Management Question
Planning
The Foundation
of Successful
Management
PPT3(A)
Chapter Five
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Major Questions You Should Be Able
to Answer
5.1 What are planning, strategy, and strategic
management, and why are they important to me as a
manager?
5.2 What are mission and vision statements and what are
three types of planning and goals?
5.3 What are the three types of goals, and what are
different kinds of plans?
5.4 What are SMART goals and MBO, and how can they
be implemented?
5.5 How does the planning/control cycle help keep a
manager’s plans headed in the right direction?
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Planning: Coping with Uncertainty
Planning
coping with
uncertainty by
formulating future
courses of action to
achieved specified
results
setting goals and
deciding how to
achieve them
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Planning: Coping with Uncertainty
Business plan
a document that outlines a proposed firm’s goals,
the strategy for achieving them, and the standards
for measuring success.
Business model
outlines the need the firm will fill, the operations
of the business, its components and functions, as
well as the expected revenues and expenses
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Strategy
Strategy
a large-scale action plan that sets the direction for
an organization
represents an “educated guess” about what must
be done in the long term for the survival or the
prosperity of the organization or its principal
parts.
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Strategic Management
Strategic management
a process that involves managers from all parts of
the organization in the formulation and the
implementation of strategies and strategic goals.
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Planning & Strategic Management
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Figure 5.1
Why Planning & Strategic
Management Are Important
1. Provide direction and momentum
2. Encourage new ideas
3. Develop a sustainable competitive
advantage.
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Encouraging New Ideas
Management scholar Gary Hamel says that
companies such as Apple have been
successful because they have been able to
unleash the spirit of “strategy innovation.”
Strategy innovation
the ability to reinvent the basis of competition
within existing industries—“bold new business
models that put incumbents on the defensive.”
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Making Plans
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Figure 5.2
Mission & Vision Statements
Mission statement
expresses the purpose of the organization
Vision statement
expresses what the organization should become,
where it wants to go strategically
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Example: Amazon and Patagonia
Amazon – “Our vision is to be earth’s most
customer-centric company; to build a place where
people can come to find and discover anything they
might want to buy online.”
Patagonia – “We prefer the human scale to the
corporate, vagabonding to tourism, and the quirky
to the toned-down and flattened out.”
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Three Types of Planning for Three
Levels of Management
Strategic planning
Top managers determine what the organization’s
long-term goals should be for the next 1-5 years
with the resources they expect to have available
Tactical planning
Middle managers determine what contributions
their departments or similar work units can make
during the next 6-24 months
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Three Types of Planning for Three
Levels of Management
Operational planning
First-line managers
determine how to
accomplish specific
tasks with available
resources within the
next 1-52 weeks
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Question
Danny is participating with other managers in a
discussion about what his organization’s goals
should be for the next decade. He is
participating in:
A. Strategic planning
B. Operational planning
C. Tactical planning
D. Controlling
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Three Levels of Management, Three
Types of Planning
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Figure 5.3
Three Types of Goals: Strategic,
Tactical, & Operational
Goals
specific commitment to achieve a measurable
result within a stated period of time
also known as an objective
strategic, tactical, operational
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Three Types of Goals: Strategic,
Tactical, & Operational
Strategic goals
set by and for top management and focus on
objectives for the organization as a whole.
Tactical goals
set by and for middle managers and focus on the
actions needed to achieve strategic goals.
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Three Types of Goals: Strategic,
Tactical, & Operational
Operational goals
set by and for first-line managers and are
concerned with short-term matters associated
with realizing tactical goals.
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The Action Plan &
the Operating Plan
Action plan
defines the course of action needed to achieve
the stated goal
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The Action Plan &
the Operating Plan
Operating plan
designed for a 1-year period
defines how you conduct your business based on
the action plan
identifies clear targets such as revenue, cash flow,
and market share
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Types of Plans: Standing Plans &
Single-Use Plans
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Table 5.1
Standing Plans: Policies, Procedures, &
Rules
Standing plans
plans developed for activities that occur
repeatedly over a period of time
consist of policies, procedures, and rules.
o Policy
outlines the general response to a designated
problem or situation
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Standing Plans: Policies, Procedures, &
Rules
o Procedure
outlines the response to a particular problem or
circumstances
o Rule
designates specific required action
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Single Use Plans:
Programs & Projects
Single-use plans
plans developed for activities that are not likely
to be repeated in the future
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o Program
single-use plan
encompassing a
range of projects or
activities
o Project
single-use plan of less
scope and complexity
than a program
SMART Goals
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Specific
Measurable
Attainable
Results-oriented
Target dates
Relationship Between Goal Difficulty
and Performance
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Figure 5.4
Management by Objectives: The FourStep Process for Motivating Employees
Management by objectives (MBO)
a 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
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Three Types of Objectives
Used in MBO
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Table 5.2
Cascading Objectives:
MBO from the Top Down
1. Top management must be committed
2. It must be applied organization-wide
3. Objectives must “cascade”
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Cascading Objectives:
MBO from the Top Down
MBO works by cascading objectives down
through the organization
Objectives are structured in a unified
hierarchy, becoming more specific at lower
levels of the organization.
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Question?
Melissa wants her employee, Ralph, to turn in
his monthly sales report by the 5
th of every
month. This meets the ____________
requirement of SMART goals.
A. Specific
B. Measurable
C. Attainable
D. Target dates
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The Planning/Control Cycle
1. Make the plan
2. Carry out the plan
3. Control the direction by comparing results
with the plan
4. Control the direction by taking corrective
action in two ways
a) Correcting deviations
b) Improving future plans
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The Planning/Control Cycle
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Figure 5.5
Question?
Apple has fired employees who have leaked
news about unannounced products. Which
step of the Planning/Control is this?
A. Make the plan
B. Carry out the plan
C. Take corrective action
D. Document the plan
