Chapter 4: Foundations of Planning Flashcards
What is planning often called?
The primary management function because it establishes the basis for all the other things managers do as they organise, lead and control.
What does planning involve?
Defining the organisation’s objectives or goals, establishing an overall strategy for achieving goals and developing a comprehensive hierarchy of plans to integrate and coordinate activities.
It’s concerned with ends (what is to be done) and means (how it’s go be done).
How can planning be further divided?
Into formal and informal planning.
What is informal planning?
Very little, if anything, is written down. What is to be accomplished is in the heads of one or a few people. Furthermore, the organisation’s goals are rarely verbalised.
Informal planning generally describes the planning that takes place in many smaller businesses.
What is formal planning?
Defining specific goals covering a specific time period, writing down these goals and making them available to organisation members and using these goals to develop specific plans that clearly define the path the organisation will take to get from where it is to where it wants to be.
Why should managers formally plan?
Managers should plan for at least four reasons, being:
. To establish coordinated effort (provide direction)
. To reduce uncertainty
. To reduce overlapping and wasteful activities
. To establish the goals or standards that facilitate control
Explain the following reason why managers should formally plan: To establish coordinated effort.
It gives direction to managers and non-managerial employees.
When everyone understands where the organisation is going and what they must contribute to reach the goals = coordinated activities, thus fostering team work and cooperation.
Explain the following reason why managers should formally plan: Reduce the impact of uncertainty (reduce the impact of change).
Planning reduces uncertainty by forcing managers to look ahead, anticipate change, consider the impact of change and develop appropriate responses.
Needed in a changing environment.
Explain the following reason why managers should formally plan: Reduces overlapping and wasteful activities.
Coordinating efforts and responsibilities before the fact is likely to uncover waste and redundancy. Furthermore, when means and ends are clear, inefficiencies becomes obvious.
Explain the following reason why managers should formally plan: Establishes the goals or standards that facilitate control.
If organisational members aren’t sure what they’re working towards, how can they assess whether they’ve achieved it?
When managers plan, they develop goals and plans. When they control the see whether the plans have been carried other and the goals met.
If significant deviations are identified, corrective action can be taken.
What are some criticisms of formal planning?
. Planning can create rigidity
. Formal plans can’t replace intuition and creativity
. Planning focuses managers’ attention on today’s competition
. Formal planning reinforces success, which may lead to failure
Explain the following criticism of formal planning and the appropriate response managers should use: Planning may create rigidity.
Formal planning can lock an organisation into specific goals to be achieved within specific timetables (assumes environment won’t change) - this is bad because the environment is random and unpredictable.
Manager’s response: managers need to remains flexible and not be tied to a course of action simply because it’s the plan.
Explain the following criticism of formal planning and the appropriate response managers should use: Formal plans can’t replace intuition and creativity.
Successful organisation’s are typically the result of someone’s vision, but these visions have a tendency to become formalised as they evolve. Of formal planning efforts reduce the vision to a programmed routine, that too can lead to disaster.
Manager’s response: planning should enhance and support intuition and creativity, not replace it.
Explain the following criticism of formal planning and the appropriate response managers should use: Planning focuses managers’ attention on today’s competition, not on tomorrow’s survival.
Formal planning, especially strategic planning, has a tendency to focus on how to best capitalise on existing business opportunities within the industry. Manager’s may not look at ways to re-create or reinvent the industry,
Manager’s response: when managers plan, they should be open to forging into uncharted waters if there are untapped opportunities.
Explain the following criticism of formal planning and the appropriate response managers should use: Formal planning reinforces success, which may lead to failure.
Success may actually breed failure in an uncertain environment. It’s hard to change or discard successful plans - to leave the comfort of what works for the uncertainty (and anxiety) of the unknown.
Manager’s response: managers may need to face that unknown and be open to doing things in new ways and be even more successful.
How does formal planning improve organisational performance?
. Formal planning generally means higher profits, higher returns on assets and other positive financial results
. The quality of the planning process and the appropriate implementation of the plan probably contribute more to high performance than does the extent of planning
. In organisations where formal planning did not lead to higher performance, the environment - eg, governmental regulations, unforeseen economic challenges - was often to blame.
What is one important aspect of an organisation’s formal planning?
Strategic planning, which managers do as part of the strategic management process.
What is strategic management?
This is what managers do to develop an organisation’s strategies.
What are strategies?
They’re the plans for how the organisation will do what it’s in business to do, how it will compete successfully and how it will attract and satisfy customers in order to achieve its goals.
Why is static management important?
Because:
. It can make a difference in how well an organisation performs.
. Manager’s in organisation’s of all those and sizes face continually changing situations.
. Organisation’s are complex and diverse and each part needs to work together to achieve the organisation’s goals.
What is the strategic management process?
A six-step procedure that involves strategy planning, but also includes implementation and evaluation of formulated strategies.
What are the steps of the strategic management process?
Step 1: identifying the organisation's current mission, goals and strategies. Step 2: doing an external analysis. Step 3: doing an internal analysis. Step 4: formulating strategies. Step 5: implementing strategies. Step 6: evaluating results.
Explain step 1 of the strategic management process.
Step 1 of this process involves identifying an organisation’s current mission, goals and strategies.
This is important for organisations because it allows them to have a purpose, which is crucial for organisational success. This is because purpose is essentially the heart of a business as employees need direction if they are to commit to a business.
What is a mission and what should it include?
Mission - statement of an organisation’s purpose.
A mission statement should include:
. Who are the firm’s CUSTOMERS?
. Where does the firm compete (MARKETS)?
. What are the firm’s basic beliefs, values and ethical priorities (PHILOSOPHY)?
. How responsive is the firm to societal and environmental concerns (CONCERN FOR PUBLIC IMAGE)?
. What are the firm’s major PRODUCTS OR SERVICES?
. Is the firm technologically current (TECHNOLOGY)?
. What is the firm’s major competitive advantage and core competencies (SELF-CONCEPT)?
. Are employees a valuable asset of the firm (CONCERN FOR EMPLOYEES)?
Explain step 2 of the strategic management process.
Steps 2 and 3 of the strategic management process involve undertaking a SWOT analysis.
The 2nd step is an external analysis which involves examine an organisation’s general and specific environments, including competitors, suppliers and employees as well as economic and political dimensions, just to name a few.
Undertaking this step is important because it allows managers to identify any opportunities and threats.
What is a SWOT analysis?
An exploration of both the external and internal environments of an organisation.
