University:
Massachusetts Institute of Technology
Course:
15.992 | S-Lab: Laboratory for Sustainable Business
Academic year:

2023
Views:

304

Pages:

27
Author:

Aylin Miranda

Chapter 4 Planning What Would You Do?      In early 2000 Air Canada controlled 90% of the domestic market By early 2001 Air Canada’s share of the market had dropped to 73% WestJet’s share had climbed to 14% WestJet had a significantly lower cost structure than Air Canada What would you do? Learning Objectives: Planning After reading these next two sections, you should be able to: 1. discuss the costs and benefits of planning 2. describe how to make a plan that works Costs and Benefits of Planning  Benefits of Planning  Planning Pitfalls Benefits of Planning     Intensified Effort Persistence Direction Creation of Task Strategies Planning Pitfalls    Impede change and slow or prevent adaptation Create a false sense of security Detachment of planners How to Make a Plan That Works Setting Goals      Specific Measurable Attainable Realistic Timely Goal Commitment The determination to achieve a goal. Increased by:     Setting goals participatively Making goals reasonable Making goals public Obtaining top management support Developing an Effective Action Plan For accomplishing a goal an action plan lists:     Specific steps People Resources Time period 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 Maintaining Flexibility  Options-based planning    keep options open through simultaneous investment invest more in promising options Learning-based planning   plans need to be continually tested, changed and improved encourages frequent reassessment and revision of goals 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 bottom 4. describe the different kinds of specialpurpose plans that companies use to plan for change, contingencies, and product development Planning From Top to Bottom Planning From Top to Bottom 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 timeframe Planning Timeframes Setting Missions  Targeting   Common-enemy mission   vowing to defeat a corporate rival Role-model mission   setting a clear, specific target emulating a successful company Internal-transformation mission  aiming to achieve dramatic change to remain competitive 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 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! 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 Special-Purpose Plans    Planning for Change Planning for Contingencies Planning for Product Development 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 Planning for Contingencies: Scenario Planning     Define the scope of the scenario Identify the major stakeholders Identify environmental trends Identify key uncertainties and outcomes     Using steps 1-4 create initial scenarios Check each scenario for consistency and plausibility of facts Create contingency plans from each scenario Develop measures to indicate when scenario events are occurring 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 Product-development Process Four factors:     cross-functional teams internal and external communication overlapping development phases frequent testing of product prototypes What Really Happened?       Air Canada set specific goals Focused on cost structure Launched Tango and Zip Attempted to reduce labour costs Hit hard by SARS, Iraqi conflict and a weakening economy Sought bankruptcy protection in 2003