MGMT 364 Ch 5

Planning
is defined as setting goals and deciding how to achieve them.
Planning
is coping with uncertainty by formulating future courses of action to achieve specified results
Why is planning important?
It helps a company achieve goals
When you make a plan, you make a blueprint for action that describes what you need to do to realize your goals.
One important type of a plan is a
business plan
Business plan
a document that outlines a proposed firm’s goals, the strategy for achieving them, and the standards for measuring success
The business model,
which outlines the need the firm will fill, the operations of the business, its components and functions, as well as the expected
Which of the following would be included in a firm’s business model?
The firm’s expected revenues and expenses, A desctiption of the industry the firm is entering
A strategy is a large-scale action plan that sets the direction for an organization
is a large-scale action plan that sets the direction for an organization
Strategic management is
a process that involves managers from all parts of the organization in the formulation and the implementation of strategies and strategic goals
Strategic management is a process that involves managers from all parts of the organization
top manager, middle managers, and first-line managers- in the formulation, implementation, and execution of strategies and strategic goals to advance the purposses of the organization.
Planning and strategic management
1. Establish the mission and vision 2. Assess the current reality 3. Formulate the grand strategy and strategic, tactical, & operational plans 4. Implement the strategy 5. Maintain strategic control
An organization should adopt planning and strategic management for three reasons
1. Provide direction and momentum 2. encourage new ideas, and above all 3. develop a sustainable competitive advantage
Mission statement
“What is our reason for being?”, it further expresses the purpose of the organization
Vision statement
“What do we want to become?” – a long-term goal describing “what” an organization wants to become. It is a clear sense of the future and the actions needed to get there.
Strategic planning
Done by top manager for the next 1-5 years -> Goals -> Action Plans
they determine what the organizations long-term goals should be for the next 1-5 years with the resources they expect to have available.
Tactical planning:
Done by middle manager for the next 6-24 months -> Goals -> Action Plans
they determine what contributions their departments or similar work units can make with their given resources during the next 6-24 months.
Operational Planning
Done by first-line managers for the next 1-52 weeks -> Goals -> Action Plans they determine how to accomplish specific tasks with available resources within the next 1-52 weeks
Three types of goals: Strategic, Tactical, Operational
Also like planning, goals are arranged in a hierarchy known as a means-end chain because in the chain of management (operational, tactical, strategic) the accomplishment of low-level goals is the means leading to the accomplishment of high-level goals or ends.
Strategic goals
are set by and for top management and focus on objectives for the organization as a whole
Tactical goals:
are set by and for middle managers and focus on the actions needed to achieve strategic goals
Operational goals:
are set by and for first-line managers and are concerned with short-term matters associated with realizing tactical goals.
As a company undertakes strategic management, which three groups should be involved?
Top Managers, Middle Managers, First-line managers
Action Plan
defines the course of action needed to achieve the stated goal, such as a marketing plan or sales plan, product plan
The operating plan,
which is typically designed for a one-year period, defines how you will conduct your business based on the action plan; it identifies clear targets such as revenues, cash flow and market share
Standing Plans
Policies, Procedures, & Rules:
Standing plans
are plans developed for activities that occur repeatedly over a period of time Standing plans consist of policies, procedures, and rules
A policy
is a standing plan that outlines the general response to a designated problem or situation – A broad statement that gives managers a general idea about what is allowable for employees who use bad language, but gives no specifics
A procedure or standard operation procedure
is a standing plan that outlines the response to particular problems or circumstances
A rule
is a standing plan that designates specific required action, allows no room for interpretation.
Single-Use Plans
Programs & Projects
Single-use plans
are plans developed for activities that are not likely to be repeated in the future. Such plans can be programs or projects.
Program
is a single-use plan encompassing a range of projects or activities
Project
is a single-use plan of less scope and complexity than a program
SMART Goal
is one that is Specific, Measurable, Attainable, Results-Oriented and has Target dates
Specific
Goals should be stated in specific rather than vague terms.
Meausurable or quantifiable that is,
there should be some way to measure the degree to which a goal has been reached.
Attainable:
Goals should be challenging, of course, but above all they should be realistic and attainable. It may be best to set goals that are quite ambitious so as to challenge people to meet high standards.
Goals should be achievable within the
scope of time, equipment and financial support available.
Results-Oriented:
only a few goals should be chose- say, five for any work unit, and they should be results-oriented they should support the organization’s vision.
Target Goals:
Goals should specify the target dates or deadline dates when they are to be attained. 3-6 months, by which this goals is to be achieved.
Management by Objectives (MBO)
is 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.
MBO was first suggested by Peter Drucker in 1954, and
has spread largely because of the appeal of its emphasis on converting general objectives into specific ones for all memebers of an organization
The purpose of the MBO is to motivate
rather than to control subordinates.
Three types of objectives used in MBO:
Improvement objectives, Express performance to be accomplished in a specific way for a specific area.Personal development
Objectives, Express personal goals to be realized, Maintenance Objectives, Express the intention to mainatin performance at previously established levels
Improvement objectives
Express performance to be accomplished in a specific way for a specific area.Personal development
Objectives
Express personal goals to be realized
Maintenance Objectives
Express the intention to mainatin performance at previously established levels
A music teacher asked her students to set a really hard goal, such as increasing your practice time by 10 hours per week, which would cause her students to stretch beyond what they think is possible, this is known as a(n) ____.
mission statement
stretch goal
strategic goal
MBO plan
growing goal
stretch goal
Setting goals and deciding how to achieve them is the definition of ____.
focusing
organizing
regulating
controlling
planning
planning
An organization should adopt planning and strategic management to ____.

decrease costs and increase synergy
keep employees happy, encourage new ideas, and decrease costs

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

develop MBO, encourage new ideas, and increase profits

provide encourage new ideas, and increase organization diversity

provide direction and momentum, encourage new ideas, and develop a sustainable competitive advantage
Quality Vacuum has been manufacturing excellent vacuum cleaners for over 50 years. In the employee break room is a banner that reads, “We will always provide the highest-quality vacuums at the lowest cost to our customers and always give honest, winning customer service, thereby earning a fair profit for our stakeholders.” This statement is Quality Vacuum’s ____.
heart pact
objective statement
vision statement
code of ethics
mission statement
mission statement
A declaration that expresses what the organization should become and where it wants to go strategically is its ____.
vision statement
objectives statement
code of ethics
management code
mission statement
vision statement
Donna is the service desk coordinator in a department store, and she has set a goal this month of finishing her daily office work quicker so she can assist at the Service Desk earlier in the morning. She knows this will also help decrease theft, which will assist the company in achieving its goal of decreasing costs. Donna’s goal of finishing her office work quicker is a(n) _____.
strategic plan
strategic goal
operational goal
tactical plan
operating plan
operational goal