Chapter Six: Planning Processes and Techniques
1. Look at the three scenarios in the lecture notes.
2. What is planning?
a. It is the process of deciding today what has to be done today to be ready for tomorrow
b. Planning is the process of collecting info and making decisions by which management formulates objectives,
and choose the pattern of action to achieve those objectives.
3. Why planning creates value?
a. Leads to an increased match between the internal organizational conditions of the firm and its external
b. Creates awareness of problems, strengths and weaknesses
c. Improves focus and flexibility – avoids wasting time, takes into account all factors and focus on critical ones,
Pareto principle (“80/20 Rule”, 20% of the activities you do accounts for 80% of your success), allows
systematic resource allocation
d. Minimization of effects of adverse conditions
e. Improves action orientation (complacency trap: is being carried along by the flow of events), coordination,
f. Gives advantage over competitors and helps stakeholders to plan their future
4. Beware of planning paralysis: when you plan too much, and you aren’t able to do it
5. Why people avoid planning? Takes time and money, disappointment, poor reward structure (you get rewarded for
your executed structure NOT your plan), fire-fighting (as and when things happen), opposition to time and expense of
planning, resistance to change, fear of failure, prior bad experience (Managerial Hubris), overconfidence
6. Approaches to Planning:
7. What types of plans do managers use? Short-range (1 year or less) and long-range plans (3 years or more)
a. People vary in their capability to deal effectively with different time horizons
b. Higher management levels focus on longer time horizons
8. Three levels of strategy in organizations: corporate, business, functional strategies
9. What types of plans for manager’s use?
a. Strategic plans: set board, comprehensive, and longer-term action directions for the entire organization
10. Vision: what do you want to become? A vision clarifies the purpose of the organization and expresses what it hopes
to be in the future
a. Short be short, preferably one sentence, and as many managers as possible should have input.
1. Planning should focus attention on objectives that identify the specific results or desired outcomes that one intends
to achieve. Planning should also create a real plan, a statement of action steps to be taken in order to accomplish the
2. Planning involves five steps:
i. Define your objectives: identify desired outcomes in very specific ways
ii. Determine where you stand vs. objectives: evaluate current accomplishments relative to the desired results –
know the strengths and weaknesses (SWOT, BCG, etc.) iii. Develop premises regarding future conditions: anticipate future events, generate alternative “scenarios” for
what may happen
iv. Analyze alternatives and make a plan: list and evaluate possible actions, choose the alternative most likely to
accomplish your objectives
v. Implement the plan and evaluate results: take action and carefully measure your progress toward objectives.