Chapter 5 Smartbook Notes PDF

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5.1: Planning and Strategy? - Planning, Strategy, and Strategic Management - Planning - defined as setting goals and deciding how to achieve them. - Another definition - coping with uncertainty by formulating future courses of action to achieve specified results. - Plan - a document that outlines how goals are going to be met. - Business Plan - a document that outlines a proposed firm’s goals, the strategy for achieving them, and the standards for measuring success, marketing strategy, a description of the industry the business is entering. - Business Model - outlines the needs the firm will fill, the operations of the business, its components and functions, as well as the expected revenues and expenses. - Describes the industry the business is entering - How the product will be different - How the company markets to customers - How the business is qualified to run the business - How the company finances their business. - Strategy - aka Strategic Plan; sets the long-term goals and direction for an organization. - Strategic Management - a process that involves managers from all parts of the organization in the formulation, the implementation and the execution of strategies and strategic goals. - Covers: - Strategic Planning - Tactical Planning - Operational Planning - Why planning and strategic management are important - Planning and strategic management are important for 3 reasons: - Providing Direction and Momentum - Without a plan, the manager will just focus on whatever is in front of them. Competitors can move out in front because it has been able to take a long-range view of things and act more quickly. - Amazon to Border bookstores; Uber to taxi cabs; Google News, blogs, and citizen media to newspapers. - Bad planning usually results from faulty assumptions about the future, poor assessment of an organization’s capabilities, ineffective group dynamics, and failure to use management control as a feedback mechanism. - Encouraging New Ideas - People think planning foster rigidity, blocks out peripheral vision and reduces creative thinking and action - However, this is not true, because strategic planning can help encourage them by stressing the importance of

innovation in achieving long-range success. Strategy Innovation - the ability to reinvent the basis of competition within existing industries. Developing a Sustainable Competitive Advantage - Competitive Advantage - the ability of an organization to produce goods or services more effectively than its competitors do. -

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5.2: Fundamentals of Planning - Mission, Vision, and Values Statements - Mission - is an organization's purpose or reason for being. - Mission Statement - expresses the purpose of the organization. - Vision - a long-term goal describing “what” an organization wants to become. It is a clear sense of the future and the actions needed to get there. - Vision Statement - expresses what the organization should become, where it wants to go strategically. - Value - the relatively permanent and deeply held underlying beliefs and attitudes that help determine a person’s behavior: integrity, dedication, teamwork, excellence, compassion, or whatever. - Value Statement - aka Core Values Statement; expresses what the company stands for, its core priorities, the values its employees embody, and what its products contribute to the world. - Three Types of Planning for Three Levels of Management - Strategic Planning by top management - Strategic Planning - top managers determine what the organization’s long-term goals should be for the next one to five years with the resources they expect to have available. - Tactical Planning by middle management - Tactical Planning - middle managers determine what contributions their departments or similar work units can make with their given resources during the next 6-24 months. - Requires visionary and directional thinking - Should communicate general goals and ways to achieve them. - Operational Planning by first-line management - Operational Management - first-line managers determine how to accomplish specific tasks with available resources within the next 1-52 weeks. 5.3: Goals and Plans - Long-Term and Short-Term Goals - Goal - aka Objective: a specific commitment to achieve a measurable result within a stated period of time. - Long-Term Goals - aka Strategic Goals: tend to spend one to five years and focus on achieving the strategies identified in a company’s strategic plan.

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Short-Term Goals - aka Tactical or Operational Goals or just plain Goals; generally span 12 months and are connected to strategic goals in a hierarchy known as a means-end chain. - Means-End Chain - shows how goals are connected or linked across an organization. The Operating Plan and Action Plan - Operating Plan - a plan that breaks long-term output into short-term targets or goals. - Action Plan - defines the course of action needed to achieve a stated goal. Types of Plans - Standing Plans - cover activities that are repeated or occur frequently over time; 3 types of them: - Policy - outlines general response to a designated problem or situation. - Procedure - outlines response to particular problems or circumstances. - Rule - designates specific required action. - Single-Use Plans - directs activity that is unlikely to be repeated; 2 of them: - Program - encompasses a range of projects or activities. - Project - has less scope and complexity than a program.

5.4: Promoting Consistencies in Goals: SMART Goals, Management by Objectives, and Goal Cascading. - SMART Goal - is a goal that is Specific, Measurable, Attainable, Result-oriented, and has Target dates. - Specific - “As many planes as possible should arrive on time” is too general. - “90% of planes should arrive within 15 minutes of the scheduled arrival time” is specific - Measurable - A goal should be measurable, or quantifiable. Meaning that there should be some way to measure the degree to which a goal has been reached. - Attainable - Goals should be challenging, but it needs to be realistic and attainable. - If a goal is too easy people won’t make much effort - If a goal is impossible, employees won’t even bother trying. - Result-Oriented - Start with the word “to” and follow it with action-oriented verbs: - Complete, acquire, increase, decrease - Don’t use verbs that imply activities - the ways used to accomplish goals: - To develop, to conduct, to implement. - Target Dates - Goals should specify target dates or deadlines dates when they are to be attained. - Management by Objectives - Management by Objectives(MBO) - a four step process in which managers and

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employees jointly set objectives for the employee, managers develop action plans, managers and employees periodically review the employee’s performance, and the manager makes a performance appraisal and rewards the employee according to results. The purpose of this is to motivate, rather to control. - Jointly Set Objectives - People tend to set their own personal goals in response to receiving an assigned goal. - Managers garner greater acceptance to goal setting when employees believe the goal is attainable. - Managers tend to set 3 types of objectives: - Performance objectives - express the objective as an outcome or end-result. - Behavioral objectives - express the objective as the behavior needed to achieve an outcome. - Learning objectives - express the objective in terms of acquiring knowledge or competencies. - Proactive Learning Orientation - represents a desire to learn and improve one’s knowledge - Fuels the achievement of learning objectives. - Employers value this because: - Drive employee creativity and innovation. - The environment requires employees to refine and enhance their skills sets throughout their careers. - Develop Action Plan - Action plans may be prepared for both individual and work units such as departments. - Teams of employees at Tornier, meet every 45, 60, and 90 days to create action plans for completing their goals. - Setting and using action plans also reduces procrastination. - Periodically Review Performance - Should meet reasonably often to review progress; both manager and subordinates. - Managers should give feedback and objectives should be updated or revised as necessary to reflect new realities. - Give Performance Appraisal and Rewards, if any - At the end, you and subordinates should meet to discuss results, comparing performance with initial objectives. Deal with results not personalities, emotional issues, or excuses. - Performances that meet the objectives should be rewarded. Cascading Goals - for goal setting to be successful these 3 things have to happen - Top management and middle management must be committed - When top-management commitment to MBO was high the

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average gain in productivity was 56%. When it was low it was only 6%. - The goals must be applied organizationwide - The goal-setting program has to be put in place throughout the entire organization. Can’t be just applied to some divisions and departments. - Goals must Cascade - be linked consistently down through the organization - Cascading Goals - the process of ensuring that the strategic goals set at the top level align, or “cascade” downward with more specific short-term goals at lower levels within an organization, including employees’ objectives and activities. - Top managers set strategic goals - Becomes divisional goals - Then becomes departmental goals - Then becomes individual goals The Importance of deadlines - Deadlines help us keep an eye on the “big picture” while simultaneously paying attention to the details that will help you realize the big picture. - It can help concentrate the mind; make quicker decisions. - Help us ignore extraneous matters. - Provide a mechanism for giving ourselves feedback. - Motivate employees to focus on the goal.

5.5 The Planning/Control Cycle - Planning/Control Cycles - has 2 planning steps and 2 control steps: - 2 planning: - Make the plan - Carry out the plan - 2 control: - Control the direction by comparing results with the plan - Control the direction by taking corrective action in 2 wys. - By correcting deviations in the plan being carried out - Or improving future plans. - This can get a projet back on track before it is too late - Or if it’s too late can provide data for improving future plans. 5.6: Career Corner: Managing Your Career Readiness - Critical Thinking/Problem Solving - defined as sound reasoning to analyze situations, make decisions, and solve problems. - Critical activities associated with planning and require the ability to obtain, interpret, and analyze both qualitative and quantitative information. - Derived from Proactive Learning Orientation.

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Critical thinkers: - Don’t make quick or rash decisions during the planning process. - Consider alternative solutions to problems and remain open-minded. - Remain open-minded by obtaining and considering a wide range of information before making a judgment.

Becoming More Proactive - Becoming “intentionally proactive” is the first step to becoming a proactive learner. - Lina Tinsley’s belief into 4 key recommendations: - Focus on solutions rather than problems - Take initiative and rely on yourself - Set realistic goals and don’t overpromise - Participate and contribute to personal and professional conversations...