Management 1 Lecture PRE FINAL

8/4/2019 Management 1 Lecture PRE FINAL

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Management Function 1:

planning


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PlanningA process that involves defining the organizations

objectives or goals, establishing an overall strategy

for achieving those goals, and developing a

comprehensive hierarchy of plans to integrate andcoordinate activities.

Purposes of Planning

Gives directionReduces the impact of change

Minimizes waste and redundancy

Sets the standards that are used for controlling


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Planning and Performance Generally speaking, formal planning is associated with higher

profits, higher return on assets and other positive financialresults.

The quality of planning process and the appropriate

implementation of the plans probably contribute more tohigh performance than does the extent of planning.

In those studies in which formal planning didnt lead tohigher performance, the environment was the culprit.

Governmental regulations, powerful labor unions, and similar

environmental forces constrain managers options andthereby reduce the impact of planning on an organizations

performance.

WHY? Because managers will have fewer choices for planning viablealternatives.


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Types of Plans

Strategic vs. Operational Plans

Strategic Plans. Plans that are organization-wide, establish

overall objectives, and position an organization in terms of

its environment.

Operational Plans. Plans that specify details on how

overall objectives are to be achieved.

Short-Term vs. Long-Term Plans

Short Term Plans. Plans that cover one year or less Long-Term Plans. Plans that extend beyond three years.


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Types of Plans Specific vs. Directional Plans

Specific Plans. Plans that are clearly defined and leave noroom for interpretation.

Directional plans. Flexible plans that set out generalguidelines.

Frequency of Use Single-use Plan. A one-time plan that is specifically

designed to meet the needs of a unique situation and iscreated in response to nonprogrammed decisions thatmanagers make.

Standing Plans. Ongoing plans that provide guidance foractivities repeatedly performed in the organization andthat are created in response to programmed decisionsthat managers make.


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Contingency Factors in Planning

Level in the Organization

Operational planning dominates the planning activities

oflower-level managers. As managers move up the

hierarchy, their planning role becomes more strategy

oriented. The planning effort by top executives in large

organizations is mostly strategic. In a small business, theowner-manager does both.

Degree of Environmental Uncertainty

The greater the environmental uncertainty, the more

plans need to be directionaland emphasis placed on theshort term.


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Contingency Factors in Planning

Length of Future Commitments

Related to the time frame of plans. The more that

current plans affect future commitments, the

longer the time frame for which managers should

plan. This commitment concept means that plansshould extend far enough to meet those

commitments made today.


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Objectives: The Foundation in Planning

Objectivesare desired outcomes forindividuals, groups or entire organizations.

These are goals.

They provide the directionfor all managementdecisions and form the criterionagainst which

actual accomplishments can be measured.That is

why we call them the foundation of planning.


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Multiplicity of Objectives Closer analysis reveals that all organizations have multiple

objectives. For example, businesses also seek to increase

market share and satisfy employee welfare, aside from

making profit. Real versus Stated Objectives

Stated Objectives. Official statements of what an

organization says and what it wants various publics to

believe its objectives are. Real Objectives. Objectives that an organization actually

pursues, as defined by the actions of its members.


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Traditional Objective Setting Objectives are set at the top and then broken

down into subgoals for each level in an

organization. The top imposes its standards on

everyone below.


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MANAGEMENT BY OBJECTIVES (MBO) First described by Peter Drucker. It consists of 4 elements:

goal specificity, participative decision making, an explicittime period and performance feedback.

A system in which specific performance objectives are

jointly determined by subordinates and their superiors,progress toward objectives is periodically reviewed, andrewards are allocated on the basis of this progress.

Do MBO Programs work? Studies of actual MBO programsconfirm that MBO effectively increases employeeperformance and organizational productivity. A review of 70programs, for example, found organizational productivitygains in 68 of them.


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Steps in a Typical MANAGEMENT BY OBJECTIVES (MBO)

1. The organizations overall objectives and strategies areformulated.

2. Major objectives are allocated among divisional anddepartmental units.

3. Unit managers collaboratively set specific objectives for theirunits with their superiors.

4. Specific objectives are collaboratively set for all departmentmembers.

5. Action plans, defining how objectives are to be achieved, arespecified and agreed upon by managers and subordinates.

6. The action plans are implemented.

7. Progress toward objectives is periodically reviewed, andfeedback is provided.

8. Successful achievement of objectives is reinforced byperformance-based rewards.


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Increasing Importance of Strategic Management

Before the early 1970s, managers who made long-range plans generally assumed that better times

were ahead. Plans for the future were merely

extensions of what the organization had done in

the past.However, environmental shocks such as energy

crises, deregulation of many industries,

accelerating technological change, and increasing

global competition undermined this approach tolong-range planning.


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Increasing Importance of Strategic Management

These changes in the rules of the gameforced managers to develop a systematicapproach to analyzing the environment,

assessing their organizations strengths and

weaknesses, and identifying opportunitiesthat would give the organization a

competitive advantage. The value of

thinking strategically began to be

recognized.

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Management 1 Lecture PRE FINAL