The planning process consists of the following six steps. It is important to note, though, that the planning process is dynamic; in other words, effective planners will continuously revisit the planning process.

1. State organizational objectives—Because planning focuses on how the management system will reach organizational objectives, a clear statement of those objectives is necessary before planning can begin. Often planners examine important elements of the environment of their organizations, such as the overall economy or competitors, when forming objectives. In essence, objectives stipulate those areas in which organizational planning must occur.²⁰

2. List alternative ways of reaching objectives—Once organizational objectives have been clearly stated, a manager should list as many available alternatives as possible for reaching those objectives.

3. Develop premises on which to base each alternative—To a large extent, the feasibility of using any one alternative to reach organizational objectives is determined by the premises, or assumptions, on which the alternative is based. For example, two alternatives a manager could generate to reach the organizational objective of increasing profit might be to (a) increase the sale of products presently being produced or (b) produce and sell a completely new product. Alternative (a) is based on the premise that the organization can gain a larger share of the existing market. Alternative (b) is based on the premise that a new product would capture a significant portion of a new market. A manager should list all of the premises for each alternative.

   

4. Choose the best alternative for reaching objectives—An evaluation of alternatives must include an evaluation of the premises on which the alternatives are based. A manager usually finds that some premises are unreasonable and can therefore be excluded from further consideration. This elimination process helps the manager determine which alternative would best accomplish organizational objectives. The decision making required for this step is discussed more fully in Chapter 8.

5. Develop plans to pursue the chosen alternative—After an alternative has been chosen, a manager begins to develop strategic (long-range) and tactical (short-range) plans.²¹ More information about strategic and tactical planning is presented in Chapter 9.

6. Put the plans into action—Once plans that furnish the organization with both long-range and short-range direction have been developed, they must be implemented. Obviously, the organization cannot directly benefit from the planning process until this step is performed. Figure 5.4 shows the sequencing of the six steps of the planning process.

Target Corporation is an example of a company that has made charitable giving a significant element of its strategic plan. Since its founding in 1962, Target has allocated 5 percent of company revenues—more than $3 million a week—to programs that serve the communities in which it operates. Consistent with its concern for the health and safety of its communities, Target earmarked $50,000 to aid the National Wildlife Foundation in its cleanup efforts following the explosion of the Deepwater Horizon oil rig in the Gulf of Mexico.²²