PlanningDetermining what you want to accomplish and developing
approaches to achieving your objectives.Planning Dimensions:
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Exhibit 51
Strategic and Operational Planning
Strategic PlanningThe process of developing a mission and
long-range objectives and determining in advance how they will be
accomplished.Operational PlanningThe process of setting short-range
objectives and determining in advance how they will be
accomplished.StrategyA plan for pursuing the mission and achieving
objectives.
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The Strategic Planning Process
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Exhibit 52
Strategic Planning
Corporate-Level StrategyThe plan for managing multiple lines of
businessesBusiness-Level StrategyThe plan for managing one line of
businessFunctional-Level StrategyThe plan for managing one area of
the business
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Strategic and Operational Levels
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Exhibit 53
Industry and Competitive Situation Analysis
Situation AnalysisFocuses on those features in a companys
environment that most directly affect its options and
opportunities.Five Competitive Forces (Porter)Rivalry among
competing sellers in the industryThreat of substitute products and
servicesPotential new entrantsPower of suppliersPower of buyers
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Competitive Advantage
Core CompetencyA functional capability (strength) that the firm
does well and one that creates a competitive advantage for the
firm.BenchmarkingThe process of comparing an organizations products
or services and processes with those of other companies.Scanning
the EnvironmentSearching the external environment for opportunities
and threats.
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Setting Objectives
ObjectivesState what is to be accomplished in singular, specific,
and measurable terms with a target date.GoalsAre general targets to
be accomplished that are translated into actionable objectives.
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Management by Objectives (MBO)
Management by Objectives
Step 1. Set individual objectives and plans.
Step 2. Give feedback and evaluate performance.
Step 3. Reward according to performance.
Sources of MBO FailuresLack of top management commitment and
follow-through on MBO.Employees negative beliefs about managements
sincerity in its efforts to include them in the decision-making
process.
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Corporate-Level Strategy
Grand StrategiesGrowthStabilityTurnaround and
retrenchmentCombinationGrowth StrategiesConcentrationBackward and
forward integrationRelated and unrelated diversification
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Portfolio Analysis: BCG Matrix
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Exhibit 510
Business-Level Strategies
Adaptive StrategiesProspectingAggressively offering new products
and/or entering new markets.DefendingStaying with the present
product line and markets, and maintaining or increasing
customers.AnalyzingA midrange approach between prospecting and
defending, moving cautiously into new markets.
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Business-Level Adaptive Strategies
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Exhibit 512
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Competitive Strategies
DifferentiationCompeting on the basis of features that distinguish
one firms products or services from those of another.Cost
LeadershipThe firm with the lowest total overall costs has a
competitive advantage in price-sensitive markets.FocusConcentrating
competitive efforts on a particular market segment, product line,
or buyer group.
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Functional-Level (Operational) Strategies
MarketingResponsible for determining which products to provide, how
they will be packaged, how they will be advertised, where they will
be sold and how they will get there, and how much they will be sold
for.OperationsResponsible for systems processes that convert inputs
into outputs.Human ResourcesResponsible for working with all the
other functional departments in the areas of recruiting, selecting,
training, evaluating, and compensating employees.
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Functional-Level (Operational) Strategies (contd)
FinanceResponsible for financing the business activities by raising
money through the sale of stock or bonds or through loans, deciding
on the debt-to-equity ratio, paying off the debt and dividends to
shareholders, keeping records of transactions, developing budgets,
and reporting financial results.Other Functional-Level
StrategiesResearch and development (R&D) is important to
remaining competitive.
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Types of Plans
Standing PlansPolicies, procedures, and rules developed for
handling repetitive situations.PoliciesGeneral guidelines to be
followed when making decisions.ProceduresA sequence of actions to
be followed in order to achieve an objective.RulesA statement of
exactly what should or should not be done.
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Types of Plans (contd)
Single-Use PlansPrograms and budgets developed for handling
nonrepetitive situations.ProgramA set of activities designed to
accomplish an objective over a specified period of time.Program
developmentSet project objectives.Break the project down into a
sequence of steps.Assign responsibility for each step.Establish
starting and ending times.Determine the resources needed for each
step.
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Types of Plans (contd)
Single-Use Plans (contd)BudgetRepresents the funds allocated to
operate a unit for a fixed period of time.Is a planning tool
initially and becomes a control tool after implementation of the
plan.
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Types of Plans (contd)
Contingency PlansAlternative plans to be implemented if
uncontrollable events occur.Developing a contingency planWhat might
go wrong?How can I prevent it from happening?If it does occur, what
can I do to minimize its effect?
