fdm mgmt unit 4 m basic planning process

Fundamentals of ManagementDMG 1043Megatech International College

Megatech International College

Learning Outcomes Understand and explain the nature and purposeof managementDescribe the structure and level of management in organizationsIdentify the function of leadership, organizing, controlling and planning in an organizationPrepare on forming the strategic goal, setting objectives and implementing and executing the strategyEmphasis on issues related to environmental scanning and industrial analysis and the effectiveness of allocation of resources Megatech International College


Recommended TextsRobbins & Decenzo (2010) Fundamentals of Management, 7th ed Prentice HallDaft R (2006) The New Era of Management International edition, Thomson South-WesternDavid C Thomas Essentials of International Management , 1st ed, SAGE Publications

Slides Robbins & Decenzo (2010) Fundamentals of Management, 7th ed Prentice Hall



Megatech International CollegeUnit 4: Basic Planning Process


Megatech International CollegeWhat Is Planning?Planning

A basic managerial function that involves:

Defining the organizations goals.Establishing an overall strategy for achieving those goals.Developing a comprehensive set of plans to integrate and coordinate organizational work.


Megatech International CollegeTypes of planningInformal planning:Not written downShort-term goalsDone in small businesses or in single organizational units (little or no sharing of goals with others).Formal planning:Written downClearly defined long-term goalsGoals are shared with other organizational members.


Megatech International CollegeWhy Do Managers Plan?Four Purposes (reasons) of planning are identified:

It Provides direction (a focus)It Reduces uncertainty (being unsure)It Minimizes waste, inefficiencies and redundancy (unnecessary actions)It Sets the standards (criteria) for controlling


Megatech International CollegePlanning and PerformanceStudies of the Relationship Between Planning And Performance have concluded that:

Formal planning is associated with positive financial resultsHigher profits.Higher returns on assets.The quality of planning and implementation is more closely linked to high performance than the extent (how wide) of planning.The external environment (e.g. government regulations) constrains managers options (choices) and can reduce the impact (effect) of planning on performance.Formal planning must be used for several years before it begins to positively affect performance.


Megatech International CollegeHow Do Managers Plan?The Role of Goals and Plans in Planning

Goals or Objectives are desired outcomes for individuals, groups, or entire organizations.They provide direction (focus) for plans and decisions.They form the criteria for evaluating results.

Plans are documents that outline (describe) how goals are going to be met (accomplished).They determine resource allocations (distribution), timetables and other necessary actions to accomplish the goals


Megatech International CollegeTypes of GoalsFinancial GoalsAre related to the financial performance of the organization.

Strategic GoalsAre related to the performance of the firm in connection with its external environment (e.g. customers, competitors).


Megatech International CollegeTypes of GoalsKnowing that an organizations stated and real goals are usually different is important to understand what seems to be management inconsistencies (contradictions).Real GoalsThe goals that an organization actually pursues, as can be seen in the actions of its membersStated GoalsOfficial statements from the organization, saying what it wants its stakeholders and the public to believe.


Megatech International CollegeStated Objectives from Large U.S. CompaniesFinancial Objectives Faster revenue growthFaster earnings growthHigher dividendsWider profit marginsHigher returns on invested capitalStronger bond and credit ratingsBigger cash flowsA rising stock priceRecognition as a blue chip companyA more diversified revenue baseStable earnings during recessionary periodsStrategic Objectives A bigger market shareA higher more secure industry rankHigher product qualityLower costs relative to key competitorsBroader or more attractive product lineA stronger reputation with customersSuperior customer serviceRecognition as a leader in technology and/or product innovationIncreased ability to compete in international marketsExpanded growth opportunities


Megatech International CollegeTypes of PlansLong-Term Plans

Plans with a time frame of more than three years.Short-Term Plans

Plans with a time frame of one year or less.


Megatech International CollegeTypes of PlansSpecific Plans

Plans that are clearly defined and leave no room for interpretation.There is no ambiguity and no problem with misunderstanding.Directional Plans

Flexible plans that set out (indicate) general guidelines, provide focus, yet allow discretion (freedom) in implementation.They dont force managers into specific courses of action.


Megatech International CollegeSpecific Versus Directional Plans


Megatech International CollegeTypes of PlansSingle-Use Plans

One-time plans that are specifically designed to meet the needs of a unique situation.Standing Plans

Ongoing plans that provide guidance for activities performed repeatedly.They include policies, rules and procedures.


Megatech International CollegeTypes of Plans


Megatech International CollegeApproaches to Establishing GoalsTraditional Goal Setting

Broad (general) goals are set at the organizations top level and then split into sub goals for each lower level of the organization.This approach assumes that top managers know whats best because they can see the big picture.The goals serve to direct, guide, and constrain from above.Goals lose clarity and focus as lower-level managers apply their own interpretation (understanding) when defining and applying them to their areas of responsibility.


Megatech International CollegeTraditional Objective Setting


Megatech International CollegeApproaches to Establishing GoalsMeansEnds Chain

Establishing a clearly-defined hierarchy (order of accomplishment) of organizational goals that results in an integrated (complete) network (system) of goals.

Accomplishment of goals at a lower level is the means (instrument) by which the goals (ends) at the next higher level are achieved.


Megatech International CollegeApproaches to Establishing GoalsManagement By Objectives (MBO)Specific performance goals are jointly (together) determined by employees and their managers.Progress toward accomplishing goals is periodically checked.Rewards are allocated (distributed) on the basis of progress.Key elements of MBO:Specific goals; employees motivation by participation in decisions; explicit time period; performance feedback/evaluation.


Megatech International CollegeSteps in a Typical MBO ProgramThe organizations overall objectives and strategies are formulated.Major objectives are allocated among divisional and departmental units.Unit managers collaboratively set specific objectives for their units with their managers.Specific objectives are collaboratively set with all department members.Action plans, defining how objectives are to be achieved, are specified and agreed upon by managers and employees.The action plans are implemented.Progress toward objectives is periodically reviewed, and feedback is provided.Successful achievement of objectives is reinforced by performance-based rewards.


Megatech International CollegeCharacteristics of Well-Designed GoalsWritten in terms of outcomes, not actionsFocuses on the ends, not the means.Measurable and quantifiableSpecifically defines how the outcome will be measured/evaluated.Clear as to time frameSpecify a time frame for accomplishment.Challenging but attainableLow goals do not motivate.High goals motivate if they can be achieved.Written downForces people to focusWritten goals become visible.Communicated to allEnsures that all members work in ways to secure accomplishment of goals.


Megatech International CollegeSteps in Goal SettingReview the organizations mission statement.Does the goal reflect the purpose of the organization?Evaluate available resources.Are resources sufficient to achieve the goal?Determine goals individually or with others.Does it conflict with other organizational goals?Write down the goals and communicate them.Is everybody on the same page?Review results and whether goals are being met.Are any changes needed?


Megatech International CollegePlanning in the Hierarchy of Organizations


Contemporary Issues in PlanningCriticisms of PlanningPlanning may create rigidity: In achieving specific goals, managers may not be able to cope with the changing environment.Plans cannot be developed for dynamic environments: These conditions may mean not being tied to formal plans.Formal plans cannot replace intuition and creativity: They may reduce intuition to programmed routine.Planning focuses managers attention on todays competition not tomorrows survival: They focus on existing business opportunities, not creativity.Formal planning reinforces todays success, which may lead to tomorrows failure: Successful plans provide a false sense of security than is warranted (justified, called for).

Megatech International CollegeContemporary Issues in PlanningCriticisms of PlanningPlanning may create rigidity: In achieving specific goals, managers may not be able to cope with the changing environment.Plans cannot be developed for dynamic environments: These conditions may mean not being tied to formal plans.Formal plans cannot replace intuition and creativity: They may reduce intuition to programmed routine.Planning focuses managers attention on todays competition not tomorrows survival: They focus on existing business opportunities, not creativity.Formal planning reinforces todays success, which may lead to tomorrows failure: Successful plans provide a false sense of security than is warranted (justified, called for).


Megatech International CollegeContemporary Issues in PlanningCriticisms of Planning

How Valid are these criticisms?They have some merit when plans are rigid and inflexible. However, in todays management effective planners should understand dynamic, uncertain environments.


Megatech International CollegeContemporary Issues in PlanningEffective Planning in Dynamic EnvironmentsDevelop plans that are specific but flexible.Understand that planning is an ongoing process.Make changes as needed if environmental conditions change.Continue in formal planning even in uncertain environment to see any effect on performance.Push the responsibility to lower organizational levels by training employees in setting goals and establishing plans.


Megatech International CollegeSummaryPlanning a basic managerial functionTypes of PlanningTypes of goalsContemporary issues in planning


Q & AQuestion and Answer SessionMegatech International College


Next LectureUNIT 5 STRATEGIC MANAGEMENT Megatech International College


fdm mgmt unit 4 m basic planning process

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