summary of chapter 7

Foundations of Planning

What is Planning?

Defininig goals, establishing strategies to acheive those goals and developing plans to coordinate and integrate activities.

Types of Planning

There are two types of planning:

1)Formal Planning

2)Informal Planning

Why do managers Plan?

Formal Planning is much important because it

1. provides directon
2. reduces uncertainty
3. minimizes waste and redundancy
4. establishes the goals or standards used in controlling
5. is assosiated with positive financial results

Factors Affecting Planning and Performance

There are two factors:

1. External environment
2. Planning time frame

How do managers plan?

Planning is often called primary management function

Planning involves two important elements

• Goals(foundations of planning)
• Plans

Goals

Goals are desired outcomes for individuals groups of entire organization

Types of Goals

1. strategic or financial goals
2. stated or real goals

Financial Goals

These are realted to the financial performance of the organization

Strategic Goals

These are related to other areas of an organization performance

Stated Goals

Official statement of what an organization says and what it wants its various stakeholders to believe, its goals are

Real Goals

Those goals that an organization actually pursues-observe what organizational memebers are doing

Examples

Stated Goals

Nike's goal is to bring inspiration and innovation to every athlete

Real Goals

Universities that proclaim the goal of limiting class size facilitating close student teacher relations and actively involving students in the learning precess and then put them in to lecture classes of 300 or more are pretty common

Plans

Documents that outline how goals are going to be met

Types of Plans

• breadth: strategic or operational
• time frame: short term or long term
• specificity: directional or specific
• frequency of use: single use or standing use

How do managers set Goals?

Goals can be establish through a process of

1. Traditional goal setting
2. Management by objectives

Traditional approach: top to down

• If hierarchy of goals is clearly define, a means-end chain is formed
• If not clearly define, goals lose clarity and unity

Management by Objectives (MBO) approach: four elements

1. goal specificity
2. participative decision making
3. explicit time period
4. performance feedback

Characteristics of well-defined Goals

• written in termof outcomes rather than actions
• measurable and quantifiable
• clear time frame
• challenging yet attainable
• written down
• communicated to all organizational members

Steps in Goal setting

Goal setting process consists of five steps

1. review the organization missions
2. evaluate available resources
3. determine the goal indvidually or with input from others
4. write down the goals and communicate them to all who need to know
5. review results and whether goals are being met

Once the goals have been established, written down, and communicated, a manager is ready to develope plans for pursuing the goals.

How do managers develope Plan

Developing Plans

The process of developing plans is influence by

• 3 contigency factors

1. level in the organization
2. environmental uncertainty
3. commitment concept

• 2 approaches

1. formal planning department
2. involving more organizational members in process

Contemporary Issues and Planning

there are 2 issues

• Criticisms of Planning

1. creates rigidity
2. cant be developed for dynamic environment
3. cant replace intuition and creativity
4. focuses on today not tomorrow
5. reinforces success, which can lead to failure
6. planning is not enough

• Effective planning in Dynamic Evironments