Mooodule Chapter 7 Planning Strategy.pptx

Management

1. ©2022 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Management, 14e Chapter 7: Planning and Goal Setting

2. Learning Objectives By the end of this chapter you should be able to : Explain the relationship between goals and plans and the types of goals an organization should have. Describe how managers can use the organizational mission and other techniques to manage goal conflict. Explain the characteristics of effective goals. Identify specific benefits and limitations of planning. Explain the importance of contingency planning, scenario building, stretch goals, and crisis planning for managers today. 2

3. Planning is Fundamental All of the other management functions stem from planning How do you plan for an undefined future? Planning for crises and unexpected events. Planning cannot read uncertain future. Planning cannot tame turbulent environment. No plan is perfect Without plans and goals, organizations flounder Hence, plan should grow and change to meet shifting conditions. Plan starts with goal setting. 3

4. 7.1 Goal Setting and Planning Overview A plan is a blueprint for goal achievement specifying the necessary resource allocations, schedules, tasks, and other actions PLANNING - must incorporates both ideas for achieving them - determining the organization’s goal and defining the means for achieving them 4 A goal is a desired future circumstances or condition that the organization attempts to realize

5. 7.1.1 Levels of Goals and Plans 5 Planning process starts with a formal mission that defines the basic purpose of the organization especially for external audiences. Mission is the basis for the strategic (company) level of goals and plans which shapes the tactical (divisional) level and operational (departmental) level. Top managers are typically responsible for establishing strategic goals and plans that reflect a commitment to both organizational efficiency and effectiveness. Middle level managers such as heads of major divisions or functional units are responsible for tactical goals and plans to fulfill its part in the strategic plan set by the top management. Lower level management such as individual departments and employees are responsible for operational plans to identify the specific procedures or processes.

6. Levels of Goals and Plans 6 Planning process starts with a formal mission that defines the basic purpose of the organization

7. 7.1.2 The Organizational Planning Process 7

8. 7.2 Goal Setting in Organizations Overall plan begins with a mission statement of goals. Goals are socially constructed or defined by an individual or group 8

9. 7.2.1 Organizational Mission 9 Mission - describes the organization’s values, aspirations, and reason for being. It is the reason for the organizations existence. A well-defined mission is the basis for development of all subsequent goals an plans Without a clear mission, goals and plans may be develop haphazardly. Mission statement -is a broadly stated definition of purpose that distinguishes the organization from others of a similar type. The content of a mission statement often describes the company ‘s basic business activities and purpose as well as values that guide the company. Some mission statements also describe company characteristics such as desired markets and customers, product quality, location or facilities, and attitude towards employees.

10. Examples of Mission 10 McDonald's corporate mission “to be our customers' favorite place and way to eat and drink.” KFC Mission To be the leading integrated food services group in the ASEAN region delivering consistent quality products and excellent customer-focused service . This  mission statement  highlights the significance of customers as the business focus, while maintaining the company as a major influence on their food and beverage purchase decisions.

11. Examples of Mission 11 IKEA - “to create a better everyday life for many people by offering a wide-range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them.” UMW - “Committed to deliver excellence and sustained value creation for our stakeholders through products and services. AIRASIA – “to be the best company to work for whereby employees are treated as part of a big family, create a globally recognised ASEAN brand, to attain the lowest cost so that everyone can fly with AirAsia, maintain the highest quality product, embracing technology to reduce cost and enhance service levels

12. 7.2.2 Goals and Plans 12 Three types of goals and plan: 7.2.2.1 Strategic goals and plans 7.2.2.2 Tactical goals and plans 7.2.2.3 Operational goals and plans

13. 7.2.2.1 Strategic Goals and Plans 13 Strategic goals - official goals, broad statements describing where the organization wants to be in the future. Pertain to the organization as a whole rather that a specific divisions or departments. Samsung strategic goal is “a quality-based” company rather than “a quantity-based” company which focus on creativity and innovation. This make them a leader in the electronics industry. Strategic plan – is a blueprint that define the action steps by which the company intends to attain strategic goals in two to five years in the future. It defines the organizational activities and resource allocation in the form of cash, personnel, space and facilities. The purpose is to turn organization goals into realities within that time period-long term.

14. Example of Goal 14 What are McDonald's short-term and long-term goals and objectives? It's simple, really. McDonald's main aims are to serve good food for great value in a friendly, fun environment , as well as being a socially responsible company that provides good returns to our shareholders .

15. 7.2.2.2 Tactical Goals and Plans 15 Tactical goals - describe what major subunits must do for the organization to achieve its overall goals. Formulated after strategic goals are formulated . Tactical plan – help execute the major strategic plans and to accomplish specific part of the company’s strategy. It has shorter time horizon within a year. It is the job of middle level managers. Eg . Unilever’s beauty products division is to develop personalized skin care treatments for the upscale market.

16. 7.2.2.3 Operational Goals and Plans 16 Operational goals - is the result expected from departments, work groups and individuals. They are precise and measurable. Eg.1: Process 150 sales applications each week. Eg.2: Reduced overtime by 10% next month. Eg.3: Improved on shelf availability of products by 5 percentage points over the next two years. Operational plan – specify the actions steps toward achieving operational goals. Developed at the lower levels of the organization. It supports the tactical plan. It is the department manager’s tools for daily and weekly operations. Usually goals are stated in quantitative terms. Schedules are important component of operational planning which define precise time frames for the completion of operational goals.

17. 7.2.3 Managing Goal Conflict 17 Managers vs Coalition Organizations perform many activities and pursue many goals simultaneously to accomplish the overall mission. But who decide what mission and goals to strive for? Eg . Geely Holding Group bought Volvo Car Corporation. The Chinese and European managers disagreed strongly. Chinese want super-luxury car market while European want safe, reliable, family-friendly car for a stable market. Need powerful motivating goals to unite people through Coalition management.

18. 7.2.3 Managing Goal Conflict cont … 18 Coalition management involves building an alliance of people who support a manager’s goals and can influence other people to accept and work toward them. 4 steps for effective coalitional managers : Modify goals by time or location – Talk to customers and other managers to solicit their views and get sense of what people care about, learn about challenges and opportunities they face . Then find ways to balance the goals rather than fighting for one over the other. Address conflict with debate and dialogue so that it won’t hurt the organization. Breakdown barriers and promote cross-silo cooperation so that people across the departments, divisions and functions could collaborate and cooperate . Manager departure – conflicts can be lessened or resolved when managers who support the goal leave the organization.

19. 7.2.4 Align Goals Using a Strategy Map 19 The achievement of goals at low levels permits the attainment of high-level goals. Organizational performance is an outcome of how well these interdependence elements are aligned, so that individuals, teams and departments are working in concert to attain specific goals that ultimately help the organization achieve its mission. Strategy map is a visual representation of the key drivers of an organizational success . A good way to communicate goals because all employees can see what part they play in helping the organization accomplish its mission.

20. A Strategy Map for Aligning Goals 20 Accomplishing internal process goals enables the organization to maintain strong relationship with customers, be a leader in quality and provide innovative solution to emerging customer needs Goals is to develop employees for continuous learning so that they can help build internal business process that promote good relationship with supplier and customers Accomplishing lower level goals helps the organization increase revenue, productivity and efficiency thru selling new products and services

21. 7.3 Performance Management Managers use operational goals to direct employees and resources Guide efficient and effective performance Includes planning approaches: 7.3.1 Management by Objectives (MBO) 7.3.2 Single-Use Plans 7.3.3 Standing Plans Key performance indicators (KPIs): tool used to assess what is important to an organization and how well the organization is progressing towards achieving its strategic goal. 21

22. 7.3.1 Criteria for Effective Goal 22 Goal characteristics: Specific and measurable -if possible make it quantifiable such as increase profit by 2% Defined time period -specify the date on which goal attainment will be measured such as set a deadline for improving teachers effectiveness by end of 2015 school term. Cover key result area- establish goals based on measurement and clarity and focus on organizational attention, energy and resources. May use key KPIs to assess what is important to the organization and how well the organization is progressing toward attaining its strategic goal. Challenging but realistic- if goals is unrealistic they set employees up for failure and lead to a decrease in employee morale. If goals too easy, employees may feel demotivated. Linked to reward- the ultimate impact of goals depends on the extend to which salary increases, promotions and awards are based on goal achievement.

23. Criteria for Effective Goals 23

24. 7.3.2 Management by Objectives 24 Defined in 1954 by Peter Drucker Method for defining and monitoring goals and performance. Management by objectives (MBO): system whereby managers and employees define goals for every department, project, and person and use them to monitor subsequent performance Management by means (MBM): new systemic approach that focuses attention on the methods and processes used to achieve goals

25. Model of the MBO Process 25

26. MBO Benefits 26

27. 7.3.3 Single Use and Standing Plans 27 Single-Use Plans Plans developed to achieve objectives and it is a one-time goal that are not likely to be repeated in the future. Program : Major undertaking that may take several years to complete. Large in scope; may be associated with several projects. Eg ., build new headquarters, convert paper files to digital Project : Smaller in scope and complexity Shorter in horizon Often one part of a larger program Eg ., renovate the office, set up a new company intranet

28. 7.3.3 Single Use and Standing Plans 28 Standing Plans Ongoing plans that provide guidance for tasks or situations that occur repeatedly. Pertains to matters such as employee illness, absence, smoking, discipline, hiring and dismissal, use of social media. Policy : Broad in scope-general guide to action Based on organization’s overall goals/strategic plan Defines boundaries within which to make decisions Eg ., Walmart issued a new “ zero tolerance policy ” for its suppliers after charred remains of clothing made for Walmart were found at Bangladesh factory where 112 people killed in 2012 .

29. 7.3.3 Single Use and Standing Plans 29 Standing Plans Rules Narrow in scope Describe how a specific action is to be performed May apply to specific setting. Eg . No eating rule in areas of the company where employees are visible to the public. Procedures Sometimes called a standard operating procedure Defines a precise series of steps to attain certain goal Eg ., procedures for issuing refunds, procedures for handling employee grievances.

30. Major Types of Single-Use and Standing Plans 30

31. Goals and plans provide a source of motivation and commitment Goals and plans guide resource allocation Goals and plans are a guide to action Goals and plans set a standard of performance 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 7.4 Benefits and Limitations of Planning 31

32. 7.5 Planning for a Turbulent Environment Contingency Planning Define company responses to be taken or planning for emergencies, setbacks, or unexpected conditions Building Scenarios A forecasting technique to look at current trends and visualize future possibilities Stretch Goals reasonable yet highly ambitious and compelling goals, characterized by both extreme difficulty and extreme novelty, that energize people and inspire excellence Crisis Planning Preparing organization, managers, and employees to cope with sudden, devastating, unexpected events that could destroy the firm. 32

33. 7.5.1 Contingency Planning 33 When organization are operating in a highly uncertain environment or dealing with long time horizons, sometimes planning can seem like a waste of time. Contingency planning is a response to be taken in the case of emergency, unexpected conditions or setbacks. To develop contingency plans, managers need to identify important factors in the environment. Possible economics downturn Declining market Increases in cost of supplies New technological developments Safety accidents

34. 7.5.2 Building Scenario 34 It is a forecasting technique and the extension of contingency planning. It involves looking at the current trends and discontinuities and visualizing future possibilities. The abbreviated scenario thinking can give managers a head start on asking “What if…” Scenarios are like stories that offer alternative vivid picture of what the future will be like and how managers will respond. Two or five scenarios are developed for each set of factors, ranging from the most optimistic to the most pessimistic view.

35. 7.5.3 Stretch Goals 35 Involved radical expectations that go far beyond current levels of capability and performance. Require totally new activities and approaches to achieve. Big hairy audacious goal (BHAG). Any goal that is so big, inspiring, and outside the prevailing paradigm At the same time, goals must be seen as achievable or employees will be discourage and demotivated.

36. 7.5.4 Crisis Planning 36 Many firms also engage in crisis planning to enable them to cope with unexpected events that are so sudden and devastating that they have the potential to destroy the organization if managers are unprepared with a quick and appropriate response. Although a crises may vary, a carefully thought-out and coordinated plan can be used to respond to any disaster. Crisis planning reduces the incidence of trouble. There are two essential stages in crisis planning: Crisis prevention Crisis preparation

37. Essentials Stages of Crisis Planning 37

38. 7.6 Innovative Approaches to Planning 38 The process of planning changes overtime to become more tune with the shift in the environment and employee attitudes. A fresh approach is to involve everyone in the organization and sometimes outside stakeholders in the planning process. Guideline for innovative planning are: 7.6.1 Decentralize planning 7.6.2 Set stretch goals for excellence 7.6.3 Use performance dashboards 7.6.4 Deploy intelligence team

39. 7.6.1 Decentralized planning 39 The evolution of the new approach begin with decentralize planning which involve managers in major divisions or departments. Planning experts work with managers in major divisions or departments to develop their own goals and plans

40. 7.6.2 Set Stretch Goals for Excellence 40 Stretch goals are highly ambitious Clear, compelling, and imaginative Require innovation Goals must be seen as achievable As times move faster and become more turbulent, these are important

41. 7.6.3 Business Performance Dashboard 41 Copyright © 2012 by South-Western, a division of Cengage Learning. All rights reserved. Visual display that helps executives keep track of key performance metric . Eg . Sales in relation to targets, % of customer service call.

42. A Performance Dashboard for Planning 42

43. 7.6.4. Deploy Intelligence Team 43 Managers need good intelligence to make informed choice about goals and plans Intelligent team – a cross-functional group of managers and employees, led by competitive intelligence professional, who work together to gain a deep understanding of a specific business issue Aim to present insights, possibilities and recommendations about goals and plans related to the issue.