©Prentice Hall, 2001 Chapter 3 1

The Foundations The Foundations of Planningof Planning

A Book ReviewA Book Review

©Prentice Hall, 2001 Chapter 3 2

Learning ObjectivesLearning Objectives

• Define planning

• Explain the potential benefits of planning

• Identify the potential drawbacks of planning

• Compare strategic and tactical plans

• Compare directional and specific plans

©Prentice Hall, 2001 Chapter 3 3

Learning ObjectivesLearning Objectives

• Discuss Management by Objectives

• Outline the strategic management process

• Describe the four grand strategies

• Explain SWOT analysis

• Learn how entrepreneurs and bureaucratic

managers approach strategy

©Prentice Hall, 2001 Chapter 3 4

Reduce theReduce theImpact of ChangeImpact of Change

Reduce theReduce theImpact of ChangeImpact of Change

ProvideProvideDirectionDirectionProvideProvide

DirectionDirection

Minimize WasteMinimize Wasteor Redundancyor RedundancyMinimize WasteMinimize Wasteor Redundancyor Redundancy

Set ControlSet ControlStandardsStandards

Set ControlSet ControlStandardsStandards

ReasonsReasonsfor Planningfor Planning

ReasonsReasonsfor Planningfor Planning

©Prentice Hall, 2001 Chapter 3 5

ArgumentsArgumentsAgainstAgainst

StrategicStrategicPlanningPlanning

Rigid Assumptions Rigid Assumptions of Stabilityof Stability

IntuitionIntuitionand Creativityand Creativity

EnvironmentalEnvironmentalTurbulenceTurbulence

Focus on Today’s Focus on Today’s CompetitionCompetition

Preoccupation withPreoccupation withCurrent SuccessCurrent Success

©Prentice Hall, 2001 Chapter 3 6

Does Planning Improve Does Planning Improve Performance?Performance?

• Financial results

• Environmental concerns

• Quality and implementation

©Prentice Hall, 2001 Chapter 3 7

ObjectivesObjectivesTime FrameTime Frame ScopeScope

How Do Strategic and How Do Strategic and Tactical Plans Differ?Tactical Plans Differ?

©Prentice Hall, 2001 Chapter 3 8

The Time Frame The Time Frame of Planningof Planning

Short-TermShort-Term

PlansPlansLong-TermLong-Term

PlansPlans

©Prentice Hall, 2001 Chapter 3 9

Specific Plans

Directional Plans

Clear

General

Low

High

Flex

ibility

Ob

ject

ives

©Prentice Hall, 2001 Chapter 3 10

Single-Use Single-Use and Standing and Standing

PlansPlans

UniqueUnique

SituationsSituationsOngoingOngoing

OperationsOperations

©Prentice Hall, 2001 Chapter 3 11

OrganizationalOrganizationalObjectivesObjectives

DivisionalDivisionalObjectivesObjectives

DepartmentalDepartmentalObjectivesObjectives

IndividualIndividualObjectivesObjectives

What Is Management by Objectives?

©Prentice Hall, 2001 Chapter 3 12

Common MBO Common MBO Elements Elements

GoalGoalSpecificitySpecificity

ExplicitExplicitTime PeriodTime Period

ParticipativeParticipativeDecision MakingDecision Making

PerformancePerformanceFeedbackFeedback

©Prentice Hall, 2001 Chapter 3 13

GoalGoalDifficultyDifficulty

GoalGoalDifficultyDifficulty

Does MBOWork?

Does MBOWork?

GoalGoalSpecificitySpecificity

GoalGoalSpecificitySpecificity

Top Top ManagementManagement

Top Top ManagementManagement

ParticipationParticipation ParticipationParticipation

©Prentice Hall, 2001 Chapter 3 14

Setting Employee Setting Employee ObjectivesObjectives

• Identify key job tasks

• Set specific hard goals

• Let employees participate

• Prioritize goals

• Build in feedback

• Reward goal attainment

©Prentice Hall, 2001 Chapter 3 15

The Downside of The Downside of ObjectivesObjectives

Quality ofQuality ofProductsProducts

Quantity ofQuantity ofProductsProducts

IndividualIndividualEffortEffort Team FocusTeam Focus

PotentialPotentialImprovementImprovement

ContinuousContinuousImprovementImprovement

©Prentice Hall, 2001 Chapter 3 16

Set Mission,Objectives,

and Strategies

FormulateStrategies

Analyze theEnvironment

Identify Opportunitiesand Threats

Analyze Resources

IdentifyStrengths andWeaknesses

ReassessMission andObjectives

ImplementStrategies

EvaluateResults

The Strategic Management Process

©Prentice Hall, 2001 Chapter 3 17

Starting the StrategicStarting the Strategic

Management ProcessManagement Process

StrategiesStrategiesObjectivesObjectivesMissionMission

©Prentice Hall, 2001 Chapter 3 18

Competitive Competitive IntelligenceIntelligenceCompetitive Competitive IntelligenceIntelligence

EnvironmentalEnvironmentalScanningScanning

EnvironmentalEnvironmentalScanningScanning

Analyzing the

Environment

Analyzing the

Environment

©Prentice Hall, 2001 Chapter 3 19

SWOTSWOTAnalysiAnalysi

ss

WeaknessesWeaknessesThreatsThreats

OpportunitiesOpportunities

StrengthsStrengths

©Prentice Hall, 2001 Chapter 3 20

Identifying Opportunities

Opportunities inthe EnvironmentOpportunities inthe Environment

Organization’sResources

Organization’sResources

Organization’sOpportunities

©Prentice Hall, 2001 Chapter 3 21

RetrenchmentRetrenchmentCombinationCombinationCombinationCombination

The Grand StrategiesThe Grand StrategiesThe Grand StrategiesThe Grand Strategies

StabilityStabilityStabilityStabilityGrowthGrowthGrowthGrowth

©Prentice Hall, 2001 Chapter 3 22

Determining ADetermining ACompetitive StrategyCompetitive Strategy

Determining ADetermining ACompetitive StrategyCompetitive Strategy

DifferentiationDifferentiationDifferentiationDifferentiationCostCostLeadershipLeadership

CostCostLeadershipLeadership

FocusFocusFocusFocus

©Prentice Hall, 2001 Chapter 3 23

Implementation

Evaluation

What HappensAfter

StrategiesAre

Formulated?

©Prentice Hall, 2001 Chapter 3 24

BenchmarkingBenchmarking

Quality As Quality As A StrategicA Strategic

WeaponWeaponISO 9000ISO 9000

Six SigmaSix Sigma

©Prentice Hall, 2001 Chapter 3 25

The EntrepreneurialThe Entrepreneurial

PersonalityPersonality

OtherOther

ImportantImportant

FactorsFactors

ThreeThree

CriticalCritical

FactorsFactors

CommonCommon

PersonalityPersonality

TraitsTraits

©Prentice Hall, 2001 Chapter 3 26

Comparing Entrepreneurs and Traditional Managers

• Traditional Rewards

• Short-Term Goals

• Delegate/Supervise

• Low

• Avoidance

• Primary Motivation

• Time Orientation

• Activity

• Risk Propensity

• View of Failure/Errors

• Personal Rewards

• Long-Term Goals

• Direct Involvement

• Moderate

• Acceptance

EntrepreneursManagersCharacteristics