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
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as The University of West Alabama
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.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 7–2
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SHARING THE VISION Planning &
Decision Making
LG3
• Vision -- More than a
goal, it’s a broad
explanation of why the
organization exists and
where it’s trying to go.
7-3
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DEFINING THE MISSION Planning &
Decision Making
LG3
• Mission Statement -- Outlines the organization’s
fundamental purposes. It includes:
- The organization’s self–concept.
- Its philosophy.
- Long–term survival needs.
- Customer needs.
- Social responsibility.
- Nature of the product or service.
7-4
BRAC
Our Vision
A world free from all forms of exploitation and discrimination where
everyone has the opportunity to realise their potential.
Our Mission
Our mission is to empower people and communities in situations of
poverty, illiteracy, disease and social injustice. Our interventions aim to
achieve large scale, positive changes through economic and social
programmes that enable men and women to realise their potential.
Our Values
Innovation
Integrity
Inclusiveness
Effectiveness
◦ MISSION
The mission of BRAC University is to foster the national
development process through the creation of a centre of
excellence in higher education that is responsive to society's
needs, and able to develop creative leaders and actively
contributes to learning and creation of knowledge. - See more at:
[Link]
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SETTING Planning &
Decision Making
GOALS AND OBJECTIVES
LG3
• Goals -- The broad, long-term
accomplishments an
organization wishes to attain.
• Objectives -- Specific, short-
term statements detailing how
to achieve the organization’s
goals.
7-7
Growing sales revenue in North America can be
considered a goal.
Expanding your distribution network is an objective
used to reach the goal of raising company revenue.
◦ Examples of Goals and Objectives
Goals ‘“ I want to be a better cricket player.” “ I
want to learn more about Chinese history.” “ I
want to maximize my professional performance.”
◦ Objectives ‘“ I want to memorize the periodic
table before my next quiz.” “I want to increase
my sales by 10% this month.” “I want learn to
play ‘Freebird’ on the guitar.”
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.
7–9
7.1 The Planning Process
7–10
Organizational Goals
Purposes of Goals
Guidance and Promotion of Source of Evaluation
unified direction good planning motivation and control
Specific and Performance can be
Where the Facilitates future goal
moderately difficult assessed in the future in
organization is going setting
goals can motivate terms of how
Why getting there is
people to work hard if successfully today’s
important
there is a reward also goals are accomplished
Ambitious revenue
goal set
Job done faster
Demonstrates how than goal
Every business will setting goals and
be either one or develop plan to reach Bonus added
7–11
two in its industry them automatically
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
7–12
Kinds of Goals
By Level
State the fundamental, unique purpose that sets a
business apart from other firms of its type
MISSION STATEMENT
Identifies the scope of the business’s operations in
product and market terms
Set by top management
STRATEGIC GOALS Focus on broad and general issues
TACTICAL GOALS Set by and for middle managers
Focus on how to operationalize actions necessary
to the strategic goals
OPERATIONAL GOALS Set by and for lower level managers
Concern on short term issues associated with
tactical goals
Used instead of the term Objective 7–13
Kinds of Goals
By Level The premier purveyor of the finest
coffee in the world while maintaining
our uncompromising principles while
MISSION STATEMENT we grow
Increasing the profitability of each of
its coffee stores by 25 percent over
STRATEGIC GOALS the next five years
Working on company-owned versus
TACTICAL GOALS licensed versus licensed stores and
global distribution of stores in different
countries
OPERATIONAL GOALS
Boost the profitability of a certain
number of stores in each of the next five
years
7–14
Kinds of Organizational Plans
Set by the board of director and top
management
Strategic Plans Have an extended time horizon and address
(upper management) questions of scope, resource deployment, and
competitative advantage and synergy
Set by the upper & middle management
Tactical Plans Compared with strategic plans, have a
(middle management) somewhat shorter time horizon and more
specific and concrete focus
Operational Plans Set by the middle and lower-level managers
Relatively narrow in scope
(lower-level managers)
Deals with a fairly small set of activities
7–16
Time Frames for Planning
The Time Dimension of Planning
Planning must provide sufficient time to fulfill the managerial
commitments involved.
Long-range Plans
Cover present and future strategic issues extending beyond five
years in the future.
Intermediate Plans
Cover from 1 to 5 years and parallel tactical plans.
Are the principal focus of organizational planning efforts.
Short-range Plans
Are action plans and reaction (contingency) plans that have a
time frame of one year or less.
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
7–18
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.
7–19
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.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website
for classroom use. 7–20
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.
7–21
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.
◦ Contingency planning is a proactive strategy that
emphasizes preparation over response.
◦ Crisis Management
◦ The set of procedures the organization uses in the event
of a disaster or other unexpected calamity.
◦ Crisis management is the process of managing the
response to a major incident after it has occurred. It is a
reactive strategy.
7–22
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
7–23
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
7–24
Developing and Executing Tactical Plans
Developing tactical plans
Recognize and understand Recognize that tactical planning must address
overarching strategic plans a number of tactical goals
and tactical goals
Represent a concrete action involving
Specify relevant resource and
measurable resources & a target date for
time issues completion
Recognize and identify human Managers must be in a position to receive
resource commitments information from others within and outside the
organization
Process that information in the most effective
way and pass it on to others
Each activity has required considerable time
and effort from dozens of management
7–25
Developing and Executing Tactical Plans
Executing tactical plans
Evaluate each course of action
in light of its goal
Obtain and distribute
information and resources
Vertical Communication
Monitor horizontal and vertical
communication and integration
of activities
Horizontal
Communication
Monitor ongoing activities for
goal achievement
7–26
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
7–27
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.
7–28
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
7–29
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.
7–30
7.5 The Formal Goal-setting Process
7–31
The Effectiveness of Formal
Goal
◦ Strengths Setting
(Success)
◦ Improved employee
◦ Weaknesses (Failure)
◦ Poor implementation of
motivation the 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 levels
plans ◦ Overemphasis on
◦ Helps identify managerial quantitative goals
talent ◦ Too much paperwork and
◦ Provides a systematic record keeping
management philosophy ◦ Managerial resistance to
◦ Facilitates control of the goal setting
organization
7–32
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
7–33