Principles of Management Ch. 5 Vocab

Planning

Setting goals and deciding how to achieve them; also, coping with uncertainty by formulating future courses of action to achieve specified results. See also Decision making; Strategic management; Strategic planning

Plan

A document that outlines how goals are going to be met

Business Plan

A document that outlines a proposed firm’s goals, the strategy for achieving them, and the standards for measuring success

Strategy

A large-scale action plan that sets the direction for an organization

Strategic Management

A process that involves managers from all parts of the organization in the formulation and the implementation of strategies and strategic goals

Why Planning/Strategic Management is Important

Provide momentum and direction, encourage new ideas, and develop a sustainable competitive advantage

Mission

An organization’s purpose or reason for being

Mission Statement

Statement that expresses the purpose of the organization

Vision

A long-term goal describing “what” an organization wants to become; it casts a clear and motivational picture of the ultimate goal the organization wants to pursue

Vision Statement

Statement that expresses what the organization should become and where it wants to go strategically

Values Statement

Expresses what the company stands for, its core priorities, the values its employees embody, and what its products contribute to the world

Strategic Planning 

Determines what the organization’s long-term goals should be for the next one to five years with the resources they expect to have available

Tactical Planning

Determining what contributions departments or similar work units can make with their given resources during the next 6 months to 2 years; done by middle management

Operational Planning

Determining how to accomplish specific tasks with available resources within the next 1-week to 1-year period; done by first-line managers

Goal

Also known as objective; a specific commitment to achieve a measurable result within a stated period of time

Objective

Also known as goal; a specific commitment to achieve a measurable result within a stated period of time

Long-Term Goals

Tend to span one to five years and focus on achieving the strategies identified in a company’s strategic plan

Strategic Goals

Goals that are set by and for top management and focus on objectives for the organization as a whole

Short-term Goals

Tend to span 12 month and are connected to strategic goals in a hierarchy known as a means-end chain

Tactical Goals

Goals that are set by and for middle managers and focus on the actions needed to achieve strategic goals

Operational Goals

Goals that are set by and for first-line managers and are concerned with short-term matters associated with realizing tactical goals

Means-end Chain

A hierarchy of goals; in the chain of management (operational, tactical, strategic), the accomplishment of low-level goals are the means leading to the accomplishment of high-level goals or ends

Operating Plan

Typically designed for a 1-year period, this plan defines how a manager will conduct his or her business based on the action plan; the operating plan identifies clear targets such as revenues, cash flow, and market share

Action Plan

Course of action needed to achieve a stated goal

Contingency Plans

Responses to possible future events that could threaten a company’s operations

SMART Goal

A goal that is Specific, Measurable, Attainable, Results oriented, and has Target dates

Management By Objectives (MBO)

Four-step process in which (1) managers and employees jointly set objectives for the employee, (2) managers develop action plans, (3) managers and employees periodically review the employee’s performance, and (4) the manager makes a performance appraisal and rewards the employee according to results

Cascading Goals

Objectives are structured in a unified hierarchy, becoming more specific at lower levels of the organization

Planning/Control Cycle

A continuous process managers use to evaluate the progress in achieving strategic goals and to make modifications as needed