Planning and Goal Setting

Chapter 4
FACULTY: VARA SYED
COURSE: PRINCIPLES OF MANAGEMENT
Planning

Planning is the most fundamental of the four management functions. It is the act of
determining goals and defining the means of achieving them.

 A goal is a desired future circumstance or condition that the organization wants to realize.
 A plan is a blueprint specifying the resource allocations, schedules, and other actions
necessary for attaining goals.
 Planning helps managers think about the future rather than thinking merely in terms of
day-to-day activities.
The
Organizational
Planning Process
The Organizational Planning Process

The planning process begins with developing the

1. DEVELOP THE PLAN overall plan for the organization by clearly defining its
mission statement and strategic goals as a whole.
Organizational Mission

Mission Statement
 A well-defined mission is the basis for development of all subsequent goals and plans.
 The formal mission statement is a broadly stated definition of purpose that distinguishes
the organization from others of a similar type.
 It includes organizations basic business activities and purpose, as well as the values that
guide the company.
 Some mission statements also describe company characteristics such as desired markets
and customers, product quality, location of facilities, and attitude toward employees.
 Goals and Plans

Strategic Goals and Plans

 Strategic goals are broad statements describing where the organization wants to be in the future. These
goals pertain to the organization as a whole rather than to specific divisions or departments.
 Strategic plans define the action steps by which the company intends to attain strategic goals. The strategic
plan is the blueprint that defines the organizational activities and resource allocations—in the form of cash,
personnel, space, and facilities—required for meeting these targets.
 Top managers are typically responsible for establishing strategic goals and plans.
 Goals and Plans

Tactical Goals and Plans

 The outcomes that major divisions and departments must achieve for the organization to reach its overall
goals are called tactical goals.
 Tactical plans are designed to help execute major strategic plans and to accomplish a specific part of the
company’s strategy.
 Tactical goals and plans are the responsibility of middle managers, such as the heads of major divisions or
functional units.
 Goals and Plans

Operational Goals and Plans

 Operational goals are specific, measurable results that are expected from departments, work groups, and
individuals. It refers to the action plan for the day-to-day functioning of an organization.
 Operational plans specify the action steps toward achieving operational goals and support tactical
activities. The operational plan is the department manager’s tool for daily and weekly operations. It
manages day to day business smoothly.
 Lower Management are responsible for developing operational plans.
 EXAMPLE

 A Company’s mission, such as “Improve the lives of families by providing consumer-preferred

paper products for kitchen and bathroom,” provides the framework for establishing more specific
goals for top managers, such as “improve company profits by 5 percent next year.” - Strategic
Goal
 This might translate into “increase sales by 10 percent next year” for the manager of the
Northwest sales division,” – Tactical Goal
 And an individual salesperson might have a goal of calling on 10 percent more customers. –
Operational Goal
Strategy Maps

 Goals and plans need to be in alignment so that they are

consistent and mutually supportive.
 A strategy map is a visual representation of the key drivers of an
organization’s success, showing the cause and-effect relationship
among goals and plans.
The Organizational Planning Process

In the next steps plans are translated into action,

which includes defining tactical objectives and plans,
developing a strategy map to align goals, formulating
2. Translate the Plan contingency and scenario plans, and identifying
intelligence teams to analyze major competitive
issues.
The Organizational Planning Process

Third, managers lay out the operational factors

needed to achieve goals. This involves devising
operational goals and plans, selecting the measures
3. Plan Operations and targets that will be used to determine if things are
on track, and identifying stretch goals and crisis plans
that might need to be put into action.
The Organizational Planning Process

Tools for executing the plan include management-by-

4. Execute the Plan objectives (MBO), performance dashboards, single-use
plans, and decentralized responsibility.
Single-Use and
Standing Plans

Single-use plans are plans that are

developed to achieve a set of goals
that are unlikely to be repeated in the
future.

Standing plans are ongoing plans

that are used to provide guidance for
tasks that occur repeatedly in the
organization.
Planning for a Turbulent Environment

 Considering the limitations to planning, what can managers do?

 Managers use innovative planning approaches to cope with today’s turbulent
environment.
 Three approaches that help brace the organization for unexpected—even unimaginable—
events are:
 contingency planning,
 building scenarios,
 crisis planning.
 Contingency planning
 Contingency planning identifies important factors in
the environment, such as possible economic
downturns, declining markets, increases in cost of
supplies, new technological developments, or safety
accidents.

Planning for a  Managers then forecast a range of alternative

responses to the most likely high-impact
Turbulent contingencies, like, emergencies, setbacks, or
unexpected conditions.

Environment Scenario building

 An extension of contingency planning is a forecasting
technique known as scenario building
 With scenario building, managers look at trends and
discontinuities and imagine possible alternative
futures to build a framework within which
unexpected future events can be managed.
 Planning for a Turbulent Environment

Crisis Management

Crisis planning involves the

two major stages of
prevention and preparation.
The Organizational Planning Process

Finally, managers periodically review plans to learn from results

5. Monitor and Learn and shift plans as needed, starting a new planning cycle.
The
Organizational
Planning Process
 Benefits and Limitations of Planning
Benefits
• Goals and plans guide resource allocation
• Goals and plans are a guide to action.
• Goals and plans provide a source of
motivation and commitment.
• Goals and plans set a standard of
performance.
Limitations
• Goals and plans can create a false sense
of certainty.
• Goals and plans may cause rigidity in a
turbulent environment.
• Goals and plans can get in the way of
intuition and creativity.