Summary of chapter 7 by nazish william

SUMMARY CHAPTER 7
FOUNDATIONS OF PLANNING


WHAT IS PLANNING AND WHY IS IT IMPORTANT?
Planning is a management function that involves, defining goals, establishing strategies for achieving those goals and developing plans to integrate and coordinate activities. There are two types of planning formal and informal. It is concerned with both a means and an end. Planning:-
1. Provides direction
2. Reduces uncertainty
3. Minimizes waste and redundancy
4. Establishes a clear picture of goals or standards used in controlling.

HOW DO MANAGERS PLAN?
There are two important elements in planning
A. GOALS which are desired outcomes for individuals, groups or entire organizations
B. PLANS which are documented form of goals and an outline on how goals are to be met.
A business can have various goals, not just one as it seems apparently. For instance an organization might want to increase market share and keep workers enthused about working for them.
WHAT TYPES OF GOALS DO COMPANIES PURSUE?
FINANCIAL GOALS are related to the financial performance of the business
STRATEGIC GOALS are related to other areas of a businesses performance.
STATED GOALS are an official statement of the businesses aims, what its stakeholders want, what its goals are etc. for instance Nike’s stated goals are “to bring inspiration and innovation to every athlete.”
REAL GOALS are those that a business actually pursues.

WHAT ARE THE TYPES OF PLANS?
BREADTH: - STARTEGIC PLANS are plans that apply to the entire organization and seek to position the organization in terms of its environment.
OPERATIONAL PLANS are those that specify the details of how overall goals are to be achieved.
TIME FRAME: - LONG TERM plans are those with a time frame beyond three years
SHORT TERM plans are those covering one year or less.
SPECIFICITY: - SPECIFIC PANS are plans that are clearly defined and leave no room for explanation. For instance the marketing department aims to cut down costs so immediately the will start working towards this goal without further delay.
DIRECTIONAL PLANS are flexible and set out general guidelines for example a business aims to increase market share. This can be done through various ways and is just a basic direction of what to do
FREQUENCY OF USE: - SINGLE USE PLAN is a one-time plan designed to meet the needs of a unique situation. A company planning to expand factory premises will only use the plan once.
STANDING PLANS are on going plans that provide guidance for activities performed repeatedly. For example increasing market share.

HOW DO MANAGERS SET GOALS?
In traditional goal setting goals are set at the highest levels and then broken down into sub goals for each level on the chain of command. For instance the goals for managers would be different from goals for an individual worker. When hierarchy of goals is clearly defined, a means-end chain is formed which serves as a mean for their accomplishment
Many organizations use Management by Objectives, which is a process of mutually agreed upon goals and using these goals to evaluate employee performance. MBO has four important elements:-
1. Goal specificity
2. Participative decision making
3. Explicit time period and
4. Performance feedback

CHARACTERISTICS OF WELL DEFINED GOALS
1. Measurable
2. Quantifiable
3. Well communicated
4. challenging but attainable
5. Written down

HOW DO MANAGERS DEVELOP PLANS?
The process of planning is influenced by three contingency factors which are level in the organization, degree of environmental uncertainty, and length of future commitment. The commitment concept states that plans should extend far enough to meet those commitments made today.

CRITICISMS OF PLANNING
1. Creates rigidity
2. Can’t be developed for dynamic environment
3. Can’t replace intuition
4. Focuses on today
5. Reinforces success which can lead to failure
6. Planning isn’t enough.