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Chapter 8

Chapter 8 - Planning and Controlling

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Ryerson University
Global Management Studies
GMS 200
Shavin Malhotra

Chapter 8 – Planning and Controlling HOW AND WHY MANAGERS PLAN Importance of Planning The process of setting objectives and determining how to best accomplish them. Creates a solid platform for the four management functions The Planning Process Plan: A statement of action steps to be taken in order to accomplish the objectives. Systematic planning process: • Define Your Objectives: Objectives identify the specific results or desired outcomes that one intends to achieve. • Determine where you stand vis-à-vis objectives: Evaluate current accomplishments relative to what you want to actually achieve. Allows you to know where you stand in reaching objectives • Develop premises regarding future conditions: Try and anticipate future results and generate alternative scenarios for what may happen (outline what will help and hurt your progress to achieving your goal) • Analyze and choose among action alternatives: list and evaluate actions to be taken, choose the one that will accomplish your objective • Implement the plan and evaluate results: take action and measure your progress toward your objectives Benefits of Planning Improves focus and flexibility: a company with focus knows what it does best and knows the needs of the customers, and flexibility allows for it to handle change and adapt to the change Improves action orientation: allows for companies to stay ahead of the competition. Makes us more result, change, advantage, and priority oriented Improves coordination: createsmaeans-end chain where lower-level objectives accomplish higher goals Improves time management: proper allocation of time and most important priorities Improves control: makes it easier to measure performance results and take action to improve things immediately Planning Theories • Rational comprehensive planning (RCP) Advantage: simplicity Disadvantage: unrealistic, only for simple problems • Incrementalism (“muddle through”) Advantage: looks at decision making as it generally occurs, quickly and with imperfect information www.notesolution.com Disadvantage: focuses on only near future, fails to take advantage of innovations TYPES OF PLANS USED BY MANAGERS Short-range and long-range plans Short-range plans = 1 year or less Intermediate-range plans = 1 to 2 years Long-range plans = 3 or more years Top management is more likely to be involved in long-range plans, whereas lower management levels focus on short-range plans to help achieve long term objectives Strategic and Operational Plans Strategic Plan: sets broad, comprehensive, and longer-term action directions for the entire organizationD . escribes what and where the organization wants to be in the future. Operational Plans: is what needs to be done in specific area to implement strategic plans. This includes: production (IT and methods), financial (financial support), facilities (work layouts), marketing (selling and distribution of product), HR (recruitment, selection and placement) Policies and Procedures (standing plans) Policy: A standing plan that communicates broad guidelines for decisions and action. Example: HR policies address hiring, termination, appraisals, pay, discipline Procedure:Plans that describe exactly what actions are to be taken in specific situations.Example: employee handbooks offer procedures of what to do when there is a harassment complaint Budgets and Projects (single-use plan) Budget:Single-use plans that commit resources to activities, projects, or programs. Fixed (specific amount to be spent for a specific purpose), flexible (allocation of resources are based on the various levels of activity), and zero-based budgets (allocates resources as if each budget is brand new – last year’s marketing percentage was 10%, does not mean it will be the same this year, so a new budget is formed) ProjectsOne-time activities that have clear beginning and end points. Project management: making sure that activities required to be completed are competed on time with budget and meeting the objectives Project schedules: what needs to be done/when it needs to be done/what resources are used/task objectives PLANNING TOOLS AND TECHNIQUES Forecasting Making assumptions about what will happen in the future. www.notesolution.com Qualitative forecasting uses expert opinions. Quantitative forecasting uses mathematical and statistical analysis. All forecasts rely on human judgment. Planning involves deciding on how to deal with the implications of a forecast. Contingency Planning Identifying alternative courses of action that can be implemented to meet the needs of changing circumstances. Contingency plans anticipate changing conditions. Contingency plans contain trigger points (pre-selected alternative plans) Scenario Planning A long-term version of contingency planning. Identifying alternative future scenarios. Plans made for each future scenario. Increases organization’s flexibility and preparation for future shocks. Benchmarking Use of external comparisons to better evaluate current performance and identify possible actions for the future. Adopting best practices of other organizations that achieve superior performance (find out what they are doing well) Best practises refers to things that lead to superior performance (a way for companies to learn from “excellent” companies) Use of Staff Planners Employed to help coordinate planning for the organization as a whole or for one of its major components. Possible communication gaps between staff planners and line management (unless everyone works closely together the final plan may be inadequate and people may lack in commitment to implement the plan no matter how good the plan is) Participation and Involvement Participatory planning requires that the planning process include people who will be affected by the plans and/or will help implement them. Benefits of participation and involvement: • Promotes creativity in planning. • Increases available information. • Fosters understanding, acceptance, and commitment to the final plan. THE CONTROL PROCESS Importance of Controlling Controlling: The process of measuring performance and taking action to ensure desired results. www.notesolution.com Has a positive and necessary role in the management process (makes sure that plans are achieved) Ensures that the right things happen, in the right way, at the right time. Organizational learning (learning from experience) and after-action review (lessons learned in completed tasks) Steps in the Control Process Step 1 - establish objectives and standards • Output standards: Measure performance results in terms of quantity, quality, cost, or time. • Input standards: Measure effort in terms of amount of work expended in task performance. Step 2 — measure actual performance. • Goal measurement of actual results and the efforts • The difference between what was done and what was the original plan Step 3 — compare results with objectives and standards • Compare objectives with results (need for action = desired performance – actual performance) Historical comparison: past performance as basis to evaluate pres
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