1. Planning in the Contemporary Organization Chapter 5 Part 2 Planning Challenges in the 21st Century

6. Figure 5.1 Planning as a Linking Mechanism

13. Where Should Planning Begin? ↓ Top-Down Planning ↓ Planning efforts begin with the board of directors and top executives of the firm ↑ Bottom-Up Planning ↑ Planning is initiated at the lowest level in the organization

15. Table 5. 1 Top-Down and Bottom-Up Planning Top-Down Bottom-Up Organizational CEO, Board of Directors People/department closest to product, level service, customer. Role of As the plan moves down the Units develop goals and plans. As plans organizational hierarchy, units determine actions move up the hierarchy, they are evaluated unit needed to support the plan. and adjusted for accuracy and feasibility. Specificity Begins broad, becomes more Begins specific and probably fragmented; of plan specific as it moves down the becomes cohesive and integrated as it hierarchy. moves up the hierarchy. Potential Plans are driven by top-level Those closest to customers, suppliers, and advantages managers who are most operating systems provide focus of plans. knowledgeable about all factors affecting the organization. Potential Top-level managers may be Lower-level managers may lack under- disadvantages removed from the front line. standing of all factors affecting the organization.

19. Table 5. 2 Levels of Strategic Planning Time Focus Specificity Participants Horizon Corporate To develop a mix of Broad Board of directors 5–10 years strategy business units that meets Top-level executives the company’s long-term growth and profitability goals Business To develop and maintain More specific Top-level executives 1–5 years strategy a distinctive competitive than the Managers within the advantage that will ensure corporate business unit long-term profitability strategy Functional To develop action plans Very specific Middle-level managers 1–2 years strategy that ensure that corporate Lower-level managers and business strategies are implemented

21. Table 5. 3 Examples of Functional Strategies

26. Figure 5. 2 Management by Objectives: The Cycle Source: K. Davis and J. Newstrom, Behavior at Work: Organizational Behavior (New York: McGraw-Hill, 1989), 209. Reproduced with permission of the McGraw-Hill Companies.

31. Table 5. 5 Measuring Performance with the Balanced Scorecard Source: J. Steele, “Transforming the Balanced Scorecard into Your Strategy Execution System,” Manage 53 (September/October 2001): 22–23. Key Principles Measurement Criteria Implications for Leaders Align organization Customers Understand the “big to the strategy picture.” Translate the strategy Internal processes BSC measures performance to operational terms. at all levels. View strategy as a Innovation Execute strategy into action. continual process. Make strategy Growth Empower frontline everyone’s job. employees.