Chapter 5 – (O) – Flashcards

As the primary management function, planning establishes the basis for all the other things that managers do. The planning we're concerned with is formal planning; that is, specific goals covering a specific time period are defined and written down and specific plans are developed to make sure those goals are met. There are four reasons why managers should plan: *(1)* it establishes coordinated efforts, *(2)* it reduces uncertainty, *(3)* it reduces overlapping and wasteful activities, and *(4)* it establishes the goals or standards that are used in controlling work. Although criticisms have been directed at planning, the evidence generally supports the position that organizations benefit from formal planning.

Managers develop the organization's strategies in the strategic management process, which is a six-step process encompassing strategy planning, implementation, and evaluation. The six steps are as follows: *(1)* Identify the organization's current mission, goals, and strategies; *(2)* Do an external analysis; *(3)* Do an internal analysis—steps 2 and 3 together are called SWOT analysis; *(4)* Formulate strategies; *(5)* Implement strategies; and *(6)* Evaluate results. The end result of this process is a set of corporate, competitive, and functional strategies that allow the organization to do what it's in business to do and to achieve its goals.

Most company's goals are classified as either strategic or financial. We can also look at goals as either stated or real. In traditional goal setting, goals set by top managers flow down through the organization and become subgoals for each organizational area. Organizations could also use management by objectives, which is a process of setting mutually agreed-upon goals and using those goals to evaluate employee performance. Plans can be described in terms of their breadth, time frame, specificity, and frequency of use. Plans can be developed by a formal planning department or by involving more organizational members in the process

One contemporary planning issue is planning in dynamic environments, which usually means developing plans that are specific but flexible. Also, it's important to continue planning even when the environment is highly uncertain. Finally, because there's little time in a dynamic environment for goals and plans to flow down from the top, lower organizational levels should be allowed to set goals and develop plans. Another contemporary planning issue is using environmental scanning to help do a better analysis of the external environment. One form of environmental scanning, competitive intelligence, can be especially helpful in finding out what competitors are doing.

In informal planning, very little, if anything, is written down. In formal planning, there are written plans at various levels, people are assigned responsibilities, there is a great deal of detail, etc. Formal planning involves specific goals to be achieved within specific timetables.

Planning is beneficial because it sets the foundation for all of the other management functions. Planning encompasses defining the organization's objectives or goals, establishing an overall strategy for achieving those goals, and developing a comprehensive hierarchy of plans to integrate and coordinate activities. It's concerned with ends (what is to be done) as well as with means (how it's to be done).

The strategic management process is made up of six steps: *(1)* identify the organization's current mission, objectives, and strategies, *(2)* analyze the external environment by identifying the opportunities and threats in the environment, *(3)* analyze the organization's internal resources by identifying the organization's strengths and weaknesses, *(4)* formulate strategies, (5) implement strategies, and (6) evaluate results.

SWOT analysis refers to analyzing the organization's internal strengths and weaknesses as well as external opportunities and threats in order to identify a niche that the organization can exploit. Having completed the SWOT analysis, the organization reassesses its mission and objectives. This process provides the foundation for planning and an accurate assessment of the organization in order to operate and succeed.

Key to this answer is the following facts. Long-term success requires that the advantage be sustainable. It must withstand both the actions of competitors and the evolutionary changes. Managers need to create barriers that make imitation by competitors difficult or reduce the competitive opportunities.

The process of planning is similar, but the content of the plans will differ. The types of objectives that are established and the plans that are formulated will be influenced by the fact that a not-for-profit organization does not have profit as its major objective. However, a not-for-profit organization must devote efforts and resources to planning how to raise funds and to recruit volunteers to achieve its mission.