As the primary management function, planning establishes the basis for all the other things that managers do. The planning we’re concerned with is formal planning; that is, specific goals covering a specific time period are defined and written down and specific plans are developed to make sure those goals are met. There are four reasons managers should plan: (1) it establishes coordinated efforts, (2) it reduces uncertainty, (3) it reduces overlapping and wasteful activities, and (4) it establishes the goals or standards that are used in controlling work. Although criticisms have been directed at planning, the evidence generally supports the position that organizations benefit from formal planning.

Managers develop the organization’s strategies in the strategic management process, which is a six-step process encompassing strategy planning, implementation, and evaluation. The six steps are as follows: (1) Identify the organization’s current mission, goals, and strategies; (2) do an external analysis; (3) do an internal analysis—steps 2 and 3 together are called SWOT analysis; (4) formulate strategies; (5) implement strategies; and (6) evaluate results. The end result of this process is a set of corporate, competitive, and functional strategies that allow the organization to do what it’s in business to do and to achieve its goals. Six strategic weapons are important in today’s environment: customer service, employee skills and loyalty, innovation, quality, social media, and big data.

The goals of most companies are classified as either strategic or financial. We can also look at goals as either stated or real. In traditional goal setting, goals set by top managers flow down through the organization and become subgoals for each organizational area. Organizations could also use management by objectives, which is a process of setting mutually agreed-upon goals and using those goals to evaluate employee performance. Plans can be described in terms of their breadth, time frame, specificity, and frequency of use. Plans can be developed by a formal planning department or by involving more organizational members in the process.

One contemporary planning issue is planning in dynamic environments, which usually means developing plans that are specific but flexible. Also, it’s important to continue planning even when the environment is highly uncertain. Finally, because there’s little time in a dynamic environment for goals and plans to flow down from the top, lower organizational levels should be allowed to set goals and develop plans. Crisis planning should be done before a crisis occurs and should cover people, preparedness, and testing. Another contemporary planning issue is using environmental scanning to help do a better analysis of the external environment. One form of environmental scanning, competitive intelligence, can be especially helpful in finding out what competitors are doing, either by traditional methods or by using technology such as social media.