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Types of PlansManagers develop and rely on several types of plans.Types ofPlans :STRATEGIC PLANS• Broad guide for majorpolicy setting• Designed to achievelong-term goals• Set by board of directorsand top managementOPERATIONAL PLANS• Designed to implementtactical plans• Plan is one year or less• Deals with how toaccomplish specificobjectivesTACTICAL PLANS• Smaller-scale plan toimplement strategic plan• May be updatedperiodically• Easier to change thanstrategic plansCONTINGENCY PLANS• Outline of alternativecourses of action if otherplans are disrupted ornoneffective• Used in conjunction withstrategic, tactical, andoperational plansTypes of Plans Once goals and objectives have been set for the organization, managersmust develop plans for achieving them. A plan is an outline of the actions bywhich an organization intends to accomplish its goals and objectives. Just as it hasdifferent goals and objectives, the organization also develops several types of plans, asshown in Figure 6.4.Resulting from the strategic planning process, an organization’s strategic plan isits broadest plan, developed as a guide for major policy setting and decision making.Strategic plans are set by the board of directors and top management and are generallydesigned to achieve the organization’s long-term goals. Thus, a firm’s strategic plandefines what business the company is in or wants to be in and the kind of company itis or wants to be. Gannett, a major publisher of 82 different newspapers, revamped itsstrategic plan in the face of a prolonged advertising slump. The firm’s plan involvedincreasing sports coverage and revamping its subscriber model in an effort to boost revenues.The new strategic plan recognizes that subscribers increasingly obtain their newsonline in a digital format and implemented an online subscriber system. Customerscan read between 5 and 15 articles per month for free, after which they have to pay.5In addition to strategic plans, most organizations also employ several narrowerkinds of plans. A tactical plan is a smaller scale plan developed to implement a strategy.Most tactical plans cover a one- to three-year period. If a strategic plan will takefive years to complete, the firm may develop five tactical plans, one covering each year.Tactical plans may be updated periodically as dictated by conditions and experience.Their more limited scope permits them to be changed more easily than strategies.IKEA has a tactical plan that involves opening three stores per year in China through2016. These stores must be located in urban areas near transit, such as train or lightrail. Because Chinese infrastructure, income levels, lifestyles, and living spaces all differfrom those of its customers in the west, IKEA must utilize a different tactical plan forits Chinese expansion170An operational plan is a type of plan designed to implementtactical plans. Operational plans are usually established for oneyear or less and deal with how to accomplish the organization’sspecific objectives.Regardless of how hard managers try, sometimes business activitiesdo not go as planned. Today, most corporations also developcontingency plans along with strategies, tactical plans, and operationalplans. A contingency plan is a plan that outlines alternativecourses of action that may be taken if an organization’s other plansare disrupted or become ineffective. For instance, Air Canada wasforced to enact its contingency plan for servicing aircraft after itsnormal supplier, Aveos Fleet Performance, suspended operations.Without warning, Aveos locked out 2,300 workers, filed for creditprotection, and announced that it permanently closed its airframemaintenance operation. Luckily, Air Canada had a contingency planin place to reroute aircraft to a supplier in Quebec for repairs.7Organizing the EnterpriseAfter goal setting and planning, the manager’s second major functionis organization. Organizing is the grouping of resources and activitiesto accomplish some end result in an efficient and effective manner. Consider the caseof an inventor who creates a new product and goes into business to sell it. At first,the inventor will do everything on his or her own—purchase raw materials, make theproduct, advertise it, sell it, and keep business records. Eventually, as business grows,the inventor will need help. To begin with, he or she might hire a professional salesrepresentative and a part-time bookkeeper. Later, it also might be necessary to hire salesstaff, people to assist with production, and an accountant. As the inventor hires newpersonnel, he or she must decide what each person will do, to whom each person willreport, and how each person can best take part in the organization’s activities. We discussthese and other facets of the organizing function in much more detail in Chapter 7.Leading and MotivatingThe leading and motivating function is concerned with the human resources within anorganization. Specifically, leading is the process of influencing people to work towarda common goal. Motivating is the process of providing reasons for people to workin the best interests of an organization. Together, leading and motivating are oftenreferred to as directing.We have already noted the importance of an organization’s human resources. Becauseof this importance, leading and motivating are critical activities. Obviously, different peopledo things for different reasons—that is, they have different motivations. Some areinterested primarily in earning as much money as they can. Others may be spurred onby opportunities to get promoted. Part of a manager’s job, then, is to determine whatfactors motivate workers and to try to provide those incentives to encourage effectiveperformance. Jeffrey R. Immelt, GE’s chairperson and CEO, has worked to transform GE
into a leader in essential themes tied to world development, such as emerging markets,
environmental solutions, demographics, and digital connections. He believes in giving
freedom to his teams and wants them to come up with their own solutions. However, he
does not hesitate to intervene if the situation demands. He believes that a leader’s primary
role is to teach, and he makes people feel that he is willing to share what he has learned.
Immelt also laid the vision for GE’s ambitious “ecomagination initiative” and has been
named one of the “World’s Best CEOs” three times by Barron’s.8 A lot of research has
been done on both motivation and leadership. As you will see in Chapter 10, research on
motivation has yielded very useful information. However, research on leadership has been
less successful. Despite decades of study, no one has discovered a general set of personal
traits or characteristics that makes a good leader. Later in this chapter, we discuss leadership
in more detail.
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