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Chapter 5:Chapter 5:

Planning andPlanning andGoal SettingGoal Setting

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Learning Objectives

• Define goals and plans and explain the relationship between them.

• Explain the concept of an organizational mission and how itinfluences goal setting and planning.

• Describe the types of goals an organization should have and whythey resemble a hierarchy.

• Define the characteristics of effective goals.

• Describe the four essential steps in the MB process.

• Explain the difference between single!use plans and standing plans.• Describe and explain the importance of the three stages of crisis

management planning.

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Learning Objectives (con’t.)

• #ummarize the guidelines for high!performance planning in a fast!changing environment.

• Define the strategic planning process and #$% analysis.

• Describe business!level strategies& including 'orter(s competitiveforces and strategies and partnership strategies.

• Explain the ma)or considerations in formulating functional strategies.

• Discuss the organizational dimensions used for implementing

strategy.

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*

Goals and Plans

• Goal ! + desired future state that theorganization attempts to realize

• Plan ! + blueprint specifying the resourceallocations& schedules& and other actionsnecessary for attaining goals

• Planning , Determining the organization(sgoals and the means for achieving them

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Levels of Goals/Plans

Exhibit -.

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Purpose of Goals and Plans

• 0egitimacy• $hat the organization stands for ! reason for being

• Employees identify with purpose• #ource of Motivation and 1ommitment

• Employees( identification with the organization• Motivate by reducing uncertainty

• esource +llocation• +llocate employees& money& and e3uipment

• 4uide to +ction• 'rovide a sense of direction5 focus attention on

specific targets

• Direct efforts toward important outcomes

Internal and external messages, goals, and plans provide:

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Purpose of Goals and Plans

• ationale for Decisions , 0earn what organization is trying to

accomplish , Ma7e decisions to ensure that internal

policies& roles& performance& structure&

products& and expenditures will be made in

accordance with desired outcomes• #tandard of 'erformance

, #erve as performance criteria , 'rovide a standard of assessment

Internal and external messages, goals, and plans provide:

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Organizational Mission

• Mission ! rganization(s reason

for existing

• Mission Stateent

, Basic business scope

, Distinguishes it from

other organizations

ur company(s mission is to

extend and enhance human life

by providing the highest!3uality

pharmaceutical and related

health care products.

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Strategic Goals and Plans

Strategic Goals

• :uture plans

• 'lans for whole organization

Strategic Plans• +ction steps used to attain strategic goals

• Blueprint that defines the organizationalactivities and resource allocations

• 0ong!term

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!actical Goals and Plans

!actical Goals

• +pply to middle management

• 4oals that define the outcomes that ma)ordivisions and departments must achieve

!actical Plans

• 'lans designed to help execute strategicplans

• #horter time frame than strategic plans

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Operational Goals and Plans

Operational Goals

• #pecific& measurable results

• Expected from departments& wor7 groups&and individuals

Operational Plans

• +ction steps toward operational goals• Daily and wee7ly operations

• #chedules are an important component

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Goal "lignent

Means#$nd %&ain

+chievement of goals at lowerlevels permits the attainment

of high!level goals.

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'ierarc& of Goals

Exhibit -."

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%&aracteristics of $ffective

Goal Setting

• #pecific and measurable#pecific and measurable

• 1over 7ey result areas1over 7ey result areas

• 1hallenging but realistic1hallenging but realistic

• Defined time periodDefined time period

• 0in7ed to rewards0in7ed to rewards

Exhibit -.*

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Manageent b

Objective ProcessExhibit 6.-

Exhibit -.-

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MO enefits and Probles

enefits*

, Manager and employee

efforts are focused

, 'erformance can beimproved

, Employees are motivated

, Departmental and individual

goals are aligned

Probles*

, 1onstant change prevents MB

from ta7ing hold

, 'oor employer!employee relations

reduces MB effectiveness

, #trategic goals may be displaced

by operational goals

, Mechanistic organizations and

values that discourage participation

, %oo much paperwor7 saps MB

energy

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Single#+se Plans , Goals

-ot Liel !o e epeated

• + program is a complex set of ob)ectives and

plans to achieve an important& one!time

organizational goal

• + project is similar to a program& but generally

smaller in scope and complexity

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Standing Plans , !ass

Perfored epeatedl

• + polic is a general guide to action andprovides direction for people within theorganization

• ules describe how a specific action is to beperformed

• Procedures define a precise series of stepsto be used in achieving a specific )ob

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%ontingenc Plans for

+ne0pected %onditions

1dentif +ncontrollable 2actors , Economic downturns , Declining mar7ets

,

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!&ree Stages of

%risis ManageentPrevention

, Build trusting relationship with 7ey sta7eholders

, pen communication

Preparation , 1risis management team and plan

, Establish an effective communications system

%ontainent

.+ctivate the crisis management plan.2.4et the awful truth out.

".Meet safety and emotional needs.

*.eturn to business.

Exhibit -.8

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2

Planning for 'ig& Perforance

'lanning has changed as the global

environment has changed

0ess top!down managementplanning

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Planning in t&e -e3 4orplace

• =ave a strong mission statement and vision

• #et stretch goals for excellence

• Establish a culture that encourages learning

• Embrace event!driven planning

• >tilize temporary tas7 forces• 'lanning still starts and stops at the top

Planning comes alive when employees are involved in

setting goals and determining the means to reach them

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!&ining Strategicall

• #trategic management pertains to

competitive actions in the

mar7etplace

• 'lan of action that describes

resource allocation and activities

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!&ining Strategicall

• Means to ta7e the long!term view and seethe big picture & including the organizationand the competitive environment.• :or!profit typically relates strategic planning to

competitive action in the mar7etplace.

• ?ot!for!profit strategic planning refers toevents in the external environment.

• >nderstanding the strategy concept& thelevels of strategy& and strategy formulationversus implementation is an important starttowards strategic thin7ing.

2*

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4&at is Strategic Manageent5

• #et of decisions and actions used toimplement strategies that will provide acompetitively superior fit between the

organization and its environment so as toachieve organizational goals.

2-

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4&at is Strategic Manageent5

Managers as7 such 3uestions as...$hat changes and trends are occurring@

$ho are our customers@

$hat products or services should we offer@

=ow can we offer these products or servicesmost efficiently@

%op management use strategic managementto define a general direction for theorganization& which is the firm(s 4rand#trategy.

2/

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Grand Strateg

• 4eneral plan of ma)or action to achieve

long!term goals• :alls into three general categories

. 4rowth

2. #tability". etrenchment

26

+ separate grand

strategy can be

defined for globaloperations

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Grand Strateg* Gro3t&

• 4rowth can be promoted internally by

investing in expansion or externally by

ac3uiring additional business divisions

!

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Grand Strateg* Stabilit

• #tability& sometimes called a pause

strategy& means that the organization

wants , to remain the same size or

, to grow slowly and in a controlled fashion

29

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Grand Strateg* etrenc&ent

• etrenchment A the organization goes through aperiod of forced decline by either shrin7ing currentbusiness units or selling off or li3uidating entirebusinesses

, 0i3uidation A selling off a business unit for thecash value of the assets& thus terminating itsexistence

, Divestiture A involves selling off of businesses that

no longer seem central to the corporation exCparts of business sold after ac3uisition

•

";

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Strategic $p&asis

Core Competence:

#omething the

organization doesespecially well in

comparison to

its competitors

Value:

%he combination ofbenefits received

and costs paid

Synergy:

+ )oint effect that

is greater than the

sum of the parts

acting alone

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Strategic Manageent Process

Exhibit -.;

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S4O! "nalsis

• #trengths

• $ea7nesses

• pportunities

• %hreats

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usiness#Level Strateg*

Porter’s 2ive 2orces

Exhibit -.2

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"-

Porter’s %opetitive Strategies

6ifferentiation • :lexible& loose 7nit with strong coordination

• 1reative flair& thin7s out of boxF

• #trong mar7eting abilities

• ewards employee innovation

• eputation for 3uality or technical leadership

%ostLeaders&ip

• 1entral authority& tight cost controls

• Efficient procurement and distribution systems

• 1lose supervision& finite employee empowerment

2ocus • :re3uent& detailed control reports• Direct combination of policies to strategic target

• Galues and rewards flexibility and customer intimacy

• 'ushes empowerment to employees with customercontact

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Partners&ip Strategies

• 1ollaboration is an alternative form of

strategy

• 1ompetition and collaboration are oftenpresent at the same time

•

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%ontinuu of Partners&ip Strategies

"6

Organizational Combination

Strategic

Alliances

Preferred Supplier Arrangements

Strategic Business Partnering

Mergers

Acquisitions

Low High

oint !entures

Degree of Collaboration

D e g r

e e o

f 1 o l l a b

o r a t i o

n

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Strateg 1pleentation

and %ontrol

Exhibit -.-

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1pleentation 6uring

!urbulent !ies

• %hree Hey

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