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CHAPTER 2
PLANNING
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Definition
PLANNINGSetting goals and defining the actions necessary to
achieve those goals
Planning is concerned with ends(what is to be done) aswell as with means (how it is to be done).
ALSO known as the process ofsetting goals andcourseof action, developing rules and procedures and
forecasting future outcomes
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PLAN
Methods ofdoing or making something
and consisting of a goal and a course ofaction.
Methods devised to achieve an
organizational goal.
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Importance Of Planning
Sense of direction and purpose
Coordinate managers of different functions
and division
Device for controlling managers
Get managers to participate in decision
making
Reduce overlapping
Resources are effectively and efficiently
utilized
Can point out the need of future
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THE PLANNING PROCESS
A. Establish objectives
B. Analyze situation/create planning premises
C. Determine alternative course of action
D. Evaluate alternatives
E. Choose and implement plan
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OBJECTIVES
Objectives
Statement of how an organization intends to fulfil its
missionmore specific terms and specific time frame
Importance Provide a direction in which the organization should
move
Coordinate the efforts and activities of the members of
the organization
Increase motivation among members of the
organization
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TYPESOF ORGANIZATIONALOBJECTIVES
Organizational Objectives The objectives set by top management for the
company
Strategic objective-broad general issues E.g. double sales revenue
Individual Objectives The objectives set for each subordinates to be
accomplish Operational objectives
New product for every 5 yrs
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Types of Plans
BREADTH TIME SPECIFICITY FREQUENCYOF USE FRAME OF USE
Strategic Long term Directional Single useTactical Short term Specific Standing
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STRATEGIC PLANNING
The process by which an organization makesdecision and takes action to enhance its long
term performance.
Strategy A plan that identifies the markets in which an organization
competes, as well as the ways in which it competes in those
markets.
A course of action the explains how an enterprise will move
from the business it is now to the business it wants to be in
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Tactical plans Plans that specify the details of how
an organizations overall objectivesare to be achieved
Short-term plans
Plans that cover less than one year
Long-term plans
Plans that extend beyond five years
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Strategic Planning
Apply broadly to the entire organization.
Establish the organizations overall objectives.
Seek to position the organization in terms of its
environment. Provide direction to drive an organizations efforts
to achieve its goals.
Cover extended periods of time.Are less specific in their details.
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Tactical Planning
Tactical plans (operational plans)
Apply to specific parts of the organization.
Specify the details of how the overall objectivesare to be achieved.
Cover shorter periods of time.
Must be updated continuously to meet currentchallenges.
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Single-Use and Standing Plans
Standing plans
A plan that is ongoing and provides guidance for
repeatedly performed actions in an organization
Customer satisfaction policy
Single-use plans
A plan that is used to meet the needs of a
particular or unique situation Single-day sales advertisement
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There are 2 types of operational plans
Standing plansPlans that deal with organizational issues and
problems that recur
Policy general guidelines for decision making within the
organization. e.g. grade, program etc Procedure plan that specifies how to proceed in a specific
situation that routinely arises. E.g. ordering supplies
Rules detailed and specific regulation for action.
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Single Use PlanA one-time plan specifically designed to meet the need
of a unique situation. E.g. build a new headquarters
Program plan that govern a comprehensive set ofactivities designed to accomplish a particular sets of
goals. Projects plan that direct the efforts of individuals or
work group towards the achievement of goals
Budget plan that specify how financial resourcesshould be allocated
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TYPES OF OPERATIONAL PLAN
Plan Description
Single-use plan Developed to carry out a course of action not likely tobe repeated in the future
Program Single-use plan for a large set of activities
Project Single-use plan of less scope and complexity than aprogram
Standing plan Developed for activities that recur regularly over a pe-riod of time
Policy Standing plan specifying the organizations general
response to a designated problem or situation
Standard operating procedure Standing plan outlining steps to be followed in particu-lar circumstances
Rules and regulations Standing plans describing exactly how specific activi-ties are to be carried out
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Specific and Directional Plans
Specific plans
Plans that have clearly defined objectives and leave no
room for misinterpretation.
What, when, where, how much, and by whom (process-focus)
Directional plans
Flexible plans that set out general guidelines.
Go from here to there (outcome-focus)
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Directional versus Specific Plans
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MISSION STATEMENT
A broad declaration of an organizations purpose that
identifies organizations products and customers and
distinguishes the organization from its competitors
It set the strategic direction of an organizationwhy
we are here & where we going
It provides a foundation for the development ofbusiness strategy
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DEVELOPINGMISSIONSTATEMENT
It should be concise and meaningful Establish a set of primary goals/objectives (sense of direction
or purpose for the organization & should be realistic)
Embodied in the minds, habits, attitudes & decisionsof everyone in the company every day
Must be describe the free primary aspect oforganization Define its business (who are our customers & what
customers needs are being satisfied)
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IMPORTANCEOF MISSIONSTATEMENT
Addresses our basic need for direction.
Defines the purpose of the organization and the
values and ethical principles by which membersaspire to live
Provide a foundation by which the organization
should operate and create goals
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BARRIERS TO EFFECTIVE
PLANNING
Lack of commitment to planning
Lack of top management support
Lack of meaningful objectives of goalsFailure to see the scope of plans
Rely to much on experience
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OVERCOMING THE BARRIERS
TO PLANNING
Planning must be organized
Planning must be clear and definite
Managers must participate in planning
Encourage strategic thinking