Professional Documents
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4th-edition-bateman-snell-and-konopaske-0077862597-9780077862596/
chapter
Planning and Decision
Making
CHAPTER CONTENTS
Learning Objectives 2
Class Roadmap 3
Sustainability Box 11
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Bateman M 4e: IM: Chapter 5 - Planning and Decision Making
Chapter Videos 12
Lecturettes 15
Examples 21
Supplemental Features 29
Self-Assessment 29
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LEARNING OBJECTIVES
Strategic planning is not a topic that most students will intuitively understand. Typical undergraduates
are not at a stage in their careers where they have had a lot of experience with strategic planning, so it is
important to emphasize the basics in this chapter.
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1. “Who does strategic planning?”
2. “What are the differences between strategic, operational, and tactical
planning?”
3. “How do organizations determine what is the best strategy for them?”
4. “How can I make good decisions?”
5. “How can I make sure I don’t fall into the decision-making traps you are
describing when you talk about things like psychological biases and time
pressures?”
Teaching Tip:
Use your university as the company to study. With the increased competition in higher educa-
tion, how are for-profit institutions and online learning changing the educational landscape?
Have students call out Strengths, Weaknesses, Opportunities and Threats, while you capture
them on the board. Then either use what the students have developed and show them how strat-
egies emerge from the information they have given you, or put them into groups and ask each
group to come up with a strategy for the school. Ask the groups to present their strategies to the
class, and discuss which would be most effective and why. Once you have a strategy, it is also
helpful to identify operational and tactical goals that would be associated with that strategy.
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CLASS ROADMAP
The stages in the general decision-making model are very similar to specific formal plan-
ning steps
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allow the organization to take corrective action when the plans are implemented
improperly or when the situation changes.
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b. Stakeholders are groups and individuals who affect and are affected by the achieve-
ment of the organization’s mission, goals, and strategies.
c. Tasks in the environmental analysis include (Table 4.1)
i. industry and market analysis
ii. competitor analysis
iii. political and regulatory analysis
iv. social analysis
v. human resources analysis
vi. macroeconomic analysis
vii. technological analysis
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i. Stars
ii. Cash Cows
iii. Question Marks
iv. Dogs
A. Lack of Structure
1. Lack of structure is the usual state of affairs in managerial decision-making.
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2. Programmed decisions are decisions encountered and made before having objec-
tively correct answers, and solvable by using simple rules policies, or numerical
computations.
3. Non-programmed decisions are new, novel, complex decisions having no proven
answers. (Table 3.1)
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1. To maximize is to make the best possible decision, the greatest positive conse-
quences and the fewest negative consequences.
2. To satisfice is to choose the first option that is minimally acceptable or adequate:
the choice appears to meet a targeted goal or criterion.
3. Optimizing means that you achieve the best possible balance among several goals.
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Brainstorming a process in which group members generate as many ideas about a problem as they can;
criticism is withheld until all ideas have been proposed
Business strategy The major actions by which a business competes in a particular industry or market
Certainty the state that exists when decision makers have accurate and comprehensive information
Concentration A strategy employed for an organization that operates a single business and competes in a
single industry
Core capability A unique skill and/or knowledge an organization possesses that gives it an edge over
competitors
Corporate strategy The set of businesses, markets, or industries in which an organization competes and
the distribution of resources among those entities
Custom-made solutions new, creative solutions designed specifically for the problem
Devil’s advocate a person who has the job of criticizing ideas to ensure that their downsides are fully ex-
plored
Dialectic a structured debate comparing two conflicting courses of action
Differentiation strategy A strategy an organization uses to build competitive advantage by being unique
in its industry or market segment along one or more dimensions
Discounting the future a bias weighting short-term costs and benefits more heavily than longer-term
costs and benefits
Framing effects a decision bias influenced by the way in which a problem or decision alternative is
phrased or presented
Functional strategy Strategies implemented by each functional area of the organization to support the
organization’s business strategy
Goal A target or end that management desires to reach
Groupthink a phenomenon that occurs in decision making when group members avoid disagreement as
they strive for consensus
Goal displacement a condition that occurs when a decision-making group loses sight of its original goal
and a new, less important goal emerges
Illusion of control people’s belief that they can influence events, even when they have no control over
what will happen
Low-cost strategy A strategy an organization uses to build competitive advantage by being efficient and
offering a standard, no-frills product
Maximizing a decision realizing the best possible outcome
Mission An organization’s basic purpose and scope of operations
Operational planning The process of identifying the specific procedures and processes required at lower
levels of the organization
Optimizing achieving the best possible balance among several goals
Plans The actions or means managers intend to use to achieve organizational goals
Ready-made solutions ideas that have been seen or tried before
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Related diversification a strategy used to add new businesses that produce related products or are in-
volved in related markets and activities
Resources Inputs to a system that can enhance performance
Risk the state that exists when the probability of success is less than 100 percent and losses may occur
Satisficing choosing an option that is acceptable, although not necessarily the best or perfect
Scenario A narrative that describes a particular set of future conditions
Situational analysis A process planners use, within time and resource constraints, to gather, interpret,
and summarize all information relevant to the planning issue under consideration
Stakeholders Groups and individuals who affect and are affected by the achievement of the organiza-
tion’s mission, goals, and strategies
Strategic control system A system designed to support managers in evaluating the organization’s pro-
gress regarding its strategy and, when discrepancies exist, taking corrective action
Strategic goals Major targets or end results relating to the organization’s long-term survival, value, and
growth
Strategic management A process that involves managers from all parts of the organization in the formu-
lation and implementation of strategic goals and strategies
Strategic planning A set of procedures for making decisions about the organization’s long-term goals
and strategies
Strategic vision The long-term direction and strategic intent of a company
Strategy A pattern of actions and resource allocations designed to achieve the organization’s goals
SWOT analysis A comparison of strengths, weaknesses, opportunities, and threats that helps executives
formulate strategy
Tactical planning A set of procedures for translating broad strategic goals and plans into specific goals
and plans that are relevant to a distinct portion of the organization, such as a functional area like
marketing
Uncertainty the state that exists when decision makers have insufficient information
Unrelated diversification a strategy used to add new businesses that produce unrelated products or are
involved in unrelated markets and activities
Vertical integration The acquisition or development of new businesses that produce parts or components
of the organization’s product
SUSTAINABILITY BOX
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Since the Zero S relies on electricity for power instead of fossil fuels, its emissions are—you guessed it—
zero. The power pack recharges in less than four hours when plugged into a standard household outlet,
which means that owners can easily recharge overnight or while at work, if necessary.
“Our goal from the beginning was to engineer a high-performance electric urban street motorcycle that
would change the face of the industry. The Zero S is a revolutionary motorcycle that is designed to tackle
any city street, hill, or obstacle,” Saiki says. “The innovation behind the Zero S is a high-performance
motorcycle that also happens to be fully electric and green. The fact that it’s electric means not having to
get gas and reduced maintenance.” That’s some- thing different.
1) The differentiation strategy of Zero S has its advantages. But what might be some of
the disadvantages of being a “first mover” in this market?
Market uncertainty is probably the biggest disadvantage of being a “first mover” in the
market. The uncertainty of whether or not the market will accept your new product or
service is one of the biggest risks. Other disadvantages may include changes in technol-
ogy, changes in customer needs and the “free-rider” affect that is created for those who
follow you into the unknown.
2) How does Neal Saiki’s role as inventor and innovator affect the company’s business
strategy? How might the company’s strategy be different if its founder’s main area
of expertise was finance or advertising instead?
Mr. Saiki took the differentiation strategy to build competitive advantage by being unique
in its industry. Each functional area of the organization is critical to the implementation
of the overall business strategy. Mr. Saiki’s role is that of the inventor of the motorcycle.
In order to successfully implement his business strategy, he will need to rely on others
who have experience in financing, marketing, production, etc. You can have the best
product on the market, but if you can’t finance it, produce it or market it, it will more
than likely fail.
If Mr. Saiki’s expertise was in finance or advertising, the business strategy might change
or it might not change. He would obviously have an easier time of trying to figure out
how to finance the new venture, but it would change the dynamics of the business de-
pending on who invented the Zero S motorcycle.
PREP CARDS
DISCUSSION QUESTIONS
1. Have you been in a situation where your group had to make an important decision? What was
the process like? Was it a positive or a negative experience?
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Student examples will generally map onto the decision-making process outlined in Chapter 5. Depend-
ing on the group dynamics experienced by students, some may note that it was a positive process,
while others may note problems such as groupthink or goal displacement.
2. Think about the hotel industry. Which hotels utilize a low-cost strategy to compete in the mar-
ketplace? Which utilize a differentiation strategy? Now think about clothing retailers. Which re-
tailers utilize a low-cost strategy? Which utilize a differentiation strategy?
Students may offer examples such as La Quinta, Motel 6, or Holiday Inn as low-cost hotels and Omni,
Marriott, or Starwood as hotels pursuing the differentiation strategy. For clothing retailers, students
may offer low-cost examples such as Gap or Old Navy or differentiation strategies used by retailers
such as Armani or Chanel.
GROUP CHALLENGE
Divide students into groups of three to five students and ask them to develop a SWOT analysis of the col-
lege or university.
Ask students to develop 3–4 examples for each and be prepared to share their examples with the rest of
the class. Answers will vary based on each institution’s unique circumstances.
ACTIVITIES
Ask students to consider the last major decision they had to make in the workplace (i.e., asking for a
raise), a financial decision (i.e., buying a car), or a school-related matter (changing his/her major). In a 1–
2 page report, address the following:
1. What was the decision you had to make?
2. How did you go about generating alternative solutions?
3. What was the process you used to evaluate those alternatives and make your choice?
4. Did you satisfice or optimize in making this decision?
VIDEOS
The moving and storage Industry has been revolutionized over the last 10 years by Pods. The company
was begun by firefighters who saw a need for temporary storage units to hold people's personal belong-
ings after a fire damaged their home. The concept evolved to having portable containers delivered to a
customer's home, where they pack it at their convenience. The container is then picked up, put into stor-
age or moved anywhere in the country. The company has serviced over 240 million customers, facilitated
250,000 long-distance relocations, exceeded 1 million deliveries of container units and has over 140,000
containers in service. It has 132 franchise markets in the United States, Canada and Australia, along with
corporate operations in larger markets. .
Follow-Up Questions:
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1. The company began as a sole proprietorship, evolved into a corporation, and then expanded
into its current franchise model. What level of planning was likely involved in this evolution?
Students will note that this evolution highlights Pods’ strategic planning efforts.
2. Consider what a SWOT analysis might look like for Pods. What threats and opportunities in
the external environment can you readily identify?
Students will likely note that other competitors, such as U-Haul, pose a threat, particularly since U-
Haul has already implemented their own version of moving container boxes. Responses pertaining to
opportunities may vary more but some potential opportunities include pursuing franchises in addi-
tional countries or pursuing more fuel-efficient moving practices by designing electronic or hybrid
moving trucks.
3. How would you describe Pods' business strategy: low-cost or differentiation, or a combination
of the two? Why do you believe this is so?
Students will note that Pods’ business strategy highlights the differentiation strategy. Pods was the
innovator of the “pack at your own pace” concept and notes flexibility as what differentiates them
from competitors. However, students may also point out that Pods may need to consider a low-cost
strategy in the future, depending on how well they are able to continue differentiating themselves
from the competition.
4. What common decisions do start-up companies like Pods often face? Are these typically pro-
grammed or nonprogrammed decisions?
Students will highlight a variety of decisions faced by start-ups related to the product/service offering,
investors, location of the business, marketing, staffing, etc. Students will likely note that most of these
decisions are nonprogrammed.
Ball Corporation was founded in 1880 by five brothers. In its early days, the company manufactured glass
containers for varnishes, paints and home canning. In the 1950s and 60s it transitioned into aluminum
packaging for beverages and now is the market leader in aluminum can manufacturing. Manufacturing
has always been a keystone of the company's success, and the company continues to be very cost-effec-
tive. They maintain their competitive edge by focusing on customers, maintaining close relationships with
suppliers, practicing continuous improvement, focusing on customers, maintaining close relationships
with suppliers, practicing continuous improvement, focusing on quality, saving on costs through site se-
lection, utilizing the Internet, and adopting new production techniques. Ball's market is both price-driven
and innovation-driven, and the company relies on "just in time" inventory control.
Follow-Up Questions:
1. What tactical planning steps did Ball take to innovate and remain competitive in the packag-
ing Industry?
Several examples were highlighted in the video. For example, students might note that Ball adopted
innovative production facilities, which has helped to decrease manufacturing costs and remain com-
petitive. They may also mention Ball’s strategic need to position themselves as a brand (highlighting
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other containers beyond their glass canning jars), which they have attempted to pursue through so-
cial media.
2. How would you describe Ball's corporate strategy -- concentration, vertical integration, related
diversification, or unrelated diversification? Cite examples from the video.
Ball’s corporate strategy will likely be viewed by students as a concentration since they focus on a
single business in a single industry.
3. Explain ways in which Ball Corporation has developed a core capability in the manufacture of
aluminum cans.
Ball is the market leader in aluminum can production and has state-of-the art technology to help
them perfect the process of producing and distributing aluminum cans. They focus on both effi-
ciency and quality of the process.
LECTURETTES
Setting clear objectives and working them through could make or break a meeting.
1. When it comes to planning a big meeting or convention, it seems meeting planners all agree on one
thing: setting a clear objective. The most important thing when starting to plan a meeting is setting a
clear objective. Every decision made goes back to that objective. Joni Rowell, president of Event-
Works, begins her event planning by developing a pre-event timeline for the meeting or convention
and then distributing it to all the managers involved. Keeping people informed is another important
element of meeting planning. A plan for a meeting must include a purpose and an agenda should be
passed out to members or employees attending the meeting. This agenda should be passed out a min-
imum of one week prior to having a meeting. It is important to remember to seek closure on each
agenda item that is discussed in a meeting the chairperson is presiding over. Whenever possible,
Robert’s Rules of Order should be utilized.
2. Rowell says, “Plan your work and work your plan, at that point everything goes a lot smoother.
Many times there are different people planning different elements of an event, but by keeping every-
one informed of who is doing what, a lot of headaches can be avoided. A recommended plan is to
keep everyone updated through communications and e-mail, and having one key contact person for
the entire event is equally important.
3. Donna Myers, the owner of Custom Events, has tips for planning a meeting: invite the right people
and have decision-makers there. It is also important to establish an agenda and time limits. Start
promptly; wait no longer than five minutes in smaller meetings (for people to come in). In larger
meetings you might need to allow longer, it depends on the purpose of the meeting and what goals are
to be accomplished.
4. Communication makes it work. Being organized, knowing what the budget is and knowing what’s
expected of them so we can know what’s expected of us—it’s truly good communication that makes a
meeting work. With good communication and a clear agenda, managers can do virtually anything.
There are different types of meetings that can be conducted. When introducing a new product or a
new service to customers, an information giving should be developed. This is where the keynote
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speaker is to provide information pertaining to the product features, attributes, and when the product
is planning to be introduced. Another meeting could be an information exchange. This is characteris-
tic of a problem or an opportunity that directly impacts employees. This type of meeting hinges upon
employee participation because the problem or opportunity directly impacts them. A third type of
meeting is based on employee questions and participation. This type of meeting is based on some
event or activity that has happened and the employee is seeking participation.
5. Pat Warren, senior events manager in industry and trade at the Mississippi Development Authority,
says, you should rely on notes from previous meetings to keep on track. Meetings and conventions
are not so individualized that you can’t learn from all the events what to do. The success of a meeting
will depend upon the planning thereof, the communication and the purpose of the meeting to direct
and the notes that are relevant for the previous or current meeting being offered.1
Most people plan more extensively for a vacation than they do for a new business. An entrepreneur
should not quit his job until he researches the type of industry he wants to start and feels confident in its
success. Unless the entrepreneur is pretty sure that over time they can earn a better salary with owning a
business, stay at the current job. Why risk what you have? If taking time to plan all the steps involved in
starting and running the new business, the entrepreneur are on the way to success.
A business plan is a document about 40-50 pages long that outlines your plans and intentions for running
your business. It serves as a guidebook for managing a business as it grows, as well as a reference man-
ual for the management team. Some sections of the plan can remain confidential (such as financial infor-
mation, new technology overviews, or client data). However, the entrepreneur should assume that most of
the plan will become public because it will be shared with many different investors. Those less-sensitive
sections might include information about personnel, existing products, and services, industry analyses,
and any other company background information that normally appears in marketing literature.
Before beginning to write a business plan, one must first learn more about a business: the market it oper-
ates, the types of products or services offering, and the needs of the customers. Organizations out there
have a vested interest in helping you succeed at starting one’s own business. These include the local
Chamber of Commerce, entrepreneurial associations, and the Federal government.
1
Kirkland, Ellzabeth, “It’s all in the Planning” Mississippi Business Journal, 12/11/2000, Vol.22, Issue 50, p4
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The business plan is essentially a document that is broken into sections. Each section deals with an im-
portant part of the way you manage the business. Your business plan should contain the following basic
elements:
➢ Table of Contents
➢ Executive Summary
➢ Market and Industry Analysis
➢ Business Description
➢ The Competition
➢ Marketing Strategy
➢ Operations Plan
➢ The Management Team
➢ Funding Needs
➢ Supplementary Materials
Automation is a wonderful thing for performing routine tasks such as extensive number of crunching and
the creation of standard section. Almost all business plans contain the same basic information, and the
overall structure is fairly well defined. For this reason, one might find that business planning software
can help start with writing the plan. A number of business planning software packages on the market are
designed to ask question to fill in the blanks. The entrepreneur’s responses are then entered into the ap-
propriate plan sections, and the plan contents are automatically created. The bad news is that no auto-
mated business planning computer software can add personality and style to the plan, and the entrepre-
neur’s personality is crucial to the success of the venture. In addition, nobody can predict all of the spe-
cial situations that apply to the business idea. As a result, some topics won’t be addressed and unneces-
sary topics might be included. Also, investors don’t always like to see the “plan-in-a-can” format that re-
sults from using one of these software packages.2
1. The chapter opened with a quote by GE’s Jack Welch: “Manage your destiny, or somebody else
will.” What does this mean for strategic management? What does it mean when Welch adds,
“…or somebody else will”?
The first part of Jack Welch’s quote means that it is up to the management of a company to have a
clearly defined vision of the organization’s future and to follow a set of strategies that will enable it to
reach its goals. Management has to define, “Where the company is going, and how it is going to get
there.”
If management and the company don’t have a clear understanding of what it is trying to achieve and
the steps it will take to achieve its goals, the second part of the quote comes into play. Other organiza-
tions, with a far better defined mission and more detailed strategies will act to achieve their goals, and
as a result, management will be forced to continually react to the leadership of others.
2. List the six steps in the formal planning process. Suppose you are a top executive of a home-
improvement chain and you want to launch a new company Web site. Provide examples of ac-
tivities you would carry out during each step to create this site.
2
Paulson, Ed: Layton, Marcia, “Preparing Your Business Plan”, Complete Idiot’s Guide to Starting Your Own Business, 1998, p 51
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The six steps in the formal planning process are: 1) situational analysis; 2) alternative goals and plans;
3) goal and plan evaluation; 4) goal and plan selection; 5) implementation; and 6) monitor and con-
trol. As the executive of a home-improvement store wanting to launch a Web site, you would first
have to analyze the situation (what are the company’s strengths, weaknesses, opportunities, and
threats?), then review alternative goals and plans (create your own web site, have the web site created
for you, partner with a company that has an existing website, etc.). Next, it would be important to
evaluate the pros and cons of each of the different possible goals (for example, one drawback of part-
nering with a company that already has a website is that your store may lose business to that com-
pany.) After evaluating all the possible goals, the company would pick the one that best fits its long-
range strategic plans, and implement it. It would be important to monitor sales through the website
closely, as this is how the company will be able to tell whether or not its plan is a success.
3. Your friend is frustrated because he’s having trouble selecting a career. He says, “I can’t plan
because the future is too complicated. Anything can happen, and there are too many choices.”
What would you say to him to change his mind?
Your friend needs to think about the consequences of not planning. By planning now, all of the
choices that crop up later can be fit into a framework for his decisions, and used rationally. But if
your friend doesn’t plan now, the choices will be overwhelming, and he or she won’t be able to make
any decision at all.
4. How do strategic, operational, and tactical planning differ? How might the three levels comple-
ment one another in an organization?
Strategic planning involves making decisions about the long-term goals and strategies for the organi-
zation. Strategic plans, which usually involve an in-depth evaluation of the external environment, nor-
mally involve heavy participation on the part of top management and cover a relatively long time
frame (from three to five years, although some Japanese companies develop 20-year plans).
Tactical planning translates the strategic plans into detailed goals and plans that are relevant to a spe-
cific part of the organization, often a functional area such as marketing or manufacturing. Tactical
plans focus on the major actions required for the unit to fulfill its part of the strategic plan. Tactical
planning is typically done by middle management with a six-month or one-year focus.
Operational planning identifies the specific procedures and processes required at lower levels of the
organization. Operational plans usually cover short periods of time (one to two weeks) and focus on
the routine tasks (production runs, delivery schedules, etc.) as required to help the larger work unit
achieve its tactical plans and goals. Front-line managers usually carry out operational planning.
It is, of course, vitally important that an organization’s strategic, tactical, and operational plans are
consistent with each other. If a company’s strategic goal is to enter the European market with a new
product, it is essential that the tactical plan specify the construction of the appropriate manufacturing
facility and that the operational plan detail the production of an appropriate number of units for that
market.
5. How might an organization such as Urban Outfitters use a strategic map? With your class-
mates, develop a possible strategic map for the company.
Urban Outfitters is a trendy store that caters to young people. Selling everything from magnets to
clothing, they aim to mock all social stereotypes, often by flaunting them. Students should use the
following model to answer the question.
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6. What accounts for the shift from strategic planning to strategic management? In which indus-
tries would you be most likely to observe these trends?
Strategic planning often emphasized a top-down approach. Senior management and specialized strate-
gic planning units developed goals and objectives that were then given to the next level of manage-
ment for implementation. The problem with this approach was that it ignored the ideas and perspec-
tives of managers throughout the organization who were usually much closer to the day-to-day reali-
ties of the marketplace.
Strategic management evolved in the 90s and expanded the concept of strategic planning to the entire
management structure. Under this approach, all managers are involved in the formulation and imple-
mentation of the company’s goals and strategies. Furthermore, these managers are encouraged to
think strategically and, in some instances, given far more autonomy to act strategically.
This trend towards strategic management has been most visible in companies in rapidly changing in-
dustries or environments. When rapid response was essential, the organization was forced to rely
more on the front-line manager handling the situation. There just wasn’t enough time to allow for a
formal review of the proposed action by top management.
7. Review the components of an environmental analysis. Why would this analysis be important to
a company’s strategic planning process?
By analyzing the components of the external environment, a company can see changes in advance,
and understand what changes need to be made in order to keep up with the environment. The more
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accurately a company can forecast changes in the environment, the more likely it will be to establish
itself as a competitor in that environment.
8. In your opinion, what are the core competencies of Harley-Davidson Motor Company motorcy-
cles? How do these core competencies help Harley Davidson compete against foreign competi-
tors such as Yamaha and Suzuki?
A “core competency” is defined as something that a company does especially well relative to its com-
petitors. Examples of core competencies might be a firm’s technological innovations, its engineering
skills, its quality assurance program, the quality of its post-sales service, or its marketing.
Note that Harley-Davidson is not mentioned in this chapter, so unless students are familiar with the
company, they may have a hard time answering this question. According to Dave Mauer, the Phyllis
Gough Huffington Professor of Finance at the SMU Cox School of Business, “The competitive strat-
egy used by Harley Davidson—a highly differentiated range of products combined with a build-to-
order manufacturing capability—enabled them to survive intense Japanese competition and define a
new product concept in a highly mature market.”3
9. How could SWOT analysis help newspaper companies remain competitive in the new media en-
vironment?
Newspaper companies which use a SWOT analysis would be able to more clearly see niche opportu-
nities that cannot be fulfilled by other types of media. For example, newspapers are truly portable -
they require no wires, batteries, or electricity to operate. In addition, newspapers offer the kind of in-
depth analysis and reporting that simply isn’t possible from Internet news sources. By capitalizing on
these strengths, and taking advantage of new technologies as they emerge (an environmental analysis)
newspapers would be able to develop a strategic plan to get themselves through these hard times.
10. What are the key challenges in strategy implementation? What barriers might prevent strategy
implementation?
Involvement of managers at all levels of the organization—ensuring that the managers who are
responsible for implementation are also involved in the planning and formulation stages.
3
Mauer, D. “Route to Building Competitive Advantage: Harley Davidson.” Posted on http://www.cox.smu.edu/article/research/research.do/89.
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EXAMPLES
Example 5.1 – Tactical planning: Gary Boomer, CPA, is the president of Boomer Consulting in
Manhattan, Kansas. Gary states that other than costs there are tactical as well as strategic issues
involved when making decisions. Gary also reflected that knowing the right questions to ask is
very important. Some basic strategic questions would include what are the firm’s priorities, how
will technology accelerate those projects, who are out peers and what are they doing, what are the
latest trends in and outside of our industry, what is our charge-back and billing model return on
investment? Some basic tactical questions would include what personnel resources do we have
and what are their unique abilities, who is in charge and responsible for each project, should we
outsource or staff the project internally, what is the timeline and budget, how much per charge
hour are we spending on technology? Gary stresses the fact it requires a team in order to succeed
– take the time to think, plan and grow.4
Example 5.2 – Evaluation of the environment: Jason Black, Vice President of the Planning In-
stitute of Australia and senior spatial planning consultant at MacroPlan, feels some of the key is-
sues city planners are facing are movement to coastal areas, higher density inner-city living, the
environmental sustainability and a long-term shortage of planners. Making recommendations for
changes in the city requires an awareness of economic change, cultural difference and environ-
mental social change. The city planning process begins with the analysis of these external and
internal forces.5
Example 5.3 – Benchmarking: Every year, J.D. Power and Associates publish numerous rank-
ings for the auto industry. One of these is the Initial Quality Study, which measures new vehicle
quality ratings after 90 days of ownership. In 2013 a key finding of the study was that approxi-
mately 2/3 of problems experienced during this time frame were related to design flaws, rather
than malfunctioning components of the vehicle. David Sargent, Vice President of Global Auto-
motive at J.D. Power and Associates noted, “Automakers are investing billions of dollars into de-
signing and building vehicles and adding technologies that consumers desire and demand but the
risk is that the vehicle design, or the technology within the vehicle, in some cases may note meet
customer needs…The successful companies will be those automakers that find a way to give cus-
tomers the technology they want while at the same time making it sufficiently intuitive so all cus-
tomers find it easy to use.” 6
Example 5.4 – Vertical integration: Vertical integration, so far, seems to have worked for the
RDF Meat Shop, Inc. of Pampanga. Starting out as a chicken contract farmer for three food
stores, the company later became an independent grower of swine and chicken. Dr. Lo, the com-
pany’s proponent, recognized his margins were getting slimmer and his company relied heavily
on middlemen to dispose of its livestock in a timely manner. Dr. Lo decided to integrate both
backward and forward by expanding operations to include feed milling, meat processing and the
establishment of meat store in strategic areas. This movement required both financial, technical
and managerial resources – the company had all three critical elements. Today the company has
19 stand-alone outlets for its meat products that carry the name “Fresh Options.”7
4
Boomer, L. Gary. “IT strategies and tactics.” Accounting Today, August 20, 2007, Vol. 21, No. 15, p 22.
5
Norris, Paul. “Map out the big picture.” The Australian, October 22, 2005. p 9.
6
J.D. Power. “2013 Initial Quality Study Results.” Retrieved from http://autos.jdpower.com/content/study-auto/vURhToQ/2013-u-s-initial-qual-
ity-study-results.htm September 8, 2014.
7
Villanueva, Frankie. “The view from Taft: Vertical integration or outsourcing?”, August 31, 2006, p S 1/5.
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Example 5.5 – Business strategy: Most people know that Southwest Airlines is the low-cost
flight leader in the United States, but fewer people will have heard of Spring, the first private
low-cost airline in China. To keep its operating costs down, Spring only sells on the Internet, and
it gives passengers bottled water instead of meals on its flights.8
Example 5.6 – Barriers to strategy implementation: AT&T was once a premiere utility in the
United States. But with deregulation came the breakup of “Ma Bell” and a strategic challenge
that has lasted for 20 years. Most recently, Michael Armstrong, the CEO of AT&T has made two
strategic blunders. The first was trying to turn AT&T into an all-purpose communications com-
pany. To do this, Armstrong spent billions buying cable companies to complement his existing
business, consumer, and wireless businesses. Unfortunately, Wall Street didn’t respond well to
the strategy, probably because of the long time frame needed to recoup the investment. Next,
Armstrong came up with the idea of “Project Grand Slam.” That strategy involved breaking
AT&T up into four separate companies. Again, the response was not positive, and in 2005,
AT&T was acquired by SBC, one of the original “Baby Bells.” 9
These expanded PowerPoint slides can be used to supplement the lecture material.
8
Bodeen, Christopher. “Chinese low-cost airline launches.” Associated Press, July 18, 2005, Online at http://www.msnbc.msn.com/id/8615128/
9
Jaffe, Sam. “Why AT&T’s “Grand Slam” looks more like a bunt.” Business Week Online, October 25, 2000. Retrieved from: http://www.busi-
nessweek.com/bwdaily/dnflash/oct2000/nf20001025_568.htm
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EXPANDED POWERPOINT
SLIDE 52
Chapter Takeaways
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Bateman M 4e: IM: Chapter 5 - Planning and Decision Making
SUPPLEMENTAL FEATURES
Go to Connect ® for M Management to access additional Resources.
SELF-ASSESSMENTS
• Your Preferred Decision Style
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