Chapter 5:

Planning and
Goal Setting

Learning Objectives

Define goals and plans and explain the relationship between them.

Explain the concept of an organizational mission and how it

influences goal setting and planning.

Describe the types of goals an organization should have and why

they resemble a hierarchy.

Define the characteristics of effective goals.

Describe the four essential steps in the MBO process.

Explain the difference between single-use plans and standing plans.
Describe and explain the importance of the three stages of crisis
management planning.

Learning Objectives (cont.)

Summarize the guidelines for high-performance planning in a fastchanging environment.

Define the strategic planning process and SWOT analysis.

Describe business-level strategies, including Porters competitive

forces and strategies and partnership strategies.

Explain the major considerations in formulating functional strategies.

Discuss the organizational dimensions used for implementing

strategy.

Goals and Plans

Goal - A desired future state that the
organization attempts to realize
Plan - A blueprint specifying the resource
allocations, schedules, and other actions
necessary for attaining goals
Planning Determining the organizations
goals and the means for achieving them

Levels of Goals/Plans

Exhibit 5.1

Purpose of Goals and Plans

Internal and external messages, goals, and
plans provide:

Legitimacy

What the organization stands for - reason for being

Employees identify with purpose

Source of Motivation and Commitment

Employees identification with the organization
Motivate by reducing uncertainty

Resource Allocation
Allocate employees, money, and equipment

Guide to Action
Provide a sense of direction; focus attention on
specific targets
Direct efforts toward important outcomes
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Purpose of Goals and Plans

Internal and external messages, goals, and
plans provide:

Rationale for Decisions

Learn what organization is trying to
accomplish
Make decisions to ensure that internal
policies, roles, performance, structure,
products, and expenditures will be made in
accordance with desired outcomes

Standard of Performance
Serve as performance criteria
Provide a standard of assessment
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Organizational Mission
Mission - Organizations reason
for existing
Mission Statement
Our companys mission is to
Basic business scope
Distinguishes it from
other organizations

extend and enhance human life

by providing the highest-quality
pharmaceutical and related
health care products.

Strategic Goals and Plans

Strategic Goals
Future plans
Plans for whole organization

Strategic Plans
Action steps used to attain strategic goals
Blueprint that defines the organizational
activities and resource allocations
Long-term
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Tactical Goals and Plans

Tactical Goals
Apply to middle management
Goals that define the outcomes that major
divisions and departments must achieve

Tactical Plans
Plans designed to help execute strategic
plans
Shorter time frame than strategic plans
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Operational Goals and Plans

Operational Goals
Specific, measurable results
Expected from departments, work groups,
and individuals

Operational Plans
Action steps toward operational goals
Daily and weekly operations
Schedules are an important component
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Goal Alignment

Means-End Chain
Achievement of goals at lower
levels permits the attainment
of high-level goals.

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Hierarchy of Goals

Exhibit 5.3

13

Characteristics of Effective
Goal Setting

Specific and measurable

Cover key result areas
Challenging but realistic
Defined time period
Linked to rewards

Exhibit 5.4

14

Management by
Objective Process
Exhibit 7.5

Exhibit 5.5

15

MBO Benefits and Problems

Benefits:

Problems:

Manager and employee

efforts are focused

Constant change prevents MBO

from taking hold

Performance can be
improved

Poor employer-employee relations

reduces MBO effectiveness

Employees are motivated

Strategic goals may be displaced

by operational goals

Departmental and individual

goals are aligned

Mechanistic organizations and

values that discourage participation
Too much paperwork saps MBO
energy

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Single-Use Plans Goals

Not Likely To Be Repeated
A program is a complex set of objectives and
plans to achieve an important, one-time
organizational goal
A project is similar to a program, but generally
smaller in scope and complexity

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Standing Plans Tasks

Performed Repeatedly
A policy is a general guide to action and
provides direction for people within the
organization
Rules describe how a specific action is to be
performed
Procedures define a precise series of steps
to be used in achieving a specific job

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Contingency Plans for

Unexpected Conditions
Identify Uncontrollable Factors

Economic downturns
Declining markets
Increases in costs of supplies
Technological developments
Safety accidents

Flexible Plans
Multiple Future Alternatives

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Three Stages of
Crisis Management
Prevention
Build trusting relationship with key stakeholders
Open communication

Preparation
Crisis management team and plan
Establish an effective communications system

Containment
1. Activate the crisis management plan.
2. Get the awful truth out.
3. Meet safety and emotional needs.
4. Return to business.
Exhibit 5.8

20

Planning for High Performance

Planning has changed as the global
environment has changed
Less top-down management
planning
Involve managers throughout the
organization
Strategic thinking and execution is
becoming job of all employees
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Planning in the New Workplace

Have a strong mission statement and vision
Set stretch goals for excellence
Establish a culture that encourages learning
Embrace event-driven planning
Utilize temporary task forces
Planning still starts and stops at the top

Planning comes alive when employees are involved in

setting goals and determining the means to reach them
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Thinking Strategically
Strategic management pertains to
competitive actions in the
marketplace
Plan of action that describes
resource allocation and activities

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Thinking Strategically
Means to take the long-term view and see
the big picture , including the organization
and the competitive environment.
For-profit typically relates strategic planning to
competitive action in the marketplace.
Not-for-profit strategic planning refers to
events in the external environment.
Understanding the strategy concept, the
levels of strategy, and strategy formulation
versus implementation is an important start
towards strategic thinking.
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What is Strategic Management?

Set of decisions and actions used to
implement strategies that will provide a
competitively superior fit between the
organization and its environment so as to
achieve organizational goals.

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What is Strategic Management?

Managers ask such questions as...
What changes and trends are occurring?
Who are our customers?
What products or services should we offer?
How can we offer these products or services
most efficiently?

Top management use strategic management

to define a general direction for the
organization, which is the firms Grand
Strategy.
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Grand Strategy

General plan of major action to achieve

long-term goals
Falls into three general categories
A separate grand
1. Growth
strategy can be
2. Stability
defined for global
operations
3. Retrenchment
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Grand Strategy: Growth

Growth can be promoted internally by
investing in expansion or externally by
acquiring additional business divisions
- Internal growth = can include development of
new or changed products
- External growth = typically involves
diversification businesses related to current
product lines or into new areas

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Grand Strategy: Stability

Stability, sometimes called a pause
strategy, means that the organization
wants
to remain the same size or
to grow slowly and in a controlled fashion

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Grand Strategy: Retrenchment

Retrenchment = the organization goes through a
period of forced decline by either shrinking current
business units or selling off or liquidating entire
businesses
Liquidation = selling off a business unit for the
cash value of the assets, thus terminating its
existence
Divestiture = involves selling off of businesses that
no longer seem central to the corporation (ex:
parts of business sold after acquisition)

)
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Strategic Emphasis

Core Competence:
Something the
organization does
especially well in
comparison to
its competitors

Value:
The combination of
benefits received
and costs paid
Synergy:
A joint effect that
is greater than the
sum of the parts
acting alone
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Strategic Management Process

Exhibit 5.10

32

SWOT Analysis

Strengths
Weaknesses
Opportunities
Threats

33

Business-Level Strategy:
Porters Five Forces

Exhibit 5.12

34

Porters Competitive Strategies

Differentiation

Cost
Leadership

Central authority, tight cost controls

Efficient procurement and distribution systems
Close supervision, finite employee empowerment

Focus

Flexible, loose knit with strong coordination

Creative flair, thinks out of box
Strong marketing abilities
Rewards employee innovation
Reputation for quality or technical leadership

Frequent, detailed control reports

Direct combination of policies to strategic target
Values and rewards flexibility and customer intimacy
Pushes empowerment to employees with customer
contact
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Partnership Strategies
Collaboration is an alternative form of
strategy
Competition and collaboration are often
present at the same time
Internet is driving and supporting more
partnerships

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Continuum of Partnership Strategies

Organizational Combination

Acquisitions

Degree of Collaboration

Mergers

Strategic
Alliances

Joint Ventures

Strategic Business Partnering

Preferred Supplier Arrangements

Low

Degree of Collaboration

High
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Strategy Implementation
and Control

Exhibit 5.15

38

Implementation During
Turbulent Times

Three Key Issues:

Global mind-set
Corporate culture
Information technology

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