FOUNDATIONS OF PLANNING
Failing to PLAN is planning to fail!!
Who plans and what is planning?
Managers of all levels, Line Managers, Middle Manager, Supervisors and Top Managers plan. Plan is not exclusive to management because we all need to plan to succeed.
• 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.
The Purpose of planning is:
To provide Direction
It sets the standards for controlling
To reduces uncertainty
It minimizes waste and redundancy
Planning and Performance
• The Relationship Between Planning And Performance
– Formal planning is associated with:
• Higher profits and returns on assets.
• Positive financial results.
– The quality of planning and implementation affects performance more than the extent of planning.
– The external environment can reduce the impact of planning on performance,
– Formal planning must be used for several years before planning begins to affect performance.
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 (mission) statements of the organization (intended for public consumption) that may be irrelevant to its real goals (what actually goes on in the organization).
Developing Effective Vision and Mission Statements
To organize the world’s information and make it universally accessible and useful.” (Google)
“We save people money so they can live better.” (Wal-Mart)
“To spice up everyday life.” (Chili’s Grill and Bar)
Qualities of Strong Mission Statements
Mission Statements must have a clear and executable view of what your company is prepared to provide and deliver.
• A good mission statement -- one which is straight forward and inspiring -- will bring people closer to your cause.
• To help your company achieve a compelling mission statement, remember to get right to the point. Briefly state the work and passion of your company.
• Good mission statements provide employees, shareholders, and other supporters with a clear vision of the company’s reason for being.
• They help people make decisions about day-to-day transactions.
• What do we do?
• How do we do it?
• For whom do we do it?
Exhibit 7–1 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)
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)
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)
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)
Types of Plans
• Strategic Plans
– Apply to the entire organization.
– Establish the organization’s overall goals.
– Seek to position the organization in terms of its environment.
– Cover extended periods of time.
• Operational Plans
– Specify the details of how the overall goals are to be achieved.
– Cover short time period.
· 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.
• Single-Use Plan
– A one-time plan specifically designed to meet the need of a unique situation.
• Standing Plans
– Ongoing plans that provide guidance for activities performed repeatedly.
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