Summary MNB1501 - Lesson 7 Study Resources

Study Notes: Lesson 7 - Planning

1. Introduction
 Time Commitment: Approximately TEN notional hours.
 Overview: Figure 7.1 provides a visual overview of the lesson.
Learning Outcomes
By the end of this lesson, you should be able to:
 Define planning.
 Explain the importance of planning in an organization.
 Differentiate between a goal and a plan.
 Provide the disadvantages of planning.
 Discuss the steps in the planning process.
 Discuss different types of organizational goals.
 Explain the SMART framework for setting goals.
 Distinguish between different organizational strategies and plans.
Key Terms
 Planning
 Tactical Goals
 Vision
 Goal
 Lower Management
 Operational Goals
 Planning Process
 Strategic Goals
 Management by Objectives (MBO)
 Top Management
 Corporate Strategy
 Middle Management
 Generic Strategy
 SMART

2. Defining Planning
 Definition: Planning is a management process where organizational goals are
formulated.
 Components:
 Outcome or Goal Statements: Represent the end state – targets and
outcomes.
 Action Statements: Describe how organizations move forward to reach their
goals.
 Process: Involves predicting problems or opportunities, formulating strategies,
and collecting comprehensive information about internal and external
environments.

3. The Importance of Planning
 Reasons for Planning:
 Directs an organization's goals and provides a roadmap.
 Helps functional areas work together (coordination, cohesion, stability).
 Reduces the impact caused by external environmental changes.
 Forces review of operations and ensures effective control systems.
 Essential due to constant change in today's environment.

4. Disadvantages of Planning
 Pitfalls:
 Creates inflexibility.
 Time-consuming.
 Delays decision-making.

,  Restrains creativity and innovation.

5. The Planning Process
 Steps:
1. Establish Goals: Formulate goals for the organization.
2. Develop Alternative Plans: Suggest courses of action to achieve the
established goals.
3. Evaluate Alternative Plans: Determine the most favourable course of
action.
4. Implement the Plan: Put the chosen plan into action.
5. Reactive Planning: Evaluate the implemented plan and refine goals and
plans based on feedback.
 Characteristics:
 Dynamic: Continuously reviewed and adjusted to adapt to changing needs
and circumstances.
 Foundation: Interlinked with other management tasks (organizing, leading,
controlling).

6. Organizational Goals
6.1 SMART Framework
Managers use the SMART framework when formulating goals:
 Specific (S): Goals and outcomes should be clearly defined.
 Measurable (M): Goals should be quantifiable.
 Attainable (A): Goals should be challenging yet realistic.
 Relevant (R): Goals should align with the vision, mission, and values of the
organization.
 Time-bound (T): Specific time limits should be assigned to goals.
6.2 Types of Goals
6.2.1 Strategic Goals
 Characteristics:
 Long-term general goals for the entire organization.
 Set by top-level management.
 Future-oriented (3-10 years).
 Elements:
 Vision: Aspirations for the future.
 Mission Statement: Purpose and reason for existence.
 Long-term Strategic Goals: Cover the entire organization and focus on long-
term objectives.
6.2.2 Functional or Tactical Goals
 Characteristics:
 Shorter-term elements derived from long-term goals.
 Determined by middle-level management.
 Period: 1-3 years.
6.2.3 Operational Goals
 Characteristics:
 Current, narrow, and resource-focused.
 Achieved by individuals or groups.
 Formulated to direct and control the implementation of tactical goals.

7. Organizational Strategies and Plans
7.1 Strategic Plans
 Generic Strategies:
 Cost Leadership: Focuses on having the lowest cost of production.
 Differentiation: Focuses on distinctiveness valued by customers.
 Focus: Targets a specific segment or domain of activity.
 Corporate Strategies: