powerpoint slides by r. dennis middlemist colorado state university chapter 8 planning

PowerPoint slides by

R. Dennis Middlemist

Colorado State University

Chapter 8Chapter 8

PlanningPlanning

2 ©2005 Prentice Hall

Learning ObjectivesLearning Objectives

Define strategy Define planning and explain its purpose. Differentiate between strategic, operational,

and tactical plans. Explain the planning process.

After studying this chapter, you should be able to:


Learning ObjectivesLearning Objectives

Identify key contingency factors in planning. Explain budgeting as a planning tool. Describe an MBO planning system. Describe effective goals.

After studying this chapter, you should be able to:


Overview of PlanningOverview of Planning

Objectives End states or targets

Plans Means to hit the desired

targets

Planning Decision-making process focused on the future of

an organization and how it will achieve its goals


Types of PlansTypes of Plans

Strategic plans Broad future of the

organization External environmental demands Internal resources

Tactical plans Translate strategic plans into specific goals Specific parts of the organization



Operational plans Translate tactical plans

into specific goals and actions

Small units of the organization Near term


Time horizon


Adapted from Exhibit 8.1: Types of Plans: Key Differences

Strategic Plans Tactical Plans Operational Plans

Scope

Complexity

Typically 3-5 years Often focused on 1-2 years in the future

Usually focused on the next 12 months or less.

Broadest,originating with a focus on the entire organization

Rarely broader than a strategic business unit

Narrower, usually cen- tered on departments or smaller units of the organization

The most complex and general, because of the different industries and business potentially covered

Somewhat complex but more specific, because of the more limited domain of application

The least complex, because they usually focus on small homogenous units


Impact


Interdependence

Have the potential to dramatically impact, both positively and negatively, the fortunes and survival of the organization

Can affect specific businesses but generally not the fortunes or survivability of the entire organization

Impact is usually restricted to specific department or organization unit

High interdependence, must take into account the resources and capabilities of the entire organization and its external environments

Moderate interdepen-dence, must take into account the resources and capabilities of several units within a business

Low interdependence, the plan may be linked to higher-level tactical and strategic plans but is less interdependent with them

Strategic Plans Tactical Plans Operational Plans

Adapted from Exhibit 8.1: Types of Plans: Key Differences


Organizational LevelsOrganizational Levels

Corporate level What industries should the firm be in? What markets should the firm be in? In which businesses should the firm invest money?

Business level Who are our direct competitors? What are their strengths and weaknesses? What

advantages do we have over them? What are our own strengths and weaknesses? What do customers value in our products/services?



Functional level What activities must my unit perform well in order to

meet customer expectations? What information about competitors does my unit

need in order to help the firm compete effectively? What are our unit’s strengths and weaknesses?



Brunswich

MarineRecreation

Astro/ProcraftSea RayU.S. Marine

Finance department

Human Resources department

Marketing and Sales

department

Corporate Level

Business Level (Strategic Business Units)

Functional Level

Adapted from Exhibit 8.2: Organizational Levels


Business Plans and LevelsBusiness Plans and Levels

Strategic Plans

Tactical Plans

Operational Plans

Corporate Level

Business Level

Functional Level

Organizational LevelsTypes of Plans

Adapted from Exhibit 8.3: Interaction Between Business Plans and Levels


The Planning ProcessThe Planning Process

Analyzing the environment Forecasts Environmental uncertainty

Contingency plans: identify key factors that could affect the desired results and specify what actions will be taken if key events change

Benchmarking Investigation of the best results among

competitors and noncompetitors and the practices that lead to those results

Analyzing the Environment



Analyze environment(forecasts, benchmarks, contingencies,

competitor analysis, scenarios)

Set objectives

Determine requirements

Assessresources

Develop action plans

Implement plans

Monitor outcomesFeedback Feedback

Adapted from Exhibit 8.4: Planning Process



Setting objectives Priorities and multiple objectives

Establish which objectives are most important and which have temporal priorities,

Measuring objectives

Setting Objectives

Financial performance Profits relative to sales Profits relative to assets Many others

Non-financial performance



Determining requirements Assess current performance What will it take in order to get from current levels of

performance to that level specified in the objectives? What drives market share? What capital will be required?

Determining Requirements



Assessing resources Resources required

What resources are needed to achieve the stated objectives?

Resources available Do we have the needed human talent to meet the

requirements? Do we have the financial resources available? Do we have the required technology?

Assessing Resources



Developing action plans Sequence and timing

Raw materials, manpower and components must be brought together in the right amounts and sequences

Accountability Who is accountable for which actions?

Developing Action Plans


Gantt ChartGantt Chart

Contact clients

Obtain contract specifications

Submit bid

Receive feedback

Revise bid

Submit revised bid

Final approval or rejection

Complete bid review

NovOctSeptAugustJulyJuneMay

Adapted from Exhibit 8.5: Gantt Chart



Implementing Plans Monitoring the implementation

Monitor the progress of the plan and its implementation

Monitor the level of support that the plan receives as it is being implemented

Monitor the level of resistance

Real-time adjustment

Implementing Plans



Monitoring outcomes Unanticipated consequences

Negative unanticipated consequences

Positive unanticipated consequences

Feedback loop Apply what has been learned to modify and improve

the planning process

Monitoring Outcomes


Planning ToolsPlanning Tools

Budgets Capital expenditure budget

Specifies the amount of money to be spent on specific items that have long-term use and require significant amounts

Expense budget Includes all primary activities on which a unit or

organization plans to spend money and the amount allocated for the upcoming year



Proposed budget Provides a plan for how much money is needed,

and is submitted to a superior or budget review committee

Approved budget Specifies what the manager is actually

authorized to spend money on and how much

Budgets



Two budgetary approaches Incremental budgeting approach

From the approved budget of the previous year present arguments for why the upcoming budget should be more or less

Zero-based budgeting approach Justify all allocations of funds from zero each

year


Goal SettingGoal Setting

Attributes of effective goals Specific Measured Agreed Realistic Time bound


MBO ProcessMBO Process

Organization Strategy

Strategic planTactical plan

Operational plan

Jointly set goals

Goal acceptance

Goal difficulty

Goal specificity

Explicit time period

Individual motivation and ability

Top management support and involvement

PerformancePeriodic

review and evaluation

Feedback

Adapted from Exhibit 8.6: The Process of MBO

powerpoint slides by r. dennis middlemist colorado state university chapter 8 planning

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