8th edition
Steven P. Robbins
Mary Coulter
What Is Planning?
Planning
A basic managerial function that involves:
Defining
the organization’s goals.
Establishing an overall strategy for achieving
those goals.
Developing a comprehensive set of plans to
integrate and coordinate organizational work.
Page 99
Slide 2
Types of planning
Informal planning:
Not written down
Short-term goals
Done in small
businesses or in
single
organizational units
(little or no sharing
of goals with
others).
Page 99
Formal planning:
Written down
Clearly defined
long-term goals
Goals are shared
with other
organizational
members.
Slide 3
Why Do Managers Plan?
Four Purposes (reasons) of planning
are identified:
1. It Provides direction (a focus)
2. It Reduces uncertainty (being unsure)
3. It Minimizes waste, inefficiencies
and redundancy (unnecessary
actions)
4. It Sets the standards (criteria)
for controlling
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Slide 4
Planning and Performance
• Studies of the Relationship Between Planning And
Performance have concluded that:
 Formal planning is associated with positive financial
results
 Higher 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.
Page 100
Slide 5
How 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
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Slide 6
Types of Goals
• Financial Goals
Are related to the financial performance of the
organization.
• Strategic Goals
Are related to the performance of the firm in
connection with its external environment (e.g.
customers, competitors).
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Slide 7
Types of Goals
Stated Goals
Official statements from
the organization, saying
what it wants its
stakeholders and the
public to believe.
Real Goals
The goals that an
organization actually
pursues, as can be seen
in the actions of its
members
Knowing that an organization’s stated and
real goals are usually different is important
to understand what seems to be
management inconsistencies (contradictions).
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Slide 8
Stated Objectives from Large U.S. Companies
Financial Objectives
Strategic Objectives
• Faster revenue growth
• A bigger market share
• Faster earnings growth
• A higher more secure industry rank
• Higher dividends
• Higher product quality
• Wider profit margins
• Lower costs relative to key competitors
• Higher returns on invested capital
• Broader or more attractive product line
• Stronger bond and credit ratings
• A stronger reputation with customers
• Bigger cash flows
• Superior customer service
• A rising stock price
• Recognition as a leader in technology
and/or product innovation
• Recognition as a “blue chip”
company
• A more diversified revenue base
• Stable earnings during recessionary
periods
Page 102
• Increased ability to compete in
international markets
• Expanded growth opportunities
Slide 9
Types of Plans
Strategic Plans
Establish the goals of
the entire organization.
Cover long time
periods.
Aim to position the
organization in
relation to its
environment.
Page 103
Operational Plans
Define the ways to
achieve the goals by
organizational
members.
Cover short time
periods.
Slide 10
Types of Plans
Long-Term Plans
Short-Term Plans
Plans with a time
frame of more
than three years.
Plans with a time
frame of one year
or less.
Page 103
Slide 11
Types of Plans
Specific Plans
Directional Plans
Plans that are
clearly defined and
leave no room for
interpretation.
Flexible plans that set
out (indicate) general
guidelines, provide
focus, yet allow
discretion (freedom) in
implementation.
 There is no ambiguity
and no problem with
misunderstanding.
Page 104
 They don’t force
managers into specific
courses of action.
Slide 12
Specific Versus Directional Plans
Page 104
Slide 13
Types of Plans
Single-Use Plans
One-time plans
that are specifically
designed to meet
the needs of a
unique situation.
Page 104
Standing Plans
Ongoing plans that
provide guidance for
activities performed
repeatedly.
 They include policies,
rules and procedures.
Slide 14
Types of Plans
Page 103
Slide 15
Approaches to Establishing Goals
Traditional Goal Setting
Broad (general) goals are set at the organization’s
top level and then split into sub goals for each
lower level of the organization.
 This approach assumes that top managers know what’s
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.
Page 105
Slide 16
Traditional Objective Setting
Page 105
Slide 17
Approaches to Establishing Goals
Means–Ends 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.
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Slide 18
Approaches to Establishing Goals
• Management 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.
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Slide 19
Steps in a Typical MBO Program
1. The organization’s overall objectives and strategies are formulated.
2. Major objectives are allocated among divisional and departmental
units.
3. Unit managers collaboratively set specific objectives for their units
with their managers.
4. Specific objectives are collaboratively set with all department
members.
5. Action plans, defining how objectives are to be achieved, are
specified and agreed upon by managers and employees.
6. The action plans are implemented.
7. Progress toward objectives is periodically reviewed, and feedback is
provided.
8. Successful achievement of objectives is reinforced by performancebased rewards.
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Slide 20
Characteristics of Well-Designed Goals
• Written in terms of
outcomes, not actions
 Focuses on the ends, not
the means.
• Measurable and
quantifiable
 Specifically defines how
the outcome will be
measured/evaluated.
• Clear as to time frame
 Specify a time frame for
accomplishment.
Page 107
• Challenging but attainable
 Low goals do not motivate.
 High goals motivate if they
can be achieved.
• Written down
 Forces people to focus
 Written goals become
visible.
• Communicated to all
 Ensures that all members
work in ways to secure
accomplishment of goals.
Slide 21
Steps in Goal Setting
1. Review the organization’s mission statement.
1. Does the goal reflect the purpose of the organization?
2. Evaluate available resources.
1. Are resources sufficient to achieve the goal?
3. Determine goals individually or with others.
1. Does it conflict with other organizational goals?
4. Write down the goals and communicate them.
1. Is everybody on the same page?
5. Review results and whether goals are being met.
1. Are any changes needed?
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Slide 22
Developing Plans
• Contingency Factors in a Manager’s Planning*
The manager’s level in the organization.
 Higher
levels of management = Strategic planning
 Lower levels of management = Operational planning
The Degree of environmental uncertainty.
 Stable
environment = Specific plans.
 Dynamic environment = Specific but flexible plans.
The time frame for accomplishment.
 The
time frame should be long enough to allow fulfillment
of all the commitments that are involved.
*Factors that have an effect on a manager’s planning.
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Slide 23
Planning in the Hierarchy of Organizations
Page 109
Slide 24
Approaches to Planning
• Establishing a formal planning department
 A group of planning specialists who help to write
organizational plans.
 This approach can be effective only if managers are
involved. Planning is a function of management, it should
not be the sole (the only) responsibility of planners.
• Involving organizational members in the process
 Plans are developed by organizational members at
various levels and then coordinated with other units
across the organization.
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Slide 25
Contemporary Issues in Planning
• Criticisms of Planning
 Planning 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 today’s competition
not tomorrow’s survival: They focus on existing business
opportunities, not creativity.
 Formal planning reinforces today’s success, which may lead
to tomorrow’s failure: Successful plans provide a false sense of
security than is warranted (justified, called for).
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Slide 26
Contemporary Issues in Planning
Criticisms of Planning
How Valid are these criticisms?
They have some merit when plans are rigid and
inflexible. However, in today’s management
effective planners should understand dynamic,
uncertain environments.
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Slide 27
Contemporary Issues in Planning
• Effective Planning in Dynamic Environments
 Develop 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.
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Slide 28
C H A P T E R R E V I E W 1/3
What Is Planning? (slides 2, 3)
• Define planning.
• Differentiate between formal and informal planning.
Why Do Managers Plan? (slides 4, 5)
• Describe the purposes of planning.
• Discuss the conclusions from studies of the relationship
between planning and performance.
How Do Managers Plan? (slides 6~8)
• Define goals and plans.
• Describe the types of goals organizations might have.
• Explain why it’s important to know an organization’s
stated and real goals.
Slide 29
C H A P T E R R E V I E W 2/3
How Do Managers Plan? (cont’d) (slides 10~12, 14)
• Describe each of the different types of plans.
Establishing Goals and Developing Plans (slides 16, 18, 19, 21,
22, 23, 25)
• Discuss how traditional goal setting works.
• Explain the concept of the means–end chain.
• Describe the management by objective (MBO) approach.
• Describe the characteristics of well-designed goals.
• Explain the steps in setting goals.
• Discuss the contingency factors that affect planning.
• Describe the approaches to planning.
Slide 30
C H A P T E R R E V I E W 3/3
Contemporary Issues in Planning (Slides 26~28)
• Explain the criticisms of planning and whether or not
they’re valid.
• Describe how managers can effectively plan in today’s
dynamic environment.
Slide 31