Business Chapter 7 Flashcards
Planning
What does planning involve
Looking ahead and chalking out a future course of action to be taken
Characteristics of planning
Goal orientated
Looks ahead
An intellectual process
Involves choice and decision making
Designed for efficiency
The importance of planning
To offset uncertainty and change
To Increase economic efficiency
To facilitate control be establishing a standard for future activities
To provide a coordinated, systematic road map for future activities
To focus on organizational activity as required for a specific objective
Advantages of planning
Facilitates management by objectives
Minimizes uncertainties by anticipating the future
Facilitates co-ordination around organizational goals
Improves employee’s morale
Facilitates control
Encourages Innovation
Helps in achieving economics
Provides a competitive edge
Disadvantages of planning
Rigidity
Misdirected planning
Time consuming
Probability in planning
False sense of security
Expensive
Criteria for effective goals
Specific: Indicates what the goal relates to
Measurable: The result can be evaluated objectively and in quantified terms
Attainable: It is realistic, yet should provide a challenge
Relevant: Org’s vision, mission and strategic goals
Types of planning
Strategic planning
Tactical planning
Operational planning
Contingency planning
Facilitating planning in the organization
1.Develop an organizational climate which encourages planning
2.Top level management show support lower/operational-level management’s planning activities
3.Top management should encourage planning by serving as role models through their own planning activities
4.Many employees might not know how to do proper planning, provide access to training
5.Create a reward system that encourages planning and supports planning activities
6.Avoid planning for the sake of planning
Strategic planning
Time frame-1.5 years
Level of management-Top management
Extent of coverage-External environment and internal environment
Purpose and goal-Establish mission and long-term goals
Breadth of content-Broad and general
Accuracy and predictability-High degree of uncertainty
Tactical planning
Time frame-less than a year
Level of management-middle management
Extent of coverage-Strategic business units
Purpose and goal-Establish midrange goals for implementation
Breadth of content-More specific
Accuracy and predictability-Moderate degree of certainty
Operational planning
Time frame-Current
Level of management-Supervisory management
Extent of coverage-Geographic and functional divisions
Purpose and goal-Implement and activate specific objectives
Breadth of content-Specific and concrete
Accuracy and predictability-Reasonable degree of certainty
Contingency plans
Time frame-when an event occurs or it is required for a situation
Level of management-Top and middle management
Extent of coverage-External environment and entire organization
Purpose and goal-Meet unforeseen challenges and opportunities
Breadth of content-Broad and detailed
Accuracy and predictability-Reasonable degree of certainty once event occurs
The nature of goals
1.Organizational goals are the starting point of the planning process. 2.Goals flow directly from the organization’s vision and its mission statement but are more specific.
3.The time period of goals may be short term, intermediate or long term.
4.Goals may be publicly stated or not.
The importance of goals
*Goals provide guidance and agreement on the direction of the organization
*Clearly formulated, unambiguous goals facilitate effective planning in terms of resource deployment.
*Goals can inspire and motivate employees
*Goals provide the basis for the effective evaluation of employee and organizational performance, and for the control of organizational resources.
Management by objective
A technique designed to achieve the integration of individual and organizational goals in organizations
The process of MBO
*The manager and the employee have an initial discussion that
*The employee establishes potential key performance targets in the
predetermined areas of responsibility for a forthcoming period.
*The employee and manager mutually establish checkpoints to measure the employee’s progress.
*Evaluation of the degree of goal attainment takes place at the end of the predetermined period.
The five variables that set the parameters for organizational planning are:
1.The purpose of the organization and the environment( its obligation to society and its stakeholders)
2.the organization’s mission statement(sets out the unique purpose that distinguishes the
organisation from other organisations of its type)
3.the organisation’s environment(plan to take advantage of external opportunities and avoid threats in the environment)
4.the managers’ values (Values influence and cement the organisation’s culture, strategy and structure. They
also determine the organisation’s commitment to social responsibility)
5.managers’ experience(The experience of management is vital because it influences the planning
performance of managers
The steps in the planning process are:
Establish goals
Develop alternative plans
Evaluate alternative plans
Select a plan
Implement the plan
Do reactive planning, when change in the environment occurs
Each level has a different planning focus
*Top-level managers formulate long-term strategic goals and strategic plans for the
entire organisation.
*Middle-level managers use strategic goals and strategic plans as inputs to develop
medium-term tactical goals and tactical plans for their functional departments.
*Lower-level managers use tactical goals and tactical plans to develop short-term
operational goals and operational plans for their sections
Implementation of plans
Involves developing a framework for its execution, leadership to set the plan in motion ,and exercise of control to determine whether the performance of the activities is going according to plan
Different strategies:
Generic strategies(how the org plans to compete in markets)
Corporate strategies(identifying in which and in how many businesses the org wishes to compete)
Internal growth strategies(Market, product , concentration growth, innovation)
External growth strategies(integration and diversification)
Corporate combination strategies(merger, joint venture)
Turnaround/decline strategies(Asset reduction , liquidation)
