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Understanding Management

First Canadian Edition


Slides prepared by Janice Edwards College of the Rockies
Copyright 2009 Nelson Education Ltd.

Chapter 5

Organizational Goal Setting and Planning

Learning Objectives
1.

2.

3.

4.

5.
6.

Define goals and plans and explain the relationship between them. Explain the concept of organizational mission and how it influences goal setting and planning. Describe the goals an organization should have and why they resemble a hierarchy. Define the characteristics of effective goals. Describe the four essential steps in the MBO process. Explain the difference between single-use plans and standing plans.
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Copyright 2009 Nelson Education Ltd.

Learning Objectives (Contd)


7.

8.

9. 10.

11.

Discuss how planning in a turbulent environment differs from traditional approaches to planning. Describe and explain the importance of the three stages of crisis management planning. Define the components of strategic management. Explain the major considerations in formulating functional strategies. Describe the strategic planning process and SWOT analysis.
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Learning Objectives (contd)


12.

13.

Describe business-level strategies, including Michael E. Porters competitive forces and strategies and partnership strategies. Discuss the organizational dimensions used for implementing strategy.

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Overview of Goals and Plans


Goal A desired future state that the organization attempts to realize.

Plan
A blueprint specifying the resource allocation, schedules, and other actions necessary for attaining goals.

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Ex. 5.1

Levels of Goals/Plans and Their Importance

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Purposes of Goals and Plans


Legitimacy/mission statement. Source of motivation and commitment. Resource allocation. Guides to action. Rationale for decisions. Standard of performance.

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Goals in Organizations
Mission: The organizations reason for existence.

Mission Statement: A broadly stated definition of the organizations basic business scope and operations that distinguishes it from similar types of organizations.

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Goals and Plans: Strategic


Strategic Goals Broad statements of where the organization wants to be in the future, pertaining to the organization as a whole rather than to specific divisions or departments. Strategic Plans

The action steps by which an organization intends to attain strategic goals.

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Goals and Plans: Tactical


Tactical Goals Goals that define the outcomes that major divisions and departments must achieve for the organization to reach its overall goals.

Tactical Plans Plans designed to help execute major strategic plans and to accomplish a specific part of the companys strategy.

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Goals and Plans: Operational


Operational Goals Specific, measurable results expected from departments, work groups, and individuals. Organizations lower levels that specify action steps toward achieving operational goals.

Operational Plans

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Ex. 5.3

Characteristics of Effective Goal Setting

Goal Characteristics: Specific and measurable Cover key result areas Challenging but realistic Defined time period Linked to rewards

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Ex. 5.4

Model of the MBO Process


Step 2: Developing Action Plans

Step 1: Setting Goals Corporate Strategic Goals Departmental Goals Individual Goals

Action Plans

Review Progress Step 3: Reviewing Progress Take Corrective Action

Appraise Performance
Step 4: Appraising Overall

Performance
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Ex. 5.5

MBO Benefits and Problems

Benefits: Manager and employee efforts are focused on activities that will lead to goal attainment. Performance can be improved at all company levels. Employees are motivated. Departmental and individual goals are aligned with company goals.

Copyright 2009 Nelson Education Ltd.

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Ex. 5.5

MBO Benefits and Problems (Contd)

Problems: Constant change prevents MBO from taking hold. An environment of poor employer-employee relations reduces MBO effectiveness. Strategic goals may be displaced by operational goals. Mechanistic organizations and values that discourage participation can harm the MBO process. Too much paperwork saps MBO energy.
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Types of Plans
1.
2. 3. 4.

Single-Use Standing Contingency Crisis Management Three Stages: Prevention Preparation Containment

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Strategic Management
Set of decisions and actions used to formulate and implement strategies that will provide a competitively superior fit between the organization and its environment so as to achieve organizational goals.

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Ex. 5.9

The Strategic Management Process

Porters Competitive Forces


1. Potential new entrants 2. Bargaining power of buyers 3. Bargaining power of suppliers 4. Threat of substitute products 5. Rivalry among competitors

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Ex. 5.11 The Five Forces Affecting

Industry Competition

Competitive Strategies

1. 2.

Differentiation Cost Leadership

3.

Focus

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Ex. 5.14

Tools for Putting Strategy into Action

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