MGT Chap07

Chapter Seven
Basic Elements of Planning and Decision Making
After studying this chapter, you should be able to:

1.
Summarize the function of decision making and the planning
process.
2.
Discuss the purpose of organizational goals, identify different

kinds of goals, discuss who sets goals, and describe how to
manage multiple goals.
3.
Identify different kinds of organizational plans, note the time

frames for planning, discuss who plans, and describe
contingency planning.
4.
Discuss how tactical plans are developed and executed.
5.
Describe the basic types of operational plans used by

organizations.
6.
Identify the major barriers to goal setting and planning, how

organizations overcome those barriers, and how to use goals to
implement plans.
Learning Objectives
Decision
making
Is the cornerstone of planning.

Is the catalyst that drives the planning process.
Underlies every aspect of setting goals and
formulating plans.
Planning
All organizations plan, but not in the same fashion.

All planning occurs within an environmental
context.
All goals require plans to guide in their
achievement.
All goals are tied higher goals and plans
Decision Making and the Planning

Process
Figure 7.1: The

Planning Process
Purposes
of Goals
Provide guidance and a unified direction for

people in the organization.
Strongly affect on the quality of other
aspects of planning.
Serve as a source of motivation for
employees.
Provide a mechanism for evaluation and
control of the organization.
Organizational Goals
By
Level
Mission statement
Strategic goals
Tactical goals
Operational goals
By
Area
Different functional areas of the organization.

By
Time Frame
Long-term, intermediate-term, or short-term time

frames and explicit time frames or open-ended.
Kinds of Goals
Figure
7.2: Kinds
of
Organizat
ional
Goals for
a
Regional
Fast-Food
Chain
Who
Sets Goals?
All managers: managerial

responsibility for goal setting should
correspond to the managers level in
the organization.
Managing
Multiple Goals
Optimizing allows managers to

balance and reconcile inconsistent or
conflicting goals.
Managers can choose to pursue one goal
and exclude all others or to seek a midrange goal.
Responsibilities
of Setting Goals
Strategic
Plans
A general plan set by and for top management

that outlines resource allocation, priorities, and
action steps to achieve strategic goals.
Tactical
Plans
A plan aimed at achieving the tactical goals set

by and for middle management.
Operational
Plans
Short-term focus plans that are set by and for

lower-level managers.
Kinds of Organizational Plans
The
Time Dimension of Planning
Planning must provide sufficient time to fulfill the

managerial commitments involved.
Long-range
Plans
Cover present and future strategic issues

extending beyond five years in the future.
Intermediate
Plans
Cover from 1 to 5 years and parallel tactical

plans.
Are the principal focus of organizational planning
efforts.
Short-range
Plans
Are action plans and reaction (contingency)

plans that have a time frame of one year or less.
Time Frames for Planning
Planning
Staff
Gather information, coordinate planning activities,

and take a broader view than individual managers.
Planning
Task Force
Created when the organization wants a special

circumstance addressed.
Board
of Directors
Establishes corporate mission and strategy.

May engage in strategic planning.
Chief
Executive Officer
May serve as president or board chair; has a major

role in planning and implementing the strategy.
Responsibilities for Planning
Executive
Committee
Composed of top executives.

Meets regularly with the CEO
to review strategic plans.
Line Management
Have formal authority and
responsibility for management of
the organization.
Responsibilities Help to formulate strategy by
providing information.
for Planning (contd)
Responsible for executing the
plans of top management.
Contingency
Planning
The determination of alternative courses of

action to be taken if an intended plan is
unexpectedly disrupted or rendered
inappropriate.
These plans help managers to cope with
uncertainty and change.
Crisis
Management
The set of procedures the organization uses in

the event of a disaster or other unexpected
calamity.
Contingency Planning and Crisis

Management
Figure 7.3: Contingency Planning
Figure 7.4: Developing and

Executing Tactical Plans
Table 7.1: Types of

Operational Plans
Barriers
to Goal Setting and Planning
As part of managing the goal-setting and

planning process, managers must understand
the barriers that can disrupt them.
Managers must also know how to overcome
them.
Managing Goal-Setting and

Planning Processes
Table 7.2: Barriers to Goal Setting

and Planning
Figure 7.5: The Formal Goalsetting Process
Using Goals to Implement Plans:

Strengths (Success)
Weaknesses (Failure)
The
Effectiveness
of Formal
Goal
Improved
Poor implementation
employee
of
motivation
the goal setting process
Setting
Enhances communication
Fosters more objective
performance appraisals
Focuses attention on
appropriate goals and
plans
Helps identify managerial
talent
Provides a systematic
management philosophy
Facilitates control of the
organization
Lack of top-management
support for goal setting
Delegation of the goalsetting process to lower
levels
Overemphasis on
quantitative goals
Too much paperwork and
record keeping
Managerial resistance to
goal setting
mission
strategic goal
tactical goal
operational goal
optimizing
strategic plan
tactical plan
operational plan
reaction plan
long-range plan
intermediate plan
Key Terms
short-range plan
crisis management
single-use plan
program
project
standing plan
policy
rules and regulations
management by
objectives (MBO)

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Chapter Seven

Basic Elements of Planning and Decision Making

After studying this chapter, you should be able to:

Discuss the purpose of organizational goals, identify different

Identify different kinds of organizational plans, note the time

Discuss how tactical plans are developed and executed.

Describe the basic types of operational plans used by

Identify the major barriers to goal setting and planning, how

Is the cornerstone of planning.

All organizations plan, but not in the same fashion.

Decision Making and the Planning

Figure 7.1: The

Provide guidance and a unified direction for

Different functional areas of the organization.

Long-term, intermediate-term, or short-term time

All managers: managerial

Optimizing allows managers to

A general plan set by and for top management

A plan aimed at achieving the tactical goals set

Short-term focus plans that are set by and for

Kinds of Organizational Plans

Time Dimension of Planning

Planning must provide sufficient time to fulfill the

Cover present and future strategic issues

Cover from 1 to 5 years and parallel tactical

Are action plans and reaction (contingency)

Time Frames for Planning

Gather information, coordinate planning activities,

Created when the organization wants a special

Establishes corporate mission and strategy.

May serve as president or board chair; has a major

Responsibilities for Planning

Composed of top executives.

The determination of alternative courses of

The set of procedures the organization uses in

Contingency Planning and Crisis

Figure 7.3: Contingency Planning

Figure 7.4: Developing and

Table 7.1: Types of

to Goal Setting and Planning

As part of managing the goal-setting and

Managing Goal-Setting and

Table 7.2: Barriers to Goal Setting

Figure 7.5: The Formal Goalsetting Process

Using Goals to Implement Plans:

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