Management: Arab World Edition Robbins, Coulter, Sidani, Jamali

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2 Management: Arab World Edition Robbins, Coulter, Sidani, Jamali Chapter 7: Foundations of Planning Lecturer: Ayat rahahleh

3 Learning Outcomes Follow this Learning Outline as you read and study this chapter. 7.1 Define the nature and purpose of planning Define planning. Describe the purposes of planning. Explain what studies have shown about the relationship between planning and performance. Understand the dynamics of planning in Arab culture. 7.2 Goals And Plans Define goals and plans. Describe the types of goals organizations might have. Describe each of the different types of plans. 7-3 Copyright 2011 Pearson Education

4 Learning Outcomes 7.3 Setting Goals and Developing Plans Discuss how traditional goal setting and MBO work. Describe well-written goals and explain how to set them. Discuss the contingency factors that affect planning. Describe the approaches to planning. 7.4 Contemporary Issues in Planning Explain the criticisms of planning. Describe how managers can effectively plan in today s dynamic environment. 7-4 Copyright 2011 Pearson Education

5 Define the nature and purpose of planning 1. Define planning. 2. Describe the purposes of planning. 3. Explain what studies have shown about the relationship between planning and performance. 4. Understand the dynamics of planning in Arab culture. 7-5 Copyright 2011 Pearson Education

6 What Is Planning? Planning A primary managerial activity that involves: Defining the organization s goals Establishing an overall strategy for achieving those goals Developing plans for organizational work activities Formal planning Specific goals covering a specific time period Written and shared with organizational members 7-6 Copyright 2011 Pearson Education

7 Why Do Managers Plan? Purposes of Planning Provides direction Reduces uncertainty Minimizes waste and redundancy Sets the standards for controlling 7-7 Copyright 2011 Pearson Education

8 Planning and Performance Formal planning is associated with: Higher profits and returns on assets. Positive financial results. The quality of planning and implementation affects performance more than the extent of planning. The external environment can reduce the impact of planning on performance. Formal planning must be used for several years before planning begins to affect performance. 7-8 Copyright 2011 Pearson Education

9 Planning in Arab Culture Planning is underdeveloped in Arab societies some attribute this to an Arab culture that is supposedly fixated on the past and resists planning for the future. Fatalism the belief in predestination, in the sense that a person has no control over things that happen to him as things have already been predestined from God. This is a mistaken understanding of Qadar. Belief in Qadar does not mean that people should not plan. 7-9 Copyright 2011 Pearson Education

10 Planning in Arab Culture (cont d) Early Arabs planned, which explains their successes. Later, however, fatalism as a historic practice, not a religious doctrine has displayed itself in their societies. What is needed is a gradual development in value systems, leading to the notion that planning is required to succeed and this is in fact in harmony with religious teachings Copyright 2011 Pearson Education

11 Planning in Arab Culture (cont d) Emergence of many successful Arab entrepreneurs and managers. They built their businesses on proper planning and adequate organization. This demonstrates that they have been progressively adopting modern managerial standards Copyright 2011 Pearson Education

12 Goals And Plans 1. Define goals and plans. 2. Describe the types of goals organizations might have. 3. Describe each of the different types of plans Copyright 2011 Pearson Education

13 How Do Managers Plan? Elements of Planning Goals (also Objectives) Desired outcomes for individuals, groups, or entire organizations Provide direction and evaluation performance criteria Plans Documents that outline how goals are to be accomplished Describe how resources are to be allocated and establish activity schedules 7-13 Copyright 2011 Pearson Education

14 Types of Goals Financial Goals are related to the expected internal financial performance of the organization. Strategic Goals are related to the performance of the firm relative to factors in its external environment (e.g., competitors). If managers emphasize only one goal, other goals necessary for long-term success are ignored Copyright 2011 Pearson Education

15 SMART Objectives Specific Measurable Attainable Relevant Time bound 7-15 Copyright 2011 Pearson Education

16 Types of Goals (cont d) Stated goals can be found in an organization s charter, annual report, or public relations announcements, or in public statements made by managers. These broadly-worded official statements of the organization (intended for public consumption) that may be irrelevant to its real goals (what actually goes on in the organization) Copyright 2011 Pearson Education

17 Exhibit 7 1 Types of Plans 7-17 Copyright 2011 Pearson Education

18 Types of Plans: Breadth Strategic Plans Apply to the entire organization. Establish the organization s overall goals. Seek to position the organization in terms of its environment. Cover extended periods of time. Operational Plans Specify the details of how the overall goals are to be achieved. Cover a short time period Copyright 2011 Pearson Education

19 Types of Plans Long-Term Plans Plans with time frames extending beyond three years Short-Term Plans Plans with time frames of one year or less 7-19 Copyright 2011 Pearson Education

20 Types of Plans (cont d) Directional Plans Flexible plans that set out general guidelines and provide focus, yet allow discretion in implementation Specific Plans Plans that are clearly defined and leave no room for interpretation 7-20 Copyright 2011 Pearson Education

21 Types of Plans (cont d) Single-Use Plan A one-time plan specifically designed to meet the need of a unique situation Standing Plans Ongoing plans that provide guidance for activities performed repeatedly 7-21 Copyright 2011 Pearson Education

22 Setting Goals and Developing Plans 1. Discuss how traditional goal setting and MBO work. 2. Describe well-written goals and explain how to set them. 3. Discuss the contingency factors that affect planning. 4. Describe the approaches to planning 7-22 Copyright 2011 Pearson Education

23 Setting Goals and Developing Plans 1. Approaches to Setting Goals Traditional goal setting MBO Characteristics of well-written goals 2. Developing Plans Contingency factors in planning Approaches to Planning 7-23 Copyright 2011 Pearson Education

24 Traditional Goal Setting Broad goals are set at the top of the organization. Goals are then broken into sub-goals for each organizational level. Assumes that top management knows best because they can see the big picture. Goals are intended to direct, guide, and constrain from above. Goals lose clarity and focus as lower-level managers attempt to interpret and define the goals for their areas of responsibility Copyright 2011 Pearson Education

25 Exhibit 7 2 The Downside of Traditional Goal Setting 7-25 Copyright 2011 Pearson Education

26 Maintaining the Hierarchy of Goals Means Ends Chain The integrated network of goals that results from establishing a clearly-defined hierarchy of organizational goals. Achievement of lower-level goals is the means by which to reach higher-level goals (ends) Copyright 2011 Pearson Education

27 Management By Objectives (MBO) Specific performance goals are jointly determined by employees and managers. Progress toward accomplishing goals is periodically reviewed. Rewards are allocated on the basis of progress towards the goals. Key elements of MBO: Goal specificity, participative decision making, an explicit performance/evaluation period, feedback 7-27 Copyright 2011 Pearson Education

28 Exhibit 7 3 Steps in a Typical MBO Program 1. The organization s overall objectives and strategies are formulated. 2. Major objectives are allocated among divisional and departmental units. 3. Unit managers collaboratively set specific objectives for their units with their managers. 4. Specific objectives are collaboratively set with all department members. 5. Action plans, defining how objectives are to be achieved, are specified and agreed upon by managers and employees. 6. The action plans are implemented. 7. Progress toward objectives is periodically reviewed, and feedback is provided. 8. Successful achievement of objectives is reinforced by performancebased rewards Copyright 2011 Pearson Education

29 Does MBO Work? Reason for MBO Success Top management commitment and involvement Potential Problems with MBO Programs Not as effective in dynamic environments that require constant resetting of goals. Overemphasis on individual accomplishment may create problems with teamwork. Allowing the MBO program to become an annual paperwork shuffle Copyright 2011 Pearson Education

30 Exhibit 7 4 Well-Written Goals Written in terms of outcomes, not actions Focuses on the ends, not the means. Measurable and quantifiable Specifically defines how the outcome is to be measured and how much is expected. Clear as to time frame How long before measuring accomplishment. Challenging yet attainable Low goals do not motivate. High goals motivate if they can be achieved. Written down Focuses, defines, and makes goals visible. Communicated to all necessary organizational members Puts everybody on the same page Copyright 2011 Pearson Education

31 Steps in Goal Setting 1. Review the organization s mission statement. Do goals reflect the mission? 2. Evaluate available resources. Are resources sufficient to accomplish the mission? 3. Determine goals individually or with others. Are goals specific, measurable, and timely? 4. Write down the goals and communicate them. Is everybody on the same page? 5. Review results and whether goals are being met. What changes are needed in mission, resources, or goals? 7-31 Copyright 2011 Pearson Education

32 Developing Plans: Contingency Factors in Planning 1. Manager s level in the organization Strategic plans at higher levels Operational plans at lower levels 2. Degree of environmental uncertainty Stable environment: specific plans Dynamic environment: specific but flexible plans 3. Length of future commitments Commitment Concept: current plans affecting future commitments must be sufficiently long-term to meet those commitments Copyright 2011 Pearson Education

33 Exhibit 7 5 Planning in the Hierarchy of Organizations 7-33 Copyright 2011 Pearson Education

34 Developing Plans: Approaches to Planning 1. Establishing a formal planning department A group of planning specialists who help managers write organizational plans. Planning is a function of management; it should never become the sole responsibility of planners. 2. Involving organizational members in the process Plans are developed by members of organizational units at various levels and then coordinated with other units across the organization Copyright 2011 Pearson Education

35 Contemporary Issues in Planning 1. Explain the criticisms of planning. 2. Describe how managers can effectively plan in today s dynamic environment Copyright 2011 Pearson Education

36 Contemporary Issues in Planning 1. Criticisms of Planning 2. Effective Planning in Dynamic Environments 7-36 Copyright 2011 Pearson Education

37 Criticisms of Planning Planning may create rigidity. Plans cannot be developed for dynamic environments. Formal plans cannot replace intuition and creativity. Planning focuses managers attention on today s competition not tomorrow s survival. Formal planning reinforces today s success, which may lead to tomorrow s failure. Just planning isn t enough Copyright 2011 Pearson Education

38 Effective Planning in Dynamic Environments Develop plans that are specific but flexible. Understand that planning is an ongoing process. Change plans when conditions warrant. Persistence in planning eventually pay off. Flatten the organizational hierarchy to foster the development of planning skills at all organizational levels Copyright 2011 Pearson Education

39 Terms to Know planning goals plans stated goals real goals framing strategic plans operational plans long-term plans short-term plans directional plans single-use plan standing plans traditional goal setting means-ends chain management by objectives (MBO) mission commitment concept formal planning department specific plans 7-39 Copyright 2011 Pearson Education

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