management

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Chapter 8
Planning work activities

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What is Planning?
•Planning: management function that involves setting goals,
establishing strategies for achieving those goals, and
developing plans to integrate and coordinate work activities
-- Planning means “Formal planning” :Specific, time-
oriented goals, Goals written and shared
•Why do managers plan?
1. Provides direction
2. Reduces uncertainty
3. Minimizes waste and redundancy
4. Establishes the goals and standards for controlling

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Planning and Performance
•Formal planning is associated with positive financial
results
•Quality of planning and implementation lead to
high performance than how much planning is done
•External factors can reduce the impact of planning
on performance
•Planning-performance relationship seems to be
influenced by the planning time frame. (At least
four years).

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Goals and Plans
• Goals (objectives): desired outcomes or targets
• Plans: documents that outline how goals are going to be met
• Types of Goals:
1. Financial goals: related to the financial performance of
an organization.
2. Strategic goals: related to all other areas of an organization’s
performance.
3. Stated goals: official statements of what an organization says,
and what it wants its various stakeholders to believe, its goals are
4. Real goals: goals that an organization actually pursues, as defined
by the actions of its members

5. Types of Plans
1. Strategic plans are plans that apply to the entire organization and establish the
organization’s overall goals. = organizations vission and mission -- LONG TERM,
DIRECTIONAL, SINGLE USE
2. Operational plans are Plans that encompass a particular operational area of the
organization -- SHORT TERM, SPECIFIC, STANDING
3. Long-term plans are Plans with a time frame beyond three years
4. Short-term plans are Plans covering one year or less
5. Specific plans are Plans that are clearly defined and leave no room for
interpretation -- eliminates ambiguity and problems with misunderstanding
6. Directional plans are Plans that are flexible and set out general guidelines --
when uncertainty is high and managers must be flexible in order to respond to
unexpected changes
7. Single-use plan is A one-time plan specifically designed to meet the needs of a
unique situation
8. Standing plans are Ongoing plans that provide guidance for activities performed
repeatedly -- policies, rules, and procedures (Chapter 2)

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Types of Plans
Exhibit 8-1 shows the most popular ways to describe organizational plans.

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Approaches to Setting Goals
•Traditional goal-setting: an approach to setting goals
in which top managers set goals that then flow down
through the organization and become subgoals for
each organizational area -- assumes that top managers
know what’s best because they see the “big picture.
•downside: clarity is lost as the goals make their way
down from the top of the organization to lower levels

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The Downside of Traditional Goal-Setting
Exhibit 8-2 illustrates what can happen as the goals make their way down from the top of the
organization to lower levels.

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Means-Ends Chain and MBO
• Means-ends chain: an integrated network of goals in which the
accomplishment of goals at one level serves as the means for
achieving the goals, or ends, at the next level. -- the goals achieved
at lower levels become the means to reach the goals (ends) at the
next level. And the accomplishment of goals at that level becomes
the means to achieve the goals (ends) at the next level
• Management by objectives (MBO): a process of setting mutually
agreed upon goals and using those goals to evaluate employee
performance

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Steps in MBO
Step
Step 1: The organization’s overall objectives and strategies are formulated.
Step 2: Major objectives are allocated among divisional and departmental units.
Step 3: Unit managers collaboratively set specific objectives for their units with their managers.
Step 4: Specific objectives are collaboratively set with all department members.
Step 5: Action plans, defining how objectives are to be achieved, are specified and agreed upon by
managers and employees.
Step 6: The action plans are implemented.
Step 7: Progress toward objectives is periodically reviewed, and feedback is provided.
Step 8: Successful achievement of objectives is reinforced by performance-based rewards.

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Steps in Goal-Setting
1. Review the organization’s mission, or purpose.
2. Evaluate available resources.
3. Determine the goals individually or with input from others.
4. Write down the goals and communicate them to all who need to
know.
5. Review results and whether goals are being met.
Contingency factors in planning:
• Organizational level
• Degree of environmental uncertainty
• Length of future commitments

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Planning and Organizational Level
Exhibit 8-5 shows the relationship between a manager’s level in the organization and the type of
planning done.

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Environmental Uncertainty
•When uncertainty is high, plans should be specific, but
flexible.
Length of Future Commitments
Commitment concept: plans should extend far enough to
meet those commitments made when the plans were
developed.
Formal planning department: a group of planning
specialists whose sole responsibility is helping to write
organizational plans

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How Can Managers Plan Effectively in
Dynamic Environments?
•Develop plans that are specific but flexible
•Keep planning even when the environment is
uncertain
•Allow lower organizational levels to set goals and
develop plans

15. Environmental Scanning
Environmental scanning = Screening information to detect emerging
trends
1. Competitor intelligence: gathering information about
competitors that allows managers to anticipate competitors’ actions
rather than merely react to them. It seeks basic information about
competitors: Who are they? What are they doing? How will what
they’re doing affect us?
2. Digital Tools: technology, systems, or software that allow the
user to collect, visualize, understand, or analyze data.
a) Business intelligence refers to a variety of data that managers
can use to make more effective strategic decisions. Sources of
business intelligence are company records, industry trends, and
competitors’ financial (for example, profits) or market (for
example, market penetration) data.

16. b) Data Visualization Tools: methods to organize and summarize
data for visual display
c) Cloud computing refers to storing and accessing data on the
Internet rather than on a computer’s hard drive or a company’s
network. The cloud is just a metaphor for the Internet. -- a company
that provides cloud services to businesses.
d) lnternet of things: Allows everyday “things” to generate and store
and share data across the Internet

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Chapter 9
Managing Strategy

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Strategic Management
The set of managerial decisions and actions
that determines the long-run performance
of an organization

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Why Strategic Management Is Important
higher organizational performance
requires that managers examine and adapt to business environment changes
coordinates diverse organizational units to focus on organizational goals
Key to the managerial decision-making process

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Exhibit 7.1 The Strategic Management
Process
SWOT Analysis
Identify the
organization's
current mission, goals,
and strategies
Internal Analysis
• strengths
• weaknesses
External Analysis
• opportunities
• threats
Formulate
Strategies
Implement
Strategies
Evaluate
Results

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Strategic Management Process
Step 1: Identify the Organization’s Current Mission,
Objectives, and Strategies
Mission: the firm’s reason for being
The scope of its products and services
Goals: the foundation for further planning
Measurable performance targets

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Exhibit 7.2 Components of a Mission Statement
• Customers: Who are the organization’s customers?
• Products or services: What are the organization’s major products or
services?
• Markets: Where does the organization compete geographically?
• Technology: How technologically current is the organization?
• Concern for survival growth, and profitability: Is the organization
committed to growth and financial stability?
• Philosophy: What are the organization’s basic beliefs, values, aspirations,
and ethical priorities?
• Self-concept: What is the organization’s major competitive advantage and
core competencies?
• Concern for public image: How responsive is the organization to societal
and environmental concerns?
• Concern for employees: Does the organization consider employees a
valuable asset?
Source: Based on F. David, Strategic Management, 8th ed. (Upper Saddle River, NJ: Prentice Hall, 2001), pp. 65–66.

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Strategic Management Process (cont’d)
Step 2: Conduct an External Analysis
The environmental scanning of specific and general environments
Focuses on identifying opportunities and threats
Step 3: Conduct an Internal Analysis
Assessing organizational resources, capabilities, activities, and
culture:
Strengths (core competencies) create value for the customer and
strengthen the competitive position of the firm
Weaknesses (things done poorly or not at all) can place the firm at
a competitive disadvantage.
Steps 2 and 3 combined are called a SWOT analysis. (Strengths,
Weaknesses, Opportunities, and Threats)

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Strategic Management Process (cont’d)
Step 4: Formulate Strategies
Develop and evaluate strategic alternatives
Select appropriate strategies for all levels in the organization that provide relative
advantage over competitors
Match organizational strengths to environmental opportunities
Correct weaknesses and guard against threats
Step 5: Implement Strategies
Implementation: effectively fitting organizational structure and
activities to the environment
The environment dictates the chosen strategy; effective strategy
implementation requires an organizational structure matched to its
requirements
Step 6: Evaluate Results
How effective have strategies been?
What adjustments, if any, are necessary?

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Types of Organizational Strategies
Corporate-level Strategies
Top management’s overall plan for the entire organization
and its strategic business units
Types of Corporate Strategies
Growth: expansion into new products and markets
Stability: maintenance of the status quo
Retrenchment: addresses organizational weaknesses that
are leading to performance declines
Corporate portfolio analysis: involves a number of
businesses; guides resource allocation

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Group Exercise
Get into small groups of 3
Think of a local business you know of...and develop a brief SWOT Analysis for that
business as if it was your own (12 minutes)
Strengths
Weaknesses
Opportunities
Threats

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Exhibit 7.4 Levels of Organizational
Strategy
Research and
Development
Manufacturing Marketing Human
Resources
Finance
Strategic
Business Unit 1
Strategic
Business Unit 2
Strategic
Business Unit 3
Multibusiness
Corporation
Functional
Level
Business
Level
Corporate
Level

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Corporate-Level Strategies
Growth Strategy
Seeking to increase the organization’s business by expansion into new
products and markets
Types of Growth Strategies
Concentration
Vertical integration
Horizontal integration
Diversification

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Corporate-Level Strategies (cont’d)
Stability Strategy
A strategy that seeks to maintain the status quo to deal with the uncertainty
of a dynamic environment, when the industry is experiencing slow- or no-
growth conditions, or if the owners of the firm elect not to grow for personal
reasons

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Corporate-Level Strategies (cont’d)
Retrenchment Strategy
Reduces the company’s activities or operations
Retrenchment strategies include:
Cost reductions
Layoffs
Closing underperforming units
Closing entire product lines or services

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Corporate-Level Strategies (cont’d)
Corporate Portfolio Analysis
BCG Matrix
Developed by the Boston Consulting Group
Considers market share and industry growth rate
Classifies firms as:
Cash cows: low growth rate, high market share
Stars: high growth rate, high market share
Question marks: high growth rate, low market share
Dogs: low growth rate, low market share

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Exhibit 7.5 The BCG Matrix
Stars
Heavily invest
Question
Marks
Sell off or
turn into stars
Cash
Cows
Milk for cash
Dogs
Sell off or
liquidate
High Low
Market Share
High
Low
Anticipated
Growth
Rate

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Business-Level Strategy
Business-Level Strategy
A strategy that seeks to determine how an organization should compete in
each of its SBUs (strategic business units)

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Five Competitive Forces
1. Threat of New Entrants
– The ease or difficulty with which new competitors can enter
an industry
2. Threat of Substitutes
– The extent to which switching costs and brand loyalty affect
the likelihood of customers adopting substitute products and
services
3. Bargaining Power of Buyers
– The degree to which buyers have the market strength to hold
sway over and influence competitors in an industry
4. Bargaining Power of Suppliers
The relative number of buyers to suppliers and threats from
substitutes and new entrants affect the buyer-supplier
relationship
5. Current Rivalry
Intensity among rivals increases when industry growth rates slow,
demand falls, and product prices descend

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Competitive Strategies
Cost Leadership Strategy
Seeking to attain the lowest total overall costs relative to
other industry competitors
Differentiation Strategy
Attempting to create a unique and distinctive product or
service for which customers will pay a premium
Focus Strategy
Using a cost or differentiation advantage to exploit a
particular market segment rather than a larger market
Stuck in the Middle
Organizations that are unable to develop a cost or
differentiation advantage

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Functional-Level Strategy
Functional-level strategies support the business-level strategy
i.e., Marketing, human resources, research and development, and
finance all support the business-level strategy
Problems occur when employees or customers don’t understand a
company’s strategy
Customer Service Strategies
• Giving the customers what they want
• Communicating effectively with them
• Providing employees with customer service training

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Innovation Strategies
Possible Events
Radical breakthroughs in products
Application of existing technology to new uses
Strategic Decisions about Innovation
Basic research
Product development
Process innovation
First Mover
An organization that brings a product innovation to market or uses
a new process innovation

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Thanks