Chapter 07 Organizational Planning and Goal Setting

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Organizational Planning Goal Setting
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Goals and Plans
Goal
?A desired future state that the organization
attempts to realize.
Plan
?A blueprint specifying the resource allocation,
schedules, and other actions necessary for
attaining goals.
?Planning is considered the most fundamental
function.
?Planning is the most controversial management
function.
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Levels of Goals/Plans
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Goals and Plans Purposes
Legitimacy/Mission Statement
Inside Motorola
?What the organization stands for.
?Describes values, aspirations, and reason for
being.
?Focuses on, customers, corporate values, product
quality, and attitude toward employees.
Source of Motivation and Commitment
?Facilitate employees identification with the
organization.
Guides to Action
Standard of Performance
?Provide a sense of direction.
?Serve as performance criteria.
?Focus attention on specific targets.
?Provide a standard of assessment.
?Direct efforts toward important outcomes.
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Peter Druckers Eight Content Areas in Developing
Goals

• Marketing.
• Innovation.
• Productivity.
• Physical and financial resources.
• Profitability.
• Managerial performance and development.
• Worker performance and attitude.
• Public responsibility.

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Overall Planning Process
Begins With

• Mission statement
• Strategic goals

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Goals and Plans

• Strategic Goals
• Where the organization wants to be in the future.
• Pertain to the organization as a whole.
• Strategic Plans
• Action Steps.
• Blueprint that defines the organizational
  activities and resource allocations.

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Tactical Goals and Plans
Tactical Goals
?Goals that define the outcomes that major
divisions and departments must achieve.
Tactical Plans
?Plans designed to help execute major strategic
plans.
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Operational Goals and Plans
Operational Goals
?Specific, measurable results expected from
departments, work groups, and individuals.
Operational Plans
?Organizations lower levels that specify action
steps toward achieving operational goals.
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Planning Time Horizon
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Means End-Chain

• The achievement of goals at low levels permits
  the attainment of high-level goals.

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Characteristics ofEffective Goal Setting
Goal Characteristics

• Specific and measurable.

• Cover key result areas.

• Challenging but realistic.

• Defined time period.

• Linked to rewards.

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Model of the MBO Process
Step 2 Developing Action Plans
Step 1 Setting Goals
?Corporate Strategic Goals
?Departmental Goals
?Individual Goals
Action Plans
Review Progress
Step 3 Reviewing Progress
Corrective Action
Appraisal of Overall Performance
Step 4 Appraising Overall Performance
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MBO Benefits and Problems
Benefits of MBO
Problems with MBO
1. Manager and employee efforts are focused on
activities that will lead to goal attainment.
1. Constant change prevents MBO from taking hold.
2. An environment of poor employer-employee
relations reduces MBO effectiveness.
2. Performance can be improved at all company
levels.
3. Employees are motivated.
3. Strategic goals may be displaced by
operational goals.
4. Departmental and individual goals are aligned
with company goals.
4. Mechanistic organizations and values that
discourage participation can harm the MBO process.
5. Too much paperwork saps MBO energy.
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Plans

• Single-Use
• Standing
• Contingency
• Crisis Management
• Three Stages
• Prevention
• Preparation
• Containment

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The New Planning Paradigm

• Planning Still Starts and Stops at the Top

• Use Temporary Task Forces

• Start with a Strong Mission

Six Rules of Planning

• Design New Roles for Planning Staff

• Set Stretch Goals

• Create an Environment that Encourages Learning

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Strategic Management Questions

• What changing and trends are occurring?
• Who are the customers?
• What products or services should we offer?
• How can we offer these products or services
  efficiently?

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Strategic Management Process
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Porters Competitive Forces
Threat of substitute products
Potential new entrants
Rivalry among competitors
Bargaining power of buyers
Beware
Bargaining power of suppliers
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The Five Forces Affecting Industry Competition
SOURCES Based on Michael E. Porter, Competitive
Strategy Techniques for Analyzing Industries and
Competitors (New York Free Press, 1980) and
Michael E. Porter, Strategy and the Internet,
Harvard Business Review (March, 2001), 63-78.
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Competitive Strategies

• 1. Differentiation
• 2. Cost Leadership
• 3. Focus

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Partnership StrategiesCollaboration
High
Organizational Combination
Acquisitions
Mergers
Degree of Collaboration
Joint Ventures
Strategic Alliance
Strategic Business Partnering
Preferred Supplier Arrangements
Low
Source Adapted from Roberta Maynard. Striking
the Right March, Nations Business (May 1996),
18-28.
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Tools for Putting Strategy into Action
SOURCE Adapted from Jay R. Galbraith and Robert
K. Kazanjian, Strategy Implementation Structure,
Systems, and Process, 2d ed. (St. Paul, Minn.
West, 1986), 115. Used with permission.