Chapter 5 Foundations of Planning

FOM 5.1

Learning Outcomes

Define planning Explain the potential benefits of planning Identify the potential drawbacks of planning Distinguish between strategic and tactical plans (continued)

FOM 5.2

Learning Outcomes (continued)

State when directional plans are preferred over specific plans Define management by objectives and identify its common elements Outline the steps in the strategic management process
(continued)

FOM 5.3

Learning Outcomes (continued)

Describe the four grand strategies

Explain SWOT analysis

Compare how entrepreneurs and bureaucratic managers approach strategy

FOM 5.4

Planning
Defining the organizations goals, establishing an overall strategy, and developing a hierarchy of plans to achieve goals
Robbins et al., Fundamentals of Management, 4th Canadian Edition 2005 Pearson Education Canada, Inc. FOM 5.5

Sets Standards to Facilitate Control

Provides Direction

Reasons for Planning

Minimizes Waste and Redundancy Reduces the Impact of Change
FOM 5.6

May Create Rigidity

Cant Be Done in a Dynamic Environment Cant Replace Intuition and Creativity Focus on Todays Competition Reinforces Success
FOM 5.7

Criticisms of Formal Planning

Does Planning Improve Performance?

Financial results Environmental concerns

Quality and implementation

FOM 5.8

How Do Strategic and Tactical Plans Differ?

Time Frame

Scope

Objectives

FOM 5.9

The Time Frame of Planning

Short-Term Plans

Long-Term Plans

FOM 5.10

Clear

Specific Plans

Low

Objectives

Flexibility

General

Directional Plans

High
FOM 5.11

Single-Use vs. Standing Plans

Unique Situations Ongoing Operations
FOM 5.12

What Is Management by Objectives?

Organizational Objectives

Divisional Objectives
Departmental Objectives Individual Objectives

FOM 5.13

Common Elements of MBO

Goal specificity Participative decision making Set time period Performance feedback

FOM 5.14

More Difficult Goals Lead To Higher Performance

Specific Goals Lead to Better Results

Does MBO Work?

Support from Top Management Is Critical Participation Is Key

FOM 5.15

Employees Setting Objectives

Identify key job tasks Set specific and challenging goals

Encourage active participation Prioritize goals Build in feedback Link rewards to goal attainment

FOM 5.16

Problems with MBO

Efforts directed primarily toward output Encourage individual rather than team efforts Goals may discourage efforts for continuous improvement

FOM 5.17

Identify Current Mission, Objectives & Strategy 2

The Strategic Management Process

3 Note Threats and Opportunities 6 Reassess Mission 7&8 Strategies 9 Evaluate Results
FOM 5.18

Analyze Environment

Analyze Resources

Note Weaknesses and Strengths

Starting the Process

Mission

Strategies

Objectives

FOM 5.19

Analyzing the Environment

Environmental Scanning

Competitive Intelligence
FOM 5.20

Strengths

Opportunities

SWOT Analysis

Threats

Weaknesses
FOM 5.21

Identifying Opportunities

Organizations Resources

Opportunities in the Environment

Organizations Opportunities
FOM 5.22

Grand Strategies

Growth Stability Retrenchment Combination

FOM 5.23

Determining A Business-Level Strategy

Cost Leadership

Differentiation

Focus
FOM 5.24

After Strategies Are Formulated

Implementation Evaluating results

FOM 5.25

Benchmarking

Quality As A Strategic Weapon

ISO 9000 and ISO 14000

Six Sigma
FOM 5.26

Entrepreneurship

Process by which individuals pursue opportunities, fulfilling need and wants through innovation, without regard to the resources they currently control Important themes

Pursuit of opportunities Innovation Growth

FOM 5.27

Entrepreneurial Process

Exploring the entrepreneurial context Identifying opportunities and possible competitive advantages Starting the venture Managing the venture

FOM 5.28

Comparison: Entrepreneurs and Traditional Managers

Traditional Manager
Primary motivation Corporate rewards

Entrepreneur
Independence

Time orientation
Activity Risk tendency View toward mistakes

Short-term goals
Delegation Low Avoidance

5-10 year growth of business

Direct involvement Moderate Acceptance
FOM 5.29

Project Management

Contemporary planning tool Is a process of quality control to ensure a projects activities are done on time, within budget, and according to specification Project is a one-time-only set of activities that has a definite beginning and ending point in time
FOM 5.30

Project Management Process (Exhibit 5-8)

Define objectives

Identify activities and resources Determine project completion date

Establish sequences Estimate time for activities

Compare with objectives Determine additional resource requirements

FOM 5.31