Chapter

PLANNING IN THE
CONTEMPORARY
ORGANIZATION
PREPARED BY: AZEYAN AWEE

PowerPoint Presentation by Wessex Press, Inc.

© 2016 Wessex Press, Inc. All rights reserved.

© 2016 Wessex Press, Inc. All rights reserved.
 4–2

PART 1:
MANAGERIAL
PLANNING
 Managerial Planning
• Planning Defined
 The process of outlining the activities that are
necessary to achieve the goals of the organization.
• A Plan
 A blueprint for action that prescribes the activities
necessary for an organization to realize their goals.
• Purpose of Planning
 The purpose of planning is simple—to ensure that the
organization is both effective and efficient in its
activities.
4–3

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 Goals and Controls
• Goals
 Provide a clear, engaging sense of direction and
specify what is to be accomplished.
• Control
 Monitor the extent to which goals have been achieved
and ensure the organization is moving in the right
direction.

4–4

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 Figure 4.1 Planning as a Linking Mechanism

4–5

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 LEARNING OUTCOMES
When you have finished studying this chapter, you
should be able to explain:

1 2 3 4 5
The managerial The benefits and The potential Strategic planning Operational planning
function of planning costs of planning. advantages and vs. Operational and standing and
and why planning is disadvantages of top- planning. single-use plans.
critical for effective down and bottom-up
leadership. planning.

6 7 8 9
Individual planning Contingency planning and How advances in Common barriers to
systems such as the circumstances under information technology have effective planning and
management by which contingency affected the planning ways to reduce these
objectives and the planning would be process. barriers.
Balanced Scorecard. appropriate.
4–6

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 Why Plan?
• Better Coordination
• Focus on Forward Thinking
• More Effective Control System

4–7

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 The Benefits of Planning
1.Better Coordination
 Planning provides a foundation for the coordination of
a broad range of organizational activities.
 A plan helps to define the responsibilities of
individuals and work groups and helps coordinate
their activities.
2.Focus on Forward Thinking
 The planning function forces managers to think ahead
and consider resource needs and potential
opportunities or threats that the organization may face
in the future. 4–8

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 The Benefits of Planning (cont’d)
3.More Effective Control Systems
 An organization’s plan provides a foundation for
control of the processes and progress of the
company.
 The implementation of the plan can be evaluated and
progress toward the achievement of performance
objectives can be monitored.
 Controls provide mechanism for ensuring that the
organization is moving in the right direction and
making progress toward achieve its goals.
4–9

© 2016 Wessex Press, Inc. All rights reserved.

 The Costs of Planning
• Management Time
 Done properly, the planning process requires a
substantial amount of managerial time and energy.
• Delay in Decision Making
 Planning can result in delays in decision making,
which must be weighed against the importance of
speed in response time.

4–
10

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 Planning: Benefits Versus Costs
• In the final analysis, managers plan because
planning leads to higher performance.
• Planning also helps managers cope with the
challenges they face and ensures the long-term
success of their companies.

4–
11

© 2016 Wessex Press, Inc. All rights reserved.

 LEARNING OUTCOMES
When you have finished studying this chapter, you
should be able to explain:

1 2 3 4 5
The managerial The benefits and The potential Strategic planning Operational planning
function of planning costs of planning. advantages and vs. Operational and standing and
and why planning is disadvantages of top- planning. single-use plans.
critical for effective down and bottom-up
leadership. planning.

6 7 8 9
Individual planning Contingency planning and How advances in Common barriers to
systems such as the circumstances under information technology have effective planning and
management by which contingency affected the planning ways to reduce these
objectives and the planning would be process. barriers.
Balanced Scorecard. appropriate.
4–
12

© 2016 Wessex Press, Inc. All rights reserved.

 Where Should Planning Begin?

↓Top-Down Planning↓
Planning efforts begin with the board
of directors and top executives of the
firm

↑Bottom-Up Planning↑
Planning is initiated at the lowest level
in the organization

4–
13

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 Advantages of Each Planning Approach

• Top-Down Planning
 Top managers, who are the most knowledgeable
about the firm as a whole, drive the development of
the plan.
• Bottom-Up Planning
 The people closest to the operating system,
customers, and suppliers drive the development of
the plan.

4–
14

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 Table 4.1 Top-Down and Bottom-Up Planning

Top-Down Bottom-Up

Organizational CEO, Board of Directors People/department closest to product,

level service, customer.

Role of As the plan moves down the Units develop goals and plans. As plans
organizational hierarchy, units determine actions move up the hierarchy, they are evaluated
unit needed to support the plan. and adjusted for accuracy and feasibility.

Specificity Begins broad, becomes more Begins specific and probably fragmented;
of plan specific as it moves down the becomes cohesive and integrated as it
hierarchy. moves up the hierarchy.

Potential Plans are driven by top-level Those closest to customers, suppliers, and
advantages managers who are most operating systems provide focus of plans.
knowledgeable about all factors
affecting the organization.

Potential Top-level managers may be Lower-level managers may lack under-

4–
disadvantages removed from the front line. standing of all factors affecting the 15
organization.

© 2016 Wessex Press, Inc. All rights reserved.

 LEARNING OUTCOMES
When you have finished studying this chapter, you
should be able to explain:

1 2 3 4 5
The managerial The benefits and The potential Strategic planning Operational planning
function of planning costs of planning. advantages and vs. Operational and standing and
and why planning is disadvantages of top- planning. single-use plans.
critical for effective down and bottom-up
leadership. planning.

6 7 8 9
Individual planning Contingency planning and How advances in Common barriers to
systems such as the circumstances under information technology have effective planning and
management by which contingency affected the planning ways to reduce these
objectives and the planning would be process. barriers.
Balanced Scorecard. appropriate.
4–
16

© 2016 Wessex Press, Inc. All rights reserved.

 Strategic Planning
• Strategic Planning
 Focuses on enhancing the competitive position and
overall performance of the organization in the long
term.
• Strategic Plans
 Are to move the organization from where it is to
where it wants to be.
 It defines:
 Markets
 Customers
4–
 Strategies to deliver its products and services to the market 17

© 2016 Wessex Press, Inc. All rights reserved.

 Operational Planning
• Operational Planning
 Focuses on the day-to-day activities that are
necessary to achieve the long-term goals of the
organization.
• Operational Plans
 Are more specific, address shorter-term issues, and
are formulated by mid- and lower-level managers who
are responsible for the work groups in the
organization.
 Can be categorized as either standing or single-use
plans. 4–
18

© 2016 Wessex Press, Inc. All rights reserved.

 LEARNING OUTCOMES
When you have finished studying this chapter, you
should be able to explain:

1 2 3 4 5
The managerial The benefits and The potential Strategic planning Operational planning
function of planning costs of planning. advantages and vs. Operational and standing and
and why planning is disadvantages of top- planning. single-use plans.
critical for effective down and bottom-up
leadership. planning.

6 7 8 9
Individual planning Contingency planning and How advances in Common barriers to
systems such as the circumstances under information technology have effective planning and
management by which contingency affected the planning ways to reduce these
objectives and the planning would be process. barriers.
Balanced Scorecard. appropriate.
4–
19

© 2016 Wessex Press, Inc. All rights reserved.

 Standing Plans
• Standing Plans
 Designed to deal with organizational issues or
problems that recur frequently. They include:
 Policies: general guidelines that govern how certain
organizational situations will be addressed.
 Procedures: more specific and are designed to give
explicit instructions on how to complete a recurring
task.
 Rules: provide detailed and specific guidelines and
limits for action. 4–
20

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 Single-Use Plans
• Single-Use Plans
 Are developed to address a specific organizational
situation. They include:
 Programs: govern a relatively comprehensive set of
activities that are designed to accomplish a
particular set of goals.
 Projects: direct the efforts of individuals or work
groups toward the achievement of specific, well-
defined objectives.
 Budgets: specify how financial resources should be 4–
allocated. 21

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 Table 4.2 Microsoft’s Commitment to Diversity

4–
22

© 2016 Wessex Press, Inc. All rights reserved.

 LEARNING OUTCOMES
When you have finished studying this chapter, you
should be able to explain:

1 2 3 4 5
The managerial The benefits and The potential Strategic planning Operational planning
function of planning costs of planning. advantages and vs. Operational and standing and
and why planning is disadvantages of top- planning. single-use plans.
critical for effective down and bottom-up
leadership. planning.

6 7 8 9
Individual planning Contingency planning and How advances in Common barriers to
systems such as the circumstances under information technology have effective planning and
management by which contingency affected the planning ways to reduce these
objectives and the planning would be process. barriers.
Balanced Scorecard. appropriate.
4–
23

© 2016 Wessex Press, Inc. All rights reserved.

 Individual Plan
• Increasingly, organizations are looking for ways
to translate boarder organizational plans to the
level of individual employees.
 One approach for doing so include:
 Management by Objectives

4–
24

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 Figure 4.2 Management by Objectives: The Cycle

Source: K. Davis and J. Newstrom, 4–

Behavior at Work: Organizational 25
Behavior (New York: McGraw-Hill,
1989), 209. Reproduced with
permission of the McGraw-Hill
Companies.

© 2016 Wessex Press, Inc. All rights reserved.

 Management by Objectives (MBO)
• A method for developing individualized plans
which guide the activities of individuals.
 MBO benefits:
 Provides a foundation for a more integrated and
system-oriented approach to planning.
 Requires communication between employees and
their managers since they must agree on the
performance goals outlined in the plan.
 Creates a participatory work environment where
employees have a voice in the design of their jobs
and setting their performance targets. 4–
26

© 2016 Wessex Press, Inc. All rights reserved.

 MBO Disadvantages
• Requires time and commitment of top
management.
• May require excessive paperwork.
• May create a tendency to focus on short-term
planning rather than long-term planning.
• Can be difficult to establish and operationalize.

4–
27

© 2016 Wessex Press, Inc. All rights reserved.

 Table 4.3 Potential Advantages and Disadvantages of MBO

• Potential Advantages • Potential Disadvantages

• Can result in better achievement of • Requires time and commitment of
goals. top-level managers.
• Forces managers to establish • May require excessive paperwork.
priorities and measurable goals or • May create tendency to focus on
standards of performance. short-term goals.
• Encourages participation of • Can be difficult to establish and put
employees and managers in into operation.
establishing goals.
• Goals of individuals may not be
• Facilitates control. coordinated with higher-level goals.
• Lets individuals know what is
expected.
• Can help improve communication.
• Increases motivation and
commitment of employees. 4–
28

© 2016 Wessex Press, Inc. All rights reserved.

 4–
29

PART 2:
STRATEGIC
PLANNING
 Strategic Planning
• Strategic Planning
 The process by which an organization determines where it
wants to be and how it will get there.
 Strategic plan: affects organization long-run performance
and provides direction by defining its strategic approach to
business.

5–
30

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 Figure 5.1 Strategic Management Diagram

5–
31

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 Strategic Analysis: Assessment in
a Global Environment
• The purpose of strategic analysis is to evaluate
the present situation of the organization.
 Analysis requires three primary activities:
 Assessing the mission of the organization
 Internal environmental analysis
 External environmental analysis

5–
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 Assessing the Mission of an Organization

• The mission of an organization reflects its

fundamental reasons for existence.
• Three primary questions every mission
statement should answer:
1. WHO will the organization serve?

2. WHAT needs will the organization fulfill?

3. HOW will the organization fulfill those needs?

5–
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 Table 5.1 Mission Statements that Work

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 Internal Analysis
• Purpose of Internal Analysis
 To identify the assets, resources, skills, and
processes that represent either strengths or
weaknesses for the organization.
 Strengths
 An aspect of an organization’s operations that
represents value to the organization and upon
which it can build.
 Weaknesses
 A vulnerability that may hinder its ability to
compete. 5–
35

© 2016 Wessex Press, Inc. All rights reserved.

 Internal Analysis (cont’d)
• Core Competency
 A unique ability or strength of an organization that can
be leveraged in such a way to enable an organization
to compete more effectively than others in its industry.
• Competitive Advantage
 Competitive advantage exists when an organization
uses its core competencies to capitalize on market
opportunities and thereby outperform its competitors
in terms of quality, price, service, or accessibility.
 The more difficult it is for competitors to duplicate a
competitive advantage, the more sustainable that 5–

advantage is. 36

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 External Analysis
• Purpose of External Analysis
 To identify aspects of the external environment that
represent either an opportunity for or a threat to the
organization.
 Opportunities:
 Those environmental trends on which the
organization can capitalize and improve its
competitive position.
 Threats
 Conditions that jeopardize the organization’s ability
to prosper and its competitive position in the long 5–

term. 37

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 SWOT Analysis
• The combined internal and external strategic
analysis is referred to as a SWOT analysis.
 Strengths
 Weaknesses
 Opportunities
 Threats

5–
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 Figure 5.7 Jasper University SWOT Analysis

5–
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 Strategy Formulation
• Answers the question:
 “Where does the organization want to be?”

• Steps in strategy formulation include:

1.Setting strategic goals and objectives.
2.Identifying strategic alternatives.
3.Evaluating and choosing strategies that provide a
competitive advantage and optimize the performance
of the organization in the long term.
5–
40

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 1.Setting Strategic Goals and Objectives

• Strategic Goals
 Are very broad statements of the results that an
organization wishes to achieve in the long run.
 Relate to the mission and vision of the organization and
specify the level of performance that the organization
wants to achieve.
• Strategic Objectives
 more specific statement of a strategic goal that is
measurable and time bound. 5–
41

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 2.Identifying Strategic Alternatives
• Strategic Alternatives
 Are developed in light of the organizational mission
considering its strengths, weaknesses, opportunities,
and threats, and its vision and strategic goals.
• Grand Strategies
 Stability strategies: intended to ensure continuity in
the operations and performance of the organization.
 Growth strategies: designed to increase the sales and
profits of the organization.
 Retrenchment strategies: designed to reverse
negative sales and profitability trends. 5–
42

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 Identifying Strategic Alternatives (cont’d)

• Generic Strategies
 The primary ways in which an organization can
compete in its chosen market(s).
 Cost leadership: competing on the basis of price.
 Differentiation: offering products or services that
are differentiated from those of competitors in
some way.
 Focus: avoiding competing in broad markets by
targeting a narrow market segment.
5–
43

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 Strategy Implementation: Focusing on Execution

• Many leaders find it easier to formulate strategy

than to execute it.
 Strategies must be established at all levels of the
organization to align organization’s people and
processes to fulfill its mission and achieve its vision.

5–
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 Evaluation and Control: Achieving
Effectiveness and Efficiency
• The final step in strategic planning process.
 Involves assessing progress toward fulfilling the mission.
• Control mechanisms are divided into two groups:
 Feedforward controls
 to
identify changes in the external or internal
environments that affect organization’s ability to fulfill
its mission and meet its strategic goals.
 Feedback Controls
 to test the success of the organization against the
strategic goals and objectives established in the plans.
5–
45

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 Implications for Leaders
• Understand the importance of a thorough and accurate
assessment of the current situation of the organization.
• Make sure that the mission statement is a working
document that provides direction for the members of the
organization.
• Understand the realities of the external environment in
which you operate.
• Strategic goals and objectives serve as targets for
achievement.

5–
46

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 Implications for Leaders (cont’d)
• Strategy should be designed to provide the organization
with a distinctive competitive advantage in the long run.
• A strategic plan is meaningless if it is not implemented
well.
• Provide for evaluation and control to be sure that
operations are on track for accomplishment of the
organization’s mission.

5–
47

© 2016 Wessex Press, Inc. All rights reserved.