Lesson 5 foundations of planning

What is Planning?• Defining the organization’s goals, establishing an overall strategy, and developing a hierarchy of plans to achieve goals • Formal planning – Specific goals covering a

Lesson 5

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1 Define planning

2 Explain the potential benefits of planning

3 Identify the potential drawbacks of planning

4 Distinguish between strategic and tactical plans

5 State when directional plans are preferred over specific plans

6 Define management by objectives and identify its common elements

7 Outline the steps in the strategic management process

8 Describe the four grand strategies

What is Planning?

• Defining the organization’s goals, establishing an overall strategy, and developing a hierarchy of plans to achieve goals

• Formal planning – Specific goals covering a specific time period – Written and shared with organizational members

=> Why do managers plan?

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Reduces the

Provides Direction

Minimizes Waste

Sets Standards to

Facilitate Control

Reasons for Planning

Criticisms of Formal Planning

May Create Rigidity

Can’t Replace Intuition and Creativity

Can’t Be Done in a Dynamic Environment

Focus on Today’s Competition Reinforces Success

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Does Planning Improve Performance?

• Financial results

• Environmental concerns

• Quality and implementation

Key elements to a plan

Objectives Actions Resources Implementation

Core competencies:

The unique skills and/or knowledge

an organization possesses that give

it an edge over competitors.

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The Time Frame of Planning

Short-Term Plans

Long-Term Plans

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Objectives Time Frame Scope

How Do Strategic and Tactical Plans Differ?

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Specific Plans

Directional Plans

Clear

General

Low

High

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Single-Use

vs Standing Plans

Unique Situations

Ongoing Operations

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• Traditional goal-setting – an approach to setting goals in which top

managers set goals that then flow down through the organization and

become sub-goals for each organizational area.

• 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.

• Management by objectives (MBO) – a process of setting mutually

agreed upon goals and using those goals to evaluate employee

performance.

Approaches to Setting Goals

What is a good objective?

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A good objective:

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Setting goals

Traditional goal setting

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Steps in

MBO

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Organizational Objectives

Divisional Objectives

Departmental Objectives

Individual Objectives

What Is Management by Objectives?

Setting goals

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Common

Elements of MBO

• Goal specificity

• Participative

decision making

• Set time period

• Performance

feedback

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More Difficult Goals Lead

To Higher Performance

Does MBO Work?

Specific Goals Lead to Better Results

Support from

Top Management

Is Critical

Participation

Is Key

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Problems with MBO

• Efforts directed primarily

toward output

• Encourage individual rather

than team efforts

• Goals may discourage efforts

for continuous improvement 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

Steps in Goal-Setting

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Well-Written Goals

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Managing strategy

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Starting the Process

Strategies Mission

Objectives

Managing strategy

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Competitive Intelligence

Environmental Scanning

Analyzing the

Environment

Managing strategy

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Managing strategy

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Identifying Business Opportunities

Opportunities in the Environment

Organization’s Resources

Organization’s Business Opportunities

Managing strategy

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Group assignment

• You are thinking about a new business you would like to start (Be

as specific as possible) Conducting

an environmental analysis for the chosen business

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Types of organizational strategies

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• Growth

• Stability

• Renewal (Retrenchment and/or Turn-around)

• Combination

Types of Corporate Strategies

Summary of Corporate strategy

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Determining A Business-Level Strategy

Differentiation Cost

Leadership

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How Strategies Are managed?

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After Strategies Are Formulated

• Implementation

• Evaluating results

Core competencies and

competitive advantage

• Core competencies:

• From internal resources: tangible and

intangible assets

• Becomes competitive advantage when:

• Instrumental for creating customers’

benefits

• Rare

• Difficult to imitate

• Well-organized

• Competitive advantage

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Resources; Core competencies and competitive

advantage