Management Planning Essay
Management
Planning Essay
1 Introduction
Planning, one of the four functions of management, is a continuous process, whose main features are the definition of goals and objectives and prescribing the means to achieve those goals. Planning takes place at all managerial levels and may take different forms, such as long-term strategic planning, formal and informal plans, project-focused plans and the establishment of criteria for the other functions, especially in regard to control. Reviewing studies on the link between planning and performance, Robbins & Coulter (2006) indicate several empirical findings, which can be used as “rules of thumb” for the evaluation of planning:
First, formal planning (i.e. making long-term plans that are written down, communicated to other members of the organization and followed by implementation plans) should generally lead to superior financial performance. Second, managers should give priority to proper implementation rather can providing extensive plans. Third, failed plans are usually those, whose implementation is not possible due to changes in the external environment. Finally, concerning the findings mentioned above, it is clear that performance is influenced not only from the quality of planning, but also from its tome frame.
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2 The Influence of Legal Issues, Ethics and CSR on Management Planning at Tyco International
Tyco International, a multinational and highly diversified provider of products and services in the fields of healthcare, flow control, work safety, security, telecommunications and electronics, has a gloomy history of executives’ fraudulent behavior. As in the case of Enron, several company executives had stolen from the company and committed arcs of deception towards the company, its investors and the market for almost a decade. However, although both companies suffered a significant decrease in value, Tyco differs from Enron by the fact that the corporate fraud did not completely undermine Tyco’s financial strength, and the company managed to recover from the incident (Collins, 2008).
Judging from the company’s operations and announcements, Tyco International is highly aware of the circumstances that have brought about its past scandals. A multinational company with a diversified portfolio of products, customers and a highly diverse workforce, Tyco is not only a good example for a proper recovery after a corporate trauma, but also a model for planning and decision-making where proper balance among numerous stakeholders all around the world is required to sustain the business (Kohlbacher1 & Krahw, 2007). The following three sections provide a detailed analysis for the means in which Tyco’s management takes legal issues, ethics, and corporate social responsibility (CSR) when performing planning tasks.
2.1 Corporate Planning and Legal Issues
When setting goal and objectives, the law may be perceived as a restrictive factor, which presumably limits the company to act at its will. Global companies’ planning is even more complicated, as the company must comply with different sets of laws of various countries, which may also amend their legislation independently from other countries and/or international organizations, thus posing a possible political risk for the global company.
All that is true for Tyco as well. However, Tyco’s sees not only the limitations of the legal environment, but also the business opportunities it entails. As a producer of safety equipment, changes in safety regulations (e.g. an obligation to install fire extinguishers in public buildings under tort law) may dramatically increase the demand for some of Tyco’s products. Therefore, Tyco’s planning should not only consider the legal boundaries on its operations (in terms of e.g. SEC filings and antitrust laws), but must examine legal environments that may change towards regulations, which may drive demand for the company’s products and services.
2.2 Corporate Planning and Business Ethics
One of the most important understandings about corporate ethics is the notion that ethics should be perceived in the process of work as a goal by itself. Hence, just as profitability, quality and customer satisfaction are essential parts of plans, managers must incorporate ethical issues in their planning processes and examine the performance of ethical goals in management control. At Tyco, whose very existence was materially jeopardized from lack of ethical conduct and control, ethics receives special attention in many aspects of the firm, especially in terms of corporate governance, executives’ compensation and financial reporting.
In addition, as mentioned earlier, Tyco is a multinational company, which seems to benefit from its multicultural workforce, though this approach demands sensitivity to the ethical challenges it comprises. Kohlbacher & Krahe (2007) provide a detailed account on Tyco’s planning, execution and control of its multinational workforce in its Far-East operations. One of the authors’ main arguments to the success of those efforts is the fact that when Tyco’s management planned the operations in its new Taiwanese facility (as part of a broader M&A in the region), the plans strictly dealt with cultural challenges. As a result, the company avoided “Americanization” of its Asian workforce, and benefited from the latter’s satisfaction from the ability to work and behave according to their local customs.
2.3 Corporate Planning and CSR
Tyco is engaged in numerous CSR initiatives and corporate philanthropy programs. Among the many examples, an interesting insight can be gained from Tyco’s guidelines for managerial planning of environment, heath and safety (EHS), which include, among others: (2004)
Establishment of EHS data collection and reporting mechanisms
Building EHS programs at all levels and in different time horizons and communicating them to the relevant staff
Planning of EHS training and managerial grids
Allocating resources as part of overall resource
3 Conclusion
Due to the extent of its business, Tyco is rather sensitive to its strategic environment, in particular to change in many relevant external factors. Hence, planning at all levels and contexts (i.e. strategic, tactical, operational, and contingency planning) should take into account not only the current state of affairs, but also possible changes in those factors. To conclude this paper, it is possible to mention three of those factors:
First and foremost, as a manufacturer of more than a few product categories, Tyco must consider available and prospective technologies, which may bring about competitive advantage or disadvantage (especially when a competitor gains technical superiority by acquiring a new technology).
Second, the company’s strategies and operations must be inclined with the strategies of Tyco’s customers, which are mostly institutional. For example, if Tesco, one of Tyco’s leading buyers of radio frequency identification, is expected to make a change (e.g. penetrating or leaving a market), Tyco should refine its operations so that it will not face overcapacities and/or supply shortages.
Finally, governments’ fiscal policies are an additional factor to be considered. National projects and “big-ticket” items (e.g. Tyco’s motorway products) should be included in the planning process, including preparing the company to the event that a certain government or municipality will lean towards expenditures that may bring about a material opportunity to the company.
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