Principles of Management

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❖ All of the other management functions

stem from planning

❖ How do you plan for an undefined future?

❖ No plan is perfect

❖Without plans and goals,

organizations flounder

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A goal is a desired future state that the organization attempts to

realize

A plan is a blueprint for goal

achievement and specifies

the necessary resource

allocations, schedules,

tasks, and other actions

PLANNING

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❖ Organizational mission – the organization’s reason for existence

❖ Strategic goals – official goals, broad statements describing the organization’s

future

❖ Strategic plans – define the action steps the company will take

❖ Goals should be aligned using a strategy

map

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Source: Holstee Website, copyright 2011

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❖ Direct employees and resources

❖ Guide toward efficient and effective

performance

❖ Includes planning approaches:

❖Management-by-Objectives (MBO)

❖Single-Use Plans

❖Standing Plans

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❖ Defined in 1954 by Peter Drucker

❖ Method for defining goals and monitoring

performance

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Single-Use Plans

❖Achieve one-time goals

❖Programs and projects

Standing Plans

❖Ongoing plans

❖Policies, rules, procedures

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❖ Single-Use Plans

❖Program: building new headquarters,

converting paper files to digital

❖Project: renovating the office, setting up a

new company intranet

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❖ Standing Plans

❖Policy: Sexual harassment policies, Internet

and social media policies

❖Rule: No eating rule in areas of company

where employees are visible to public

❖Procedure: Procedures for issuing refunds,

Procedures for handling employee

grievances

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• Goals and plans provide a source of motivation and commitment

• Goals and plans guide resource allocation

• Goals and plans are a guide to action

• Goals and plans set a standard of performance

• Goals and plans can create a false sense of certainty

• Goals and plans may cause rigidity in a turbulent environment

• Goals and plans can get in the way of intuition and creativity

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❖ Contingency Planning

❖Planning for emergencies, setbacks, or

unexpected conditions

❖ Building Scenarios

❖A forecasting technique to look at current

trends and discontinuities and visualize future

possibilities

❖ Crisis Planning

❖Unexpected events that are sudden and

devastating 15

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❖ Stretch goals are highly ambitious

❖ Clear, compelling, and imaginative

❖ Require innovation

❖ Goals must be seen as achievable

❖ Like Big Hairy Audacious Goal (BHAG) from

1996 article on “Building Your Company’s

Vision”

❖ As times move faster and become more

turbulent, these are important

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❖ Every company is concerned with strategy

❖It determines which organizations succeed

and which ones struggle

❖Strategic blunders can hurt a company

❖ Strategic management is a specific type of planning

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❖ The long-term view of the organization and competition

❖ Thinking strategically impacts performance

and financial success

❖ Today’s environment requires everyone to

think strategically

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Decisions and actions used to formulate and

execute strategies that will provide

competitively superior fit between the

organization and its environment to achieve

organizational goals

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❖ Explicit strategy is the plan of action

❖ Competitive advantage is the

organization’s distinctive edge for

meeting customer needs

Strategies should:

❖Exploit Core Competencies

❖Build Synergy

❖Deliver Value

❖Target Customers

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© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

❖ Formulating strategy often begins with an

audit of internal and external factors

❖Internal Strengths and Weaknesses

❖External Opportunities and Threats

❖ Information is acquired from reports,

surveys, discussions, and meetings

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❖ Organizes business along two dimensions

❖Business growth rate

❖Market share

❖ Four categories for corporate portfolio

❖The combination of high/low market share

and high/low business growth

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❖ Strategy within the business units: How do

we compete?

❖ Business-level strategies are developed by

Porter’s Five Forces

❖ Web technology is impacting all industries

in positive and negative ways

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