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Topic 4 mp_planning (1)

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Topic 4 mp_planning (1)

  1. 1. 4ChapterFoundationsof Planning Copyright ©2013 Pearson Education 5-1
  2. 2. Learning OutcomesAfter studying this chapter, you will be able to:• Discuss the nature and purposes of planning.• Explain what managers do in the strategic management process.• Compare and contrast approaches to goal setting and planning.• Discuss contemporary issues in planning. Copyright ©2013 Pearson Education 5-2
  3. 3. Copyright ©2013 Pearson Education 5-3
  4. 4. What Is Planning? •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) Copyright ©2013 Pearson Education 5-4
  5. 5. Reasons for Planning Copyright ©2013 Pearson Education 5-5
  6. 6. Why Do Managers Need to Plan?• Managers should plan for at least four reasons 1. planning establishes coordinated effort 2. planning reduces uncertainty 3. planning reduces overlapping and wasteful activities 4. planning establishes the goals or standards that facilitate control Copyright ©2013 Pearson Education 5-6
  7. 7. Criticisms of Formal PlanningFormal planning may:1. Create rigidity2. Can’t Replace intuition and creativity3. Focus managers’ attention on today’s competition, not on tomorrow’s survival4. Reinforce success, which may lead to failure Copyright ©2013 Pearson Education 1-7
  8. 8. Copyright ©2013 Pearson Education 5-8
  9. 9. Strategic ManagementWhat do managers need to know aboutstrategic management?Strategic Management What managers do to develop an organization’s strategiesStrategies 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 goalsStrategic Management Process A six-step process that encompasses strategy planning, implementation, and evaluation Copyright ©2013 Pearson Education 5-9
  10. 10. The Importance of StrategicManagement• Has positive impact on org performance• Prepares managers to cope with changing situations• Guides managers to examine relevant factors in planning future action Copyright ©2013 Pearson Education 5-10
  11. 11. The Strategic Management Process• STEP 1: Identifying the organization’s current mission, goals and strategies• STEP 2: Doing an external analysis• STEP 3: Doing an internal analysis• STEP 4: Formulating the strategies• STEP 5: Implementing strategies• STEP 6: Evaluating results
  12. 12. Steps in the Strategic Management Process Copyright ©2013 Pearson Education 5-12
  13. 13. Step 1: Mission, Goals, & Strategies Copyright ©2013 Pearson Education 5-13
  14. 14. Step 2 & 3: What is a SWOT Analysis?SWOT Analysis – The combined external and internal analyses• 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
  15. 15. SWOT Analysis (cont.)• Opportunities – Positive trends in the external environment• Threats – Negative trends in the external environment
  16. 16. Step 4, 5, & 6 :Formulating,Implementing, and Evaluating ResultsSTEP 4: Formulating STEP 6: Evaluating ResultsStrategies • How effective have • Corporate the strategies been? • Business • What adjustments • Functional are necessary?STEP 5: ImplementingStrategies Copyright ©2013 Pearson Education 5-16
  17. 17. Strategies Managers Use Copyright ©2013 Pearson Education 5-17
  18. 18. Growth StrategyGrowth strategy – An organization expands thenumber of markets served or products offeredActivities can include: • Concentration • Vertical integration • Horizontal integration • Diversification Copyright ©2013 Pearson Education 5-18
  19. 19. Stability & Renewal StrategiesStability strategy – An organization continues todo what it is currently doingRenewal strategy – An organization addressesdeclining organizational performance • Retrenchment strategy • Turnaround strategy Copyright ©2013 Pearson Education 5-19
  20. 20. Competitive Strategy• Competitive Strategy – An organizational strategy for how an organization will compete in its business(es)• Competitive Advantage – What sets an organization apart; its distinctive edge• Strategic Business units (SBUs) – An organization’s single businesses that are independent and formulate their own competitive strategy
  21. 21. Types of Competitive Strategies• 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
  22. 22. Functional StrategyFunctional strategy – A strategy used in anorganization’s various functional departments tosupport the competitive strategy Copyright ©2013 Pearson Education 5-22
  23. 23. Strategic Weapons & BenchmarkingStrategic weapons:• Customer service• Employee skills and loyalty• Innovation• QualityBenchmarkingThe search for the best practices among competitors or noncompetitors that lead to their superior performance Copyright ©2013 Pearson Education 5-23
  24. 24. Copyright ©2013 Pearson Education 5-24
  25. 25. Compare and Contrast Approaches toGoal Setting and Planning• Goals (objectives) – Desired outcomes or targets• Plans – Documents that outline how goals are going to be met
  26. 26. Setting Goals and Developing PlansTypes of Goals:• Financial goals – The financial performance of the organization• Strategic goals – All other areas of an organization’s performance Copyright ©2013 Pearson Education 5-26
  27. 27. Setting Goals Copyright ©2013 Pearson Education 5-27
  28. 28. Characteristics of Well-Written Goals Copyright ©2013 Pearson Education 5-28
  29. 29. Steps in Goal Setting1. Review the organization’s mission and employees’ key job tasks.2. Evaluate available resources.3. Determine the goals individually or with input from others. Copyright ©2013 Pearson Education 5-29
  30. 30. Steps in Goal Setting (cont.)4. Make sure goals are well-written and then communicate them to all who need to know.5. Build in feedback mechanisms to assess goal progress.6. Link rewards to goal attainment. Copyright ©2013 Pearson Education 5-30
  31. 31. Types of Plans Copyright ©2013 Pearson Education 5-31
  32. 32. TYPES OF PLANS• The most popular ways to describe plans are in terms of their – Breadth (strategic versus tactical) – Time frame (long term versus short term) – Specificity (directional versus specific) – Frequency of use (single use versus standing)
  33. 33. 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
  34. 34. 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
  35. 35. Specificity• Specific Plans – Plans that are clearly defined and leave no room for interpretation• Directional Plans – Plans that are flexible and set general guidelines
  36. 36. 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
  37. 37. Developing Plans Copyright ©2013 Pearson Education 5-37
  38. 38. Approaches to Planning• “Top-down” traditional approach – Top-level managers plan; plans flow down to the different levels.• Development by organizational members – Employees at various levels and in various work units develop plans to meet their specific needs. Copyright ©2013 Pearson Education 5-38
  39. 39. Copyright ©2013 Pearson Education 5-39
  40. 40. Contemporary Issues Copyright ©2013 Pearson Education 5-40
  41. 41. 4.4 Contemporary Issues in PlanningHow Can Managers Plan Effectively in Dynamic Environments? Managers should develop plans that are specific, but flexible. Managers need to stay alert to environmental changes that may impact implementation and respond. A flatter organizational hierarchy helps to effectively plan in dynamic environments
  42. 42. How Can Managers Use Environmental Scanning?• Environmental scanning—screening large amounts of information to detect emerging trends and create a set of scenarios.  Competitive intelligence - It seeks basic information about competitors that gives managers accurate information about competitors

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