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
2. Classify the types of goals organizations might have and the plans they use.
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
3. Make your plans for reaching those goals. Setting goals is important, but so is
deciding how you’re going to achieve them.
5. Review your goals periodically. As your life and career circumstances change,
CHAPTER OUTLINE
INTRODUCTION
Planning is one of the four functions of management. Fundamental information
about managerial planning is presented in this chapter; the text discusses the
nature and purposes of planning, strategies for effective planning, and
contemporary planning issues.
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
1. Planning gives direction to managers and nonmanagers of an
organization.
3. Planning minimizes waste and redundancy.
4. Planning establishes goals or standards used in controlling.
C. Planning and Performance. Although organizations that use formal
planning do not always outperform those that do not plan, most studies
show positive relationships between planning and performance.
2. Studies have shown that when formal planning has not led to
higher performance, the external environment is often the reason.
8.2 GOALS AND PLANS
Planning is often called the primary management function because it establishes
the basis for all other functions. Planning involves two important elements: goals
and plans.
A. Types of Goals
2. Types of goals
1) Stated goals are official statements of what an
B. Types of Plans
1. Plans are documents that outline how goals are going to be met.
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
b. Time frame: Short-term versus long-term plans. Short-
c. Specificity: Specific versus directional plans. Specific
d. Frequency of use: Single-use versus standing plans. A
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.”
Employees are to work to meet the goals for their particular
d. Management by objectives (MBO) is a process of setting
e. Studies of actual MBO programs confirm that MBO can
increase employee performance and organizational
2. Characteristics of Well-Written Goals (see Exhibit 8-4):
1 Written in terms of outcomes
2. Measurable and quantifiable
4. Challenging yet attainable
6. Communicated to all organizational members
3. Steps in Goals-Setting
1. Review the organization’s mission (the purpose of the
organization).
3. Determine the goals individually or with input from others.
5. Review results and whether goals are being met. Make
changes as needed.
B. Developing Plans
The process of developing plans is influenced by three contingency
factors and by the particular planning approach used by the organization.
1. Contingency Factors in Planning:
a. Manager’s level in the organization (see Exhibit 8-5).
b. Degree of environmental uncertainty. The greater the
environmental uncertainty, the more directional plans
should be, with emphasis placed on the short-term.
plans, or even to abandon their plans if necessary.
c. Length of future commitments
1. According to the commitment concept, plans
2. Planning for too long or for too short a time period
C. Approaches to Planning
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
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.
develop plans.
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
information to detect emerging trends. Competitive intelligence
2. Competitive intelligence is not corporate espionage – much
3. Global information can be garnered through subscriptions to news
services.
4. Managers should ensure that information gathering is legal and
ANSWERS TO REVIEW AND DISCUSSION
QUESTIONS
Student answers to these questions will vary.
8-1. Explain what studies have shown about the relationship between planning and
performance.
It should be noted that one cannot say that organizations that formally plan always
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?
8-7. What types of planning do you do in your personal life? Describe these plans in
terms of being (a) strategic or operational plans, (b) short- or long-term plans, and (c)
specific or directional plans.
8-8. Many companies have a goal of becoming more environmentally sustainable. One
of the most important steps they can take is controlling paper waste. Choose a
company—any type, any size. Imagine that you’ve been put in charge of creating a
program to control paper waste for the company. Set goals and develop plans. Prepare
PERSONAL INVENTORY ASSESSMENTS
Student answers to these questions will vary.
ETHICS DILEMMA
Student answers to these questions will vary.
Students are asked to assess an event that happened at a Safeway store in Hawaii
where a couple was arrested and their young daughter detained because of a suspected
theft of $2.50 in sandwiches. The couple acknowledged their mistake and provided a
reasonable explanation for the event. The store manager, on the other hand, claimed he
was following company policy when he called the police. Was this overkill on the part of
the manager or was it just a case of following company rules and procedures? How did
8-11. What do you think? Was this a good business decision for Safeway?
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?
SKILLS EXERCISE: DEVELOPING YOUR GOAL-
SETTING SKILL
Students are provided with eight suggestions for effectively setting goals. They are then
asked to determine goals for five years from the present. In addition, they are to set
personal and academic goals to be achieved by the end of the current college term.
Skills Exercise: Developing Your Goal Setting
Skill
Students are provided with eight suggestions for effectively setting goals. They are then
asked to determine goals for five years from the present. They are given the scenario
where they are managers in a grocery store. In this exercise, they are required to
describe how they would set goals for their position including the examples of goals for
the jobs of butcher, cashier and bakery manger. Ensure that students’ goals are
WORKING TOGETHER: TEAM EXERCISE
In groups of three to four individuals, students tackle planning and goal-setting for a
public school system moving to a four-day week. Students should be able to clearly
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
• For the goals that you have set, write out plans for achieving those goals. Think
in terms of what you will have to do to accomplish each one. For instance, if one
of your academic goals is to improve your grade-point average, what will you
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
• Interview three managers about the types of planning they do. Ask them for
suggestions on how to be a better planner. Write a report that describes and
• 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.
• Steve’s and Mary’s suggested readings: Atul Gawande, The Checklist Manifesto:
How to Get Things Right (Metropolitan Books, 2009); Peter F. Drucker,
Management: Tasks, Responsibilities, Practices (Harper Business, 1974); Peter
F. Drucker, The Executive in Action: Managing for Results (Harper Business,
1967); and Peter F. Drucker, The Practice of Management (HarperCollins, 1954).
(LO: 1, Define the nature and purposes of planning, AACSB: Analytical thinking)
• What does it take to be a good planner? Do some research on this issue. As part
of your research, talk to professors and other professionals. Make a bulleted list
• In your own words, write down three things you learned in this chapter about
being a good manager. (LO: 1, Define the nature and purposes of planning,
AACSB: Analytical thinking) (LO: 2, Classify the types of goals organizations
might have and the plans they use, AACSB: Analytical thinking) (LO: 3, Compare
• Self-knowledge can be a powerful learning tool. Go to mymanagementlab.com
and complete these self-assessment exercises: What’s My Attitude Toward
Achievement? What Are My Course Performance Goals? What Time of Day Am I
Most Productive? and How Good Am I at Personal Planning? Using the results of
your assessments, identify personal strengths and weaknesses. What will you do
ANSWERS TO CASE APPLICATION 1
QUESTIONS
Student answers to these questions will vary.
Crisis Planning at Livestrong Foundation
8-14. Could an organization even plan for this type of situation? If yes, how? If
not, why not?
8-15. How would goals be useful in this type of situation? What types of goals
might be necessary?
8-16. What types of plans will be useful to Livestrong? Explain why you think these
plans would be important.
A sudden, unexpected event such as the loss of an organization’s founder would call for
use, AACSB: Analytical thinking)
8-17. What lessons about planning can managers learn from what Livestrong has
endured?
Students should grasp the importance of flexibility with the planning process.
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
the characteristics of well-written goals.)
Goals play a substantial role in an organization’s planning for situations requiring
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
important.
8-20. What contingency factors might affect the planning Garmin executives have to do?
How might those contingency factors affect the planning?
Three contingency factors that affect the choice of plans are: organizational level,
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?
A plan involving such a fundamental change in products would be quite challenging.
ADDITIONAL CHAPTER INFORMATION
With a turbulent economy and high levels of uncertainty, planning and strategic planning,
in particular, present difficult challenges for managers. The article “There Is No
Alternative to…” provides an interesting contemporary approach to planning in an
uncertain economy. Scenario planning was pioneered by Royal Dutch/Shell to