MGMT 309 Chapter 6

tactical plans

a plan aimed at achieving the tactical goals set by and for middle management. The focus is on how to operationalize action necessary to achieve the strategic goals

planning staff

gather information, coordinate planning activities, and take a broader view than individual managers

By Time Frame

long term, intermediate term, or short term time frames and explicit time frames or open ended

Formal Goal setting

manager and subordinate each select the goals and rules. -giving sub ordinance a voice on the process

When discussing optimization

managers can pursue one goal and exclude all other or to seek a mid-range goal

Managerial responsibility for goal setting should correspond to the

managers level in the organization

short-range plans

operational action and contingency plans of 1 year or less

Middle and lower level managers are jointly responsibly for what?

operational goals

An action plan

operationalizes any other kind of plan. When as specific Nissan plant was ready to have its technology overhauled, its managers focused their attention on replacing the exiting equipment with new equipment as quickly and as efficiently as possible, to minimize lost production time. In most cases, this was down in a matter of a few months, with actual production halted for only a few weeks. this plan thus coordinates the actual changes at a given factory.

Mission statement of a fast food chain:

our mission is to operate a chain of restaurants that will prepare high quality food on a timely basis and at reasonable prices

mission statement

statement of an organization's fundamental purpose that sets a business apart from other firms of its type and identifies the scope of the business's operations in product and market terms

The mission and strategic goals are usually determined by who?

the board of directors and top managers

Reluctance to establish goals

the reason for this reluctance may be lack of confidence or fear of failure

Example of Crisis Management

*how to respond to something that was not planned -natural disasters like hurricanes and earthquakes can have a devastating impact on business. Large companies often have crisis management plans in place to provide at least partial direction and support for those affected by such a disaster. But smaller businesses like the one in the picture above are likely to suffer long term financial consequences ad many do not survive.

Example of Management by Objectives (MBO)

*note that although many firms use this basic approach, they often tailor it to their own special circumstances and use a special term or name for it. For example.. Raytheon uses an MBO-type system but calls it the "Performance Agreement System" or PAS.

Figure 6.3: Contingency Planning-most organizations develop this type of plan. These plans specify alternative course of action to be taken if an intended plan is unexpectedly disrupted or rendered inappropriate

-Action Point 1- Develop plan, considering contingency events -Action Point 2- Implement plan and formally identify contingency events -Action Point 3-Specify indicators for the contingency events and develop contingency plans for each possible event -Action Point 4- Successfully complete plan or contingency plan

Some large organizations use a professional planning staff. Organizations might use a planning staff for a variety of reasons..

-a planning staff can reduce the workload of individual mangers -help coordinate the planning activities of individual -managers -bring to a particular problem many different tools and techniques -take a broader view than individual mangers In recent years, some businesses have realized that they can plan more effectively by diffusing planing responsibility throughout their organization and/or by using planning task forces. For instance.. Disney and Shell Oil have eliminate or downsized their centralized planning units.

planning

-all organizations plan, but not in the same fashion -all planning occurs within an environmental context -all goals require plans to guide in their achievement -all goals are tied higher goals and plans

executive committee

-composed of top executives -meets regularly with the CEO to review strategic plans

board of directors

-establishes corporate mission and strategy -may engage in strategic planning

Executing Tactical Plans

-evaluate each course of action bin light of its goal -obtain and distribute information and resources -monitor horizontal and vertical communication and integration of activities -monitor ongoing activities for goal achievement

line management

-have formal authority and responsibility for management of the organization -help to formulate strategy by providing information -are responsible for executing the plans of top management

purpose of organizational goals

-provide guidance and a unified direction for the people in the organization -strong affect on the quality of other aspects of planning -serve as a source if motivation for employees -provide a mechanism for evaluation and control of the organization

Developing Tactical Plans

-recognize and understand overarching strategic plans and tactical goals -specify relevant resource and time issues -recognize and identify human and resource commitments

criteria for effective goals

-specific and measurable -cover key result areas -challenging but realistic -defined time period -linked to rewards

decision making

-the cornerstone of planning -the catalyst that drives the planning process -underlies every aspect of setting goals and formulating plans

contingency planning

-the determination of alternative courses of action to be taken if an intended plan is unexpectedly disrupted or rendered inappropriate -these plans help managers to cope with uncertainty and change

crisis management

-the set of procedures the organization uses in the event of a disaster or other unexpected calamity -difficult to anticipate

Other examples of optimization

1. Starbucks faces optimization challenges as it tires to maintain its cachet as an upscale purveyor of fine coffees while also opening roadside drive through stores and adding non-coffee drinks to its menus. 2. Airlines most always seem to face a classic optimizing question, carrying more passengers for lower prices? or fewer passages for higher prices?

1st Tactical Goal for the fast food chain:

1. Vice President-operations -open 150 new restaurants during next 10 years -decrease food-container costs by 15% during next 5 years -decrease average customer wait by 30 seconds this year *then the operational goals will be implemented by the lower level manger so following vice president of operations.. 1. Restaurant Manager -implement employee incentive system within one year -decrease waste by 5% this year -hire and train new assistant manager

The are 2 basic kinds of Short range plans, these are..

1. action plan 2. reaction plan

The 4 basic levels of goals are..

1. mission 2.strategic goals 2. tactical goals 3. operational goals

3 kinds of standing plans

1. policies 2. standard operating procedures 3. rules and regulations

Goals serve 4 important purposes

1. they provide guidance and a unified direction for people in the organization 2. goal setting practices strongly affect other aspects of planning 3. goals can serve as a source of motivation for employees of the organization 4. goals provide an effective mechanism for evaluation and control.. meaning that performance can be assessed in the future in terms of how successful todays goals are accomplished

2nd Tactical Goal for the fast food chain:

2. Vice President-Marketing -increase per store sales 5% per year for 10 years -target and attract two new market segments during the next 5 years -develop new promotional strategy for next year *then the operational goals will be implemented by the lower level manager so following vice president of marketing.... 2. Advertising Director -develop regional advertising campaigns within one year -negotiate 5% lower advertising rates next year -implement this years promotional strategy

3rd Tactical Goal for the fast food chain:

3. Vice President-Finance -keep corporate debt no more than 20% of liquid assets for the next 10 years -revise computerized accounting system within 5 years -earn 9% on excess cash this year *then the operational goals will be implemented by the lower level manager so following vice president of finance... 3. Accounting Manager -split accounts receivable/payable functions from other areas within 2 years -computerize payroll system for each restaurant this year -pay all invoices within 30 days

an example of a program

American Airlines and US Airways are currently merging to create a single airline. As part of the merger, the new firm must make decisions about harmonizing frequent flyer programs, airport lounge facilities, in-flight services such as coffee and meal services, work schedules and benefits for pilots and flight crews, route structures, and myriad other things. The total integration of the 2 airlines can be thought of as a program.

an example of a single use plan

As disney plans the expansion of its theme park in Hong Kong, it will develop many single use plans for individual rides, attractions and hotels. Similarly, disney is also expanding its animal kingdom theme park in Florida, and has multiple single use plans for those new rides, shows and attractions as well.

Example of Board of Directors

At CBS, the the board of directors has traditionally played a major role i planning. In other companies the board selects a competent chief executive and delegates planning to that person

example of resistant to change

Avon products almost drove itself into bankruptcy several years ago because it insisted on continuing a policy of large dividend payments to its stockholders. When profits started to fall, managers resisted cutting the dividends and started borrowing to pay them. The company debt grew from $3 million to $1.1 billion in 8 years. Eventually, managers were forced to confront the problem and cut dividends.

example of consistency, revision, and updating

Citigroup once used a 3 year planning horizon for developing and providing new financial services. The cycle was subsequently cut to 2 years and the bank now often uses a one year horizon.

example of understanding the purposes of goal planning

Coca Cola followed a logical and rational approach to setting goals and planning a few years ago when it introduced a new formula to combat Pepsi's increasing market share. But all the plans proved to be wrong as consumers rejected the new version of Coca Cola. Managers quickly reversed the emission and reintroduced the old formula as Coca Cola Classic. Thus, even though careful planning resulted in a big mistake, the company was able to recover from its blunder.

example of rules and regulations

Each McDonalds restaurant has a rule prohibiting customers from using its telephones. The university admissions office might have a rule stipulating that if an applicants file is not complete 2 months before the beginning of a semester, the student cannot be admitted until the next semester.

example of effective reward system

Frederick Smith, founder and CEO of Federal Express, has a stated goal of encouraging risk. Thus, when Federal Express lost $233 million on an unsuccessful service called ZapMail, no one was punished. Smith believed that the original idea was a good one but was unsuccessful for reasons beyond the company's control.

Organizations also set goals for different areas. an example of "by area" would be..

Hewlett-Packard routinely sets production goals for quality, productivity and so forth. by keeping activities focused on these important areas, HP has managed to remain competitive against organizations from around the world. Human resource goals might be set for employee turnover and absenteeism. 3M and Rubbermaid set goals for product innovation. Similarly, Bath and Body works has a goal that 30% of the products sold in its retail outlets each year will be new. In addition to its profit growth goals, Starbucks also has financial goals related to return on investment and return on assets.

example of inappropriate goals

If Kmart were to set a goal of earning more revenues than Walmart next year, people a the company would probably be embraced because achieving such a goal would be impossible.

Example of a policy

McDonalds has a policy that it will not grant a franchise to an individual who already owns a competing fast-food restaurant. Similarly, Starbucks has a policy that it will not franchise at all, instead retaining ownership of all Starbucks coffee shops.

Example of Executive Committee

Members of this committee are often assigned to various staff committees, subcommittees, and task forces to concentrate on specific projects or problems that might confront the entire organization at some time in the future.

An example of Optimizing

Nike has problems with inconsistent goals a few years ago. The firm was producing high quality shoes (a manufacturing goal), but they were not particularly stylish (a marketing goal). As a result, the company lost substantial market share when adidas, reebok and new balance started making shoes that were both high quality and fashionable. When nike management recognized and corrected the inconsistencies, Nike regained its industry standing.

Example of an intermediate plan

Nissan fell behind its domestic rivals Toyota and Honda in profitability and productivity. To turn things around, the firm developed serval plans ranging in duration from 2 to 4 years, each intended to improve some part of the company operations. One plan (3 years in duration) involved updating the manufacturing technology used in each Nissan assembly favor. Another (4 years in duration) called for shifting more production to foreign plans to lower labor costs. And the successful implementation of these plans helped turn things around for Nissan.

example of improper reward system

People may inadvertently be rewarded for poor goal setting behavior or go unrewarded or even be punished for proper goal setting behavior. Suppose that a manger sets a goal of decreasing turnover next year. If turnover is decreased by even a fraction, the manage can claim success and perhaps be reward for the accomplishment. but if a manager tried to decrease turnover, they may receive a smaller reward because of his or he failure to reach the established goal.

example of reluctance to establish goals

Pfizer, a large pharmaceutical company, ran into problems because its manages did not set goals for research and development. Consequently, the organization fell further and further behind because managers has no way of knowing how effective their R&D efforts actually were.

Strategic goals of the fast food chain:

President and CEO- 1. provide 14% return to investors for at least 10 years 2. start or purchase new restaurant chain within 5 years 3. negotiate new labor contract this year

Example of a mission statement

Starbucks: - "To inspire and future the human spirit-one person, one cup, and one neighborhood at a time"

What kind of goal is this? Starbucks has a goal of increasing the profitability of each of its coffee stores by 25% over the next 5 years

Strategic Goal

What kind of goal is this? To achieve Starbucks goal of increasing its per-store profitability, managers are woking on this goal related to company owned versus licensed stores and the global distribution of stores in different countries

Tactical Goal

The top and middle managers then work together to establish what?

Tactical goals

Example of Chief Executive officer

The CEO plays a major role in the complete planning process and is responsible for implementing the strategy. The board and CEO then assume direct roles in planning. The other organizational players involved in the planning process have more of an adviser or a consulting role.

An example of the 3rd purpose of goals which talks about how goals can serve as a source of motivation for employees of the organization, would be..

The Italian furniture manufacturer Natuzzi uses goals to motivate its workers. Each craftsperson has a goal for how long it should take to perform his or her job, such as sewing leather sheets together to make a sofa cushion or building wooden frames for chair arms. At the completion of assigned tasks, workers enter their ID numbers and job numbers into the firms computer system. If they get the job done faster than their goal, a bonus is automatically added to their paycheck. Intel has tied compensation of its top managers to their achievement of the firms diversity goal.

Example of standard operating procedure

The admissions clerk at the university might be told that when an application is received, he or she should.. 1) set up an electronic file for the applicant 2) merge test score records, transcripts, and letters of reference to the electronic file as they are received 3) Forward the electronic file to the appropriate admissions director when it is complete. *Gallo Vineyards in California has a 300-page manual of SOP's. This planning manual is credited with making Gallo one of the most efficient wine operations in the United Staes. McDonald's has SOPs explaining exactly how Big Macs are cooked, how long they can stay in the warming rack, and so forth

An example of the 2nd purpose of goals which talks about goal setting practices strongly affecting other aspects of planning, would be..

The ambitious revenue goal set for P&G demonstrates how setting goals and developing plans to reach them should be seen as complementary activities. The strong growth goal should encourage managers to plan for expansion by looking for new market opportunities. Similarly, the must also always be alert for competitive threats and new ideas that will help facilitate future expansion. Ford, meanwhile is focusing on increasing revenues from a particular product line.

Organizations also set goals across different time frames. an example of "by time frame" would be..

The first is a long term goals, the second is an intermediate term goal and the third is a short term goal. Some goals have explicit time frame (open 150 new restaurants during the next 10 years), and others have an open ended time horizon (maintain 10% annual growth). Finally, we should also note that the meaning of different time frames varies by level. For example, at the strategic level, "long term" often means 10 years or longer, "intermediate term" around 5 years or so, and "short term" around one year. But 2 or 3 years may be long term at the operational level, while short term may mean a matter of weeks or even days.

An example of the 1st purpose of goals which talks about goals providing guidance and a unified direction for the people in the organization would be..

Top managers at General electric have a long standing goal that every business owned by the firm will be either number one or number 2 in its industry (or have a reasonable chance of achieving that ranking). It helps set the tone for decisions made by GE managers as it competes with other firms like whirlpool and Electrolux (appliances), roll royce (jet engines) and numerous financial service firms. Likewise, P&G's goal of doubling revenues helps everyone in the firm recognize the strong emphasis on growth and expansion that is driving the firm, while Ford's goal reflects a clear focus on product diversification. Intel recently announced a goal that the diversity of its workforce should mirror the talent available in the United States by the year 2020.

An improper reward system

acts as a barrier to goal setting and planning

Who sets goals?

all managers

optimizing

allows managers to balance and reconcile inconsistent or conflicting goals

Strategic plans set by the board of directors and top management, generally have..

an extended time horizon address questions of scope resource development competitive advantage synergy

As part of managing the goal-setting and planning process, manages must understand the

barriers that can disrupt them, as well as knowing how to overcome them

Ebays Mission statement: "We exist to serve, and, through our service, we create an engaged and loyal eBay community"

by this statement, it clearly indicates that eBay views itself as a service organization dedicated to building an engaged and loyal community (of buyers and sellers).

Many managers also set individual goals for themselves, which may involve what?

career paths, informal work related goals outside the normal array of official goals, or just about anything of interest or concern to the manager.

long-range plans

covers many years, perhaps even decades

planning task force

created when the organization wants a special circumstance addressed

Effective tactical planning involves both

development and execution

By area

different functional areas of the organization

Communication and participation

even though goals and plans may be initiated at high levels in the organization, they must also be communicated to others in organizations

Rules and regulations describe

exactly how specific activities are to be carried out. Rather than guiding decision making, rules and regulations actually take the place of decision making in various situations

A policy is also likely to describe how

exceptions ar handled. For example, The university's policy statement might create an admissions appeals committee to evaluate applicants who do not meet minimum requirements buy may warrant special consideration

Effective Reward System

in general, people should be rewarded both for establishing effective goals and plans and for successfully achieving them. Because failure sometimes results from factors outside the managers control, people should also assured that failure to reach a goal will not necessarily bring punitive consequences.

major barriers

inappropriate goals, improper reward system, dynamic and complex environment, reluctance to establish goals, resistance to change, constraints

Formal Goal setting is an effective technique for

integrating goal setting and planning

A reaction plan

is a plan designed to allow the company to react to an unforeseen circumstance. At one Nissan factory, the new equipment arrived earlier than expected , and plan mangers had to shut down production more quickly that expected. These managers thus had to react to events beyond their control in ways that still allowed their goals to be achieved. In fact, reacting to any form of environmental turbulence, is a form of this type of planning

A program

is a single-use plan for a large set of activities. It might consist of identifying procedures for introducing a new product line, opening a new facility, or changing the organizations mission

A single use plan

is developed to carry out a course of action that is not lily to be repeated in the future

A policy

is the most general form of standing plan. It specifies the organizations general response to a designated problem or situation

Standing plan

is used for activities that recur regularly over a period of time. they can greatly enhance efficiency by making decision making routine.

level, area, time frame

kinds of goals...

CEO

may serve as president or board chair; has a major role in planning and implementing the strategy

A standard operating procedure

more specified than a policy, in that it outlines the steps to be followed in particular circumstances.

Understanding the purposes of goals and planning

one of the best ways to facilitate goal setting and planning processes is to recognize their basic purposes

Goals may be "inappropriate if they

place too much emphasis on either quantitative or qualitative measures of success.

Resistance to change

planning essentially involved changing something about the organization

time dimension of planning

planning must provide sufficient time to fulfill the managerial commitments involved

The 2 most common forms of single use plans are

programs and projects

area

quality, productivity, innovation

Dynamic Complex Environment

rapid change, techonological innovation, and intense competition can all increase the difficulty of an organizations accurately assessing future opportunities and threats

operational goals

set by and for lower-level managers to address issues associated with tactical goals

tactical goals

set by and for middle managers; their focus is on how to operationalize actions to strategic goals

strategic goals

set by and for top management of the organization that address broad, general issues

Operation plans are developed by middle and lower level managers, operation plans have a

short term focus are are relatively narrow in score. each one deals with a family small set of activities.

operational plans

short-term focus plans that are set by and for lower-level managers. Their concern is with shorter-term issues associated with the racial goals

Tactical plans involve upper and middle management and, compared with strategic plans, have a somewhat..

shorter time horizon and a more specific and concrete focus. So tactical plans are more concerned with actually getting things done than with deciding what to do

overcoming the barriers

understanding the purposes of goals and planning, communication and participation, consistency, revision, and updating, effective reward system

intermediate plans

usually cover from 1-5 years and parallel tactical plans

The effectiveness of formal goal setting: Strengths (success)

-improved employee motivation -enhances communication -fosters more objective performance appraisals -focuses attention on appropriate goals and plans -helps identify managerial talent -provides a systematic management philosophy -facilitates control of the organization

The effectiveness of formal goal setting: Weaknesses (failure)

-poor implementation of the goal setting process -lack of top-management support for goal setting -delegation of the goal setting process to lower levels -overemphasis on quantitative goals -too much paperwork and record keeping -managerial resistance to goal setting

Steps most organizations use when they adopt the formal goal strategy

1. starting the formal goal-setting program 2. establishment of organizational goals and plans 3. collaborative goal setting and planning 4. communicating organizational goals and plans (meeting, verifiable goals and clear plans, counseling, resources, etc). 5. Periodic View 6. Evaluation

Line management plays an important role in an organizations planning process for 2 reasons:

1. they are a valuable source of inside information for other manager as plans are formulated and implemented. 2. the line managers at the middle and lower levels of the organization usually must execute the plans developed by top management. Line management identifies, analyzes, and recommends program alternatives, develops budgets and submits them for approval, and finally sets the plan in motion.

Rules and regulations and Standard operating procedures are similar in many ways, such as

1. they both relatively narrow in scope and each can serve as a substitute for decision making. 2. An SOP typically describes a sequence of activities whereas rules and regulations focus on one activity In an industrial setting, the SOP for orienting a new employee could involve enrolling the person in various benefit options, introducing him or her to coworkers and supervisors, and providing a tour of the facilities. A pertinent rule for the new employee might involve when to come to work each day.

An example of the 4th purpose of goals which talks about goals providing an effective mechanism for evaluation and control, would be..

Officials of the United Way of America set a goal of collecting $250,000 from a particular small community. If, midway through the campaign, they have raised only $50,000, they know that they need to change or intensify their efforts. If they raise only $100,000 by the end of their drive, they will need to carefully study why they didn't reach their goal and what they need to do differently next year. on the other hand, if they succeed in raising $250,000, evaluations of their efforts will take on an entirely different character. The FDA recently revealed that it was not meeting the goals it had set for itself for auditing food safety inspection programs. To address the issue, the FDA also announced plans to overhaul its inspection program and to tie individual performance ratings to food safety audits. And it 2015, the agency completely overhauled its organization structure to perform at an even higher level.

What kind of goal is this? This specific goal for Starbucks might be to boost the profitability of a certain number of stores in each of the next 5 years

Operational Goal

An example of a planning task force

When electronic data systems decided to expand its information management services to Europe, manager knew that the firms normal planning approach would not suffice, and top management created a special planning task force. The task force included representatives from each of the major units within the company, the corporate planning staff, and the management team that would run the European operation. Once the plan for entering the European market was formulated and implemented, the task force was implemented.

example of a constraint

Owens Corning Fiberglass took on an enormous debt that it was forced to cut back on capital expenditures and research and development. And those cutbacks greatly constrained what the firm could plan for the future. Time constraints are also a factor. It is easier to say, "I'm too busy to plan today; I'll do it tomorrow." Effective planning take time, energy, and an unwavering belief in its importance.

Example of a Contingency Plan

What will we do if the lights go out in the classroom?

example of dynamic complex environment

When an electronics firm like dell develops a long range plan, it tries to take into account how much technological innovation is likely to occur during the interval. But forecasting such events is extremely difficult

strategic plans

a general plan set by and for top management that outlines resource allocation, priorities, and action steps to achieve strategic goals. They focus on broad and general issues

management by objectives (MBO)

a technique for integrating formal goal setting and planning by giving subordinates a voice and clarifying what they are expected to accomplish

Horizontal consistency means that

goals should be consistent across the organization, from one department to the next.

Consistency, Revision, and Updating

goals should be consistent both horizontally and vertically

Vertical consistency means that

goals should be consistent up and sown the organization-strategic, tactical, and operational goals must agree with one another.

Constraints

limit what an organization can do and are another major obstacle. common forms include a lack of resources, government restrictions and strong competition