Chapter 5: Planning

business plan

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

management by objectives (MBO)

A four-step process in which managers and employees jointly set objectives for the employee, managers develop action plans, managers and employees periodically review the employee's performance, and the manager makes a performance appraisal and rewards the employee according to results.

SMART goal

A goal that is Specific, Measureable, Attainable, Results-oriented, and has Target dates.

strategy

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

vision

A long-term goal describing "what" an organization wants to becomes. A clear sense of the future and the actions needed to get there.

strategic management

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

program

A single-use plan encompassing a range of projects or activities.

project

A single-use plan of less scope and complexity than a program.

goal (objective)

A specific commitment to achieve a measurable result within a stated period of time.

rule

A standing plan that designates specific required action.

policy

A standing plan that outlines the general response to a designated problem or situation.

procedure

A standing plan that outlines the response to particular problems or circumstances.

planning

Coping with uncertainty by formulating future courses of action to achieve specified results.

operating planning

Defines how you will conduct your business based on the action plan.

action plan

Defines the course of action needed to achieve the stated goal.

operational planning

Determine how to accomplish specific tasks with available resources within the next 1-52 weeks.

tactical planning

Determine what contributions their departments or similar work units can make with their given resources during the next week 6-24 months.

strategic planning

Determine what the organization's long-term goals should be for the next 1-5 years with the resources they expect to have available.

mission statement

Expresses the purpose of the organization.

vision statement

Expresses what the organization should become, where it wants to go strategically.

Means-end chain

In the chain of management the accomplishment of low-level goals is the means leading to the accomplishment of high-level goals or ends.

cascading

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

business model

Outlines the need the firm will fill, the operation of the business, its components and functions, as well as the expected revenues and expenses.

single-use plans

Plans developed for activities that are not likely to be repeated in the future.

standing plans

Plans developed for activities that occur repeatedly over a period of time.

mission

Purpose or reason for being.

operational goals

Set by and for first-line managers and are concerned with short-term matters associated with realizing tactical goals.

tactical goals

Set by and for middle managers and focus on the actions needed to achieve strategic goals.

strategic goals

Set by and for top management and focus on objectives for the organization as a whole.

planning

Setting goals and deciding how to achieve them.

planning/control cycle

Two planning steps and two control steps: make the plan, carry out the plan, control the direction by comparing results with the plan, control the direction by taking corrective action by correcting deviations in the pan or by improving future plans.