Planning: Processes Planning: Processes and Techniquesand Techniques

Chapter 4Chapter 4

MGMT 370MGMT 370

Managers PlanningManagers Planning

Why plan?Why plan?ProcessProcess

Step 1Step 1 Situational Analysis Situational Analysis

Step 2Step 2 Alternative Goals and Plans Alternative Goals and Plans

Step 3Step 3 Goal and Plan Evaluation Goal and Plan Evaluation

Step 4Step 4 Goal and Plan Selection Goal and Plan Selection

Step 5Step 5 Implementation Implementation

Step 6Step 6 Monitor and Control Monitor and Control

Decision Making Stages and Decision Making Stages and Formal Planning StepsFormal Planning Steps

Situational AnalysisSituational Analysis

A process planners use, within A process planners use, within time and resource constraints, to time and resource constraints, to gather, interpret, and summarize gather, interpret, and summarize all information relevant to the all information relevant to the planning issue under planning issue under consideration.consideration.

Alternative Goals and PlansAlternative Goals and Plans

Stress Stress creativitycreativity and encourage managers and encourage managers and employees to think in and employees to think in broadbroad terms terms about their jobs.about their jobs.

GoalGoal A target or end that management desires A target or end that management desires

to reachto reach Specific, measurable, attainable, relevant, Specific, measurable, attainable, relevant,

time-bound - SMARTtime-bound - SMART

Alternative Goals and PlansAlternative Goals and Plans

PlansPlans The actions or means managers intend to use The actions or means managers intend to use

to achieve organizational goalsto achieve organizational goals

Contingency plansContingency plans sets of actions to be taken when a company’s sets of actions to be taken when a company’s

initial plans have not worked well or if events initial plans have not worked well or if events in the external environment require a sudden in the external environment require a sudden changechange

Benefits of PlanningBenefits of Planning

Focus and flexibilityFocus and flexibility

Action orientationAction orientation

CoordinationCoordination

Time managementTime management

ControlControl

Goal and Plan Evaluation Goal and Plan Evaluation

Managers will evaluate the Managers will evaluate the advantagesadvantages, , disadvantagesdisadvantages, and , and potential effectspotential effects of of each each alternativealternative goal and plan. goal and plan.

Must prioritize those goals and even Must prioritize those goals and even eliminateeliminate some of them. some of them.

Managers must consider carefully the Managers must consider carefully the implicationsimplications of alternative plans for of alternative plans for meeting high priority goals.meeting high priority goals.

Goal and Plan SelectionGoal and Plan Selection

Managers will select the option that is Managers will select the option that is most most appropriateappropriate and and feasiblefeasible

The evaluation process will identify the The evaluation process will identify the priorities and trade-offs among the goals priorities and trade-offs among the goals and plansand plans

Scenario Scenario A narrative that describes a particular set of A narrative that describes a particular set of

future conditions.future conditions.

Types of Managerial PlansTypes of Managerial Plans

Short-range vs. long-rangeShort-range vs. long-rangeStrategicStrategicOperationalOperationalPolicyPolicyProcedures or rulesProcedures or rulesBudgetBudget Zero-basedZero-basedProjectProject

ImplementationImplementation

Managers and employees must Managers and employees must understandunderstand the plan, have the the plan, have the resourcesresources to implement it, and be motivated to do soto implement it, and be motivated to do so

Successful implementation requires a plan Successful implementation requires a plan to be to be linkedlinked to other systems in the to other systems in the organization, particularly the budget and organization, particularly the budget and reward systemsreward systems

Monitor and ControlMonitor and Control

Managers must Managers must continuallycontinually monitor the monitor the actual performance of their work units actual performance of their work units against the unit’s goals and plans. against the unit’s goals and plans.

Manager’s also need to develop Manager’s also need to develop controlcontrol systemssystems to measure that performance and to measure that performance and allow them to take corrective action when allow them to take corrective action when the plans are implemented improperly or the plans are implemented improperly or when the situation when the situation changeschanges

Strategic PlanningStrategic Planning

Strategic planningStrategic planning A set of procedures for making decisions A set of procedures for making decisions

about the organization’s long-term goals and about the organization’s long-term goals and strategiesstrategies

Strategic goals Strategic goals major targets or end results that relate to the major targets or end results that relate to the

long-term survival, value, and growth of the long-term survival, value, and growth of the organization.organization.

Strategic PlanningStrategic Planning

StrategyStrategy A pattern of actions and resource allocations A pattern of actions and resource allocations

designed to achieve the organization’s goalsdesigned to achieve the organization’s goals

Strategic PlanningStrategic Planning

1.1. Where will we be active? Where will we be active?

2.2. How will we get there?How will we get there?

3.3. How will we win in the marketplace? How will we win in the marketplace?

4.4. How fast will we move and in what How fast will we move and in what sequence will we make changes? sequence will we make changes?

5.5. How will we obtain financial returnsHow will we obtain financial returns

Hierarchy of Goals and PlansHierarchy of Goals and Plans

Tactical and Operational Tactical and Operational PlanningPlanning

Tactical planningTactical planning A set of procedures for translating A set of procedures for translating

broad strategic goals and plans into broad strategic goals and plans into specific goals and plans that are specific goals and plans that are relevant to a distinct portion of the relevant to a distinct portion of the organization, such as a functional area organization, such as a functional area like marketing.like marketing.

Tactical and Operational Tactical and Operational PlanningPlanning

Operational planningOperational planning The process of identifying the The process of identifying the

specific procedures and processes specific procedures and processes required at lower levels of the required at lower levels of the organization.organization.

The Strategy MapThe Strategy Map

Stategic PlanningStategic Planning

Strategic managementStrategic management A process that involves managers A process that involves managers

from all parts of the organization in from all parts of the organization in the formulation and implementation the formulation and implementation of strategic goals and strategiesof strategic goals and strategies

Strategic Management Strategic Management ProcessProcess

Establishment of Mission, Establishment of Mission, Vision, and GoalsVision, and Goals

MissionMission An organization’s basic purpose and An organization’s basic purpose and

scope of operationsscope of operations

Environmental AnalysisEnvironmental Analysis

Analysis of External Analysis of External Opportunities and ThreatsOpportunities and Threats

StakeholdersStakeholders Groups and individuals who affect and Groups and individuals who affect and

are affected by the achievement of the are affected by the achievement of the organization’s mission, goals, and organization’s mission, goals, and strategiesstrategies

Analysis of Internal Strengths Analysis of Internal Strengths and Weaknessesand Weaknesses

ResourcesResources Inputs to a system that can enhance Inputs to a system that can enhance

performanceperformance Tangible, intangible assetsTangible, intangible assets

Internal Resource AnalysisInternal Resource Analysis

Resources and Core Resources and Core CompetenciesCompetencies

Analysis of Internal Strengths Analysis of Internal Strengths and Weaknessesand Weaknesses

BenchmarkingBenchmarking process of assessing how well one process of assessing how well one

company’s basic functions and skills company’s basic functions and skills compare with those of another company or compare with those of another company or set of companies. set of companies.

goal of benchmarking is to thoroughly goal of benchmarking is to thoroughly understand the “best practices” of other understand the “best practices” of other firms and to undertake actions to achieve firms and to undertake actions to achieve both better performance and lower costsboth better performance and lower costs

SWOT Analysis and Strategy SWOT Analysis and Strategy FormulationFormulation

SWOT analysisSWOT analysis A comparison of strengths, A comparison of strengths,

weaknesses, opportunities, and weaknesses, opportunities, and threats that helps executives threats that helps executives formulate strategy.formulate strategy.

SWOT Analysis and Strategy SWOT Analysis and Strategy FormulationFormulation

Corporate strategyCorporate strategy The set of businesses, markets, or industries The set of businesses, markets, or industries

in which an organization competes and the in which an organization competes and the distribution of resources among those entitiesdistribution of resources among those entities

ConcentrationConcentration A strategy employed for an organization that A strategy employed for an organization that

operates a single business and competes in a operates a single business and competes in a single industry.single industry.

Summary of Corporate Summary of Corporate StrategiesStrategies

SWOT Analysis and Strategy SWOT Analysis and Strategy FormulationFormulation

Vertical integrationVertical integration The acquisition or development of new The acquisition or development of new

businesses that produce parts or businesses that produce parts or components of the organization’s productcomponents of the organization’s product

Concentric diversification Concentric diversification A strategy used to add new businesses A strategy used to add new businesses

that produce related products or are that produce related products or are involved in related markets and activities.involved in related markets and activities.

SWOT Analysis and Strategy SWOT Analysis and Strategy FormulationFormulation

Low-cost strategyLow-cost strategy A strategy an organization uses to build A strategy an organization uses to build

competitive advantage by being efficient and competitive advantage by being efficient and offering a standard, no-frills productoffering a standard, no-frills product

Differentiation strategyDifferentiation strategy A strategy an organization uses to build A strategy an organization uses to build

competitive advantage by being unique in its competitive advantage by being unique in its industry or market segment along one or industry or market segment along one or more dimensions.more dimensions.

Strategy ImplementationStrategy Implementation

1.1. Define Define strategicstrategic risks risks

2.2. Assess organization capabilitiesAssess organization capabilities

3.3. Develop an implementation Develop an implementation agendaagenda

4.4. Create an Create an implementationimplementation plan plan

Strategic ControlStrategic Control

Strategic control systemStrategic control system A system designed to support A system designed to support

managers in evaluating the managers in evaluating the organization’s progress regarding its organization’s progress regarding its strategy and, when discrepancies strategy and, when discrepancies exist, taking corrective action.exist, taking corrective action.

BCG MatrixBCG Matrix