The Manager as a Planner and Strategist

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The Manager as a Plannerand Strategist

• chapter eight

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Learning Objectives

• Identify the three main steps of the planning
  process and the relationship between planning and
  strategy.
• Describe some techniques managers can use to
  improve the planning process so they can better
  predict the future and mobilize organizational
  resources to meet future contingencies.

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Learning Objectives (cont.)

• Differentiate between the main types of
  business-level strategy and explain how they give
  an organization a competitive advantage lead to
  superior performance.
• Differentiate between the main types of
  corporate-level strategies and explain how they
  are used to strengthen a companys business-level
  strategy and competitive advantage
• Describe the vital role managers play in
  implementing strategies to achieve an
  organizations mission and goals

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Planning and Strategy

• Planning
• Identifying and selecting appropriate goals and
  courses of action for an organization.
• The organizational plan that results from the
  planning process details the goals and specifies
  how managers will attain those goals.

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Planning and Strategy

• Strategy
• A cluster of decisions about what goals to
  pursue, what actions to take, and how to use
  resources to achieve goals.

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Planning and Strategy

• Mission Statement
• A broad declaration of an organizations purpose
  that identifies the organizations products and
  customers and distinguishes the organization from
  its competitors.

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Example Facebook Mission Statement

• Facebook's mission is to give people the power to
  share and make the world more open and connected.

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Three Steps in Planning
Figure 8.1
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The Nature of the Planning Process

• To perform the planning task, managers
• Establish where an organization is at the present
  time
• Determine its desired future state
• Decide how to move it forward to reach that
  future state

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Why Planning is Important

• Necessary to give the organization a sense of
  direction and purpose
• Useful way of getting managers to participate in
  decision making about the appropriate goals and
  strategies for an organization
• Helps coordinate managers of the different
  functions and divisions of an organization
• Can be used as a device for controlling managers

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Why Planning is Important

• Unity
• at any one time only one central, guiding plan is
  put into operation

• Continuity
• planning is an ongoing process in which managers
  build and refine previous plans and continually
  modify plans at all levels

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Why Planning is Important

• Accuracy
• managers need to make every attempt to collect
  and utilize all available information at their
  disposal

• Flexibility
• plans can be altered and changed if the situation
  changes

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Levels of Planning at General Electric
Figure 8.2
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Levels and Types of Planning
Figure 8.3
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Levels of Planning

• Corporate-Level Plan
• Top managements decisions pertaining to the
  organizations mission, overall strategy, and
  structure.
• Provides a framework for all other planning.
• Corporate-Level Strategy
• A plan that indicates in which industries and
  national markets an organization intends to
  compete.

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Levels of Planning

• Business-Level Plan
• Long-term divisional goals that will allow the
  division to meet corporate goals
• Divisions business-level and structure to
  achieve divisional goals

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Levels of Planning

• Business-Level Strategy
• Outlines the specific methods a division,
  business unit, or organization will use to
  compete effectively against its rivals in an
  industry

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Levels of Planning

• Functional-Level Plan
• Goals that the managers of each function will
  pursue to help their division attain its
  business-level goals
• Functional Strategy
• A plan of action that managers of individual
  functions can take to add value to an
  organizations goods and services

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Time Horizons of Plans

• Time Horizon
• Period of time over which they are intended to
  apply or endure.
• Long-term plans are usually 5 years or more.
• Intermediate-term plans are 1 to 5 years.
• Short-term plans are less than 1 year.

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Types of Plans

• Standing Plans
• used in programmed decision situations
• Policies - general guides to action
• Rules - formal written specific guides to action
• Standard operating procedures (SOP) - specify an
  exact series of actions to follow

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Types of Plans

• Single-Use Plans
• Developed to handle non-programmed
  decision-making in one-of-a-kind situations
• Programs integrated plans achieving certain
  goals.
• Project specific action plans to complete
  programs.

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Scenario Planning

• Scenario Planning (Contingency Planning)
• The generation of multiple forecasts of future
  conditions followed by an analysis of how to
  effectively respond to those conditions.

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Determining the Organizations Mission and Goals

• Defining the Business
• Who are our customers?
• What customer needs are being satisfied?
• How are we satisfying customer needs?
• Establishing Major Goals
• Provides the organization with a sense of
  direction

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Three Mission Statements
Figure 8.4
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Establishing Major Goals

• Strategic leadership
• the ability of the CEO and top managers to convey
  a compelling vision of what they want to achieve
  to their subordinates

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Formulating Strategy

• Strategic Formulation
• The development of a set of corporate, business,
  and functional strategies that allow an
  organization to accomplish its mission and
  achieve its goals

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Formulating Strategy

• SWOT Analysis
• A planning exercise in which managers identify
  organizational strengths (S) and weaknesses (W)
  and environmental opportunities (O) and threats
  (T).

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Questions for SWOT Analysis
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Planning and Strategy Formulation
Figure 8.5
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The Five Forces

• Level of rivalry in an industry
• Potential for new entrants
• Power of large suppliers
• Power of large customers
• Threat of substitute products

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The Five Forces

• Hypercompetition
• industries that are characterized by permanent,
  ongoing, intense, competition brought about by
  advancing technology or changing customer tastes
  and fads and fashions

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Formulating Business-Level Strategies

• Low-Cost Strategy
• Driving the organizations total costs down below
  the total costs of rivals.

• Differentiation
• Distinguishing an organizations products from
  the products of competitors on dimensions such as
  product design, quality, or after-sales service.

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Formulating Business-Level Strategies

• Stuck in the Middle
• Attempting to simultaneously pursue both a low
  cost strategy and a differentiation strategy.
• Difficult to achieve low cost with the added
  costs of differentiation.

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Formulating Business-Level Strategies

• Focused Low-Cost
• Serving only one market segment and being the
  lowest-cost organization serving that segment.

• Focused Differentiation
• Serving only one market segment as the most
  differentiated organization serving that segment.

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Principal Corporate-Level Strategies
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Related Diversification

• Synergy
• Obtained when the value created by two divisions
  cooperating is greater than the value that would
  be created if the two divisions operated
  separately and independently

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International Expansion

• Multi-domestic Strategy
• Customizing products and marketing strategies to
  specific national conditions
• Helps gain local market share
• Raises production costs

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Four Ways to Expand Internationally
Figure 8.7
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Planning and Implementing Strategy

• Allocate implementation responsibility to the
  appropriate individuals or groups.
• Draft detailed action plans for implementation.
• Establish a timetable for implementation
• Allocate appropriate resources
• Hold specific groups or individuals responsible
  for the attainment of corporate, divisional, and
  functional goals.

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Video Case State Farm Bank

• Why is planning important for organizations like
  State Farm?
• What kind of diversification took place when
  State Farm entered the banking field?
• How does State Farm differentiate its banking
  services from those of its competitors?