WHAT IS PLANNING?
Planning involves defining the organization’s goals,
establishing an overall strategy for achieving these
goals, and developing a comprehensive set of plans to integrate and
coordinate organizational work. The
as used in this chapter refers to
planning. The quality
of the planning process and
probably contribute more to high performance
than does the extent
WHY DO MANAGERS PLAN?
Purposes of Planning.
Planning is important and serves many significant purposes.
1. Planning gives direction to the organization.
2. Planning reduces the impact of change.
3. Planning establishes a coordinated effort.
4. Planning reduces uncertainty.
5. Planning reduces overlapping and wasteful activities.
6. Planning establishes objectives or standards that are used in
HOW DO MANAGERS PLAN?
Planning is often called the primary
management function because it establishes the basis for all other
functions. Planning involves two important elements: goals and plans.
The Role of Goals and Plans in Planning
1. Goals—desired outcomes for individuals,
groups, or entire organizations.
2. Goals are objectives—the two terms are used interchangeably.
3. Types of goals.
a. Financial performance versus strategic goals
b. Stated versus Real.
are official statements of what an
organization says, and what it wants its various
stakeholders to believe, its goals are.
are those that an organization actually
Questions and Answers
1. Define planning.
lanning involves defining the organization’s
goals, establishing an overall strategy for achieving
those goals, and developing a comprehensive set of plans to integrate
and coordinate organizational work.
It’s concerned with both ends (what’s to be done) and means (how it’s to
2. What purposes does planning serve?
Planning gives direction, reduces the impact
of change, establishes coordinated effort, reduces
uncertainty, minimizes waste and redundancy, and sets the standards used
3. What is the relationship between planning and organizational
Formal planning is associated with higher
profits, higher return on assets, and other positive
financial results. The quality of the planning process and the
appropriate implementation of the plans
probably contribute more to high performance than does the extent of
4. Differentiate between goals and plans.
Goals are desired outcomes for individuals,
groups, or entire organizations. Plans are documents
that outline how goals are going to be met and that typically describe
resource allocations, schedules, and
other necessary actions to accomplish the goals.
5. What are the different types of goals?
Organizations may utilize financial and/or
strategic goals, stated and/or real goals.
6. Describe each of the different types of plans.
Strategic plans apply to the entire
organization, establish the organization’s overall goals, and seek
to position the organization in terms of its environment. Operational
plans specify the details of how the
overall goals are to be achieved. Long-term plans are plans with a time
frame beyond three years. Shortterm
plans cover one year or less. Specific plans are clearly defined and
leave no room for interpretation.
Directional plans are flexible plans that set out general guidelines.
Single-use plans are one-time plans
specifically designed to meet the needs of a unique situation. Standing
plans are ongoing plans that provide
guidance for activities performed repeatedly and include policies,
rules, and procedures.
The Nature of organizational Goals
The use of goals has several benefits.
can be improved.
can be improved.
Controlling function can be facilitated
so that progress can be assessed and
corrective action taken.
4. Meeting goals can increase
The three levels of goals within an
organization form a hierarchy of goals, with lower-level goals forming a
mean-end chain with the next level of goals.
1. Strategic goals
are broadly defined targets or future end results set
2. Tactical goals
are the targets or future end results usually set by
management for specific departments or units.
3. Operational goals
are those targets or future end results set by lower
management that address specific, measurable outcomes required from the
Linkage of goals and plans.
Goal and plans are closely related in that
plans specify the means to achieving the goals.
A. Plans, like goals, enter into a
of levels and priority.
1. Strategic plans
are detailed action steps mapped out to reach
a. Strategic plans are organizational wide and are developed by top
b. The time horizon tends to be long 3 to 5 years or more.
2. Tactical plans
are the means charted to support implementation of
plan and achievement of tactical goals.
a. Tactical plans tend to be more specific and concrete than strategic
b. Tactical plans are important to the success of strategic plans.
c. The time horizon tends to be intermediate in range 1 to 3 years.
3. Operational plans
are the means devised to support implementation of
plans and achievement of operational goals.
a. Operational plans spell out specifically what must be accomplished to
achieve operational goals.
b. The time horizon is relatively
short-tem—usually less than 1 year as a
B. Plans can be categorized according to the extent to which they will
be used on a recurring
1. Single-use plans
are plans aimed at achieving a specific goal that,
will most likely not recur in the future.
a. A program
is a comprehensive plan that coordinates a complex
activities related to a major non-recurring goal.
b. A project
is a plan that coordinates a set of limited-scope
do not need to be divided into several major projects in order to reach
major non-recurring goal. Programs are broader than projects.
2. Standing plans
are plans that provide ongoing guidance for
a. A policy
is a general guide that specifies the broad
parameters within which organization members are expected to operate in
b. A procedure
is a prescribed series of related steps to be taken
certain recurring circumstances.
1) Procedures are detained and inflexible; policies are general.
2) Well established and formalized procedures are often called
standard operating procedures (SOPs).
C. Different levels
of goals and plans are related to different
Strategic plans typically involve time periods
of 5 years or more, but the time frame is dependent upon the
stability of the industry in question.
1. Tactical goals and plans typically involve time periods of 1 to 5
2. Operational goals and plans can be for as short a period as 1 week or
as long as 1
D. The planning process can be used to promote
1. The organizational mission statement can be a primary means of
2. The goals component can translate the mission in a way supporting
The plans component can provide actual plans for achieving innovative