PLANNING
• The planning process starts with a
GOAL
- A desired future state that the
organization attempts to realize.
PLAN
- A blueprint specifying the resource
allocations, schedules, and other
actions necessary for attaining goals.
PLANNING
- The act of determining the
organization’s goals and the means
for achieving them.
Levels of Goals/Plans and Their Importance
formal mission that defines the basic
purpose of the organization,
especially for external audiences.
• The mission is the basis for the
strategic (company) level of goals
and plans, which in turn shapes the
tactical (divisional) level and the
operational (departmental) level.
• Top managers are typically
responsible for establishing strategic
goals and plans that reflect a
commitment to both organizational
efficiency and effectiveness, as
described in Tactical goals and plans
are the responsibility of middle
managers, such as the heads of
major divisions or functional units.
• A division manager will formulate
tactical plans that focus on the
major actions the division must take
to fulfill its part in the strategic plan
set by top management. Operational
plans identify the specific
procedures or processes needed at
lower levels of the organization,
such as individual departments and
employees.
• Front-line managers and supervisors
develop operational plans that focus
on specific tasks and processes and
that help meet tactical and strategic
goals. Planning at each level
supports the other levels.
Purposes of Goals and Plans
1. Legitimacy. An organization’s
mission describes what the
organization stands for and its
reason for existence. It symbolizes
legitimacy to external audiences
such as investors, customers,
suppliers, and the local community.
2. Source of motivation and
commitment. Goals and plans
enhance employees’ motivation and
commitment by reducing
uncertainty and clarifying what they
should accomplish. Lack of a clear
goal can hamper motivation because
people don’t understand what
they’re working toward. Whereas a
goal provides the “why” of an
organization or subunit’s existence,
a plan tells the “how.” A plan lets
employees know what actions to
undertake to achieve the goal.
3. Resource allocation. Goals help
managers decide where they need
to allocate resources, such as
employees, money, and equipment.
For example
This goal lets managers know they
need to use resources to develop
renewable and biodegradable
materials, acquire businesses that
produce products with renewable
resources, and buy equipment that
reduces waste, emissions, and
energy usage.
4. Guides to action. Goals and plans
provide a sense of direction. They
focus attention on specific targets
and direct employee efforts toward
important outcomes
5. Rationale for decisions. Through
goal setting and planning, managers
clarify what the organization is
trying to accomplish.
They can make decisions to ensure
that internal policies, roles,
performance, structure, products,
and expenditures will be made in
accordance with desired outcomes.
Decisions throughout the
organization will be in alignment
with the plan.
6. Standard of performance. Because
goals defi ne desired outcomes for
the organization, they also serve as
performance criteria. They provide a
standard of assessment. If an
organization wishes to grow by 15
percent, and actual growth is 17
percent, managers will have
exceeded their prescribed standard.
Organizational Mission Goals and Plans

- At the top of the goal hierarchy is Strategic goals

the mission—the organization’s
Broad statements of where the organization
reason for existence. The mission
wants to be in the future; pertain to the
describes the organization’s values,
organization as a whole rather than to
aspirations, and reason for being. A
specific divisions or departments.
well-defined mission is the basis for
development of all subsequent goals Strategic plans
and plans.
The action steps by which an organization
Mission statement intend s to attain strategic goals.
- A broadly stated definition of the Tactical goals
organization s’ basic business scope
and operations that distinguishes it Goals that define the outcomes that major
from similar types of organizations divisions and departments must achieve for
the organization to reach its overall goals.
- A well-designed mission statement
can enhance employee motivation Tactical plans
and organizational performance.
Plans designed to help execute major
- The content of a mission statement strategic plans and to accomplish a specific
often focuses on the market and part of the company’s strategy
customers and identifies desired fi
Operational goals
elds of endeavor.
• Specific, measurable results
- Some mission statements describe
expected from departments, work
company characteristics such as
groups, and individuals within the
corporate values, product quality,
organization.
location of facilities, and attitude
toward employees. Operational plans

• Plans developed at the

organization’s lower levels that
specify action steps toward
achieving operational goals and that
support tactical planning activities.
ORGANIZING
The deployment of organizational resources
to achieve strategic goals.
Organization structure
• The framework in which the
organization defines how tasks are
divided, resources are deployed, and
departments are coordinated.
Organization Chart
• The visual representation of an
organization’s structure.
1. Authority is vested in organizational
positions, not people.
2. Authority is accepted by
subordinates.
3. Authority flows down the vertical
hierarchy.
Responsibility
• The duty to perform the task or
activity an employee has been
assigned.
Accountability

Work Specialization • is the mechanism through which

authority and responsibility are
• The degree to which organizational
brought into alignment.
tasks are subdivided into individual
jobs; also called division of labor • The fact that the people with
authority and responsibility are
Chain of Command
subject to reporting and justifying
• An unbroken line of authority that task outcomes to those above them
links all individuals in the in the chain of command.
organization and specifies who
reports to whom.

• Authority
• Responsibility
• Delegation

Authority

• The formal and legitimate right of a

manager to make decisions, issue
orders, and allocate resources to
achieve organizationally desired
outcomes.
Delegation
• The process managers use to
transfer authority and responsibility
to positions below them in the
hierarchy.
7. Little time is required in nonsupervisory
activities such as coordination with other
departments or planning.
8. Managers’ personal preferences and
styles favor a large span.

Line and Staff Authority The average span of control used in an

organization determines whether the
• A form of authority in which
structure is tall or flat
individuals in management positions
have the formal power to direct and • A tall structure has an overall
control immediate subordinates. narrow span and more hierarchical
levels.
Line authority A form of authority in which
individuals in management positions have • A flat structure has a wide span, is
the formal power to direct and control horizontally dispersed, and has
immediate subordinates. fewer hierarchical levels

Staff authority A form of authority granted

to staff specialists in their area of expertise.

The following section describes the factors

that are associated with less supervisor
involvement and thus larger spans of
control

1. Work performed by subordinates is

Centralization and Decentralization
stable and routine.
• Centralization The location of
2. Subordinates perform similar work tasks.
decision authority near top
3. Subordinates are concentrated in a single organizational levels.
location.
• Decentralization The location of
4. Subordinates are highly trained and need decision authority near lower
little direction in performing tasks. organizational levels.

5. Rules and procedures defining task 1. Greater change and uncertainty in

activities are available. the environment are usually
associated with decentralization.
6. Support systems and personnel are
available for the manager.
 2. The amount of centralization or
decentralization should fi t the fi
rm’s strategy.
3. In times of crisis or risk of company
failure, authority may be centralized
at the top.
Functional Versus Divisional Structures
Departmentalization

• The basis on which individuals are

grouped into departments and
departments into the total
organization.

VERTICAL FUNCTIONAL APPROACH

Five approaches to structural design

Matrix Approach
Five approaches to structural design reflect
different uses of the chain of command in • An organization structure that uses
departmentalization, functional and divisional chains of
command simultaneously in the
• Functional
same part of the organization.
• Divisional,
• Matrix
• Teams
• Virtual networks

Functional structure

• The grouping of positions into

departments based on similar skills,
expertise, and resource use.

Divisional structure
Terms:
• An organization structure in which
departments are grouped based on • Two-boss employees Employees
similar organizational outputs. who report to two supervisors
simultaneously.
 • Matrix boss The product or made up of horizontal teams that
functional boss, responsible for one coordinate their ac tivities and work
side of the matrix. directly with customers to
accomplish the organization’s goals.
• Top leader The overseer of both the
product and functional chains of Virtual network structure
command, responsible for the entire
• An organization structure that
matrix.
disaggregates major functions to
Team Approach separate companies that are
brokered by a small headquarters
• The team approach gives managers
organization
a way to delegate authority, push
responsibility to lower levels, and be
more flexible and responsive in the
competitive global environment.

Advantages and Disadvantages

Terms:

• Cross-functional teams A group of

employees from various functional
departments that meet as a team to
resolve mutual problems.
Organizing for Horizontal Coordination
• Permanent teams A group of
The Need for Coordination
participants from several functions
who are permanently assigned to • The quality of collaboration across
solve ongoing problems of common departments.
interest.

• Team-based structure Structure in

which the entire organization is
Task Forces, Teams, and Project
Management

Task force

A temporary team or committee formed to

solve a specific short t - erm problem
involving several departments.

Project manager

A person responsible for coordinating the

activities of several departments on a full-
time basis for the completion of a specific
project

Example of Project Manager Relationships

to Other Departments

Organizing for Horizontal Coordination

Reengineering

The radical redesign of business processes

to achieve dramatic improvements in cost,
quality, service, and speed.

Process

An organized group of related tasks and

activities that work together to transform
inputs into outputs and create value