Using Planning Tools - Principles of Management - ثالث ثانوي

ohassi www.edu 2.2 Using Planning Tools KLEY TERMS Goal Budget Schedule Standard LEARNING OBJECTIVES Once you have completed this lesson, you should be able to 2.2.1 identify the characteristics of effective goals 2.2.2 Describe several business planning tools and explain how they are used. Policies Procedure REALITY CHECK Who Needs Goals? Nasir and Khalid are two young business professionals who have just met at an annual management conference held by a regional university in Riyadh: One of the key topics discussed during the moming session was the setting of business goals. "I'm a junior manager for an app development company," says Nasir "The top management is obsessed with setting goal! I have one goal and it's very simple. be successful and make lots of mon- ey." "Who doesn't want to be successful?" laughs Khalid. "But that's not really a goal in itself. What are the specific objecuves you plan to achieve to make that happen!" "Personally, I think too much planning and goal setting can hold you back." replies Nasir, "particularly in the fast-paced app develop- ment industry. The environment is constantly shifting and you have to be ready to act on the latest trend or seize a new opportunity." "I'm not sure I agree." says Khalid "I think specific, measurable goals are always important, regardless of the industry or environ- ment. How can you effectively manage a team without them?" What's Your Reaction? Do you agree most with Nasir or Khalid? Are goals always really necessary in every business environment? التعليم 78 Chapter 2 Plaining and Digrinizing

حرارت التعليم " LO 2.2.1 Establishing Direction It has been said that you will never know when you have arrived if you don't know where you are going. Goals provide direction for a business. A goal is a specific statement of a result the business expects to achieve. All types and sizes of businesses and all parts of a business need to develop goals. Goals keep the business focused on where it wants to be in the future and the results it expects to accomplish Managers and employees may overreact to short-term problems or the actions of competitors it goals are not clearly stated and communicated. Managers in large companies may take actions that conflict with those of other managers if they are not aware of goals. Here are several characteristics of effective goals: 1. Goals must be specific and meaningful. The goal "make a prof- it" is vague. However, the goal "increase sales to new customers by SAR 50,000 in the next six months" is much more specific. Goals should relate to the activities and operations of the busi- ness so that employees see how their work relates to the goals. Managers must be careful in setting goals and must consider such factors as (1) the general economic conditions facing the business, (2) past sales and profits, (3) the demand for prod- ucts and services, (4) the reactions of current and prospective customers, (5) the resources of the business, (6) the actions of competitors, and (7) any other factors that can influence the achievement of the goals. 2. Goals must be achievable. It is important that goals move the company forward, but they must also be realistic. It is not useful to set a goal "to increase unit sales by 5%" if the company does not have the capability of manufacturing that many more units. If telemarketing salespeople are already making many more calls each day than the industry average, it may not be realistic to set a higher goal for making calls without increasing the number of salespeople. Lesson 2.2 Using Planning Tools 79

ارت التعليم 3. Goals should be dearly communicated. Company and depart- mental goals: should be communicated to all employees, be- cause they will be responsible for accomplishing those goals. Communicating the company's goals will help employees un- derstand that they are part of a team effort working together for a common purpose. Usually, they will work harder to achieve goals they understand 4. Goals should be consistent with each other and with the goals of the entire company. Each department within a business has its own specific goals, but the goals. must be coordinated with those of other departments Assume, for example, that the sales manager sets a goal of increasing sales in a specific area of the country. The advertising manager, however, sets a goal of reduc ing expenditures in the same area to use the money to promote a new product in another part of the country. If advertising is needed to support the sales efforts, the managers have conflict- ing goals Department managers must work together so that their goals will complement each other and support the goals of the entire company. Note that this list is a variation of the "SMART goals" frame- work (introduced previously in Introduction to Business), which stands for: specific, meaningful (or measurable), achievable (or attainable), relevant, and time-bound. ? CHECKPOINT Identify the four characteristics of effective goals. 80 Chapter 2 Planning and Organizing

حرارت التعليم J LO 2.2.2 Planning Tools Managers must be skilled and efficient in planning A number of plan- ning tools are available to help them with their work. Using tools such as budgets, schedules, standards, policies, procedures, and research will improve the results of planning. Budgets The most widely used planning tool is the budget. A budget is a written financial plan for business operations developed for a specfic period of time. Financial budgets assist managers in determining the best way to use available money to reach goals. As a part of Ibrahim's business plan, his banker will require him to develop a budget for expanding his business through online sales. This budget will help both the banker and Ibrahim see how much money he will need, as well as it and when the new part of the business could be profitable. When department managers carry out operational planning, they prepare budgets for their departments. In addition to the operating budget, the managers often prepare specific budgets for personnel expenses, equipment, costs of materials and supplies, sales, and many others. BUDGET 789 4 5 2 AC 3 шо لصلة 154 المعدة STA Why do you think it is important for businesses to have burgers? Do you use budget in your personal e coor 01 OCT 101,60 144 STAL 1000 A 46254 נאור D X ИШЕМ ரன் 1979 1,00 WHA 35 Lesson 2.2 Using Planning Tools 81

التعليم Schedules Just as budgets help in financial planning, schedules are valuable in planning for the most effective use of time. For most business purpos- es, a schedule is a time plan for reaching objectives. Schedules identify the tasks to be performed, the sequence of related tasks, and the time allotted to perform each task. A supervisor may develop a schedule to organize the work done by each employee for a day or a week (see Figure 2-3). Production managers use schedules to plan the completion and shipment of orders. Salespeople use schedules to plan their sales calls efficiently, and advertising people use schedules to make sure the ads appear at the correct time and in the proper media. Administrative managers need to schedule the preparation and printing of mailings and reports to make sure they are completed on time. Department Special Order Department Date July 27 Employee Orders Name Number Order 532 Order 533 Order 534 Order 535 Order 536 Abdullah 50531 Faisal 50540 ✓ Saud 20896 ✓ Omar 10765 ↓ Mona 50592 Nora 10573 Amal 50243 Figure 2-3 Department Work Schedule A work schedule is an important planning tool for supervisors and employees. Standards Another planning tool for managers is the use of standards. A stand- ard is a specific measure against which something is judged. Businesses set quality standards for the products and services they produce. Com- pleted products are examined using the standards to judge whether Chapter 2 Planning and Organizing

قرارت التعليم or not the quality is acceptable. Companies also set standards for the amount of time that tasks should take. For example, a fast- food restaurant may set a standard that cus- tomers will receive their food within three minutes of placing their orders. If managers see that customers are getting their food five minutes after ordering, then the service time is not meeting company standards and is therefore not acceptable. Companies may also set standards related to the number of defective products allowed on an assembly line or the number of calls a salesperson must make during a day. Managers are responsible for setting real- istic standards and for using those standards to judge performance. They also must know when to revise outdated standards. Policies As part of planning, managers frequently establish policies. Policies are guidelines used in making decisions regarding specific, recurring situations. A policy is often a gen- eral rule to be followed by the entire business or by specific departments. Work rules are examples of business polices. Management Matters Trend Spotting &traced a current vryla ul preference that may have major impact om inlividual and business behavior Trend spotting is a new busit less plan- ning activity Inal analyzes a number ofbliyiness sources to idenery emerging wends Businesses use information form trend spatung to play pew products, eliminate older products and find ways to the exiting products to the latest trend. In order to develop customer interest and excitement. Trend spoiling researchers me- quently monitor so al media to idemnify exter- nal trends that may provide opportuniues for businesses They are indecented what opin- for leaders are owns though social medla bout what new hot mm, or out What Do You Think? Whig as some advantages no possible pyplac or businesses that use rent powing as a part plawg When are some wet ben you blew bu nesses wuld be Spammy To Tay A broad policy may state that the performance of each employee must be evaluated at least twice a year using the company's perfor mance review procedures. Because of that policy, even an employee who has been with the company for 10 years must be evaluated. Policies help to reduce misunderstandings and encourage consistent decisions in situations frequently encountered by managers and employees Lesson 2.2 Using Planning Tools 83

التعليم 84 Procedures A procedure is a sequence of steps to be followed for performing a specific task. In order to implement the policy described in the previous paragraph, the company must develop a specific performance review procedure. Procedures for both routine and complex tasks that are performed by many employees improve business efficiency and are of special help to employees who are learning a new job. The procedure shown in Figure 2-4 would be helpful to a new employee assigned to monitor the secured entrance for a company headquarters. Experienced employees can help managers design new procedures and improve existing ones. Yes Employ ID No Yes Tell Since Employee ww Employee or Visitor Commal Yes No No No T= Figure 2-4 Procedure for Admitting Employees and Visitors A flowchart can be used to show the order of steps in a work procedure. In this example, the green box represents a scenario, the purple diamond-shaped box represent security checks that needs to be verified as a result of that scenario, and the blue rectangular box represents an action that must be performed as a result of those security checks. Chapter 2 Planning and Organizing

ودارت التعليم Research To do a good job of planning, managers need a great deal of informa- non. To develop budgets, they need to know how money was spent in past years, what certain tasks will cost, and how competitors are spend- ing their money. Managers can improve schedules if they know how long certain jobs take to perform. They can establish better standards and procedures by analyzing carefully collected information on the way jobs are performed. Research is done to collect data for managers and to provide the information needed to improve their planning decisions. ? CHECKPOINT What is the difference between a policy and a standard? Lesson 2.2 Using Planumy Toal 85

ارت التعليم 86 2.2 Assessment UNDERSTAND MANAGEMENT CONCEPTS Determine the best answer for each of the following questions. 1. The goal to increase the average productivity of all work teams by 3% within six months is an example of which characteristic of an effective goal7 aspect and memingful b. adijevable c vlearly commun.ated d. onament Wither separtments 2. Guidelines used in making decisions regarding specific recurring situa tions are called b. pollales d. THINK CRITICALLY Answer the following questions as completely as possible. 3. How does the use of effective goals increase the probability that busi ness plans will be successful? Discuss the importance of each of the characteristics of an effective goal. How can businesses use information from competitors and customers when establishing quality standards for their products and services? Chapter 2 Planning and Organizing