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M
ahm
ood
Qas
im PLANNING
M
ahm
ood
Qas
imGoal, Plan And Planning
A desired future state that the organization attempts to realize.Goal
A blueprint specifying the resource allocations, schedule, and other actions necessary for attaining goals.Plan
The act of determining the organization’s goals and the means for achieving them.Planning
M
ahm
ood
Qas
imLevels Of Goals/Plans And Their Importance
Strategic
Goals/Plans
Senior Management
(Organization as a whole)
Operational Goals/Plans
Lower
Management
(Departments, in
divid
uals)
External MessageLegitimacy for investors,
customers, suppliers, community
Internal Message
Legitimacy, motivation,
guides, rationale, standards
M
ahm
ood
Qas
imLevels of Goal in Organizations
A broadly stated definition of the organization’s basic business scope and operations that distinguishes it from similar types of organizations
Mission Statement
Broad statements about the organization’s direction and future that pertain to the organization as a whole rather than to specific divisions or departments
Strategic Goals
The action steps by which an organization intends to attain its strategic goals
Strategic Plans
The organization’s reason for existenceMissions
Mission Statement
Strategic Goals
Strategic Plans
Missions
M
ahm
ood
Qas
imComponents of Mission Statement
1
2
3
4
5
6
7
8
9
Customers : Who are the organization’s customers?
Products or services : What are the organization’s major products or services?
Location : Where does the organization compete?
Technology : What is the organization’s basic technology?
Concern for survival : What is the organization’s commitment to economic objectives?Philosophy : What are the beliefs, values, aspiration, and philosophical priorities of the organization?Self-concept : What are the organization’s major strengths and competitive advantage?Concern for public image : What are the organization’s public responsibilities, and what image is desired?Concern for employees : What is the organization’s attitude towards employees?
M
ahm
ood
Qas
imHierarchy of Goal
StrategicGoals
StrategicPlans
TacticalPlans
TacticalGoals
OperationalPlans
OperationalGoals
Top ManagementOrganization wide
perspective
Middle ManagementDepartment perspective
First-Level ManagementUnit / individual perspective
M
ahm
ood
Qas
imHierarchy of Goal
Plans developed at the organization’s lower levels that specify action steps towards achieving operational goals and that support tactical planning activities.
Operational Plans
Plans designed to help execute major strategic plans and to accomplish a specific part of the company’s strategy.
Tactical Plans
Specific, measurable results expected from departments, work groups, and individuals within the organization.
Operational Goals
Goals that define the outcomes that major divisions and departments must achieve in order for the organization to reach its overall goals.
Tactical Goals
The action steps by which an organization intends to attain its strategic goals.
Strategic Plans
Broad statements of where the organization wants to be in the future: pertain to the organization as a whole rather than to specific divisions or departments
Strategic goals
M
ahm
ood
Qas
imHierarchy of Goal
Manufacture both standard and custom metal products for various applications in the machine tool industry
PRESIDENT12% return on investment
5% growthNo employee layoffs
Excellent service to customers
FINANCE V.P.Keep outstanding accounts below
Rs.500,000Below borrowing below
Rs.1.250,000Provide monthly budget statements
for departments
PRODUCTION V.P.Manufacture 1,200,000 products at
average cost of Rs.19Scrap rate of 3% or less
Increase manufacturing productivity by 2%
Resolve employee grievances within 3 working days
Marketing V.P.Sell 1,200,000 units at average
price of Rs.27Introduce 1 new product line Increase sales by 5% in new
market areasOpen 1 new sales office
ACCOUNT RECEIVABLE MANAGER
Issue invoices within 5 days of saleCheck new customers’ credit within
1 working dayAllow no account to be overdue
more than 5 months
SUPERVISOR-AUTOMATIC MACHINES
Produce 150,000 standard units at average cost of Rs.16Have machine downtime of
less than 7%
SALES MANAGER-REGION 1Respond to customer inquiries
within 2 hoursMeet sales quotes of 120,600
unitsWork with salespeople to:
MISSION
Strategic Goals
Tactical Goals
Operational Goals
M
ahm
ood
Qas
imCriteria for Effective Goals
Linked to Rewards
Defined Time Period
Specific and Measurable
Challenging but Realistic
Cover Key Result Area
1
2
3
4
5
M
ahm
ood
Qas
imPlanning Types and Models
Management by Objectives
A method of management whereby managers and employees define goals for every department, project, and person and use them to monitor subsequent performance.
Single-Use Plans
Plans that are developed to achieve a set of goals that are unlikely to be repeated in the future.
Standing plans
Ongoing plans used to provide guidance for tasks performed repeatedly within the organization.
Shewhart Cycle
A planning cycle used in companies that have instituted quality management; also called PDCA – plan, do, check, act – Cycle.
Contingency plans
Plans that define company responses to specific situation, such as emergencies or set backs
M
ahm
ood
Qas
imManagement by Objectives (MBO)
Four major activities must occur in order for MBO to be successful
Set Goals
Appraise overall
performance
Develop action plan
Review progress
M
ahm
ood
Qas
imModel of the MBO Process
Corporate strategic goalsDepartmental goalsIndividual goals
Action Plan
Review Progress
Take Corrective Action
Appraise Performance
Step 1: Set GoalsStep 2: Develop Action Plan
Step 3: Review Progress
Step 4: Appraise Overall Performance
M
ahm
ood
Qas
imBenefits and Problems with MBO
1. Manager and employee efforts are focused on activities that will lead to goal attainment.
2. Performance can be improved at all company levels.
3. Employees are motivated.4. Departmental and individual goals
are aligned with company goals.
1. Constant change prevents MBO from taking hold.
2. An environment of poor employer-employee relations reduces MBO effectiveness
3. Strategic goals may be displaced by operational goals.
4. Mechanistic organizations and values that discourage participants can harm the MBO process.
5. Too much paperwork saps MBO energy.
Benefits of MBO Problems with MBO
M
ahm
ood
Qas
imMajor Types of Standing Plans
PolicyBroad in scope – a general guide to actionBased on organization's overall goals/strategic planDefines boundaries within which to make decisions
Examples:Drug-free workplace policiesContinuous improvementShewhart Cycle Rule Narrow in scope
Describes how a specific action is to be performedMay apply to specific setting
Examples:No-smoking rule in areas of plant where hazardous materials are stored
ProcedureSometimes called a standard operating procedureDefines a precise series of steps to attain certain goalsMay apply to specific setting
Examples:Procedures for issuing refundsProcedures for handling employee grievances
M
ahm
ood
Qas
imContingency Plans
When organizations are operating in a highly uncertain environment or dealing with long time horizons, sometimes planning can seem like a waste of time. In fact, strict plans may even hinder rather than help them form more flexible plans.
To develop contingency plans, planners indentify uncomfortable factors, such as recession, inflation, technological developments, or safety accidents. To minimize the impact of these potential factors, a planning team can forecast the worst-case scenarios.
Example:If sales fall 20% and prices drop 8%, what will the
company do?
M
ahm
ood
Qas
imShewhart Cycle of Continuous Improvement
4. ACTAnalyze results;
put learning into action
1. PlanDecide what changes are
desirable, and plan a change
or test
2. DoCarry out the change or test
3. CheckObserve the
results
M
ahm
ood
Qas
imPlanning Time Horizon
Short-TermPlanning
(Operational Goals)
Intermediate –Term Planning
(Tactical Golas}
Long-Term Planning(Strategic Planning}
Today 1 Year 2 Years 3 Years 4 Years Six Years & Beyond
M
ahm
ood
Qas
imThe New Planning Paradigm
Today, some companies are taking decentralized planning even further and involving workers at every level of the
organization in the planning process. In this new paradigm, a decentralized planning staff – made up of middle
managers and other planners – works with a planning task force of line managers and frontline workers to develop
dynamic plans that meet the organization’s needs .
Decentralized Planning StaffA group of planning specialists assigned to major departments and divisions to help managers develop their own strategic plans
Planning Task forceA temporary group consisting of line managers responsible for developing strategic plans
M
ahm
ood
Qas
imWhat is Strategic Management?
Strategic management is the set of decisions and actions used to formulate and implement strategies that will
provide a competitively superior fit between the organizations and its environment so as to achieve
organizational goals.
Essence of StrategyIs choosing to perform different activities differently than
competitors do.
M
ahm
ood
Qas
imStrategic Formulation versus Implementation
The final aspect of strategic management involves the stages of formulation and implementation.
Strategy formulation includes the planning and decision making that leads to the establishment of the firm’s goals and the development of
specific strategic plan. Strategic formulation may include external environment and internal
problems and integrating the results into goals and strategy.
Strategy implementation is the administration and execution of the strategic plan. Managers may use persuasion, new equipment ,
changes in organization structure , or a reward system to ensure that employees and resources are used to make formulated strategy a
reality.
M
ahm
ood
Qas
imThe Strategic Management Process
Evaluate CurrentMissionGoalsStrategies
Scan External EnvironmentNational Global
Identity strategic Factors:•Opportunities•Threats
Identify Strategic Factors:StrategiesWeaknesses
Scan internal EnvironmentCore CompetenceSynergyValue Creation
Define New:MissionGoalsGrand Strategy
Formulate Strategy:CorporateBusinessFunctional
Implement Strategy via Changes in:
Leadership/cultureStructureHuman ResourceInformation and control systems
SWOT
M
ahm
ood
Qas
imPorter’s Competitive Forces and Strategies
Potential New Entrants
Bargaining Power of Buyers
Bargaining Power of Suppliers
Threat of Substitute Products
Rivalry Among Competitors
1
2
3
4
5
M
ahm
ood
Qas
imCompetitive Strategies
Differentiation
Cost Leadership
Focus
1
2
3
M
ahm
ood
Qas
imThank You
End of Planning