PLANNING - ocw.upj.ac.id · Takeaway 1: Why and How Managers Plan •More personal time management tips: •DON’T let drop-in visitors instant messaging use up your time •DO prioritize

PLANNING Irma M. Nawangwulan, B.Sc, MBA

Universitas Pembangunan Jaya

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Planning

Planning Choosing a goal and developing a method of strategy to achieve that goal

Planning

• Defining the organization’s goals, establishing an overall strategy, and developing a hierarchy of plans to achieve goals

FOM 5.5

Robbins et al., Fundamentals of Management, 4th Canadian Edition

©2005 Pearson Education Canada, Inc.

Planning

• A primary managerial activity that involves: • Defining the organization’s goals

• Establishing an overall strategy for achieving those goals

• Developing plans for organizational work activities.

• Types of planning • Informal: not written down, short-term focus;

specific to an organizational unit.

• Formal: written, specific, and long-term focus, involves shared goals for the organization.

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Why Do Managers Plan?

• Provides direction

• Reduces uncertainty

• Minimizes waste and redundancy

• Sets the standards for controlling

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Planning and Performance

•Higher profits and returns on assets.

•Positive financial results.

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How Do Managers Plan?

• Elements of Planning

• Goals (also Objectives)

• Desired outcomes for individuals, groups, or entire organizations

• Provide direction and evaluation performance criteria

• Plans

• Documents that outline how goals are to be accomplished

• Describe how resources are to be allocated and establish activity schedules

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Types of Goals

• Financial Goals

• Are related to the expected internal financial performance of the organization.

• Strategic Goals

• Are related to the performance of the firm relative to factors in its external environment (e.g., competitors).

• Stated Goals versus Real Goals

• Broadly-worded official statements of the organization (intended for public consumption) that may be irrelevant to its real goals (what actually goes on in the organization).

BENEFITS OF PLANNING

Improves focus and flexibility

Improves action orientation

Improves coordination

Improves time management

Improves control

Takeaway 1: Why and How Managers Plan

• Personal time management tips:

• DO say “no” to requests that distract from what you should be doing

• DON’T get bogged down in details that can be addressed later

• DO screen telephone calls, emails, and meeting requests

Takeaway 1: Why and How Managers Plan

• More personal time management tips:

• DON’T let drop-in visitors instant messaging use up your time

• DO prioritize your important and urgent work

• DON’T become calendar bound by letting others control your schedule

• DO follow priorities; do most important and urgent work first

TYPES OF PLANS

Types of Plans

Long-Range and Short-

Range Plans

Strategic and Tactical

Operational Specific Directional

Management - Chapter 8

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Short and Long-Term Plans

Long-term plans look three or more years into the future

Short-term plans typically cover one year or less


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Strategic and Operational Plans

Strategic plans • — set broad, comprehensive, and longer-term action

directions for the entire organization • Cover extended periods of time. Operational plans — define what needs to be done in specific areas to implement strategic plans.

• Production plans • Financial plans • Facilities plans • Marketing plans • Human resource plans

• Cover short time period

Takeaway 2: Types of Plans Used by Managers

• Operational plans — identify short-term activities to implement strategic plans

• Policies are standing plans the communicate guidelines for decisions

• Procedures are rules that describe actions to be taken in specific situations

• Budgets are plans the commit resources to projects or activities • Zero based budgets allocate resources as if each budget were brand new

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Types of Plans (cont’d)

• Long-Term Plans

• Plans with time frames extending beyond three years

• Short-Term Plans

• Plans with time frames on one year or less

• Specific Plans

• Plans that are clearly defined and leave no room for interpretation

• Directional Plans

• Flexible plans that set out general guidelines, provide focus, yet allow discretion in implementation.

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Specific Versus Directional Plans

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Establishing Goals and Developing Plans • Traditional Goal Setting

• Broad goals are set at the top of the organization.

• Goals are then broken into subgoals for each organizational level.

• Assumes that top management knows best because they can see the “big picture.”

• Goals are intended to direct, guide, and constrain from above.

• Goals lose clarity and focus as lower-level managers attempt to interpret and define the goals for their areas of responsibility.

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The Downside of Traditional Goal Setting


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What are the useful planning tools and techniques?

Forecasting

• Making assumptions about what will happen in the

future.

• Qualitative forecasting uses expert opinions.

• Quantitative forecasting uses mathematical and

statistical analysis.

• All forecasts rely on human judgment.

• Planning involves deciding on how to deal with the

implications of a forecast.


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Contingency planning

• Identifying alternative courses of action that

can be implemented to meet the needs of

changing circumstances.

• Contingency plans anticipate changing

conditions.

• Contingency plans contain trigger points.


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Scenario planning

• A long-term version of contingency planning.

• Identifying alternative future scenarios.

• Plans made for each future scenario.

• Increases organization’s flexibility and

preparation for future shocks.


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Benchmarking

• Use of external comparisons to better evaluate current

performance and identify possible actions for the

future.

• Adopting best practices of other organizations that

achieve superior performance.


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Use of staff planners

• Coordinating the planning function for the total

organization or one of its major components.

• Possible communication gaps between staff planners

and line management.

Implementation plans to achieve results

Implementations plans to achieve results • Goal Setting

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Examples of S.M.A.R.T. Goals? • Starbucks: “In fiscal 2006, we

plan to open approximately 1,800 net new stores globally.”

• Walgreen: “Second is to hire a significant number of people with disabilities in our South Carolina distribution center, scheduled to open in 2007, and achieve 20% productivity gains there.”

• UPS: “65% of drivers will have access to the new technology (implemented in 2004) by the end of 2005.” and “In 2005, we will increase operating profit in each of our 3 key businesses: domestic, int’l, supply chain.”

• Wrigley: “In 2005, the company will decrease the long-term rate of return assumption for the assets of its U.S. (pension) plans from 8.75 % to 8.5%.”

• Halliburton: “We estimate that 74% of the backlog existing on 12/31 will be eliminated the following fiscal year.”

• Martha Stewart Living Omnimedia: “In 2004 we will discontinue the Catalog for Living and its online product options, and sell remaining inventory in early fiscal 2005.”

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Stated Goals of Large Global Companies

Execute strategic roadmap—“Plan to Win.” Grow the business profitably. Identify and develop diverse talent. Promote balanced, active lifestyles. (McDonald’s Corporation)

Continue to win market share globally. Focus on higher-value products. Reduce production costs. Lower purchasing costs. Integrate diversity. Gain ISO 14001 certification for all factories. (L’Oreal)

Respect the environment. Respect and support family unity and national traditions. Promote community welfare. Continue implementing quality systems. Continue to be a strong cash generator. (Grupo Bimbo)

Control inventory. Maintain industry’s lowest inventory shrinkage rate. Open 25–30 new locations in fiscal 2006. Live by the code of ethics every day. (Costco)

Expand selection of competitively priced products. Manage inventory carefully. Continue to improve store format every few years. Operate 2,000 stores by the end of the decade. Continue gaining market share. (Target)

Roll out newly-designed environmentally friendly cup in 2006. Open approximately 1,800 new stores globally in 2006. Attain net revenue growth of approximately 20 percent in 2006. Attain annual EPS growth of between 20 percent to 25 percent for the next 3 to 5 years. (Starbucks)

Source: Information from company’s Annual Reports, 2004–2005.

Implementations plans to achieve results • Goal Allignment

Goal Alignment Between Team Leader and Team Member

• Jointly plan: set objectives, set standards, choose actions

• Individually set: perform tasks (member), provide support (leader)

• Jointly control: review results, discuss implications, renew cycle

Implementing Plans to Achieve Results Participatory Planning

•Unlocks the motivational potential of goal setting

•Management by objectives (MBO) promotes participation

•When participation is not possible, workers will respond positively if supervisory trust and support exist

How participation and involvement help build commitment to plans