Summary of chapter 7

Chapter 7 Foundation of Planing
Summary:
Planning:
Defining organization's goals,establishing overall strategy and making plans.Planning is often called the primary management function.
Types of planning:
Formal Planning:
Goals are defined,written and shared with organizational members
· Informal Planning:
Nothing is written down and no sharing of goals
Importance of Formal Planning:
provides direction, reduces uncertainty, minimizes waste and redundancy and
establishes the goals or standard used in controlling
Important elements of planning:
· Goals:
Desired outcomes for individuals, groups or entire organization
· Plans:
Documents that outline how goals are going to be met.
Types of Goals:
· Strategic or financial:
Financial goals are related to the financial performance of the organization and strategic goals are related to other areas of an organizations performance.
· Stated Goals:
Official statement of what an organization says and what its want.
· Real Goals:
Goals that an organization actually pursues.
Types of Plans:
· Strategic plans:
Plans that apply to the entire organization and establish overall goals.
· Operational Plans:
Plans that tells the details of how goals are to be achieved.
· Long-term Plans:
Plans with a time frame beyond 3 years.
· Short-term Plans:
Plans covering 1 year or less.
· Directional Plans:
Plans that are flexible and set general guideline.
· Specific Plans:
Plans that are clearly defined.
· Single-use Plan:
A one time plan designed to meet the need of unique situation. For instance when
Wal- Mart decided to expand the number of its stores in China, top level executives formulated a single-use plan as a guide.
· Standing Plan:
Plans that are on going and provide guidance for activities performed.
Establishing Goals:
Goals can be set through a process of traditional goal setting or management by objective.
In Traditional goal setting, goals are set at the top of the organization and then broken into sub goals for each organizational level.For example the president of a manufacturing business tell the vice president of production what he expects manufacturing cost to be and tells the marketing vice president what level he expects sales.
Management by objectives(MBO) is a process of setting mutually agreed upon goals.MBO programs have shown that it can increase employee performance but may not be effective in times of dynamic environmental change.
Well-Designed Goals:
Written in terms of outcomes rather than action
Measurable
Clear as to a time frame
Challenging yet attainable
Written down
Communicated to all members
Developing Plans:
Three contingency factors affect planning
Level in the organization
Degree of environment uncertainty
Length of future commitments
Approaches:
· Formal planning department:
A group of planning specialists whose sole responsibility is helping to write organizational plans
· Second way to approach planning is to involve more organizational members in the process.

MCQs Question
1. ________ is called the primary function.
(a) planning
(b) goals
(c) task
2. Plans that specify the details of how goals are to be achieved called_______.
(a) specific plans
(b) standing plans
(c) operational plans
3. How many contingency factors affect planning
(a) 3
(b) 4
(c) 5
4. Formalized organizational planning became popular in
(a) 1950s
(b) 1960s
(c) 1970s
5. MBO
(a) management by objectives
(b) managers business organization
(c) management business organization
6. _________should be written in terms of outcomes.
(a) plans
(b) goals
(c) mission