Topic 3

Chapter 5
Planning: Fundamentals
of Planning

Learning Outcome
1. Discuss the various types of
uncertainties faced by an
organization.
2. Discuss the role of planning in
handling uncertainties.
3. Discuss the fundamentals of
planning.
4. Apply planning skills to set SMART
goals and implement Management
by Objectives.

Planning
Planning: previously defined as

setting goals and deciding how

to achieve them
Another definition:
Planning is coping with
uncertainty by formulating
future courses of action to
achieve specified results.

WHY NOT PLAN?

Planning requires

you to set aside

time to do it
You may have to
make some
decisions without a
lot of time to plan

The Benefits of Planning

1)

Planning helps you check on your

progress

2)

Planning helps you coordinate activities

3)

Planning helps you think ahead

4)

Above all, planning helps you cope with

uncertainty

THREE TYPES OF UNCERTAINTY

State Uncertainty: when the environment is

considered unpredictable.
Effect Uncertainty: when the effects of
environmental changes are unpredictable.
Response Uncertainty: when the
consequences of a decision are uncertain.

What possible
harmful event could
occur?
State Uncertainty: when
the environment is
considered unpredictable.
Example: the uncertainty
regarding the weather

What possible harmful

impact might an
environmental change have?
Effect Uncertainty: when the effects
of environmental changes are
unpredictable.
Example: losing the trail in a
thunderstorm and risking
hypothermia.

What possible harmful

consequence might a
decision have?
Response Uncertainty: when the
consequences of a decision are
uncertain.
Example: you might have a cell
phone in a thunderstorm, but
someone has to receive the call.

Responding to Uncertainty
Defenders: are experts at producing and

selling narrowly defined products and services.

Prospectors: focus on developing new
markets or services and in seeking out new
markets rather than waiting for things to
happen.
Analyzers: let other organizations take the
risks of product development and marketing
and then imitate what seems to work best.
Reactors: make adjustments only when finally
forced to by environmental pressures.

Company Lite scans its environment

regularly. However, it does not tend to
seek opportunities outside its present
markets. This company would most
likely be a (n):
A.Reactor
B.Prospector
C.Analyzer
D.Defender

Making Plans
Mission
Statemen
t What is
our reason
for being?

Vision
Statemen
t What
do we
want to
become?

Strategic
Planning
Done by
top
managers
for the next
1-5 years

Goals
Action
plans

Tactical
Plannin
g Done
by middle
managers
for the
next 6-24
months

Operationa
l Planning
Done by
first-line
managers
for the next
1-52 weeks

Goals
Goals
Action
plans

Action
plans

Mission & Vision

Statements
Mission Statements:

expresses the purpose of

the organization.

Vision Statement: expresses

what the organization should

become, where it wants to go
strategically

Example

Vision
To be a global university of
educational excellence with
transformative societal
impact

Example

MISSION
We are committed to achieving the Vision
through:
* Universal values in our beliefs
Tenacity in overcoming challenges
Agility in facing new frontiers
Responsibility in pursuit of excellence

TYPES OF PLANNING
Strategic planning: top managers decide what the

organizations long-term goals should be for the next

1-5 years with the resources they expect to have
available.
Tactical planning: middle managers decide what

contributions their departments or similar work units

can make with their given resources during the next
6-24 months.
Operational planning: first-line managers determine

how to accomplish specific tasks with available

resources within the next 1-52 weeks.

Illustration: Three Levels of

Management,
Three Types of
Planning
Top Managers:
Chief executive officer,
president, vice president
general managers,
division heads
Middle Managers:
Functional managers,
product-line managers,
department managers
First-line Managers:
Unit manager, team leaders,
first-line supervisors

STRATEGIC PLANNING
1-5 years

TACTICAL PLANNING
6 months 2 years

OPERATIONAL PLANNING
1 week 1 year

Jack is participating with other managers

in a discussion about what his
organization's goals should be for the
next decade. He is participating in:
A.Strategic planning
B.Operational planning
C.Tactical planning
D.Controlling

TYPES OF GOALS
Strategic Goals: are set by and for top

management and focus on objectives for the

organization as a whole.

Tactical Goals: are set by and for middle

managers and focus on the actions needed to

achieve strategic goals.

Operational Goals: are set by and for first-

line managers and are concerned with shorttem matters associated with realizing tactical
goals.

SMART Goals
SPECIFIC
MEASURABLE
ATTAINABLE
RESULTORIENTED
TARGET DATE

Example

Engage in research, scholarship, teaching

and practice at the highest international
standards
Ensure that UTAR's Vision and Mission are
supported by effective administrative and
management structures, policies

Provide a supportive and challenging

environment for faculty and students
Promote the use of ICT and IT-intensive
learning

Relationship Between Goal Difficulty

and Performance
B

Performance

High

A
C
Medium

Low
Low

Moderate

A Performance of committed individuals with adequate

ability
B Performance of committed individuals who are
working at capacity
C Performance of individuals who lack commitment to
high goals

Challenging

Goal Difficulty

Impossible

MANAGEMENT BY OBJECTIVES
(MBO)
Is a four-step process in which:
Managers and employees jointly set

objectives for the employee

Managers develop action plans
Managers and employees periodically
review the employees performance
The manager makes a performance
appraisal and rewards the employee
according to the results

MANAGEMENT BY OBJECTIVES
(MBO)
Cascading Objectives:
MBO from the Top Down
1) The commitment of top
management is essential
2) It must be applied
organization wide
3) Objectives must cascade
(become more specific at
lower levels of management)

Reference
Chapter 5
Kinicki, A., & Williams, B.K.

(2013). Management: A
practical introduction. (6th
ed.). New York: McGrawHill.