©2008 by Nelson, a division of Thomson Canada Limited 1

Management Second Canadian Edition

Chuck WilliamsAlex Z. KondraConor Vibert

Slides Prepared by:Kerry Rempel, Okanagan College

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Chapter 4

Planning

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What Would You Do?

To combat the rapid decline in market share, Air Canada launched two new discount airlines to compete directly with WestJet

Initially this enabled the troubled carrier to turn a profit, however the profits did not continue

With only 40 planes in Zip and Tango, what would you do?

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Learning Objectives:Planning

After reading the next two sections, you should be able to:

1. discuss the costs and benefits of planning2. describe how to make a plan that works

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Costs and Benefits of Planning

Benefits of Planning

Planning Pitfalls

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Benefits of Planning

Intensified Effort Persistence Direction Creation of Task Strategies

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Planning Pitfalls

Impede change and slow or prevent adaptation

Create a false sense of security Detachment of planners

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How to Make a Plan That Works

Exhibit 4.1

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Setting Goals

Specific Measurable Attainable Realistic Timely

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Goal Commitment

The determination to achieve a goal.Increased by:

Setting goals participatively Making goals public Obtaining top management support

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Developing an Effective Action Plan

For accomplishing a goal an action plan lists:

Specific steps People Resources Time period

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Tracking Progress

First method Set proximal (i.e., short-term) goals Set distal (i.e., long-term or primary)

goals Second method

Gather and provide feedback Make adjustments in effort, direction,

and strategies

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Maintaining Flexibility Options-based planning

keep options open through small, simultaneous investment in many options or plans

Learning-based planning plans need to be continually tested,

changed and improved encourages frequent reassessment

and revision of goals

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Learning Objectives:Kinds of Plans

After reading the next two sections, you should be able to:

3. discuss how companies can use plans at all management levels, from top to bottom4. describe the different kinds of special-purpose plans that companies use to plan for change, contingencies, and product

development

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Planning From Top to Bottom

Exhibit 4.3

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Planning From Top to Bottom

Exhibit 4.3

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Starting at the Top Vision

statement of a company’s purpose brief, inspirational, clear, and consistent

with company beliefs and values Mission

flows from the vision specific, unifying goal that stretches

and challenges the organization and has a finish line and a timeframe

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Planning Timeframes

Exhibit 4.4

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Setting Missions Targeting

setting a clear, specific target Common-enemy mission

vowing to defeat a corporate rival Role-model mission

emulating a successful company Internal-transformation mission

aiming to achieve dramatic change to remain competitive

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Bending in the Middle Tactical Plans

specify how a company will use resources, budgets, and people to accomplish goals

Management by Objectives develop and carry out tactical plans four steps

discuss goals participatively select goals jointly develop tactical plans meet to review performance

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Disadvantages of MBO May involve excessive paperwork Managers are reluctant to give

employees feedback about their performance

Managers and employees sometimes have difficulty agreeing on goals

Employees may neglect important unmeasured parts of their jobs

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What Really Works

Management by Objectives (MBO) Based on:

goals participation Feedback

Companies that use MBO are likely to outproduce companies that do not use it!

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Finishing at the Bottom

Operational plans day-to-day plans

Single-use plans deal with unique, one-time-only events

Standing plans plans for recurring events three types

Policies Procedures Rules and regulations

Budgets

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Special-Purpose Plans

Planning for Change

Planning for Contingencies

Planning for Product Development

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Planning for Change

Stretch goals extremely ambitious goals that you

don’t know how to reach Benchmarking

identifying outstanding practices, processes, and standards in other companies

adapting them to your company

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Planning for Contingencies:Scenario Planning1. Define the scope of the scenario2. Identify the major stakeholders3. Identify environmental trends4. Identify key uncertainties and outcomes5. Using steps 1-4 create initial scenarios6. Check each scenario for consistency and

plausibility of facts7. Create contingency plans from each

scenario8. Develop measures to indicate when

scenario events are occurring

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Planning for Product Development

Aggregate product plans: used to manage and monitor all new

products indicate resources being used for each

product indicate product’s place in company’s

plans help avoid having too many products in

development

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Product-development Process

Four factors: cross-functional teams internal and external communication overlapping development phases frequent testing of product prototypes

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What Really Happened?

Air Canada set specific goals that focused aggressive negotiating with it’s labour unions, changing its mix of planes and shut down Tango and Zip.

They were able to lower labour costs, reduce aircraft and associated costs and restructured its debt.