Adobe Systems BPH_AMBE – fall 2020 1 Planning Lecture 4 Adobe Systems BPH_AMBE – fall 2020 2 Agenda for today §What is planning? §Goals (objectives) and plans §Planning process §Planning tools and techniques Adobe Systems BPH_AMBE – fall 2020 3 Where are we? Adobe Systems BPH_AMBE – fall 2020 4 What is 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. ̶ ̶Types of planning Informal: not written down, short-term focus; specific to an organizational unit. Formal: written, specific, and long-term focus, involves shared goals for the organization. ̶ Adobe Systems BPH_AMBE – fall 2020 5 Purposes of planning Why do managers plan? Planning vs. Performance ̶Provides direction ̶Reduces uncertainty ̶Minimizes waste and redundancy ̶Sets the standards for controlling ̶ ̶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. ̶ Adobe Systems BPH_AMBE – fall 2020 6 GOALS (Objectives) Elements of planning PLANS –Desired outcomes for individuals, groups, or entire organizations –Provide direction and evaluation performance criteria –they specify future conditions that are deemed satisfactory (by the organization itself and also by the environment). –objectives should be measurable (S.M.A.R.T.); –management initiates planning to determine the priority and timing of objectives; ̶ –Documents that outline how goals are to be accomplished –Describe how resources are to be allocated and establish activity schedules ̶ Adobe Systems BPH_AMBE – fall 2020 7 The planning process Adobe Systems You can make better plans if you can predict the future. -realistic objectives can be set; -feasible course of action can be planned; -resource costs can be minimized; Þ no major corrections will be needed in the future. Qualitative approach to forecasting – Delphi method – estimates of salespeople – consumer panels – historical analogy Quantitative approach to forecasting – time series analysis = extrapolative methods - naïve model - averages - exponential smoothing – causal methods = to suggest causes of behavior of independent variables - regression - econometric models BPH_AMBE – fall 2020 8 Setting objectives ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶You must balance the cost of obtaining better forecasts against the benefit of the improved decision. Adobe Systems ̶Broad goals are set at the top of the organization. ̶Goals are then broken into subgoals 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. ̶ BPH_AMBE – fall 2020 9 Traditional goal setting Traditional goal setting vs. MBO Management By Objectives ̶Specific performance goals are jointly determined by employees and managers. ̶Rewards are allocated on the basis of periodically reviewed progress towards the goals. Goal specificity, participative decision making, an explicit performance/evaluation period, feedback ̶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. ̶ Adobe Systems BPH_AMBE – fall 2020 10 Means – ends chain Goals are interrelated… •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). ̶ ̶Supportive goals ̶ ̶ ̶Conflicting goals (=> trade-off) ̶ ̶ ̶Independent goals Adobe Systems BPH_AMBE – fall 2020 11 Assessing the environment Planning tools and techniques (1/2) ̶Environmental Scanning ̶The screening of large amounts of information to anticipate and interpret change in the environment. ̶Competitor Intelligence = The process of gathering information about competitors — who they are; what they are doing = but rather careful attention to readily accessible information from employees, customers, suppliers, the Internet, and competitors themselves (=>NOT spying) ̶May involve reverse engineering of competing products to discover technical innovations. ̶Forecasting (see slide no. 8) ̶ ̶Benchmarking ̶The search for the best practices among competitors and noncompetitors that lead to their superior performance. ̶By analyzing and copying these practices, firms can improve their performance. ̶ Adobe Systems BPH_AMBE – fall 2020 12 Allocating Resources Planning tools and techniques (2/2) ̶Resources are assets of the organization •Financial: debt, equity, and retained earnings •Physical: buildings, equipment, and raw materials •Human: experiences, skills, knowledge, and competencies •Intangible: brand names, patents, reputation, trademarks, copyrights, and databases ̶are constraints on the courses of action • ̶ ̶Budgeting ̶Capacity planning ̶Production planning ̶Materials (inventory) planning ̶Schedulling ̶Human Resources Planning ̶ ̶ Adobe Systems BPH_AMBE – fall 2020 13 Planning within an organizational setting Organizational approaches to planning ̶ ̶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. ̶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. ̶ Adobe Systems BPH_AMBE – fall 2020 14 Effective Planning in Dynamic Environments Contemporary Issues in Planning Criticisms of Planning ̶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. ̶ ̶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. ̶ Adobe Systems BPH_AMBE – fall 2020 15 Must know - keywords ̶planning ̶goals ̶plans ̶strategic plans ̶operational plans ̶long-term plans ̶short-term plans ̶specific plans ̶traditional goal setting ̶means-ends chain ̶ ̶ ̶management by objectives (MBO) ̶commitment concept ̶benchmarking ̶reverse engineering ̶competitor intelligence ̶environmental scanning ̶forecasting ̶ ̶ ̶