Chapter 5

Managing the Planning Process

Example of a “Manager” as

Planner

Blackhawk Down

Learning ObjectivesAfter reading this chapter, you should be able to:

Identify the different elements of an effective plan.

Analyze the advantages and disadvantages of planning, and identify how planning pitfalls can be avoided.

Distinguish between formal and informal planning.

Recognize the features of well-designed objectives.

Identify the various types of action plans that managers can use to accomplish stated objectives.

Disney in Hong Kong:Bad luck or bad planning? Critical Thinking Questions focus on:

What did it do right? Do wrong? Levels of planning applied? Planning horizon for its Asian operations? Advantages and disadvantages of establishing

long term plans?

What is planning?The management function that:

assesses the management environment to set future objectives; and

maps out activities necessary to achieve those objectives.

Planned actions require careful resource allocation.

Plans must be accompanied by implementation guidelines.

Key Elements to a Plan

ObjectivesObjectives

ActionsActions

ResourceResource

ImplementatioImplementationn

Benefits of PlanningAssessment of external forces Develop a sense of direction and purpose

Identifying the factors that affect the organization

Encouraging participationCoordination of effortsEstablishment of prioritiesFocusing attention on different time horizons

Benefits of planning (continued)

Understanding circumstances contributing to past success or failure

Ensuring the availability of adequate resources

Establishing performance standardsSupporting organizational control systems

Developing “what if” scenariosManagement development

The Pitfalls of PlanningPoor forecasts of future

conditions

Plans imposed from above

Planning as a self-contained activity

Extensive bureaucratization

Inflexible adherence to objectives and processes

Keys to Successful PlanningDecentralizing the planning powers

Using both numerical and judgmental methods

Viewing planning as continuous and capable of adapting to change

Avoiding paralysis of the analysisConcentrating on a manageable set of issues

Good and Bad PlanningGOOD Decentralize planning

process Use numerical and

judgmental methods Assess external forces Develop a sense of direction

and purpose Identify factors that affect

the organization Encourage participation Coordinate efforts Establish priorities

BAD Poor forecast of future

conditions Plans imposed from poor

forecasts Planning as self-contained

activity

Formal Planning and Opportunistic PlanningFormal planning

systems are designed to: Identify objectives;

and to

Structure the major tasks of the organization to accomplish them.

Opportunistic planning involves: Programmatic actions

triggered by unforeseen circumstances.

It can coexist with formal planning and can help the formal plan function more smoothly.

The Formal Planning Process Involves

Setting objectives

Charting a course of action to meet the objectives

Implementation

Setting ObjectivesObjectives are more general at the top and

become more specific at the lower levelOverall objectives of the organization reflect

its missionObjectives should be specific and

measurable.Objectives should be challenging and

achievableObjectives should specify a timetable or

deadline for accomplishment.Objectives should be prioritized.

Key Steps of the MBO Cycle

3. Formally Evaluate Extent to Which Objectives Were Met or Exceeded

2. Develop Action Plan to Accomplish Objectives

1. Establish Mutually Agreed Objectives between Employee and Supervisor

4. Monitor Progress toward Achievement of Objectives (Ongoing)

Charting a Course of Action

Strategic Action Plans

Tactical Action Plans

Operational Action Plans

To be effective, a strategic action plan should meet the following criteria:

Proactivity – The degree to which the strategic action plan takes a long-term view of the future.

Congruency – The extent to which the strategic action plan fits with organizational characteristics and the external environment.

Synergy – The integration of the efforts of various organizational subunits to better accomplish corporate-wide business objectives.

Two important aspects of tactical action plans: Division of Labor – The formal assignment of

authority and responsibility to job holders.

Helps ensure that tasks of jobholders are appropriate for accomplishing the department’s tactical action plan, which in turn should support the organization’s strategic action plan.

Budgeting – Controlling and allocating funds.

Variable budgeting

Moving budgeting

A Typical Operating System

Feedback LoopFeedback Loop

ControlControl

InputsInputs TransformationTransformation OutcomeOutcome

Benefits of Operational PlanningThe opportunity to use feedback for

continued incremental learning.The ability to visualize alternative types of

operations – that is, alternative ways to use resources to create a product or service.

The ability to predict the effects of modifications in operations on the efficiency of operations.

The ability to evaluate the effectiveness of operations.

Project Planning Project: a set of tasks designed to achieve

certain objectives Project planning:

Identify tasks to be done Timeline (when tasks need to be done) Resources required Establish control process, e.g. document what

has been accomplished so far.

ImplementationA distinction

Standing plansSingle-use plans

PolicyGeneral guide

Rule

ImplementationMeans of implementation:

AuthorityPersuasionPolicyFeedback mechanism

A Six-Stage Approach to Facilitate Organizational Problem Solving Identify performance gaps. Identify tasks and work processes

necessary for accomplishing the plan. Check for organizational congruence. If any in-congruencies or inconsistencies

are found, intervene to create alignment in order to effectively implement the plan.

Execute the plan. Learn from the consequences.

Mechanisms to Deal with Organizational ChangeDeal with power and politics

Reduce individual anxiety and resistance

Maintaining control during the transition period

As a Manager Engaged in Planning You Should:

Keep a pulse for what customers want and be on the lookout for changing consumer desires.

Ensure that planning in your area of responsibility is closely linked with the rest of the organization.

Establish an effective goal-driven plan.

Ensure that planning does not become a straightjacket.

Engage others in plan design and implementation.

Disney in Hong Kong:Bad luck or bad planning? Responses to Critical Thinking Questions:

They got some things right, others wrong Levels of planning – strategic decision to enter

Asian market and Hong Kong as a first site, tactical decisions on design of the park, and operational plans such as hiring policies, discounting tickets, etc.

Planning horizon includes expansion in Asia Long term plans require objectives, which

establishes a criteria or benchmark (or success or failure); these objectives require review given emerging conditions

Focusing on the Future . . . P. 215

This is a useful synopsis of this chapter.

In-class exercises Bottom-up planning Contingency planning

Bottom-Up planning

Contingency planning:Minicase 5.2 (p. 219)

Venture Planning

Joe to Go