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Managerial Planning and Goal Setting

The Importance of Goals and Plans What do an organizations goals and plans
Investors Customers Suppliers

communicate to external and internal audiences? Legitimacy to external audiences such as:

A source of motivation and guidance for internal audiences


Help employees identify with the organization Reduce uncertainty and clarify what employees

should accomplish Help minimize wasted resources

Common Criticisms of Planning


Creates rigidity Doesnt work in dynamic environment Cant replace intuition and creativity

So, Should Organizations Plan?


Most orgs. do better by planning Should match degree and frequency of planning to rate of change in the environment Andy Grove (CEO of INTEL) plans like a fire department plans

Organizational Mission
Most general purposes, goals, plans
Long run vision, values What distinguishes it from other organizations

Focus on items such as:


Market and customers Product quality Location of facilities Attitude toward employees

Mgmt. Levels and Planning


Top Management Strategic Goals/Plans Whole Organization Plan for Several years Middle Management Tactical Goals/Plans Major Units of the Org. Plan for up to Two years Lower Management Operational Goals/Plans Departments, Individuals Plan mostly for under One year

Criteria for Effective Goals


Specific
Measurable Attainable (and challenging) Relevant (Key result areas) Time-based Rewards for achievement

Contingency Plans

Define company responses to be taken in case plan first implemented does not work as expected (i.e., go to Plan B) Usually, contingency plans are for crises, emergencies or setbacks, but could be for unexpected positive results, also.

Strategic Planning: General Questions


What changes and trends are occurring? Who are the customers? What products or services should we offer? How can we offer these products or services efficiently?

SWOT Analysis and the World Football League


Overestimated STRENGTHS
(e.g., Time of Year, Locations)

Underestimated WEAKNESSES
(e.g., Lack of Talent, Finances)

Overestimated OPPORTUNITIES
(e.g., Demand for Product, NFLs Weaknesses)

Underestimated THREATS
(e.g., NFLs ability to compete, other activities of Summer and early Fall)

Levels of Strategic Planning CORPORATE Level


What business(es) are we in? Growth, Retrenchment, or Stability? Portfolio Strategy

BUSINESS Level
How do we compete? Porters Competitive Forces and Strategies Partnership Strategies

FUNCTIONAL Level
How do we support the above? See Putting Strategy into Action in text

Porters Competitive Forces


Threat of substitute products

Potential new entrants


Bargaining power of customers

Rivalry among competitors

Bargaining power of suppliers

Business-Level Strategy
Porters Competitive Strategies
Strategy
Low Cost Differentiation

Number of market segments

Many

Low-Cost

Differentiation

Few

Focused Low-Cost

Focused Differentiation

Porters Competitive Strategies


Differentiation (Maytag, Mary Kay, Perdue, L.L.

Bean, Nike) Cost Leadership(Wal-Mart, Southwest Air, Gallo Wine, Motel 6) Focused Differentiation (Stouffers Lean Cuisine, Mercedes, Rolex) Focused Cost Leadership (Ft. Howard Paper, ARCO Gasoline)

Partnerships
How Dissimilar Orgs. Collaborate
Supply chain relationships Joint Ventures Holding stock in one another Interlocking directorates Mergers

Partnerships
How Similar Orgs. Collaborate
Joint Ventures Cartels (association of firms that agree

to coordinate activities) Collusion (secret agreement to share


information)