Management: Principles and Practices

11e
Ricky W. Griffin

CHAPTER 7
Basic Elements of Planning
and Decision Making

PART 3
Planning and Decision Making

PowerPoint Presentation by Charlie Cook

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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
 Learning Objectives

1. Summarize the function of decision making and the planning

process.
2. Discuss the purpose of organizational goals, identify different kinds
of goals, discuss who sets goals, and describe how to manage
multiple goals.
3. Identify different kinds of organizational plans, note the time frames
for planning, discuss who plans, and describe contingency
planning.
4. Discuss how tactical plans are developed and executed.
5. Describe the basic types of operational plans used by
organizations.
6. Identify the major barriers to goal setting and planning, how
organizations overcome those barriers, and how to use goals to
implement plans.
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 Decision Making and the Planning Process
• Decision Making
 Is the cornerstone of planning.
 Is the catalyst that drives the planning process.
 Underlies every aspect of setting goals and
formulating plans.
• 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.

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 7.1 The Planning Process

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 Organizational Goals

Purposes of Goals

Guidance and Promotion of Source of Evaluation

unified direction good planning motivation and control

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 Kinds of Goals

Setting Organizational Goals

By Level By Area Time Frame

Mission statement Operations Long-term goals
Strategic goals Marketing Intermediate goals
Tactical goals Finance Short-term goals
Operational goals Production Explicit goals
Open-ended goals

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 7.2
Kinds of Organizational
Goals for a Regional
Fast-Food Chain

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 Responsibilities of Setting Goals

• Who Sets Goals?

 All managers
 Managerial responsibility for goal setting
should correspond to the manager’s level
in the organization.

• Managing Multiple Goals

 Optimizing allows managers to balance and
reconcile inconsistent or conflicting goals.
 Managers can pursue one goal and exclude
all others or to seek a mid-range goal.

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 Kinds of Organizational Plans

Strategic Plans
(upper management)

Tactical Plans
(middle management)

Operational Plans
(lower-level managers)

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 Time Frames for Planning
• The Time Dimension of Planning
 Planning must provide sufficient time to fulfill
the managerial commitments involved.
1 5 10

Long-range (strategic)
plans of 5 or more years

Intermediate-range
(tactical) plans of 1–5 years

Short-range (operational)
action and reaction plans
of 1 year or less

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 Responsibilities for Planning
• Planning Staff
 Gather information, coordinate planning activities,
and take a broader view than individual managers.
• Planning Task Force
 Created when the organization wants a special
circumstance addressed.
• Board of Directors
 Establishes corporate mission and strategy.
 May engage in strategic planning.
• Chief Executive Officer
 May serve as president or board chair; has a major role
in planning and implementing the strategy.

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 Responsibilities for Planning (cont’d)

• Executive Committee
 Is composed of top executives.
 Meets regularly with the CEO
to review strategic plans.

• 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.

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 Contingency Planning
and Crisis Management
• 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.

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 7.3 Contingency Planning

Ongoing planning process

Action point 1 Action point 2 Action point 3 Action point 4

Develop plan, Implement plan and Specify indicators Successfully complete
considering formally identify for the contingency plan or contingency
contingency events contingency events events and develop plan
contingency plans for
each possible event

Monitor contingency event indicators and

implement contingency plan if necessary

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 Management Challenge Question

• What effects does an organization’s culture have

on its contingency planning?
• On its management of a crisis?

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 7.4 Developing and Executing Tactical Plans

Developing tactical plans Executing tactical plans

• Recognize and understand • Evaluate each course of action
overarching strategic plans in light of its goal
and tactical goals • Obtain and distribute
• Specify relevant resource and information and resources
time issues • Monitor horizontal and vertical
• Recognize and identify human communication and integration
resource commitments of activities
• Monitor ongoing activities for
goal achievement

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 7.1 Types of Operational Plans

Plan Type Description

Single-use plans Developed to carry out a course of action not likely to be

repeated in the future
Program Single-use plan for a large set of activities
Project Single-use plan of less scope and complexity than a
program

Standing plans Developed for activities that recur regularly over a period
of time
Policy Standing plan specifying the organization’s general
response to a designated problem or situation
Standard operating Standing plan outlining steps to be followed in particular
procedure circumstances
Rules and regulations Standing plans describing exactly how specific activities
are to be carried out

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 Managing Goal-Setting
and Planning Processes
• Barriers to Goal Setting and Planning
 As part of managing the goal-setting and planning
process, managers must understand the barriers
that can disrupt them.
 Managers must also know how to overcome them.

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 7.2 Barriers to Goal Setting and Planning

Major barriers Inappropriate goals

Improper reward system
Dynamic and complex environment
Reluctance to establish goals
Resistance to change
Constraints
Overcoming Understanding the purposes of goals and
the barriers planning
Communication and participation
Consistency, revision, and updating
Effective reward system

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 Using Goals to Implement Plans

• Management by Objectives (MBO)

 Is a technique for integrating formal goal setting and
planning by giving subordinates a voice and clarifying
what they are expected to accomplish.
 Is frequently tailored to the special circumstances of
firms which may use a special term or name for it.

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 7.5 The Formal Goal-setting Process

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 The Effectiveness of Formal Goal Setting
• Strengths (Success) • Weaknesses (Failure)
 Improved employee  Poor implementation of the
motivation goal setting process
 Enhances communication  Lack of top-management
 Fosters more objective support for goal setting
performance appraisals  Delegation of the goal-
 Focuses attention on setting process to lower
appropriate goals and plans levels
 Helps identify managerial  Overemphasis on
talent quantitative goals
 Provides a systematic  Too much paperwork and
management philosophy record keeping
 Facilitates control of the  Managerial resistance to
organization goal setting

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 KEY TERMS

• mission • short-range plan

• strategic goal • crisis management
• tactical goal • single-use plan
• operational goal • program
• optimizing • project
• strategic plan • standing plan
• tactical plan • policy
• operational plan • rules and regulations
• reaction plan • management by
• long-range plan objectives (MBO)
• intermediate plan
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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 7–23