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BM_Ch 5

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Business Management chapter 5

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BM_Ch 5

  1. 1. Chapter 5 Managerial Planning and Goal Setting
  2. 2. New Manager’s Question 1 It is better to have a very flexible and loose plan so you can easily adapt as you go along. 1 2 3 4 5 Mostly Yes Mostly No (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  3. 3. New Manager’s Question 2 It’s a good idea to make the product or service available to as many customers as possible. 1 2 3 4 5 Mostly Yes Mostly No (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  4. 4. New Manager’s Question 3 Top managers should get together and develop a plan and then announce it to employees. 1 2 3 4 5 Mostly Yes Mostly No (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  5. 5. Planning is Fundamental • All of the other management functions stems from planning • How do you plan for an undefined future? • No plan is perfect – Without plans and goals, organizations flounder (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  6. 6. A plan is a blueprint for goal achievement and specifies the necessary resource allocations, schedules, tasks and other (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Goals and Plans A goal is a desired future state that the organization attempts to realize. A plan is a blueprint for goal achievement and specifies the necessary resource allocations, schedules, tasks and other actions. actions. PLANNING
  7. 7. Levels of Goals and Plans (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  8. 8. Purpose of Goals and Plans • Planning has a positive effect on performance – Send message to external and internal audiences • Create legitimacy • Source of motivation and commitment • Resource allocation • Guides action • Rationale for decisions • Establishes standard of performance (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  9. 9. The Organizational Planning Process (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  10. 10. Goals in Organizations • Organizational Mission – the organization’s reason for existence. • Mission Statement– broadly stated definition of purpose that distinguishes the organization from others of a similar type (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  11. 11. Goals in Organizations • Strategic goals – official goals, broad statements describing the organization’s future – Pertains to entire organization • Strategic plans/blueprint – define the action steps by which the company intends to attain strategic goals – Defines organizational activities & resource allocations – Long term (2-5 years) (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  12. 12. Goals in Organizations • Tactical goals – results that major divisions/depts. within the organization intend to achieve – Middle management – Describe what subunits must do in order for whole organization to achieve strategic goals • Tactical plans – define what major depts./organization subunits will do to implement strategic plan – Shorter time frames (next year or so) (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  13. 13. Goals in Organizations • Operational goals – specific results expected from depts./work groups/individuals – Precise & measurable • Organizational plans – developed at lower levels of the org. to specify action plans toward achieving operational goals – Support tactical plans – Daily/weekly operations – Schedules (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  14. 14. A Strategy Map for Aligning Goals (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  15. 15. Operational Planning • Direct employees and resources • Guide efficient and effective performance • Include planning approaches: – Management By Objective (MBO) – Single-use Plans – Standing Plans (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  16. 16. Criteria for Effective Goal Setting (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  17. 17. Management by Objective (MBO) • Defined in 1954 by Peter Drucker • Method for defining and monitoring goals (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  18. 18. MBO Benefits and Problems (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  19. 19. Single-Use and Standing Plans Single Use Plans – Achieve one-time goal – Programs and Projects Standing Plans – Ongoing plans – Policies, rules, procedures (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  20. 20. Types of Single-Use and Standing Plans (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  21. 21. Planning for a Turbulent Environment • Contingency Planning – Planning for emergencies, setbacks or unexpected conditions • Ex: catastrophic decreases in sales or prices • Building Scenarios – A forecasting technique to look at current trends and visualize future possibilities – 2-5 scenarios developed for each set of factors • Crisis Planning – Sudden, devastating unexpected events (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  22. 22. Essentials Stages of Crisis Planning Building open, trusting relationships with key stakeholders Written plan that specifies the steps to be taken and by whom if a crisis occurs (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  23. 23. Planning for High Performance • Traditional planning is a central process of executives and consultants 1970 – Central planning department—group of planning specialists who report directly to CEO • A shift to decentralized planning to increase organizational performance – Planning experts work with managers of divisions or departments to develop their own goals/plans (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  24. 24. Planning for High Performance • High-performance approaches to planning – Set stretch goals for excellence (BHAG) • Stretch goals are reasonable yet highly ambitious • Big Hairy Audacious Goal – Goals that hit people in the gut and shifts their thinking – Use performance dashboards • Helps employees track progress toward goals – Deploy Intelligence Teams • Cross-functional group of managers and employees • Work together to gain a deep understanding of a specific business issue (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  25. 25. Performance Dashboard for Planning (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  26. 26. Thinking Strategically • Take the long-term view • See the BIG PICTURE • Strategic thinking is important for all organizations – Impacts an organization’s performance – 51% of executives are unhappy with strategy formulation process • Tough decisions and choices define and support strategy (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  27. 27. What is Strategic Management • Strategic Management • Set of decisions & actions used to formulate & implement strategies that will provide a competitively superior fit between the organization & its environment • Who are our customers? • What products or services should we offer? • How can we offer them most efficiently? (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  28. 28. Purpose of Strategy • Define explicit strategy/plan of action – Achieve competitive advantage • Exploit Core Competencies – what does the organization do well compared to competitors? • Build Synergy – joint effort to gain special advantage • Deliver Value – combination of benefits and costs (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  29. 29. The Strategic Management Process Strategy Formulation – Planning and decision making that lead to goals and plans – Assessing the external environment & internal problems and integrating the results into the goals & strategies Strategy Execution – Managerial tools to direct resources toward strategic outcomes – Administration & implements of the strategic plan (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  30. 30. (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. SWOT Analysis Analysis of strengths, weaknesses, opportunities and threats Internal Strengths and Weaknesses External Opportunities and Threats
  31. 31. The Strategic Management Process/SWOT (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  32. 32. Checklist for Analyzing Organizational Strengths and Weaknesses (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  33. 33. Formulating Business-Level Strategy • Michael E. Porter developed model for the development of business-level strategy • Porter’s Five Competitive Forces – help determine a company’s position in the industry – Potential new entrants – Bargaining power of buyers – Bargaining power of suppliers – Threat of substitute products – Rivalry among competitors (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  34. 34. Porter’s Five Competitive Forces (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  35. 35. Porter’s Competitive Strategies (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  36. 36. New Trends in Strategy • Dynamic capabilities - organizations desire to enhance existing capabilities • Innovation from within – Learning – Reallocation of assets – Internal innovation • Strategic Partnerships – Collaboration with other organizations – The Internet is driving more collaboration (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  37. 37. Global Corporate Strategy (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  38. 38. Strategy Execution Execution is how strategy is put into action Execution is most important, and most challenging Strategy is only successful if it is well executed Execution requires organization to be in congruence Coordination of efforts to put strategy in action (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  39. 39. Putting Strategy into Action (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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