Managing Organizations - Chapter 5

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  1. Planning defined
    Planning includes all the activities that lead to the definition of objectives and to the determination of appropriate course of action to achieve those objectives
  2. Major Benefits of planning
    • Planning forces managers to think ahead
    • It leads to the development of performance standards that enable more effective management control
    • Having to formulate plans forces management to articulate clear objectives.
    • Planning enables an organization to be better prepared for sudden developments
  3. Four important factors of planning
    • Increasing time spans between present decisions and future results
    • Increasing organizational complexity
    • Increasing external change
    • Planning and other management functions
  4. Increasing time spans between present decisions and future results
    The period of time between the decision to create a new product and the resulting product may be very long.

    Managers have to see further into the future.

    Campbell's Soup took 20 years to make dry soup packets.
  5. Increasing Organization complexity
    As organizations become larger and more complex, the manager's job also becomes bigger and more complicated by the interdependence among the organization's various parts.
  6. Increasing External Change
    Rapid rates of change in the external environments will force managers at all levels to focus on larger issues rather than solely on solving internal issues.

    The faster the rate of change becomes the greater the necessity for organized responses at all levels in the organization.
  7. Planning and other Management functions
    Before a manager can organize, lead or control, he must have a plan.  Otherwise these have no purpose or direction.
  8. Types of Planning
    • Strategic
    • Operational
    • Tactical

    • Single use plan
    • Standing plan
  9. Scope
    The range of activities that a plan covers
  10. Time frame
    The period considered by a plan, ranging from short term to long term
  11. Level of detail
    The amount of specificity in a plan
  12. Strategic Planning
    The activities that lead to the definition of objectives for the entire organization and to the determination of appropriate strategies for achieving those objectives.
  13. Operational planning
    Translates the broad concepts of a strategic plan into clear numbers, specific steps, and measurable objectives for the short term.
  14. Tactical planning
    Planning that deals more with issues of efficiency than with longer-term effectiveness. Falls between strategic and operational planning on the continuum.
  15. Single use plans
    Plans wit a clear time frame for their usefulness; includes detailed goals and objectives concerning quality, primary markets, rollout schedule, and so on.
  16. Standing plan
    A plan that has ongoing meaning and application for an organization.

    e.g. US Constitution
  17. Elements of Planning
    • Objectives
    • Actions
    • Resources
    • Implementation
  18. Objectives
    Specify future conditions that the planner deems satisfactory
  19. Actions
    The specified preferred means to achieve objectives
  20. Resources
    Constraints on courses of action

    A plan should specify amount of resources required as well as potential sources and allocations of those resources.
  21. Implementation
    The ways and means to implement the intended actions.

    Assignment and direction of personnel to carry out the plan
  22. Priority Objectives
    At a given time, accomplishing one objective is more important than accomplishing any of hte others
  23. Balanced Scorecard (p/o priority of objectives)
    An approach to establishing appropriate objectives and priorities by presenting a balanced picture of current operation performance and the drivers of future performance.
  24. Soft Measures (balanced score card)
    Balanced Scorecards contain hard financials but also have these soft measures:

    • Customer acquisition
    • Customer retention
    • Customer satisfaction
    • Customer profitability
    • Product development cycle times
    • Employee satisfaction
    • Intellectual assets
    • Organizational learning
  25. Time frame of objectives
    The role times plays in plans

    Long and short run objectives

    The definition of short & long time periods are firm specific
  26. Conflicts among objectives
    • Regulatory Conflict:  Stock holders, Union (employees), customers, suppliers, creditors, and government.
    • Production conflict:  Demand changes trickle from retailer back to manufacturer, all with different goals and objectives.
  27. Common planning tradeoffs
    • Short-term profits v. long-term growth
    • Profit margin v. competitive position
    • Direct sales efforts v. development effort
    • Penetration of market v. developing new markets
    • Growth through related v. non-related businesses
    • Growth v. stability
    • Profit v. non-profit objectives (social responsibility)
    • Low Risk v. High Risk environments
  28. Five categories of measurement objectives
    • Profitability
    • Competitiveness
    • Efficiency
    • Flexibility
    • Quality
  29. Profitability (measurement objective)
    Usually expressed in terms of return on investment (ROI)

    net profit/capital invested
  30. Three reasons to create value over time for the owners/shareholders
    • Increasing shareholder value over time is the job the economic system demands of management.
    • Increased shareowner value contributes to society in very meaningful ways
    • Focus on creating value over the long term keeps executives from acting in a short sighted manner.
  31. Competitiveness (measurement objective)
    Long term profitability

    Established objectives that concentrate on specific rates of increase in sales and market share.
  32. Main factors of competitiveness (measurement objectives)
    • Customer value: Able to deliver value when compared to competitors - customer value = benefit/price
    • Shareholder value: able to provide a satisfactory ROI in the short, medium and long terms
    • Ability to Act and React within a competitive environment:  retain competitive position satisfy expectations of customers and shareholders eliminating threats and exploiting opportunities
  33. Efficiency (measurement objectives)
    How well the resources are employed 

    Return on assets = Net Profit/total assets
  34. Flexibility (measurement objectives)
    Flexible organizations continually develop new strategies and adapt to new market realities, and then shift all aspects of the organization so that they are congruent with the new strategies.
  35. Quality (measurement objectives) W. Edwards Deming's 14 points of Quality
    • Create consistency of purpose for improved product and service
    • Adopt the new philosophy
    • Cease dependence on mass inspection
    • End practice of awarding business on price tag alone
    • Improve constantly the system of product and service
    • Institute Training
    • Institute Leadership
    • Drive out fear
    • Break down barriers between staff areas
    • Eliminate slogans, exhortations, and targets for the workforce
    • Eliminate numerical quotas
    • Remove barriers to pride of work
    • Institute a vigorous program of education and training
    • Take action to accomplish the transformation
  36. Quality (measurement objectives) 10 Dimensions of service quality
    • Access: Availability to customers
    • Communication: Clear descriptions, answer questions
    • Competence: Proven expertise at a task
    • Courtesy: Friendliness, respect for customers
    • Credibility: Believability, meeting promises
    • Reliability: Error reduction
    • Responsiveness: Speed at meeting customer requests
    • Security: maintaining customer safety and privacy
    • Tangibles: Physical appearance of workplaces
    • Knowing the customer: listen, respond, satisfy
  37. Five Values of Quality
    • The firm is customer driven, not product driven
    • All employees manage, not just the managers
    • Decisions are fact based, not based on hunches or tampering
    • The basic, ongoing work emphasis is on producing quality and continuous improvement
    • Prevention (not detection) of defects is emphasized.
  38. David Garvin (Harvard) 8 Planning values - Basis of Quality-based systems
    • Performance: primary operating characteristic, e.g. speed
    • Features: supplements to performance
    • Reliability: No malfunctioning or need for repair
    • Conformance: to established standards
    • Durability: product life
    • Serviceability: speed and ease of repair
    • Aesthetics: appeal to taste, looks, or feel
    • Perceived Quality: customer perception
  39. Actions (elements of planning)
    Actions are specific, prescribed means to achieve objectives

    Actions determine success or failure to meet objectives
  40. Forecasting (actions - elements of planning)
    The process of using past and current information to predict future events.
  41. Forecasting - 2 basic questions
    • An important element of the planning function that must make two basic determinations:
    • a. What level of activity can be expected during the planning period
    • b. What level of resources will be available to support the projected activity

    Critical Forecast = Sales Forecast
  42. Resources Defined (elements of planning)
    Resources are defined as the financial, physical, human, time or other assets of an organization.
  43. Budget (elements of planning - resources)
    A predetermined amount of resources linked to an activity
  44. Two means to provide budget flexibility
    • Variable Budgeting
    • Moving Budgeting
  45. Manager's means for implementing plans
    • Authority
    • Persuasion
    • Policy
  46. Authority
    The legitimate right to use assigned resources to accomplish a delegated task or objective; the right to give orders and to exact obedience.
  47. Persuasion
    A process of selling a plan to those who must implement it and communicating relevant information so individuals understand all implications.

    If persuasion fails, the manager must fall back to authority.
  48. Policy
    Policies usually are written statements that reflect the basic objectives of the plan and provide guidelines for selecting actions to achieve the objectives.

    When plans are intended to be permanent fixtures.
  49. Effective policy characteristics
    • Flexibility: conditions change - stability v. flexibility
    • Comprehensiveness:  enough to cover any contingency if plans are to be followed.
    • Coordination: between subunits whose actions are interrelated
    • Ethical: conform to canons of ethical behavior
    • Clarity: written clearly and logically
  50. The ultimate test of a policy
    Whether or not the objective is obtained
  51. Time-based planning - concept to customer
    The period of time between the time the customer first considers a product and the time it is sold
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Managing Organizations - Chapter 5
2014-08-24 13:41:20

Managing Organizations - Second Edition
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