Management Chapter 5 Homework Managerial Planning And Goal Setting 109

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CHAPTER 5

MANAGERIAL PLANNING AND GOAL SETTING

CHAPTER OUTLINE

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Are You Ready to Be a Manager?

I. Overview of the Goal-Setting and Planning Process

A. The Organizational Planning Process

II. Goal-Setting in Organizations

A. Organizational Mission

B. Goals and Plans

III. Operational Planning

A. Criteria for Effective Goals

IV. Benefits and Limitations of Planning

V. Planning for a Turbulent Environment

A. Contingency Planning

B. Scenario Building

C. Crisis Planning

VI. Innovative Approaches to Planning

A. Set Stretch Goals for Excellence

VII. Thinking Strategically

VIII. What is Strategic Management?

A. Purpose of Strategy

IX. The Strategic Management Process

A. Strategy Formulation Versus Execution

B. SWOT Analysis

X. Formulating Business-Level Strategy

A. Porter’s Five Competitive Forces

B. Competitive Strategies

XI. Strategy Execution

ANNOTATED LEARNING OBJECTIVES

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After studying this chapter, students should be able to:

1. Define goals and plans and explain the relationship between them.

A goal is a desired future state that the organization attempts to realize. A plan is a blueprint for

2. Explain the concept of organizational mission and how it influences goal setting and

planning.

The overall planning process begins with a mission statement, which describes the organization’s

3. Describe the types of goals an organization should have and how managers use strategy

maps to align goals.

Within the organization there are three levels of goals: strategic, tactical, and operational.

• Strategic goals are broad statements of where the organization wants to be in the future.

4. Define the characteristics of effective goals.

5. Discuss the benefits and limitations of planning.

The benefits of planning include:

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• Goals and plans provide a source of motivation and commitment. Planning can reduce

uncertainty for employees and clarify what they should accomplish.

The limitations of planning include:

• Goals and plans can create a false sense of certainty. Having a plan can give managers a

6. Describe and explain the importance of contingency planning, scenario building, and crisis

planning for today’s managers.

Contingency plans define company responses to be taken in the case of emergencies, setbacks, or

unexpected conditions. Contingency planning enables managers to respond quickly to be

7. Identify innovative planning approaches managers use in a fast-changing environment.

• Set stretch goals for excellence. Stretch goals get people to think in new ways that can lead

to bold, innovative breakthroughs.

8. Define the components of strategic management and discuss the levels of strategy.

Strategic management is the set of decisions and actions used to formulate and implement

strategies that will provide a competitively superior fit between the organization and its

9. Describe the strategic management process and SWOT analysis.

The strategic management process begins when executives evaluate their current position with

respect to mission, goals, and strategies. Managers then scan the organization’s internal and

10. Discuss the organizational dimensions managers use to execute strategy.

The final step in the strategic management process is execution, which is how strategy is put into

action. Strategy execution is the most difficult and important part of strategic management.

Execution requires changes in the organization’s behavior. These changes can be implemented

by changes in leadership, structure, information and control systems, and human resources.

LECTURE OUTLINE

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INTRODUCTION

Managers decide where the organization should go in the future and how to get it there. Without

clear goals and plans, employees cannot perform up to their potential and the organization

flounders. In some organizations, typically small ones, planning is informal. In others,

managers follow a well-defined planning framework. The company establishes a basic mission

and develops formal goals and strategic plans for carrying it out. Companies such as Royal

Dutch/Shell, IBM, and United Way undertake a strategic planning exercise each year—

reviewing their missions, goals, and plans to meet environmental changes or the expectations of

important stakeholders such as the community, owners, or customers. Many of these companies

also develop contingency plans or scenarios for unexpected circumstances and disaster recovery

plans in the event of a hurricane, earthquake, or terrorist attack. Of the four management

functions—planning, organizing, leading, and controlling—planning is considered the most

fundamental. Everything else stems from planning. Yet planning also is the most controversial

management function. How do managers plan for the future in a constantly changing

environment?

Are You Ready to Be a Manager?

This questionnaire helps students determine their ability to set goals and plan for their

accomplishment.

New Manager Self-Test: Your Approach to Studying

Students’ approaches to studying may predict their planning approaches as new managers. An

I. OVERVIEW OF THE GOAL-SETTING AND PLANNING PROCESS

INSTRUCTOR’S NOTES___________________________________________________________

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A goal is defined as a desired future state that the organization attempts to realize. Goals are

important because they define the purpose of an organization. A plan is a blueprint for goal

A. The Organizational Planning Process

1. The overall planning process prevents managers from thinking merely in terms of

day-to-day activities. The planning process includes five steps: 1) develop the plan;

2) translate the plan into action; 3) lay out operational factors needed to achieve

II. GOAL-SETTING IN ORGANIZATIONS

INSTRUCTOR’S NOTES___________________________________________________________

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Exhibit 5.1: The Organizational Planning Process

1. At the top of the goal hierarchy is the mission—the organization’s reason for

existence—that describes the organization’s values, aspirations, and reason for being.

2. The formal mission statement is a broadly stated definition of purpose that

distinguishes the organization from others of a similar type.

a. The content often focuses on the market and customers and identifies desired

Discussion Question #1: Write a brief mission statement for a local business with which you

are familiar. How might having a clear, written mission statement benefit a small organization?

Exhibit 5.2: Mission Statement for DaVita Inc.

B. Goals and Plans

1. Strategic goals, sometimes called official goals, are broad statements describing

2. Strategic plans define the action steps by which the company intends to attain

3. Tactical plans define what major departments and organizational subunits will do to

4. Tactical goals are the results that major divisions and departments within the

6. Operational goals are the specific results expected from departments, work groups,

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III. OPERATIONAL PLANNING

INSTRUCTOR’S NOTES___________________________________________________________

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Exhibit 5.3: Characteristics of Effective Goal Setting

A. Criteria for Effective Goals

1. These characteristics pertain to organizational goals at the strategic, tactical, and

operational levels:

a. Specific and measurable. When possible, goals should be expressed in

quantitative terms. Vague goals tend not to motivate employees.

b. Defined time period. Goals should specify the time period over which they will

be achieved. A time period is a deadline on which goal attainment will be

measured.

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IV. BENEFITS AND LIMITATIONS OF PLANNING

A. Planning generally positively affects a company’s performance.

1. Goals and plans provide a source of motivation and commitment. Planning can

reduce uncertainty for employees and clarify what they should accomplish.

3. Goals and plans are a guide to action. Planning focuses attention on specific targets

and directs employee efforts toward important outcomes.

Spotlight on Skills: Is a Tweet Just a Tweet?

Managers in all types of organizations are learning that trying to keep employees off social

media sites is not realistic and that, in fact, social networking can bring benefits to the

organization. However, companies need social media policies as a way to limit the risks of

B. Planning can also hurt organizational performance in some ways.

1. Goals and plans can create a false sense of certainty. Having a plan can give

managers a false sense that they know what the future will be like.

2. Goals and plans may cause rigidity in a turbulent environment. A related problem is

Business Blooper: Johnson & Johnson

Rather than spend time devising strategic plans, Johnson & Johnson executives got involved in

an elaborate scheme to pay 20 percent kickbacks on medical devices to doctors in Greece, paid

V. PLANNING FOR A TURBULENT ENVIRONMENT

INSTRUCTOR’S NOTES___________________________________________________________

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A. Contingency Planning

1. Contingency plans define company responses to be taken in case of emergencies or

B. Scenario Building

1. Scenario building involves looking at trends and discontinuities and imagining

C. Crisis Planning

Exhibit 5.4: Essential Stages of Crisis Planning

1. Crisis Prevention

a. Although unexpected events and disasters will happen, managers should do

everything they can to prevent crises.

2. Crisis Preparation

a. Preparation includes all the detailed planning to handle a crisis when it occurs.

VI. INNOVATIVE APPROACHES TO PLANNING

INSTRUCTOR’S NOTES___________________________________________________________

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A. Set Stretch Goals for Excellence

1. Stretch goals are reasonable yet highly ambitious goals that are so clear, compelling,

VII. THINKING STRATEGICALLY

Thinking strategically means to take a long-term view, see the big picture, and consider how the

organization and the competitive environment fit together. Understanding the strategy concept,

the levels of strategy, and strategy formulation versus implementation is an important start

towards strategic thinking.

New Manager Self-Test: Your Approach to Studying, Part 2

Strategy means knowing your desired outcomes, how to acquire factual knowledge, thinking

VIII. WHAT IS STRATEGIC MANAGEMENT?

INSTRUCTOR’S NOTES___________________________________________________________

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Strategic management refers to the set of decisions and actions used to formulate and

implement strategies that will provide a competitively superior fit between the organization and

its environment so as to achieve organizational goals.

A. Purpose of Strategy

1. Strategy is the plan of action that describes resource allocation and activities for

2. Competitive advantage refers to what sets the organization apart from others and

Benchmarking: Trinity College Squash Team

Trinity College could no longer stand with its competitors, Amherst and Williams, mostly

because it was located in one of Hartford’s blighted and crime-ridden neighborhoods. Looking

3. To remain competitive, companies develop strategies that focus on core

competencies, develop synergy, and create value for customers.

a. Exploit Core Competence. A company’s core competence is something the

b. Build Synergy. Synergy occurs when organizational parts interact to produce a