Management Ch4 Planning

PLANNING WORK
ACTIVITIES
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LEARNING OBJECTIVES
1. Define the nature and purposes of planning.
2. Classify the types of goals organizations might
have and the plans they use.
3. Compare and contrast approaches to goal-setting
and planning.
 Know how to set goals personally and create a
useful, functional to-do list.
 Develop your skill at helping your employees set
goals.
4. Discuss 6 rules for planning and organizing.
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BASIC MANAGERIAL FUNCTIONS
• Planning is one of the primary functions of
management
• Setting of goals to be achieved and lines of action
to be followed precedes the organizing, leading
and control. Hence planning precedes other
functions of management.
• Planning involves selecting objectives or goals and
the course of actions to achieve them:
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WHAT IS PLANNING?
• Planning – defining the organization’s

goals, establishing strategies for
achieving those goals, and developing
plans to integrate and coordinate work
activities.
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WHY DO MANAGERS PLAN?
 Advantages for planning
– Minimizes uncertainties
– Provide direction
– Reduce waste and redundancy
– Facilitates control and co-ordination
– Encourages innovations / brain-storming
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FORMAL VS INFORMAL PLANNING
• Formal planning
– Specific goals covering a specific time period
– Written and shared with organizational members
• Informal Planning
– planning occurs on the spot. ... sudden plans take
place
– It happens informally and not necessarily shared
with organizational member
– It could be also effective type of planning
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PLANNING AND PERFORMANCE
Formal planning is associated with:
• Positive financial results – higher profits, higher return

on assets, and so forth.
• The quality of planning and implementation affects
performance more than the extent of planning.
• The external environment can reduce the impact of
planning on performance.
• The planning-performance relationship seems to be
influenced by the planning time frame.
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CRITICISMS OF FORMAL PLANNING?
• Critics have challenged some of the basic assumptions of

planning
1. Planning may create rigidity.
2. Plans can't be developed for a dynamic environment.
3. Formal plans can't replace intuition and creativity.
4. False sense of security may lead to failure
5. Expensive
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Planning Process
TYPES OF PLANS
 Strategic plans – plans that apply to the

entire organization and establish the
organization’s overall goals.
 Operational plans – plans that encompass
a particular operational area of the
organization.
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TYPES OF PLANS (CONT.)
 Long-term plans – plans with a time frame

beyond three years.
 Short-term plans – plans covering one year or
less.
 Specific plans – plans that are clearly defined and
leave no room for interpretation.
 Directional plans – plans that are flexible and set
out general guidelines.
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TYPES OF PLANS (CONT.)
 Single-use plan – a one-time plan

specifically designed to meet the needs of a
unique situation.
 Standing plans – ongoing plans that
provide guidance for activities performed
repeatedly.
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EXHIBIT 8-1
TYPES OF PLANS
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GOALS AND PLANS
Goals (objectives) – desired

outcomes or targets.
• Plans – documents that outline
how goals are going to be met.
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TYPES OF GOALS
Financial Goals – related to the expected

internal financial performance of the
organization.
Strategic Goals – related to the performance
of the firm relative to factors in its external
environment (e.g., competitors).
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TYPES OF GOALS (CONT.)
 Stated Goals – official statements of what an

organization says, and what it wants its various
stakeholders to believe its goals are.
 Real goals – goals that an organization actually
pursues, as defined by the actions of its members.
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APPROACHES TO SETTING GOALS
 Traditional goal-setting (Means-ends chain) an
approach to setting goals in which top managers set
goals that then flow down through the organization
and become sub-goals for each organizational area.
 – The lower level goals in traditional goal setting are

called means while the higher level goals are called
ends and the chain of these is called the means-end-
chain. The achievement of goals at low levels permits
the attainment of high-level goals.
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PROBLEMS OF TRADITIONAL GOAL SETTING
1. Planners out of touch on day to day basis

2. No flexibility in plans
3. Less creativity and learning
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APPROACHES TO SETTING GOALS
(CONT.)
Management by objectives (MBO) – a
process of setting mutually agreed upon goals
and using those goals to evaluate employee
performance.
MBO programs have four elements: goal

specificity, participative decision-making, an
explicit time period, and performance feedback.
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STEPS IN MBO
1.Define organizational goals.
2.Define employees objectives.
3.Continuous monitoring performance and progress.
4.Performance evaluation.
5.Providing feedback.
6.Performance appraisal.
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MBO Benefits and Problems
Benefits of MBO Problems with MBO

1. Manager and employee efforts are 1. Constant change prevents MBO from
focused on activities that will lead to taking hold.
goal attainment.
2. An environment of poor employer-
2. Performance can be improved at all employee relations reduces MBO
company levels. effectiveness.
3. Employees are motivated. 3. Strategic goals may be displaced by
4. Departmental and individual goals operational goals.
are aligned with company goals. 4. Mechanistic organizations and values that
discourage participation can harm the
MBO process.
5. Too much paperwork saps MBO energy.
WELL-WRITTEN GOALS (SMART)
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EXHIBIT 8-5
PLANNING AND ORGANIZATIONAL LEVEL
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6 RULES FOR PLANNING AND ORGANIZING
Rule # 1 Prioritizing
Rule # 2 Time Management
Rule # 3 Coordinating Resources
Rule # 4 Delegating
Rule # 5 Creating Systems
Rule #6 Planning Ahead
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REVIEW QUESTIONS

CHOOSE THE BEST ANSWER
 1) ________ involves defining the organization's goals,

establishing strategies for achieving those goals, and developing
plans to integrate and coordinate work activities.

 A) Logistics
 B) Operations
 C) Planning
 D) Execution

 2) ________ plans are plans that are clearly defined and leave no
room for interpretation.
 A) Stated
 B) Long-term
 C) Specific
 D) Directional

 3) The effect of planning on managers is that it forces them to

________.
 A) eliminate uncertainty
 B) anticipate and respond to change
 C) work at cross purposes
 D) grow resistant to change

 4) Which of the following factors has contributed to the decline

in the number of years used to define short-term and long-term
plans?

 A) stagnant business conditions
 B) flattened organizational structures
 C) profit-orientation of businesses
 D) environmental uncertainty

 5) Operational plans are usually ________.
 A) short term, specific, and standing

 B) short term, directional, and standing
 C) long term, directional, and single use
 D) long term, specific, and standing


 6) When formal planning fails to lead to higher performance,

which of the following is most likely to be the reason for the
failure?

 A) A participative style of planning was used.
 B) The company emphasized the control function over other
functions.
 C) Constraints of the external environment.
 D) Managers were allowed too much autonomy.

 7) Which of the following is the last step in MBO?
 A) Successful achievement of objectives is reinforced by

performance-based rewards.
 B) Action plans are implemented.
 C) The organization's overall objectives and strategies are
formulated.
 D) Progress toward objectives is periodically reviewed, and
feedback is provided.

 8) Goals are different from plans because ________.
 A) goals describe financial objectives, and plans describe

objectives related to social responsibility
 B) goals are desired outcomes, and plans describe how those
outcomes will be accomplished
 C) goals identify specific steps that the organization needs to
achieve, and plans identify the overall mission of the organization
 D) goals are important only for small companies, and plans are
important only for large companies

 9) Plans that encompass only the production or the sales goals of

a company are termed ________ plans.

 A) operational
 B) informal
 C) strategic
 D) financial

 10) An organization's ________ goals are official statements of

what an organization says, and what it wants its stakeholders to
believe, its goals are.
 A) authentic
 B) stated
 C) implicit
 D) seal

 11) Strategic plans are usually ________.
 A) long term, directional, and single use

 B) short term, directional, and standing
 C) long term, specific, and standing
 D) short term, specific, and standing

 12) Which of the following is an assumption associated with
traditional goal setting?
 A) Employees will be more motivated to try to attain goals that

they helped set.
 B) Organizational goals must not be broken down into individual
goals.
 C) Organizational goals must not be communicated to lower
level employees.
 D) Top managers know what is best because they see the "big
picture."

 13) ________ is a process of setting mutually-agreed upon goals

and using those goals to evaluate employee performance.

 A) Traditional goal setting
 B) Management by observation
 C) Management by objectives
 D) Management by exception

 14) A standing plan is ________.
 A) a flexible plan that sets out general guidelines for company

strategy
 B) an ongoing plan that provides guidance for activities
performed repeatedly
 C) a one-time plan specifically designed to meet the needs of a
unique situation
 D) a plan that stands in place of a preferred plan in case of the
failure of the latter

 15) ________ refers to gathering information about competitors

that allows managers to anticipate competitors' actions rather
than merely react to them.

 A) Data aggregation
 B) Due diligence
 C) Value analysis
 D) Competitor intelligence

TRUE OR FALSE
1-Informal plans are not recognized to be an effective form of planning.
2-The four reasons that organizations plan is to provide direction, set standards,
reduce waste, and reduce uncertainty and the impact of change.
3-A major argument against formal plans is that they can't replace intuition and
creativity.
4-Traditional goal setting requires top managers to set goals that are carried out by
the organizational levels.

TRUE OR FALSE
5-The key to MBO, or management by objectives, is that managers and subordinates

mutually agree on goals.
6-Long-term plans used to refer to plans that covered a period of over three years, but now
it refers to any time period over one year.
7-Directional plans leave no room for interpretation.
8-In general, upper-level managers focus on tactical or operational planning.


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PLANNING WORK

• Planning – defining the organization’s

Formal planning is associated with:

• Positive financial results – higher profits, higher return

• Critics have challenged some of the basic assumptions of

Copyright © 2014 Pearson Education, Ltd

 Strategic plans – plans that apply to the

 Long-term plans – plans with a time frame

 Single-use plan – a one-time plan

Goals (objectives) – desired

Financial Goals – related to the expected

 Stated Goals – official statements of what an

 – The lower level goals in traditional goal setting are

1. Planners out of touch on day to day basis

MBO programs have four elements: goal

Benefits of MBO Problems with MBO

Copyright © 2014 Pearson Education, Ltd

 1) ________ involves defining the organization's goals,

Copyright © 2014 Pearson Education, Ltd

Copyright © 2014 Pearson Education, Ltd

 3) The effect of planning on managers is that it forces them to

Copyright © 2014 Pearson Education, Ltd

 4) Which of the following factors has contributed to the decline

Copyright © 2014 Pearson Education, Ltd

 5) Operational plans are usually ________.

 A) short term, specific, and standing

Copyright © 2014 Pearson Education, Ltd

 6) When formal planning fails to lead to higher performance,

Copyright © 2014 Pearson Education, Ltd

 7) Which of the following is the last step in MBO?

 A) Successful achievement of objectives is reinforced by

Copyright © 2014 Pearson Education, Ltd

 A) goals describe financial objectives, and plans describe

Copyright © 2014 Pearson Education, Ltd

 9) Plans that encompass only the production or the sales goals of

Copyright © 2014 Pearson Education, Ltd

 10) An organization's ________ goals are official statements of

Copyright © 2014 Pearson Education, Ltd

 11) Strategic plans are usually ________.

 A) long term, directional, and single use

Copyright © 2014 Pearson Education, Ltd

 A) Employees will be more motivated to try to attain goals that

Copyright © 2014 Pearson Education, Ltd

 13) ________ is a process of setting mutually-agreed upon goals

Copyright © 2014 Pearson Education, Ltd

 A) a flexible plan that sets out general guidelines for company

Copyright © 2014 Pearson Education, Ltd

 15) ________ refers to gathering information about competitors

Copyright © 2014 Pearson Education, Ltd

1-Informal plans are not recognized to be an effective form of planning.

Copyright © 2014 Pearson Education, Ltd

5-The key to MBO, or management by objectives, is that managers and subordinates

7-Directional plans leave no room for interpretation.

8-In general, upper-level managers focus on tactical or operational planning.

Copyright © 2014 Pearson Education, Ltd

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