CHAPTER 3

PLANNING
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 the specific strategies managers will implement to attain
those goals.
• Strategy
• A cluster of decisions about what goals to pursue, what actions to
take, and how to use resources to achieve goals
• Mission statement
• A broad declaration of an organization’s purpose that identifies the
organization’s products and customers and distinguishes the
organization from its competitors
 THREE
STEPS IN
PLANNING
DETERMINING THE ORGANISATION’S 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
 COMPANY MISSION STATEMENT
Facebook: “To give people the power to
build community and bring the
world closer together.”

EXAMPLES
Twitter: “To give everyone the power to
create and share ideas and
information instantly, without
barriers.”
Google: “To organize the world’s
information and make it
universally accessible and
useful.”
ESTABLISHING MAJOR GOALS

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

• Strategy formulation
• The development of a set of corporate, business, and functional strategies
that allow an organization to accomplish its mission and achieve its goals
• SWOT analysis
• A planning exercise in which managers identify internal organizational
strengths (S) and weaknesses (W) and external environmental opportunities
(O) and threats (T)
PLANNING AND
STRATEGY
FORMULATION
QUESTIONS FOR SWOT ANALYSIS

Potential Strengths Potential Opportunities Potential Weaknesses Potential Threats

Well-developed strategy? Expand core business(es)? Poorly developed Attacks on core

strategy? business(es)?
Manufacturing competence? Widen product range? Rising manufacturing Increase in foreign
costs? competition?
Brand-name reputation? Enter new related businesses? Loss of brand name? Potential for takeover?

Ability to manage strategic Apply-brand-name capital in High conflict and Rising labor costs?
change? new areas? politics?
Other strengths? Other opportunities? Other weaknesses? Other threats?
THE NATURE OF THE PLANNING PROCESS

To perform the planning task, managers:

1. Establish and discover where an organization is at the present
time.
2. Determine its desired future state.
3. Decide how to move it forward to reach that future state.
IMPORTANCE OF PLANNING

1. Necessary to give the organization a sense of direction and

purpose
2. Useful way of getting managers to participate in decision making
about the appropriate goals and strategies for an organization
3. Helps coordinate managers of the different functions and
divisions of an organization
4. Can be used as a device for controlling managers
IMPORTANCE OF PLANNING
• Unity • Accuracy
• At any one time, only one central, • Managers need to make every attempt
guiding plan is put into operation. to collect and utilize all available
• Continuity information at their disposal.

• Planning is an ongoing process in which • Flexibility

managers build and refine previous plans • Plans can be altered if the situation
and continually modify plans at all levels. changes.
LEVELS OF
PLANNING
LEVELS AND
TYPES OF
PLANNING
LEVELS AND TYPES OF PLANNING

• Corporate-level plan
• Top management’s decisions pertaining to the organization’s mission, overall strategy, and structure
• General Mill’s seeks to increase market share in the organic/natural food sector

• Corporate-level strategy
• A plan that indicates in which industries and national markets an organization intends to compete

• Functional strategy
• A plan of action to improve the ability of each of an organization’s functions to perform its task-
specific activities in ways that add value to an organization’s goods and services
LEVELS AND TYPES OF PLANNING

• Business-level plan
• Long-term divisional goals that will allow the division to meet corporate goals
• Division’s business-level strategy and structure to achieve divisional goals
• Business-level strategy
• This strategy outlines the specific methods a division, business unit, or organization will
use to compete effectively against its rivals in an industry
• Functional-level plan
• Goals that the managers of each function will pursue to help their division attain its
business-level goals
TIME HORIZON OF PLANS

• Time horizon
• Period of time over which plans 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.
TYPES OF PLANS
• Standing plans
• Used in situations in which programmed
decision making is appropriate
• Policies are general guides to action.
• Rules are formal written guides to action.
• Standard operating procedures (SOP) are
written instructions describing the exact
series of actions that should be followed in a
specific situation.
• Single-use plans
• Developed to handle non-programmed
decision-making in unusual or one-of-
a-kind situations
• Programs — Integrated sets of plans
achieving certain goals
• Project — Specific action plans to
complete various aspects of a program
REFERENCES

• Contemporary Management
• 11th Edition
• By Gareth Jones and Jennifer George