Ch 3

:Foundations
of planning

What is the planning ?

The process of outlining the activities that are
necessary to achieve the goals of the
organization.
Two major items in planning :1. Setting goals or objectives
2. Listing or identifying activities to reach these
goals ( How to reach these goals? )

What is the plan ?

Is a specific documented intention consisting of an
objective (end) and an action statement (means ).
State what , when , how , something to be done.
Notes : Planning is a future oriented.
Planning is often called the primary
management function.
Plan is the end result of planning process.

Purpose of
Planning

The purpose of planning is simple - to ensure

that the organization is both effective and
efficient in its activities.
What ? ( objectives)
How ? (method)
When ? ( time frame )
Where ? (place)
Who ? (responsibility)

Reasons (Benefits) of
Planning

1. Better Coordination
Planning provides a foundation for the
coordination of a broad range of
organizational activities.
A plan helps to define the responsibilities of
individuals and work groups and helps
coordinate their activities.

2. Focus on Forward Thinking

The planning function forces managers to
think ahead and consider resource needs
and potential opportunities or threats
that the organization may face in the future.

3. Participatory Work Environment

Successful planning requires the participation of
a wide range of organizational members. This
creates a more participatory work environment .

A participatory work environment is good

for two reasons:

The organization
benefits by having
access to a broad
base of experience
and knowledge in
the planning process.

Organizational
members are more
likely to buy in to a
plan that they have
helped develop.

4. More Effective Control System

An organizations plan provides a
foundation for control. A plan provides a
mechanism for ensuring that the
organization is moving in the right
direction and making progress toward
achieving its goals.

Costs of
Planning

1. Managerial Time
Done properly, the planning process requires a
substantial amount of managerial time and energy.

2. Delay in Decision Making

Planning can result in delays in decision making,
which must be weighed against the importance of
speed in response time. of speed in response time

Weighing the Benefits Against

the Costs of Planning
In the final analysis, managers plan because
planning leads to higher performance. Planning
also helps managers cope with the many
complex situations they face.

Formal planning and

organizational performance
Formal planning generally results in:
Higher profits
Higher return on assets
Improved quality of planning
Appropriate implementation of the plan

Criticisms of Formal
Planning
Formal
planning may:
1. Create rigidity
2. Replace intuition and creativity
Note: planning should enhance and support
intuition and creativity .
3. Focus managers attention on todays
competition, not on tomorrows survival
4. Reinforce success, which may lead to failure

Where Does Planning Start?

Which Approach is Better - Top-Down or
Bottom-Up?

 Top-down planning
the advantage is that , the top managers who are the
most knowledgeable about the firm as a whole , drive
the development of the plan

A bottom-up approach
The primary advantages is that the people closes to
operating systems , customers and suppliers drive the
development of the plan .

Planning as a Linking
Mechanism
Goals
Goals

Plans
Plans

Control
Control

Relationship among goals,

plans, and controls

Setting Goals and

Developing
Plans
Planning = Goals + Plans
Goals (objectives) : are desired outcomes
or targets
Note that :They guide mangers decisions and form
the criteria against which results are
measured .

Plans : are documents that outline how

goals are going to be met .
Note that :-

They usually include resource allocations ,

budgets , schedules , and other necessaryy
actions to accomplish the goals.

Steps in goal setting

1. Review the organizations
mission and employees key job
tasks.
2. Evaluate available resources.
3. Determine the goals
individually or with input from
others.

4. Make sure goals are well-written

and then communicate them to
all who need to know.
5. Build in feedback mechanisms to
assess goal progress.
6. Link rewards to goal attainment.

Setting Goals
Goals can be set either through a
process of :
1. Traditional goal setting
2. Management by objectives
(MBO)

1. Traditional goal setting : goals set by top

mangers flow down through the
organization and become sub goals for each
organizational area

erence between goals and object

Objectives : state what is to be
accomplished in singular , specific ,
and measurable terms with a target
date .
Goals : are general target to be
accomplished that are translated into
actionable objectives
Note that :
Goals include objectives , or goals are

Characteristics of effective
goals settings
1.
2.
3.
4.
5.

Specific and measurable

Defined time frame
Cover key result area
Challenging but realistic
Linked to rewards

S.M.A.R.T. Goals are

Specific
Measurable

Attainable
Realistic
Timely

Types of planning (plans)

Types of plans ( Breadth)

The managerial
pyramid
Top management
Chief executive
General managers

Planning horizon

Middle management
Functional managers
Product line
Department heads
Lower management
Unit managers
First-line supervisor

Tactical
( intermediate ) planning
6 months to 2 years

Strategic planning
1 to 10 years

Operational planning
1 week o 1 year

Types of plans ( frequency of

use )
1. Standing Plans
Are designed to deal with organizational
issues or problems that recur frequently.
Standing plans include policies, procedures,
and rules

 Policies - general guidelines that

govern how certain organizational
situations will be addressed.
Procedures - are more specific and
are designed to give explicit
instructions on how to complete a
recurring task.
Rules - provide detailed and specific
guidelines for action.

2. Single-Use Plans
developed for handling non repetitive situation.
Single-use plans include programs, and budgets .

Programs a set of activities that are designed

to accomplish an objective over a specific period
of time .

Budgets represent the funds allocated to

operate a unit for a fixed period of time

Standing
Standing versus
versus Single-Use
Single-Use Plans
Plans

Identify each type of plan by

categories
Standing plan : a- policy bprocedure
c- one
rule
1. Quality is job
( ford motor company)
Single-use
plan
: d-program
2. President john
f.kennedy's
plan to landesomeone on
budget
the moon
3. how much will it cost to operate your
department next month
4. Wearing safety glasses while touring the
factory
5. Forms for leaves of absence must be
approved by the managers and
submitted to the personnel office one
month in advance of their effective

 Contingency Plans
Alternative plans to be implemented if
uncontrollable events occur.
Developing a contingency plan
What might go wrong in my department?
How can I prevent it from happening?
If it does occur, what can I do to minimize its effect?

Contingency planning : requires the

development of two or more plans, each
of which is based on a different set of
strategic or operating conditions that
could occur.

 When is Contingency Planning Needed?

Contingency planning is necessary in
business environments that change rapidly
and in unpredictable ways.
Contingency planning is useful when a
firms effectiveness is dependent on a
particular set of business conditions.