Ch 3- Foundations of Planning

Planning

is a primary managerial activity

planning involves:

- Defining the organisation’s goals
- Establishing an overall strategy for achieving those goals
- Developing plans for organisational work activities

informal planning

not written down, short-term focus, specific to an organisational unit

Formal

written, specific, and long term focus, involved shared goals for the organisation

purpose of planning

- Provides purpose
- Reduces uncertainty
- Minimises waste and redundancy
- Sets the standards for controlling

elements of planning

goals, plans

Goals (or objectives)

desired outcomes for individuals, groups, or entire organisations, provide direction and evaluation performance criteria

Plans

documents that outline how goals are to be accomplished, describe how resources are to be allocated and establish activity schedules

types of goals

financial goals, strategic goals, stated goals vs real goals

Financial Goals

are related to the expected internal financial performance of the organisation

Strategic Goals

related to the performance of the firm relative to factors in its external environment

Stated goals Vs. Real goals

broadly-worded official statements of the organisation (intended for public consumption) that may be irrelevant to its real goals (what goes on in the organisation)

Breadth; strategic plans

Apply to the entire organisation
Establish the organisation’s goals
Seek to position the environment in terms of its environment
Cover extended periods of time

Breadth; operational plans

Specify the details of how the overall goals are to be achieved
Cover short time period

Time frame; long term plans

Plans with time frames extending beyond three years

time frame; short term plans

Plans with time frames on one year or less

specificity; specific plans

Plans that are clearly defined and leave no room for interpretation

specificity; directional plans

Flexible plans that set out general guidelines, provide focus, yet allow discretion in implementation

frequency of use; single use plan

A one-time plan specifically designed to meet the need of a unique situation

Frequency of Use; Standing Plans

Ongoing plans that provide guidance for activities performed repeatedly

Traditional Goal Setting

-Broad goals are set at the top of the organisation
-Goals are broken into subgoals for each organisational level
-goals are intended to be direct

Means-end Chain

Network of goals that results from establishing a clearly defined hierarchy of organisational goals
Achievement of lower-level goals is the means by which to reach higher-level goals (ends)

Management By Objectives (MBO)

Specific performance are determined by employees and managers
Progress towards accomplishing goals is periodically reviewed
Rewards are allocated on the basis of progress towards the goals
Key elements of MBO: goal specificity, participative decision making, an explicit performance/evaluation period, feedback

Manager’s level in the organisation

Strategic plans at higher levels
Operational plans at lowers levels

Stable environment

specific plans

Dynamic environment

specific but flexible plans

Commitment concept

current plans affecting future commitments must be sufficiently long-term to meet those commitments

Establishing a formal planning department

Group of planning specialists who help managers write organisational plans

Involving organisational members in the process

Plans are developed by members of organisational units at various levels and then coordinated with other units across the organisation

issues in planning, disadvantages

-May create rigidity
-Plans cannot be developed for dynamic environments
-Does not replace intuition and creativity

Effective planning in Dynamic Environments

-Develop plans that are specific but flexible
-Understand that planning is a process
-Plans change depending on the conditions
-Flatten the organisational hierarchy to foster the development of planning skills at the organisational levels