Essentials of Planning and Managing by Objectives

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The more common problem is not finding alternatives but reducingthe number of alternatives so that the most promising may beanalyzed. Even with mathematical techniques and the computer,there is a limit to the number of alternatives that can be thoroughlyexamined. The planner must usually make a preliminaryexamination to discover the most fruitful possibilities.5. Evaluating Alternative CoursesAfter seeking out alternative courses and examining their strongand weak points, the next step is to evaluate the alternatives byweighing them in light of premises and goals. One course mayappear to be the most profitable but may require a large cashoutlay and have a slow payback; another may look lessprofitable but may involve less risk; still another may better suitthe company's long-range objectives.There are so many alternative courses in most situations and somany variables and limitations to be considered that evaluationcan be exceedingly difficult. Because of these complexities, thenewer methodologies and applications and analysis arediscussed in Part 6 on controlling.6. Selecting a CourseThis is the point at which the plan is adopted—the real point ofdecision making. Occasionally, an analysis and evaluation ofalternative courses will disclose that two or more are advisable,and the manager may decide to follow several courses ratherthan the one best course.7. Formulating Derivative PlansWhen a decision is made, planning is seldom complete, and aseventh step is indicated. Derivative plans are almost invariablyrequired to support the basic plan.
8. Quantifying Plans by BudgetingAfter decisions are made and plans are set, the final step ingiving them meaning, as was indicated in the discussion ontypes of plans, is to quantify them by converting them intobudgets. The overall budget of an enterprise represents the sumtotal of income and expenses, with resultant profit or surplus,and the budgets of major balance sheet items such as cash andcapital expenditures. Each department or program of abusiness or some other enterprise can have its own budgets,usually of expenses and capital expenditures, which tie intothe overall budget. If done well, budgets become a means ofadding the various plans and set important standards againstwhich planning progress can be measured.Coordination of Short- and Long-Range PlansOften short-range plans are made without reference to long-range plans.This is plainly a serious error. The importance of integrating the twotypes can hardly be overemphasized, and no short-run plan should bemade unless it contributes to the achievement of the relevant long-rangeplan.Much waste arises from decisions about immediate situations that fail toconsider their effect on more remote objectives.Responsible managers should continually review and revise immediatedecisions to determine whether they contribute to long-range programs,and subordinate managers should be regularly briefed on long-range plansso that they will make decisions consistent with the company's long-rangegoals. Doing this is far easier than to correct inconsistencies later, especiallysince short-term commitments tend to lead to further commitments alongthe same line.
Page 1 and 2: Essentials of Planning and Managing
Page 3 and 4: .Types of PlansPlans can be classif
Page 5 and 6: the same situation every time it co
Page 7 and 8: ProgramsPrograms are a complex of g
Page 9: 2. Establishing ObjectivesThe secon
Page 13 and 14: Hierarchy of objectivesAs Figure 4-
Page 15 and 16: Examples of objectives for key resu
Page 17 and 18: Multiplicity of objectivesObjective
Page 19 and 20: 113evolving Concepts in Management
Page 21 and 22: Failures of management by objective
Page 23 and 24: KEY IDEAS AND CONCEPTSFOR REVIEWPla

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