Understanding Management First Canadian Edition Slides prepared by Janice Edwards College of the Rockies Copyright © 2009 Nelson Education Ltd. Chapter 5 Organizational Goal Setting and Planning Learning Objectives 1. 2. 3. 4. 5. 6. Define goals and plans and explain the relationship between them. Explain the concept of organizational mission and how it influences goal setting and planning. Describe the 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. Copyright © 2009 Nelson Education Ltd. 5-3 Learning Objectives (Cont’d) 7. 8. 9. 10. 11. Discuss how planning in a turbulent environment differs from traditional approaches to planning. Describe and explain the importance of the three stages of crisis management planning. Define the components of strategic management. Explain the major considerations in formulating functional strategies. Describe the strategic planning process and SWOT analysis. Copyright © 2009 Nelson Education Ltd. 5-4 Learning Objectives (cont’d) 12. 13. Describe business-level strategies, including Michael E. Porter’s competitive forces and strategies and partnership strategies. Discuss the organizational dimensions used for implementing strategy. Copyright © 2009 Nelson Education Ltd. 5-5 Overview of Goals and Plans Goal • A desired future state that the organization attempts to realize. Plan • A blueprint specifying the resource allocation, schedules, and other actions necessary for attaining goals. Copyright © 2009 Nelson Education Ltd. 5-6 Ex. 5.1 Levels of Goals/Plans and Their Importance Copyright © 2009 Nelson Education Ltd. 5-7 Purposes of Goals and Plans • • • • • • Legitimacy/mission statement. Source of motivation and commitment. Resource allocation. Guides to action. Rationale for decisions. Standard of performance. Copyright © 2009 Nelson Education Ltd. 5-8 Goals in Organizations Mission: • The organization’s reason for existence. Mission Statement: • A broadly stated definition of the organization’s basic business scope and operations that distinguishes it from similar types of organizations. Copyright © 2009 Nelson Education Ltd. 5-9 Goals and Plans: Strategic Strategic Goals  Broad statements of where the organization wants to be in the future, pertaining to the organization as a whole rather than to specific divisions or departments. Strategic Plans  The action steps by which an organization intends to attain strategic goals. Copyright © 2009 Nelson Education Ltd. 5-10 Goals and Plans: Tactical Tactical Goals • Goals that define the outcomes that major divisions and departments must achieve for the organization to reach its overall goals. Tactical Plans • Plans designed to help execute major strategic plans and to accomplish a specific part of the company’s strategy. Copyright © 2009 Nelson Education Ltd. 5-11 Goals and Plans: Operational Operational Goals • Specific, measurable results expected from departments, work groups, and individuals. Operational Plans • Organization’s lower levels that specify action steps toward achieving operational goals. Copyright © 2009 Nelson Education Ltd. 5-12 Ex. 5.3 Characteristics of Effective Goal Setting Goal Characteristics: • Specific and measurable • Cover key result areas • Challenging but realistic • Defined time period • Linked to rewards Copyright © 2009 Nelson Education Ltd. 5-13 Ex. 5.4 Model of the MBO Process Step 1: Setting Goals Step 2: Developing Action Plans • Corporate Strategic Goals • Departmental Goals Action Plans • Individual Goals Review Progress Step 3: Reviewing Progress Take Corrective Action Appraise Performance Step 4: Appraising Overall Performance Copyright © 2009 Nelson Education Ltd. 5-14 Ex. 5.5 MBO Benefits and Problems Benefits: • Manager and employee efforts are focused on activities that will lead to goal attainment. • Performance can be improved at all company levels. • Employees are motivated. • Departmental and individual goals are aligned with company goals. Copyright © 2009 Nelson Education Ltd. 5-15 Ex. 5.5 MBO Benefits and Problems (Cont’d) Problems: • Constant change prevents MBO from taking hold. • An environment of poor employer-employee relations reduces MBO effectiveness. • Strategic goals may be displaced by operational goals. • Mechanistic organizations and values that discourage participation can harm the MBO process. • Too much paperwork saps MBO energy. Copyright © 2009 Nelson Education Ltd. 5-16 Types of Plans 1. 2. 3. 4. Single-Use Standing Contingency Crisis Management • Three Stages: • Prevention • Preparation • Containment Copyright © 2009 Nelson Education Ltd. 5-17 Strategic Management • Set of decisions and actions used to formulate and implement strategies that will provide a competitively superior fit between the organization and its environment so as to achieve organizational goals. Copyright © 2009 Nelson Education Ltd. 5-18 Ex. 5.9 The Strategic Management Process Porter’s Competitive Forces 1. Potential new entrants 2. Bargaining power of buyers 3. Bargaining power of suppliers 4. Threat of substitute products 5. Rivalry among competitors Copyright © 2009 Nelson Education Ltd. 5-20 Ex. 5.11 The Five Forces Affecting Industry Competition Competitive Strategies 1. Differentiation 2. Cost Leadership 3. Focus Copyright © 2009 Nelson Education Ltd. 5-22 Ex. 5.14 Tools for Putting Strategy into Action Copyright © 2009 Nelson Education Ltd. 5-23