serve four important purposes

st 1

Purpose

They provide guidance and a unified direction for people in the organization. Goals can help everyone understand where the organization is going and why getting there is important.

st 1

Purpose Example

Several years ago, top managers at General Electric set a goal that every business owned by firm would be either number one or number two in its industry. This goal still helps set the tone for decisions made by GE managers as it compare with other firms like Whirlpool and Electrolux.

nd 2

Purpose

Goal setting practices strongly affect other aspects of planning. Effective goal setting promotes good planning, and good planning facilitates future goal setting.

nd 2

Purpose Example

The ambitious revenue goal set for P&G (Procter & Gamble Co) demonstrates how setting goals and developing plans to reach them should be seen as complementary activities. The strong growth goal should encourage managers to plan for expansion.

rd 3

Purpose

Goals can serve as a source of motivation for employees of the organization. Goals that are specific and moderately difficult can motivate people to work harder, especially if attaining the goal is likely to result in rewards.

rd 3

Purpose Example

The Italian furniture manufacturer Industrie Natuzzi SpA uses goals to motivate its workers. If a worker get his job done faster than their goal, a bonus is automatically added to their paycheck.

th 4

Purpose

Goals provide an effective mechanism for evaluation and control. This means that performance can be assessed in the future in the terms of how successfully todays goal are accomplished.

th 4

Purpose Example

Suppose that officials of United Way of America set a goal of collecting 250,000$ from particular small community. If they collect 50,000$ in the midway they have to change their efforts and plans. If they collect 200,000 in the midway they change their efforts and collect more for their good performance.

Kinds of Goals
There are four kinds of goals 1. Mission 2. Strategic Goals 3. Tactical Goals 4. Operational Goals

Mission

A statement of an organizations fundamental purpose.

Strategic Goals

A goal set by and for top management of the organization.

Tactical Goals

A goal set by and for middle managers of the organization.

Operational Goals

A goal set by and for lowerlowerlevel managers of the organization.

Goals Settings
Goals also set by Level Area Time Frame

Managing Multiple Goals

Sometimes organization have to manage multiple goals this Concept is called Optimizing. Optimizing.

Optimizing
Balancing and reconciling possible conflicts among goals.

Example of Optimizing
Few years ago Nike was making high Quality shoes but not stylish. As a result the company lost market share. On the other hand Reebok International started making both High Quality and Fashionable shoes.

Organizational Planning
Process of identifying an organization s immediate and long term objectives and formulating and monitoring specific strategies to achieve them.

Kinds of Organizational Plans

There are three kinds of goals. 1.Strategic 1.Strategic Plans 2.Tactical 2.Tactical Plans 3.Operational 3.Operational Plans

Strategic Plans
A general plan outlining decisions of resource allocation, priorities, and action steps necessary to reach strategic goals.

Tactical Plans
A plan aimed at achieving tactical goals and developed to implement parts of a strategic plan.

Operational Plans
Focuses on carrying out tactical plans to achieve operational goals.

Time frames for Planning

 Long-Range Long-

Plans  Intermediate Plans  Short-Range Plans Short-

LongLong-Range Plans
A plan that covers many years, perhaps even decades; common longlong-range plans are for five years or more.

Intermediate Plans

A plan that generally covers from one to five years plans.

Short-Range Plans
A plan that generally covers a span of one year or less.
There are two basic kinds of Short-Range plans 1.Action Plan 2.Reaction Plan

Action & Reaction Plan

Action Plan:A plan used to operationalize any other kind of plan.

Reaction Plan:A plan developed to react to an unforeseen circumstance.

Responsibilities for Planning

All managers engage in planning to some degree. Example Marketing Sales managers develop plans for target markets, market penetration and sales increases.

Responsibilities for Planning

Planning also associated with the group of managers rather than with the individual managers. Planning Staff Planning Task Force Board of Directors Chief Executive Officer Executive Committee Line Management

Crisis Management
Crisis management is the process by which an organization deals with a major event that threatens to harm the organization, its stakeholders, or the general public.

Contingency Planning
A contingency plan is a plan devised for a specific situation when things could go wrong. Contingency plans are often devised by governments or businesses who want to be prepared for anything that could happen.

Ongoing Planning Process

Action Plan 1
Develop Plan Considering Contingency

Action Plan 2
Implement plan and formally identify contingency events

Action Plan 3
Specify indicators for the contingency event and develop contingency plans for each possible event

Action Plan 4
Successfully complete plan or contingency plan

Types of Operational Plans

There are two types of Operational Plans Single-Use Plan SingleStanding Plan

SingleSingle-Use Plan
SingleSingle-use plans are created to address shortshort-term challenges or provide guidance for short-term initiatives. Single-use plans shortSinglecan be created in teams or by individual managers. The scope of these plans is generally smaller than the scope of standing plans.

Types of Single-Use Plan SingleProgram:Program:A single-use plan for a large set singleof activities.

Project:Project:A single-use plan of less scope singleand complexity than a program.

Standing Plan
Standing plans are used over a long period of time, sometimes indefinitely, and can be altered to adapt to changing circumstances. A standing plan is often created with input from a wide range of individuals over a longer period of time than single-use plans. single-

Types of Standing Plans

guidelines for taking action consistent with reaching organizational objectives.

Policy:- A standing plan that furnishes broad Policy:-

outlines a series of related actions that must be taken to accomplish a particular task. Rules and Regulations:-Describe exactly Regulations:how specific activities are to be carried out.

Standard Operating Procedure(SOP):-A standing plan that Procedure(SOP):-

Barriers to Goal Setting and Planning

Inappropriate Goals Improper Reward System Dynamic and Complex Environment Reluctance to Establish Goals Resistance to change Constraints

Overcoming the Barriers

Understand the Purposes of Goals and Planning Communication and Participation Consistency, Revision and Updating Effective Reward Systems

Management by Objectives (MBO)

Management by Objectives (MBO) is a process of defining objectives within an organization so that management and employees agree to the objectives and understand what they need to do in the organization.

Management by Objective (MBO)

The Formal Goal-setting GoalProcess

Formal goal setting is an effective technique for integrating goal setting and planning.

The Formal Goal-setting GoalProcess

Starting the formal goal-setting program Establishment of organizational goals and plans Collaborative goalsetting and planning

Communicating organizational goals and plans Meeting Verifiable goals and plans Counseling Resources

Periodic Review

Evaluatio n

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