978-0134527604 Chapter 8

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Chapter 8

Planning Work Activities

In this chapter, we begin our study of the first of the management functions: planning.

Planning is important because it establishes what an organization is doing. We’ll look at

how managers set goals as well as how they establish plans. Focus on the following

learning objectives as you read and study this chapter.

LEARNING OBJECTIVES

1. Define the nature and purposes of planning.

2. Classify the types of goals organizations might have and the plans they use.

3. Compare and contrast approaches to goal-setting and planning.

4. Discuss contemporary issues in planning.

It’s Your Career

You Gotta Have Goals

It’s been said that if you don’t know where you’re going, any road will get you there. It

has also been said that the shortest distance between two points is a straight line. These

two sayings emphasize the importance of goals. Organizations want people who can

get things done. And goal-setting is an essential component of long–term career

success. How can you be better at setting goals? Here are some suggestions:

1. Identify what you’d like to do or achieve in important life areas such as career,

2. Make your goals actionable. Although having broad, visionary goals is important,

you need to set smaller goals with more specific, achievable actions. Use the

4. Determine how you’ll measure progress toward your goal. You need to think

about how you will know you’ve achieved a goal.

5. Review your goals periodically. As your life and career circumstances change,

change your goals to reflect that.

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8.1 THE WHAT AND WHY OF PLANNING

A. What is Planning? Planning involves defining the organization’s goals,

establishing an overall strategy for achieving these goals, and developing

plans for organizational work activities. The term planning as used in this

chapter refers to formal planning.

B. Why Do Managers Plan? Planning serves a number of significant

2. Planning reduces uncertainty.

4. Planning establishes goals or standards used in controlling.

1. Effective planning and implementation play a greater part in high

performance than does the amount of planning done.

8.2 GOALS AND PLANS

Planning is often called the primary management function because it establishes

1. Goals (often called objectives) are desired outcomes for

individuals, groups, or entire organizations.

2. Types of goals

1) Stated goals are official statements of what an

2) Real goals are those that an organization actually

2. Plans can be described by their breadth, time frame, specificity,

and frequency of use (see Exhibit 8-1).

a. Breadth: Strategic versus operational plans. Strategic

plans (long-term plans) are plans that apply to the entire

organization, establish the organization’s overall goals,

and seek to position the organization in terms of its

environment. Operational plans (short-term plans) are

plans that specify the details of how the overall goals are

to be achieved.

b. Time frame: Short-term versus long-term plans. Short-

term plans are plans that cover one year or less. Long–

term plans are plans with a time frame beyond three

d. Frequency of use: Single-use versus standing plans. A

single–use plan is a one-time plan specifically designed to

meet the needs of a unique situation. Standing plans are

ongoing plans that provide guidance for activities

performed repeatedly.

LEADER MAKING A DIFFERENCE

One of the truly successful businesses coming out of the Dot.com revolution is

Amazon.com. Led by charismatic founder Jeff Bezos, Amazon has grown beyond an

online bookstore to become a leader in Internet retailing. Not satisfied selling just books,

Bezos used his drive, energy, and enthusiasm to move the company into other areas,

such as LEGOs, power drills, and Jackalope Buck taxidermy mounts, to name a few of

the thousands of products you can buy.

What can you learn from this leader making a difference?

8.3 SETTING GOALS AND DEVELOPING PLANS

1. Traditional goal-setting is an approach to setting goals in which

goals are set at the top level of the organization and then broken

into subgoals for each level of the organization.

a. Traditional goal-setting assumes that top managers know

what is best because of their ability to see the “big picture.”

integrated network of goals in which the accomplishment of

goals at one level serves as the means for achieving the

increase employee performance and organizational

productivity. However, top management commitment and

involvement are important contributions to the success of

an MBO program.

2. Characteristics of Well-Written Goals (see Exhibit 8-4):

1 Written in terms of outcomes

3. Clear as to a time frame

5. Written down

3. Steps in Goals-Setting

2. Evaluate available resources.

4. Write down the goals and communicate them to all who

need to know.

5. Review results and whether goals are being met. Make

changes as needed.

1. Contingency Factors in Planning:

a. Manager’s level in the organization (see Exhibit 8-5).

Operational planning usually dominates the planning

1. When uncertainty is high, plans should be specific,

but flexible.

2. Managers must be prepared to rework and amend

1. According to the commitment concept, plans

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2. Planning for too long or for too short a time period

1. In the traditional approach, planning was done entirely by top–level

2. Another approach to planning is to involve more members of the

organization in the planning process. In this approach, plans are

not handed down from one level to the next but are developed by

organizational members at various levels to meet their specific

needs.

FUTURE VISION: Using Social Media for Environmental Scanning

The use of social media has become a routine part of marketing for many companies.

Now, some companies are turning to social media as an environmental scanning tool.

Companies can use software tools and analytic techniques to learn about competitors,

suppliers, and customers from social media sites like LinkedIn and Twitter.

It is important to use a strategic approach to the process to avoid becoming overwhelmed

and to have the flexibility to respond quickly to trends or other intelligence that is revealed

in the social media sites.

The following discussion questions are posed:

Talk About It 1: With so much information available through social media, how can

businesses focus their efforts to scan for relevant information?

Talk About It 2: How can a business determine if information gathered from social media

is reliable?

8.4 CONTEMPORARY ISSUES IN PLANNING

The concluding section of Chapter 8 examines how managers can plan

effectively in dynamic environments as well as addressing the concept of

environmental scanning.

A. How Can Managers Plan Effectively in Dynamic Environments?

1. The external environment is continually changing. Dynamic

environments are more the norm than the exception.

2. Managers should develop plans that are specific, but flexible.

Planning is an ongoing process and maintaining flexibility is

important. Even though the environment is highly uncertain, it’s

critical to continue formal planning. Persistence in planning

contributes to significant performance improvement. In addition, a

flatter hierarchy allows lower organizational levels to set goals and

develop plans.

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B. How Can Managers Use Environmental Scanning?

1. A manager’s analysis of the external environment may be

improved by environmental scanning, which involves screening

2. Competitive intelligence is not corporate espionage – much

4. Managers should ensure that information gathering is legal and

1. Business intelligence refers to a variety of data that managers

can use to make more effective strategic decisions. Company

2. To make sense of vast amounts of data managers use digital

tools, technology, systems, or software that allow the user to

collect, visualize, understand, or analyze data.

3. Using digital tools managers make decisions based on both

quantitative information (also referred to as big data) and

4. Three more prevalent digital tools available today are:

a. Data Visualization Tools. Pie charts, bar charts, and trend lines

can all be used to organize and summarize data for visual display.

5. Digital tools should be seen as a complement to current planning

approaches rather than a replacement for them.

ANSWERS TO REVIEW AND DISCUSSION QUESTIONS

8-1. Explain what studies have shown about the relationship between planning and

performance.

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It should be noted that one cannot say that organizations that formally plan always

outperform those that don’t plan. However, studies have indicated that formal planning

is often associated with positive financial results. Generally, performance is also higher

in those organizations where planning is present. And, when higher performance is not

the result of formal planning, often the reason is due to something in the external

environment. Finally, studies indicate that at least four years of formal planning are

necessary before performance is affected. (LO: 1, Define the nature and purposes of

planning, AACSB: Analytical thinking)

8-2. Discuss the contingency factors that affect planning.

The first contingency factor is a manager’s level in the organization. Typically, lower–

8-3. Will planning become more or less important to managers in the future? Why?

8-4. If planning is so crucial, why do some managers choose not to do it? What would

you tell these managers?

8-5. Explain how planning involves decisions today that will have an impact later.

As managers plan, they make decisions that influence how activities are organized, how

8-6. How might planning in a not-for-profit organization such as the American Cancer

Society differ from planning in a for-profit organization such as Coca-Cola?

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to raise funds and to recruit volunteers to achieve its mission. (LO: 4, Discuss

contemporary issues in planning, AACSB: Analytical thinking)

8-7. What types of planning do you do in your personal life? Describe these plans in

8-8. Provide an example of how a digital tool could help an organization analyze data to

support decision making.

Responses to this question will vary, but students should demonstrate knowledge of the

more prevalent digital tools available and how they can be used. (LO: 4, Discuss

contemporary issues in planning, AACSB: Analytical thinking)

PERSONAL INVENTORY ASSESSMENTS

ETHICS DILEMMA

Students are asked to assess an event that happened at a pharmacy. The case

revolves around an individual who had been diagnosed with a serious vision issue that

would ultimately result in blindness if it wasn’t treated. The drugs required to treat the

8-11. What do you think? Was this a good business decision for the pharmacies?

8-12. What potential ethical issues do you see here?

8-13. If you were the store manager, what would you have done in this situation?

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SKILLS EXERCISE: Making a To-Do List That Works and Using It

Students are provided with eight suggestions for effectively creating to-do lists. They are

then asked to create a to-do list for an upcoming project using the suggestions. (LO: 3,

Compare and contrast approaches to goal-setting and planning, AACSB: Reflective

thinking)

WORKING TOGETHER: TEAM EXERCISE

In groups of three to four individuals, students tackle planning and goal-setting for

something they would like to accomplish in the future. Students should refer to Exhibit

8-4 when creating their goals in writing. Goals associated with the plans should be

specific, achievable, and measurable. (LO: 3, Compare and contrast approaches to

goal– setting and planning, AACSB: Analytical thinking)

MY TURN TO BE A MANAGER

• Practice setting goals for various aspects of your personal life, such as

academics, career preparation, family, hobbies, and so forth. Set at least two

short-term goals and at least two long-term goals for each area. (LO: 3, Compare

and contrast approaches to goal-setting and planning, AACSB: Reflective

thinking)

• Write a personal mission statement. Although this may sound simple to do, it’s

not going to be simple or easy. Our hope is that it will be something that you’ll

want to keep, use, and revise when necessary…that it will be something that

helps you be the you you’d like to be and helps you live the life you’d like to live.

Start by doing some research on personal mission statements. There are some

wonderful Web resources that can guide you. Good luck! (LO: 3, Compare and

contrast approaches to goal-setting and planning, AACSB: Reflective thinking)

• Choose two companies, preferably in different industries. Research the

companies’ Web sites and find examples of goals that they have stated. (Hint: A

company’s annual report is often a good place to start.) Evaluate these goals.

Are they well-written? Rewrite those that don’t exhibit the characteristics of well–

• Effective managers are always screening information to look for emerging trends

that might affect their industries. Start looking for trends in an industry you are

interested in by subscribing to a variety of social media sources that are related

to the industry. (LO: 4, Discuss contemporary issues in planning, AACSB:

Analytical thinking)

ANSWERS TO CASE APPLICATION 1

QUESTIONS

Planning for Holiday Shipping at FedEx

8-14. How can the planning process help FedEx meet the company’s goal of meeting

on-time delivery promises?

8-15. FedEx noted that inclement weather and last-minute online sales surges impacted

the company’s ability to deliver packages by Christmas. How could planning help

overcome unexpected challenges such as these in the future?

8-16. Would it be valuable for FedEx to gather competitor intelligence? Why or why not?

8-17. What other trends could affect the shipping industry in the future?

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ANSWERS TO CASE APPLICATION 2

QUESTIONS

Student answers to these questions will vary.

Shifting Direction

8-18. What role do you think goals would play in planning the change in direction for the

company? List some goals you think might be important. (Make sure these goals have

8-19. What types of plans would be needed in an industry such as this one? (For

instance, long-term or short-term, or both?) Explain why you think these plans would be

8-20. What contingency factors might affect the planning Garmin executives have to do?

How might those contingency factors affect the planning?

8-21. What planning challenges do you think Garmin executives face with continuing to

be the global market leader? How should they cope with those challenges?

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