1) Planning involves determining an organization's goals and the means to achieve them. It includes setting goals at different levels from strategic to operational.
2) Strategic goals pertain to the organization as a whole while tactical and operational goals define outcomes for divisions/departments and individuals.
3) Effective goals are specific, measurable, linked to rewards, cover key areas, and have a defined timeline.
2. Goal, Plan And Planning
Mahmood Qasim
Goal
A desired future state that the organization attempts to
realize.
Plan
A blueprint specifying the resource allocations, schedule,
and other actions necessary for attaining goals.
Planning
The act of determining the organization’s goals and the
means for achieving them.
3. Levels Of Goals/Plans And Their Importance
External Message
Mission
Mahmood Qasim
Statement
Legitimacy for
investors, customers, supp
liers, community
Strategic Goals/Plans
Senior Management
(Organization as a whole)
Tactical Goals/Plans
Middle Management
(Major divisions, functions)
Operational Goals/Plans
Lower Management
(Departments, individuals)
Internal
Message
Legitimacy,
motivation,
guides,
rationale,
standards
4. Levels of Goal in Organizations
Mahmood Qasim
Missions
The organization’s reason for existence
Mission
Statement
A broadly stated definition of the organization’s basic
business scope and operations that distinguishes it from
similar types of organizations
Strategic
Goals
Broad statements about the organization’s direction and
future that pertain 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 its strategic goals
5. Components of Mission Statement
Customers : Who are the organization’s customers?
2
Mahmood Qasim
1
Products or services : What are the organization’s major products or
services?
3
Location : Where does the organization compete?
4
Technology : What is the organization’s basic technology?
5
6
7
8
9
Concern for survival : What is the organization’s commitment to economic
objectives?
Philosophy : What are the beliefs, values, aspiration, and philosophical
priorities of the organization?
Self-concept : What are the organization’s major strengths and competitive
advantage?
Concern for public image : What are the organization’s public
responsibilities, and what image is desired?
Concern for employees : What is the organization’s attitude towards
employees?
6. Mahmood Qasim
Hierarchy of Goal
Strategic
Goals
Strategic
Plans
Tactical
Goals
Tactical
Plans
Operational
Goals
Operational
Plans
Top Management
Organization wide perspective
Middle Management
Department perspective
First-Level Management
Unit / individual perspective
7. Hierarchy of Goal
Mahmood Qasim
Strategic
goals
Tactical
Goals
Operational
Goals
Broad statements of where
the organization wants to be
in the future: pertain to the
organization as a whole rather
than to specific divisions or
departments
Goals that define the
outcomes that major divisions
and departments must
achieve in order for the
organization to reach its
overall goals.
Specific, measurable results
expected from
departments, work
groups, and individuals
within the organization.
Strategic
Plans
The action steps by which an
organization intends to attain
its strategic goals.
Tactical
Plans
Plans designed to help
execute major strategic plans
and to accomplish a specific
part of the company’s
strategy.
Operational
Plans
Plans developed at the
organization’s lower levels
that specify action steps
towards achieving
operational goals and that
support tactical planning
activities.
8. Hierarchy of Goal
MISSION
Manufacture both standard and custom metal products for various applications in the
machine tool industry
Strategic Goals
Mahmood Qasim
PRESIDENT
12% return on investment
5% growth
No employee layoffs
Excellent service to customers
Tactical Goals
FINANCE V.P.
Keep outstanding accounts below
Rs.500,000
Below borrowing below
Rs.1.250,000
Provide monthly budget statements
for departments
PRODUCTION V.P.
Manufacture 1,200,000 products at
average cost of Rs.19
Scrap rate of 3% or less
Increase manufacturing productivity
by 2%
Resolve employee grievances within
3 working days
Marketing V.P.
Sell 1,200,000 units at average
price of Rs.27
Introduce 1 new product line
Increase sales by 5% in new
market areas
Open 1 new sales office
Operational Goals
ACCOUNT RECEIVABLE
MANAGER
Issue invoices within 5 days of sale
Check new customers’ credit within
1 working day
Allow no account to be overdue
more than 5 months
SUPERVISOR-AUTOMATIC
MACHINES
Produce 150,000 standard
units at average cost of Rs.16
Have machine downtime of
less than 7%
SALES MANAGER-REGION 1
Respond to customer inquiries
within 2 hours
Meet sales quotes of 120,600
units
Work with salespeople to:
9. Criteria for Effective Goals
Mahmood Qasim
1
Specific and
Measurable
5
2
Linked to
Rewards
Cover Key
Result Area
4
Defined Time
Period
3
Challenging
but Realistic
10. Planning Types and Models
Management by Objectives
Mahmood Qasim
A method of management whereby managers and employees define goals for
every department, project, and person and use them to monitor subsequent
performance.
Single-Use Plans
Plans that are developed to achieve a set of goals that are unlikely to be
repeated in the future.
Standing plans
Ongoing plans used to provide guidance for tasks performed
repeatedly within the organization.
Shewhart Cycle
A planning cycle used in companies that have instituted quality management;
also called PDCA – plan, do, check, act – Cycle.
Contingency plans
Plans that define company responses to specific situation, such as
emergencies or set backs
11. Management by Objectives (MBO)
Mahmood Qasim
Set Goals
Develop
action plan
Four major activities must occur in order
for MBO to be successful
Review
progress
Appraise
overall
performance
12. Model of the MBO Process
Mahmood Qasim
Step 1: Set Goals
Corporate strategic goals
Departmental goals
Individual goals
Step 2: Develop Action Plan
Action Plan
Review Progress
Step 3: Review
Progress
Take Corrective
Action
Appraise Performance
Step 4: Appraise Overall
Performance
13. Benefits and Problems with MBO
Mahmood Qasim
Benefits of MBO
1. Manager and employee efforts
are focused on activities that will
lead to goal attainment.
2. Performance can be improved at
all company levels.
3. Employees are motivated.
4. Departmental and individual goals
are aligned with company goals.
Problems with MBO
1. Constant change prevents MBO
from taking hold.
2. An environment of poor
employer-employee relations
reduces MBO effectiveness
3. Strategic goals may be displaced
by operational goals.
4. Mechanistic organizations and
values that discourage
participants can harm the MBO
process.
5. Too much paperwork saps MBO
energy.
14. Major Types of Standing Plans
Mahmood Qasim
Policy
Rule
Broad in scope – a general guide to action
Based on organization's overall goals/strategic plan
Defines boundaries within which to make decisions
Examples:
Drug-free
workplace
policies
Continuous
improvement
Shewhart
Cycle
Narrow in scope
Describes how a specific action is to be
Examples:
performed
No-smoking rule in areas
May apply to specific setting
of plant where hazardous
materials are stored
Sometimes called a standard operating
Procedure
procedure
Defines a precise series of steps to attain
certain goals
May apply to specific setting
Examples:
Procedures for
issuing refunds
Procedures for
handling employee
grievances
15. Mahmood Qasim
Contingency Plans
When organizations are operating in a highly uncertain environment
or dealing with long time horizons, sometimes planning can seem like
a waste of time. In fact, strict plans may even hinder rather than help
them form more flexible plans.
To develop contingency plans, planners indentify uncomfortable
factors, such as recession, inflation, technological developments, or
safety accidents. To minimize the impact of these potential factors, a
planning team can forecast the worst-case scenarios.
Example:
If sales fall 20% and prices drop 8%, what will the
company do?
16. Mahmood Qasim
Shewhart Cycle of Continuous Improvement
1. Plan
Analyze results;
put learning
into action
Decide what
changes are
desirable, and
plan a change
or test
3. Check
2. Do
Observe the
results
Carry out the
change or test
4. ACT
17. Mahmood Qasim
Planning Time Horizon
Today
Short-Term
Planning
(Operational
Goals)
1 Year
Intermediate –
Term Planning
(Tactical
Golas}
2 Years
3 Years
4 Years
Long-Term Planning
(Strategic Planning}
Six Years &
Beyond
18. Mahmood Qasim
The New Planning Paradigm
Today, some companies are taking decentralized planning
even further and involving workers at every level of the
organization in the planning process. In this new
paradigm, a decentralized planning staff – made up of
middle managers and other planners – works with a
planning task force of line managers and frontline workers
to develop dynamic plans that meet the organization’s
needs .
Decentralized Planning Staff
A group of planning specialists assigned to major departments
and divisions to help managers develop their own strategic plans
Planning Task force
A temporary group consisting of line managers responsible for
developing strategic plans
19. Mahmood Qasim
What is Strategic Management?
Strategic management is the set of decisions and actions
used to formulate and implement strategies that will
provide a competitively superior fit between the
organizations and its environment so as to achieve
organizational goals.
Essence of Strategy
Is choosing to perform different activities differently than
competitors do.
20. Strategic Formulation versus Implementation
Mahmood Qasim
The final aspect of strategic management involves the
stages of formulation and implementation.
Strategy formulation includes the planning and decision making that
leads to the establishment of the firm’s goals and the development of
specific strategic plan.
Strategic formulation may include external environment and internal
problems and integrating the results into goals and strategy.
Strategy implementation is the administration and execution of the
strategic plan. Managers may use persuasion, new equipment ,
changes in organization structure , or a reward system to ensure that
employees and resources are used to make formulated strategy a
reality.
21. The Strategic Management Process
Mahmood Qasim
Scan External
Environment
National
Global
Evaluate
Current
Mission
Goals
Strategies
Identity
strategic
Factors:
•Opportunities
•Threats
SWOT
Scan internal
Environment
Core Competence
Synergy
Value Creation
Define
New:
Mission
Goals
Grand
Strategy
Identify Strategic
Factors:
Strategies
Weaknesses
Formulate
Strategy:
Corporate
Business
Functional
Implement Strategy
via Changes in:
Leadership/culture
Structure
Human Resource
Information and
control systems
22. Porter’s Competitive Forces and Strategies
Mahmood Qasim
Potential New
Entrants
Bargaining Power of
Buyers
Bargaining Power of
Suppliers
Threat of Substitute
Products
Rivalry Among
Competitors