Chapter 6 Basic Elements of Planning and Decision Making

Area

Organizations also set goals for different areas such as goals for operations, marketing, and finance (separately).

What is the role of the Board of Directors?

-Establishes the corporate mission and strategy -Takes an active role in the planning process -Selects competent chief executives and delegates to plan

Responsibilities for Setting Goals

-Mission and strategic goals: set by board of directors and top managers -Tactical goals: set by top and middle managers -Operational goals: set by middle and lower-level managers

What is the formal goal-setting process?

-Starting the formal goal-setting program -Establishment of organizational goals and plans -Collaborative goal setting and planning -Communicating organizational goals and plans -Periodic reviews -Evaluation

How do companies overcome the barriers?

-Understand the purposes of goals and planning -Communication and participation: everyone should be involved in the planning process -Consistency revision and updating: goals should be consistent both horizontally and vertically; they should be revised as time goes on -Effective reward systems: people should be rewarded both for establishing effective goals/plans and for successfully achieving them

What are the steps in Executing Tactical Plans?

1. Evaluate each course of action in light of its goals 2. Obtain and distribute information and resources 3. Monitor horizontal and vertical communication and integration of activities 4. Monitor ongoing activities for goal achievements

What are the two short-range plans?

1. Action plan: A plan used to operationalize any other kind of plan (a plan that coordinates the actual changes) 2. Reaction Plan: A plan developed to react to an unforeseen circumstance (reacting to any form of environmental turbulence in a reaction)

What are the three types of standing plans?

1. Policies: specifies the organization's general response to a designated problem or situation (ex. admission standards at a university) 2. Standard Operating Procedures: outlines the steps to be follows in a particular circumstance (ex. steps of applying for admission- input transcript, then SAT score, then essays, etc.) 3. Rules and Regulations: describe exactly how specific activities are to be carried out (ex,. McDonald's prohibiting employees phone use during a shift)

What are the most common forms of single-use plans?

1. Programs: Single-use plan for a LARGE set of activities (example: creating a program to intertwine two businesses in a merger) 2. Projects: Single-use plan of LESS scope and complexity than a program (example: replacing old magazines with new magazines in an airplane)

What are the steps in developing Tactical Plans?

1. Recognizing and understand overarching strategic plans and tactical goals 2. Specify relevant resource and time issues 3. Recognize and identify human resource commitments

What are the two basic forms of Operational Plans?

1. Single Use: Developed to carry out a course of action that is not likely to be repeated in the future 2. Standing Plan: developed for activities that recur regularly over a period of time

What are the 4 important purposes that goals serve?

1. They provide guidance and a unified direction for people in the organization 2. Goal-setting practices strongly affect other aspects of planning (facilitates better planning practices) 3. Goals can serve as a source of motivation for employees of the organization (especially if there are incentives) 4. Goals provide an effective mechanism for evaluation and control. (Performance can be assessed in the future based on successful/unsuccessful goals today)

Planning Staff

A planning staff can reduce the workload of individual managers help coordinate the planning activities of individual managers, bring a particular problem to many different tools and techniques, take a broader view than individual managers, and go beyond pet projects and particular departments.

Planning Task Force

A planning task force is most often created when the organization wants to address a special circumstance

Management by Objectives (MBO)

A formal goal-setting process involving collaboration between managers and subordinates; the extent to which goals are accomplished is a major factor in evaluating and rewarding subordinates performance

Strategic Plans

A general plan outlining decisions of resource allocation, priorities, and action steps necessary to reach strategic goals. -Set by board of directors and top managers -extended time horizon

Inappropriate Goals

A goal that comes at the expense of something/someone else. Such as a goal that is unattainable, a goal that costs a department largely, a goal that puts too much focus on one department and lacks focus on another

Tactical Plans

A plan aimed at achieving tactical goals, developed to implement parts of a strategic plan. Concerned more with actually getting things done than deciding what to do -Set by upper and middle management -Shorter time horizon

Long-Range Plan

A plan that covers many years, perhaps even decades; common long-range plans are for five years or more.

Short Range

A plan that generally covers a span of one year or less. Deals with day to day operations.

Intermediate Plan

A plan that generally covers from one to five years. Generally parallel tactical plans

Mission

A statement of an organization's fundamental purpose

What are the four action points in which contingency planning comes into play?

Action Point 1: management develops basic plans of the organization (strategic, tactical, operational) 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 of either the original or contingency plan

What is Decision Making in regards to Planning?

Decision making is: -the cornerstone of planning -the catalyst that drives the planning process -underlining aspect of every setting of goals and formulating plans

Operational Plans

Focuses on carrying out tactical plans to achieve operational goals. -Set by middle and lower-level managers -Short term, narrow scope

Strategic goals

Goals set by and for top management of the organization. They focus on broad, general issues

What are the barriers to goal setting and planning?

Inappropriate Goals, Improper reward System, Dynamic and Complex environment, Reluctance to establish Goals, Resistance to change, Constraints

Optimizing

Involves balancing the reconciling possible conflicts among goals

What is the Role of the Executive Committee?

It is composed of top executives that are put in different committees to concentrate on specific projects or problems that might confront an organization

What are the different factors in which goals vary by?

Level, area, and time frame

Constraints

Limit what an organization can do. Include a lack of resources, government restrictions, time constraints, and strong competition

What is the Role of Line Management?

Line managers are the formal authority and are responsible for the management of the organization. They are valuable sources of inside information and they must execute the plans developed by top management.

What are the Time Frames for Planning?

Long-range, intermediate, short-term

Reluctance to Establish Goals

Managers who consciously or unconsciously try to avoid establishing goals to avoid accountability are likely to hinder the organization's planning efforts

What is Operational Planning?

Operational plans are aimed at achieving operational goals. They are narrowly focused, have relatively short-time horizons, and involve lower-level managers.

Time Frame

Organizations set goals across different time frames. (At a strategic level) -Long term: +10 years -Intermediate term: around 5 years -Short term: around 1 year

Managing Multiple Goals

Organizations set many different kinds of goals and sometimes experience conflicts or contradictions among goals. The manager must look for inconsistencies and decide whether to pursue one goal or meet in the middle

Improper Reward System

People may inadvertently be reward for poor goal-setting behavior or go unrewarded or even be punished for proper-goal setting behavior. (Getting rewarded for doing the bare minimum. Getting punished for not reaching an outlandish goal)

Resistance to Change

Planning essentially involves changing something about the organization and employees/managers are not keen about the changes.

What is the role of the CEO?

Plays a major role in the complete planning process and is responsible for implementing strategy.

Dynamic and Complex Environment

Rapid change, technological 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. Their concern is with short-term issues associated with tactical goals

Tactical Goals

Set by and for middle managers. Their focus is on how to operationalize actions necessary to achieve the strategic goals

What are the Kinds of Organizational Plans?

Strategic, Tactical, Operational

Tactical Planning: what does it focus on?

Tactics focus primarily on people and action

Management in Action Case study: Carnival Cruise

The CEO did not acknowledge the situation until 5 days later through twitter, he did not come out to the public, and blamed a single employee. -Example of horrible Crisis Management

Contingency Planning

The Determination of alternative courses of action to be taken if an intended plan of action is unexpectedly disrupted or rendered inapproriate.

What are the four basic levels of goals? Goals: Level

The four basic goals are the mission and strategic, tactical, and operational goals

What is the mission of an organization?

The mission outlines the organization's purpose, premises, values, and directions

Crisis Management

The set of procedures the organization uses in the event of a disaster or other unexpected calamity

What is the nature and purpose of formal goal setting?

To give subordinates a voice in the goal-setting and planning processes and to clarify for them exactly what they are expected to accomplish in a given time span