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3
Foundations
of Planning

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 Learning Outcomes
 Discuss the nature and purposes of
planning.
 Explain what managers do in the strategic
management process.
 Compare and contrast approaches to goal
setting and planning.
 Discuss contemporary issues in planning.

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 5-1 Discuss the nature
and purposes of
planning.

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 What is Planning?

Planning:
the primary management function.

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Reasons for Planning

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 Criticisms of
Formal Planning
 May create rigidity
 Can’t replace intuition and creativity
 Focuses attention on today’s success, not
tomorrow’s survival
 Reinforces success, which may lead to
failure

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 Formal Planning and
Organizational Performance

Does it pay to plan?

 Higher profits
 Higher return on assets
 Improved quality of planning
 Appropriate implementation

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 5-2 Explain what
managers do in the
strategic
management
process.

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 Strategic Management

What managers do to develop an

organization’s strategies

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 The Importance of
Strategic Management
 It has a positive impact on organizational
performance
 It prepares managers to cope with changing
situations
 It guides managers to examine relevant
factors in planning future action

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Steps in the Strategic
Management Process

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Step 1: Identify Mission,
Goals and Strategies

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External and Internal Analyses
Step 2: External Step 3: Internal
Analysis Analysis
 Competition  Resources
 Components of  Capabilities
environment  Core competencies
 Threats and  Organizational
opportunities strengths and
weaknesses

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 Formulating, Implementing,
and Evaluating Results
Step 4: Formulate Step 6: Evaluate
Strategies Results
 Corporate  How effective have
 Business strategies been?
 Functional  What adjustments
Step 5: Implement are necessary?
Strategies

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Strategies Managers Use

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 Stability and Renewal
Strategies
Stability strategy Renewal strategy
Organization continues Organization
to do what it’s doing addresses declining
organizational
performance
Retrenchment
Turnaround

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 Competitive Strategy

Competitive strategy:
a strategy for how an organization will
compete in its business.

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 Competitive Advantage
What sets an organization apart; its distinctive
edge that comes from its:
core competencies and resources

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 Functional Strategy
Those strategies used by an organization’s
various functional departments to support the
competitive strategy

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 Strategic Weapons
 Customer service
 Employee skills & loyalty
 Innovation
 Quality
 Social media
 Big data

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 5-3 Compare and
contrast
approaches to goal
setting and
planning.

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 Setting Goals and
Developing Plans
Types of goals
 Financial versus strategic
 Stated versus real

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Traditional Goal Setting

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Management by Objectives

 Goal specificity
 Participative decision making
 Explicit time period
 Performance feedback

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 Steps in Goal Setting
1. Review the organization’s mission and
employees’ key job tasks.
2. Evaluate available resources.
3. Determine the goals individually or with input
from others.
4. Make sure goals are well-written and
communicate to all who need to know.
5. Review results/Build in feedback mechanisms
to assess goal progress.

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Types of Plans

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Developing Plans

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 Approaches to Planning

 Top-down traditional approach

 Development by organizational
members

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 5-4 Discuss
contemporary
issues in planning.

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 Contemporary Issues

 Planning in dynamic environments

 Environmental scanning

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