Copyright 2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 6–1

CHAPTER 6

ESTABLISHING ORGANISATIONAL GOALS & PLANS, THEN DEVELOPING STRATEGY

Copyright 2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 6–2

LECTURE OUTLINE• The planning process

• The nature of organisational goals

• How goals facilitate performance• Linking goals & plans• Management by objectives

Copyright 2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 6–3

LECTURE OUTLINE

• The concept of strategic management

• The role of competitive analysis in strategy formulation

• Formulating functional level strategy

• Strategy implementation

Copyright 2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 6–4

THE PLANNING PROCESS

• Mission The organisation’s purpose or fundamental reason for existence

• GoalFuture target or end result an organisation wishes to achieve

• PlanMeans devised for attempting to reach a goal

Copyright 2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 6–5

THE PLANNING PROCESS

mission goals plans

Goal attainment(organisational

efficiency & effectiveness)

Copyright 2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 6–6

THE PLANNING PROCESS

‘Setting goals & developing plans leads to goal attainment and ultimately, to organisational efficiency & effectiveness.’

Copyright 2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 6–7

ORGANISATIONAL MISSION

‘Essentially, planning builds on the organisation’s mission, the organisation’s purpose or fundamental reason for existence.’

Copyright 2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 6–8

ORGANISATIONAL MISSION

Mission statement may:• be unwritten• address customers,

products/services, location, technology, concern for survival, philosophy, self-concept, concern for public image, concern for employees (David 1989)

Copyright 2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 6–9

NATURE OF ORGANISATIONAL GOALS

• Benefits of goals– Increase performance– Clarify expectations– Facilitate control– Increase motivation

• Levels of goals– Operational goals (base)– Tactical goals (mid)– Strategic goals (top)

Copyright 2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 6–10

LEVELS OF GOALS

• Top managers Organisational perspective

• Middle managersDepartmental perspective

• 1st level managersUnit/individual perspective

strategicgoals

strategicplans

tacticalgoals

tactical plans

operationalgoals

operational plans

Copyright 2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 6–11

GOALS AND PERFORMANCE

Key aspects:• Goal content• Goal commitment• Work behaviour• Other process components• Possible problems

Copyright 2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 6–12

GOALS AND PERFORMANCE

GOAL CONTENTShould be:• Challenging• Attainable• Specific & measurable• Time-limited• Relevant

Copyright 2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 6–13

GOALS AND PERFORMANCE

GOAL COMMITTMENTInfluenced by:• Supervisory authority• Peer & group pressure• Public display• Expectations of success• Incentives & rewards• Participation

Copyright 2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 6–14

GOALS AND PERFORMANCE

WORK BEHAVIOUR

Goals & commitment affect work

behaviour:• Direction• Effort• Persistence• Planning

Copyright 2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 6–15

GOALS AND PERFORMANCE

Job process components affect

performance:

• Job knowledge & ability• Task complexity• Situational constraints

Copyright 2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 6–16

GOALS AND PERFORMANCE

POTENTIAL PROBLEMS WITH GOALS• Excessive risk-taking• Increased stress• Undermined self-confidence• Ignored non-goal areas• Excessive short-run thinking• Dishonesty & cheating

Copyright 2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 6–17

LINKING GOALS & PLANS

• Levels of plans• Extent of recurring use• Time horizons of goals & plans• Promoting innovation

Copyright 2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 6–18

LINKING GOALS & PLANS

Levels of plans:• Strategic• Operational• Tactical

Recurring use:• Single-use• Standing plans: policies, procedures, rules

Copyright 2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 6–19

LINKING GOALS & PLANS

Time horizons of goals/plans:• Short• Intermediate• Long range

Promoting innovation by:• Mission statement• Goal content & process• Planning content & process

Copyright 2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 6–20

OBSTACLES TO PLANNING

Domination by specialists

Low levels of manager skill & knowledge

Pressure of day-to-day work

Manager hostility

Environmental change

Copyright 2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 6–21

OBSTACLES TO PLANNING

REDUCING PLANNING OBSTACLES

• Use of planning staffSmall group who assist managers in planning

• Use contingency planningDevelopment of alternative plans

Copyright 2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 6–22

MANAGEMENT BY OBJECTIVES

Process through which specific goals are set collaboratively for the organisation as a whole and every unit within it; the goals are then used as a basis for planning, managing organisational activities, and assessing and rewarding contributions.

Copyright 2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 6–23

MANAGEMENT BY OBJECTIVES

Steps in the MBO process:• Develop organisational goals• Establish specific goals for departments• Formulate action plans• Implement & maintain ‘self-control’• Review progress periodically• Appraise performance

Copyright 2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 6–24

MANAGEMENT BY OBJECTIVESStrengths:• Helps link goals & plans• Clarifies priorities, expectations• Fosters organisational communication• Builds member motivation

Weaknesses:• Needs strong, enduring commitment• Requires training of managers• May be misused

(i.e. for punishment)• Risk of dominance of quantitative goals

Copyright 2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 6–25

MANAGEMENT BY OBJECTIVES

Assessing MBO:• Can heighten organisational

performance• Short-term focus of US, Australian &

NZ organisations limits application

• 20–25% success rate

Copyright 2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 6–26

THE CONCEPT OF STRATEGIC MANAGEMENT

‘Process through which managers formulate and implement strategies geared to optimising strategic goal achievement, given available environmental and internal conditions.’

• THE STRATEGIC MANAGEMENT PROCESS• IMPORTANCE OF STRATEGIC MANAGEMENT• LEVELS OF STRATEGY

Copyright 2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 6–27

THE CONCEPT OF STRATEGIC MANAGEMENTTHE STRATEGIC MANAGEMENT PROCESS• Strategy formulation• Strategy implementation

IMPORTANCE OF STRATEGIC MANAGEMENT• Competitive advantage

LEVELS OF STRATEGY• Corporate level• Business level• Functional level• Coordinating strategy levels

Copyright 2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 6–28

THE ROLE OF COMPETITIVE ANALYSIS IN STRATEGY FORMULATION

SWOT analysis (Strengths, Weaknesses, Opportunities, Threats)

relies upon:• ENVIRONMENTAL ASSESSMENT

– Porter’s five competitive forces model

• ORGANISATIONAL ASSESSMENT– Organisational resources & capabilities– Distinctive competencies

Copyright 2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 6–29

FORMULATING FUNCTIONAL LEVEL STRATEGY

Functional level strategies spell out how functional areas can bolster business-level strategye.g. an R&D department might accelerate innovation to provide new products before competitors

Copyright 2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 6–30

STRATEGY IMPLEMENTATIONCarrying out strategic plans• Technology• Human Resources• Reward systems• Decision processes• Structure

Maintaining strategic control• Monitoring environment• Assessing effects of actions• Monitoring results

Copyright 2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 6–31

LECTURE SUMMARY• The planning process

– Major components – Organisational mission statement

• The nature of organisational goals

– Benefits of goals– Levels of goals– Goals & performance– Work behaviour– Other work processes– Possible problems with goals

Copyright 2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 6–32

LECTURE SUMMARY

• How goals facilitate performance– Direction, effort, persistence & planning

• Linking goals & plans– Levels, recurrent use, time spans, promoting

innovation– Possible obstacles to planning

• MBO (Management by objectives)– The key steps in MBO process– Strengths & weaknesses

Copyright 2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 6–33

LECTURE SUMMARY

• Concept of strategic management– The strategic management process– Importance of strategic management– Levels of strategy

• Role of competitive analysis in strategy formulation– SWOT analysis

Copyright 2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 6–34

LECTURE SUMMARY

• Formulating functional level strategy

• Strategy implementation– Carrying out strategic plans– Maintaining strategic control