Chapter5_Foundations of Planning

Defining the organizational purpose and ways to achieve it. Planning includes defining goals, establishing strategy, and developing plans to coordinate activities.

Chapter5 Foundations of Planning

• What is planning?
  • Defining the organizational purpose and ways to achieve it. Planning includes defining goals, establishing strategy, and developing plans to coordinate activities.
  • Planning is often called the primary management function because it establishes the basis for all the other things managers do
  • It’s concerned with ends (what is to be done) as well as with means (how it’s to be done)
• Why do managers need to plan?
  • Managers should plan for at least four reasons
    • establishes coordinated effort
    • reduces uncertainty
    • reduces overlapping and wasteful activities
    • establishes the goals or standards that facilitate control
• What Do Managers Need to Know About Strategic Management?
  • Strategic Management What managers do to develop an organization’s strategies
  • Strategies Plans for how the organization will do what it’s in business to do, how it will compete successfully, and how it will attract its customers in order to achieve its goals
  • Strategic Management Process A six-step process that encompasses strategy planning, implementation, and evaluation
    • Identifying the organization’s current mission, goals and strategies
      • Mission A statement of an organization’s purpose
    • Doing an external analysis
      • Opportunities Positive trends in the external environment
      • Threats Negative trends in the external environment
    • Doing an internal analysis
      • Strengths Any activities the organization does well or any unique resources that it has
      • Weaknesses Activities the organization doesn’t do well or resources it needs but doesn’t possess
      • (Capabilities) An organization’s skills and abilities in doing the work activities needed in its business (Core Competencies) The major value-creating capabilities of an organization
    • SWOT Analysis
    • Formulating the strategies
    • Implementing strategies
    • Evaluating results
  • Types of Strategies
    • Corporate Strategy An organizational strategy that specifies what businesses a company is in or wants to be in and what it wants to do with those businesses The three main types of corporate strategies are growth, stability, and renewal
      • Growth Strategy A corporate strategy in which an organization expands the number of markets served or products offered either through its current business(es) or through new business(es).
        • Concentration Focuses on its primary line of business and increases the number of products offered.
        • Vertical Integration Backward (supplier, input) or forward (distributor, output) vertical integration
        • Horizontal Integration Grows by combining competitors
        • Diversification Grow through combination with related or unrelated industries.
      • Stability Strategy A corporate strategy in which an organization continues to do what it is currently doing
      • Renewal Strategy A corporate strategy that addresses declining organizational performance
    • Competitive Strategy An organizational strategy for how an organization will compete in its business(es)
      • Cost Leadership Strategy Competing on the basis of having the lowest costs in the industry
      • Differentiation Strategy Competing on the basis of having unique products that are widely valued by customers
      • Focus Strategy Competing in a narrow segment or niche with either a cost focus or a differentiation focus
    • Functional Strategy The strategies used in an organization’s various functional departments to support the competitive strategy
• How Do Managers Set Goals and Develop Plans?
  • Planning involves two important aspects: goals and plans. Planning = goals+ plans
    • Goals (objectives) Desired outcomes or targets
      • Stated Goals Official statements of what an organization says, and wants its stakeholders to believe, its goals are
      • Real Goals Those goals an organization actually pursues as shown by what the organization’s members are doing
      • Traditional Goal Setting Goals set by top managers flow down through the organization and become sub-goals for each organizational area
      • Goal Setting
        • Means-End Chain An integrated network of goals in which higher level goals (ends) are linked to lower-level goals, which serve as the means for their accomplishment
        • Management By Objectives (MBO) A process of setting mutually agreed-upon goals and using those goals to evaluate employee performance
    • Plans Documents that outline how goals are going to be met. They usually include resource allocations, budgets, schedules, and other necessary actions to accomplish the goals
      • TYPES OF PLANS
        • Breadth
          • Strategic Plans Plans that apply to the entire organization and encompass the organization’s overall goals
          • Tactical Plans Plans that specify the details of how the overall goals are to be achieved
        • Time Frame
          • Long-term Plans Plans with a time frame beyond three years
          • Short-term Plans Plans with a time frame of one year or less
        • Specificity
          • Specific Plans Plans that are clearly defined and leave no room for interpretation
          • Directional Plans Plans that are flexible and set general guidelines
        • Frequency of Use
          • Single-use Plan A one-time plan specifically designed to meet the needs of a unique situation
          • Standing Plans Plans that are ongoing and provide guidance for activities performed repeatedly