Planning | Goal | Strategic Management

Planning

³Planning before doing´

What is planning?
‡ Planning
± Managerial function that involves:
‡ Defining the organization¶s goals ‡ Establishing an overall strategy for achieving those goals ‡ Developing a comprehensive set of plans to integrate and coordinate organizational work

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Purposes of Planning
± Provides direction ± Reduces uncertainty ± Minimizes waste and redundancy ± Sets the standards for controlling

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Planning and Performance
‡ The Relationship Between Planning and Performance
± Formal planning is associated with:
‡ Higher profits and returns on assets ‡ Other positive financial results

± The quality of planning and implementation affects performance more than the extent of planning

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How Do Managers Plan?
‡ Elements of Planning
± Goals (also objectives)
‡ Desired outcomes for individuals, groups, or entire organizations ‡ Provide direction and performance evaluation criteria

± Plans
‡ Documents that outline how goals are to be accomplished ‡ Describe how resources are to be allocated and establish activity schedules

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TYPES OF PLANS 8/16/2010 Free template from www.com 6 .brainybetty.

specific to an organization unit FORMAL ± written. short-term focus. specific. long-term focus.com 7 . involved shared goals for the organization 8/16/2010 Free template from www.INFORMAL ± not written down.brainybetty.

brainybetty.com 8 .Types of Plans Breadth Time Frame Specificity Frequency of Use Strategic ‡ Should we expand into overseas markets? ‡ Should we develop new products? ‡ How large would we like the company to be in five years? Long term Directional Single use Operational ‡ Should we order new equipment to produce our number-one product more efficiently? ‡ How many extra employees should we hire for the year-end sales rush? ‡ How can we improve quality control on the production line? Short term Specific Standing 8/16/2010 Free template from www.

plans that apply to the entire organization.com 9 . establish the organization¶s overall goals.plans that specify the details of how the overall goals are to be achieved 8/16/2010 Free template from www.STRATEGIC PLANS .brainybetty. and seek to position the organization in terms of its environment OPERATIONAL PLANS .

plans covering one year or less 8/16/2010 Free template from www.com 10 .LONG-TERM PLANS .plans with a time frame beyond three years SHORT-TERM PLANS .brainybetty.

plans that are flexible and that set out general guidelines 8/16/2010 Free template from www.com 11 .plans that are clearly defined and that leave no room for interpretation DIRECTIONAL PLANS .brainybetty.SPECIFIC PLANS .

SINGLE-USE PLAN .ongoing plans that provide guidance for activities repeatedly 8/16/2010 Free template from www.brainybetty.com 12 .a one time plan specifically designed to meet the needs of a unique situation STANDING PLANS .

Planning Process .

brainybetty.Planning Process Identification of opportunities and threats Valuation of Present situation Goal Setting Determination of Premises Evaluation of alternatives and selection of course of action Programming budgeting 8/16/2010 Free template from www.com 14 .

com 15 .brainybetty.TECHNIQUES FOR ASSESSING THE ENVIRONMENT 8/16/2010 Free template from www.

GLOBAL SCANNING Expanded scanning efforts to gain vital information on global forces that might affect their organization 8/16/2010 Free template from www.com 16 .brainybetty. COMPETITOR INTELLIGENCE Process by which organizations gather information about their competitors b.3 techniques: 1. ENVIRONMENTAL SCANNING Screening of large amounts of information to anticipate and interpret changes in the environment a.

process of correct anticipations of future events or prediction of outcomes a.com 17 .2. FORECASTING .brainybetty. FORECASTING TECHNIQUES: ‡QUANTITATIVE FORECASTING Forecasting that applies a set of mathematical rules to a series of past data to predict outcomes ‡QUALITATIVE FORECASTING Forecasting that uses judgment and opinions of knowledgeable individuals to predict outcomes 8/16/2010 Free template from www.

com 18 . FORECASTING EFFECTIVENESS ‡ Forecasting techniques are most accurate when the environment is not rapidly changing ‡ Forecasting is relatively ineffective in predicting unseasonable events ‡ Use simple forecasting methods ‡ Don not rely on single forecasting method ‡ Forecasting is a managerial skill 8/16/2010 Free template from www.brainybetty.b.

com 19 .brainybetty.BENCHMARKING Search for the best practices among competitors or noncompetitors that lead to their superior performance STEPS: ‡Form a benchmarking planning team ‡Gather internal/ external data ‡Analyze data to identify performance gaps ‡Prepare and implement action plan 8/16/2010 Free template from www.

brainybetty. human. physical.assets of organization ( financial.com 20 .‡ TECHNIQUES FOR ALLOCATING RESOURCES ‡ Resource. intangible) 8/16/2010 Free template from www.

brainybetty.‡ 1.com 21 . BUDGETING ‡ BUDGET ‡ numerical plan for allocating resources to specific activities ‡ 2 TYPES OF BUDGET: ‡ VARIABLE BUDGET ‡ Take into account the costs that vary in volume ‡ FIXED BUDGET ‡ Assumes fixed level of sales of production 8/16/2010 Free template from www.

who is to do each and when they are to be completed 8/16/2010 Free template from www.‡ 2. SCHEDULING ‡ Detailing what activities have to be done.com 22 .brainybetty. the order to which they are to be completed.

GANTT CHART Scheduling chart developed by Henry Gantt that shows actual and planned output over a period of time 8/16/2010 Free template from www.com 23 .a.brainybetty.

‡ b. LOAD CHART ‡ Modified Gantt chart that schedules capacities by entire departments or specific resources 8/16/2010 Free template from www.com 24 .brainybetty.

brainybetty.com 25 . PERT NETWORK ANALYSIS ‡ Flowchart diagram showing the sequence of activities needed to complete the project and the time and costs associated with it EVENTS End points that represent the completion of major activities ACTIVITIES Time of activities needed to progress form one event to another SLACK TIME Amount of time an individual activity cam be delayed without delaying the whole project ‡ CRITICAL PATH ‡ Longest sequence of activities ‡ ‡ ‡ ‡ ‡ ‡ 8/16/2010 Free template from www.‡ c.

brainybetty. identifying each activity and its relationship to other activities ‡ Compute a time estimate for completing each activity ‡ Using a network diagram determine a schedule for the start and finish dates of each activity and entire project 8/16/2010 Free template from www.com 26 .‡ STEPS IN DEVELOPING A PERT NETWORK: ‡ Identify every significant activity that must be achieved for a project to be completed ‡ Diagram the order in which these events must be completed ‡ Diagram the flow of activities from start to finish.

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brainybetty.‡ 3.000 / ( $0.10 per photocopy FC= $ 27.000 x $ 0.$0.04 a copy BE = $ 27.000 a year VC= $0.000 Annual Revenue : $ 45.com 28 .000 ( 450.10 .10 ) 8/16/2010 Free template from www. BREAK-EVEN ANALYSIS ‡ Technique for identifying the point at which total revenue is just sufficient to cover total costs ‡ BE = TFC / P ± VC ‡ BE = break-even point P = unit price ‡ TFC = total fixed costs VC = variable costs ‡ ‡ ‡ ‡ ‡ ‡ EXAMPLE: Randy¶s photocopying services charges $0.04 ) = 450.

alternative ways of combining resources and linear relationship between variables Kinds of problems: ‡Selecting transportation routes that minimize shipping costs ‡ Allocating limited advertising budget among various product brands 8/16/2010 Free template from www.Mathematical technique that solves resource allocation problems * It requires that there be limited resources. outcome optimization. LINEAR PROGAMMING .brainybetty.com 29 .4.

alternative ways of combining resources and linear relationship between variables Kinds of problems: ‡Selecting transportation routes that minimize shipping costs ‡ Allocating limited advertising budget among various product brands 8/16/2010 Free template from www. outcome optimization.Mathematical technique that solves resource allocation problems * It requires that there be limited resources.brainybetty. LINEAR PROGAMMING .com 30 .4.

brainybetty. 36 g of carbohydrates.* In order to ensure optimal health (and thus accurate test results). and 1 g of protein per ounce. and 2 g of protein per ounce. Rather than order rabbit food that is custom-blended.com 31 . a lab technician needs to feed the rabbits a daily diet containing a minimum of 24 grams (g) of fat. Food X contains 8 g of fat. What is the optimal blend? Since the exercise is asking for the number of ounces of each food required for the optimal daily blend. and 4 g of protien. my variables will stand for the number of ounces of each: x: number of ounces of Food X y: number of ounces of Food Y 8/16/2010 Free template from www. But the rabbits should be fed no more than five ounces of food a day.30 per ounce.20 per ounce. 12 g of carbohydrates. and costs $0. Food Y contains 12 g of fat. 12 g of carbohydrates. it is cheaper to order Food X and Food Y. and blend them for an optimal mix. at a cost of $0.

2x + 0.3y.The optimization equation will be the cost relation C = 0.com 32 . 8/16/2010 Free template from www. not the maximum. but this time I'll be finding the minimum value.brainybetty.

(5. using three ounces of Food X only. (0. 0). The other constraints come from the grams of fat. 2). 5).When you test the corners at (0. and protein per ounce: fat: 8x + 12y > 24 carbs: 12x + 12y > 36 protein: 2x + 1y > 4 Also. 4). Since I can't use negative amounts of either food. the maximum weight of the food is five ounces. you should get a minimum cost of sixty cents per daily serving. the first two constrains are the usual ones: x > 0 and y > 0. so: x+y<5 8/16/2010 Free template from www. carbohydrates. 0). (3.com 33 . and (1.brainybetty.

com 34 .THE DECISION-MAKING PROCESS 8/16/2010 Free template from www.brainybetty.

com 35 .a set of eight steps including identifying a problem. selecting an alternative. and evaluating the decision¶s effectiveness 8/16/2010 Free template from www.brainybetty.a choice from two or more alternatives DECISION-MAKING PROCESS .DECISION .

every decision maker has criteria that guide his or her decision 8/16/2010 Free template from www. IDENTIFYING A PROBLEM .existence of a problem or more specifically a discrepancy between an existing and a desired state of affair 2. IDENTIFYING DECISION CRITERIA .brainybetty.important in resolving a problem.com 36 .1.

3.com 37 .it is important in order for the decision maker.this step requires the decision maker to list the viable alternatives that could resolve the problem 8/16/2010 Free template from www. DEVELOPING ALTERNATIVES . ALLOCATING WEIGHTS TO THE CRITERIA . to give them the correct priority in decision making 4.brainybetty.

SELECTING THE ALTERNATIVE .the sixth step is the important act of choosing the best alternative among those considered 8/16/2010 Free template from www.5.once the alternatives have been identified. ANALYZING ALTERNATIVES .brainybetty.com 38 . the decision maker must critically analyze each one 6.

7.involves appraising the outcome of the decision to see if the problem has been resolved 8/16/2010 Free template from www.brainybetty.concerned with putting the decision into action IMPLEMENTATION ± involves conveying the decision to those affected by it and getting their commitment to it 8.com 39 . EVALUATING DECISION EFFECTIVENESS . IMPLEMENTING THE ALTERNATIVE .

brainybetty.Strategic Management ‡ The set of managerial decisions and actions that determines the long-run performance of an organization 8/16/2010 Free template from www.com 40 .

brainybetty. helping them focus on organizational goals ‡ It is very much involved in the managerial decision-making process 8/16/2010 Free template from www.Why Strategic Management Is Important ‡ It results in higher organizational performance ‡ It requires that managers examine and adapt to business environment changes ‡ It coordinates diverse organizational units.com 41 .

goals.The Strategic Management Process External Analysis ‡ opportunities ‡ threats Identify the organization's current mission.brainybetty. and strategies SWOT Analysis Formulate Strategies Implement Strategies Evaluate Results Internal Analysis ‡ strengths ‡ weaknesses 8/16/2010 Free template from www.com 42 .

Organization¶s Resources/Capabilities Organization¶s Opportunities Opportunities in the Environment 8/16/2010 Free template from www.com 43 .brainybetty.

Levels of Organizational Strategy Corporate Level Business Level Functional Level Research and Development Strategic Business Unit 1 Multibusiness Corporation Strategic Business Unit 2 Strategic Business Unit 3 Human Resources Manufacturing Marketing Finance 8/16/2010 Free template from www.brainybetty.com 44 .

com 45 .brainybetty.Corporate-Level Strategies ‡ Growth Strategy ± Seeking to increase the organization¶s business by expansion into new products and markets ‡ Types of Growth Strategies ± Concentration ± Vertical integration ± Horizontal integration ± Diversification 8/16/2010 Free template from www.

when the industry is experiencing slow.brainybetty.Corporate-Level Strategies (cont¶d) ‡ Stability Strategy ± A strategy that seeks to maintain the status quo to deal with the uncertainty of a dynamic environment.or no-growth conditions.com 46 . or if the owners of the firm elect not to grow for personal reasons 8/16/2010 Free template from www.

brainybetty.com 47 .Corporate-Level Strategies (cont¶d) ‡ Retrenchment Strategy ± Reduces the company¶s activities or operations ± Retrenchment strategies include: ‡ Cost reductions ‡ Layoffs ‡ Closing underperforming units ‡ Closing entire product lines or services 8/16/2010 Free template from www.

high market share ‡ Question marks: high growth rate. high market share ‡ Stars: high growth rate. low market share ‡ Dogs: low growth rate.brainybetty.Corporate-Level Strategies (cont¶d) ‡ Corporate Portfolio Analysis ‡ BCG Matrix ± Developed by the Boston Consulting Group ± Considers market share and industry growth rate ± Classifies firms as: ‡ Cash cows: low growth rate. low market share 8/16/2010 Free template from www.com 48 .

Business-Level Strategy ‡ Business-Level Strategy ± A strategy that seeks to determine how an organization should compete in each of its SBUs (strategic business units) 8/16/2010 Free template from www.brainybetty.com 49 .

brainybetty.The Role of Competitive Advantage ‡ Competitive Advantage ± An organization¶s distinctive competitive edge that is sourced and sustained in its core competencies ‡ Quality as a Competitive Advantage ± Differentiates the firm from its competitors ± Can create a sustainable competitive advantage ± Represents the company¶s focus on quality management to achieve continuous improvement and meet customers¶ demand for quality 8/16/2010 Free template from www.com 50 .

Forces in an Industry Analysis New Entrants Threat of New Entrants Bargaining Power of Buyers Buyers Suppliers Bargaining Power of Suppliers Intensity of Rivalry Among Current Competitors Threat of Substitutes Substitutes 8/16/2010 Free template from www.com 51 .brainybetty.

com 52 .brainybetty.Competitive Strategies ‡ Cost Leadership Strategy ± Seeking to attain the lowest total overall costs relative to other industry competitors ‡ Differentiation Strategy ± Attempting to create a unique and distinctive product or service for which customers will pay a premium ‡ Focus Strategy ± Using a cost or differentiation advantage to exploit a particular market segment rather than a larger market ‡ Stuck in the Middle ± Organizations that are unable to develop a cost or differentiation advantage 8/16/2010 Free template from www.

e. Marketing. human resources.com 53 . and finance all support the business-level strategy ± Problems occur when employees or customers don¶t understand a company¶s strategy 8/16/2010 Free template from www.brainybetty.. research and development.Functional-Level Strategy ‡ Functional-level strategies support the businesslevel strategy ± i.

and hiring ‡ Differentiation ± Internet-based knowledge systems. online ordering.brainybetty.Strategies in Today¶s Environment: Applying E-Business Techniques ‡ Cost Leadership ± Online activities: bidding. inventory control. targeted web sites 8/16/2010 Free template from www. order processing. recruitment.com 54 . and customer support ‡ Focus ± Chat rooms and discussion boards.

com 55 .brainybetty.Customer Service Strategies ‡ Giving the customers what they want ‡ Communicating effectively with them ‡ Providing employees with customer service training 8/16/2010 Free template from www.

com 56 .brainybetty.Innovation Strategies ‡ Possible Events ± Radical breakthroughs in products ± Application of existing technology to new uses ‡ Strategic Decisions about Innovation ± Basic research ± Product development ± Process innovation ‡ First Mover ± An organization that brings a product innovation to market or uses a new process innovation 8/16/2010 Free template from www.

CONTEMPORARY ISSUES IN PLANNING (CRITICISMS OF PLANNING) 8/16/2010 Free template from www.com 57 .brainybetty.

brainybetty.‡ PLANNING MAY CREATE RIGIDITY ‡ PLANS CAN¶T BE DEVELOPED FOR A DYNAMIC ENVIRONMENT ‡ FORMAL PLANS CAN¶T REPLACE INTUITION AND CREATIVITY 8/16/2010 Free template from www.com 58 .

WHICH MAY LEAD TO FAILURE ‡JUST PLANNING ISN¶T ENOUGH 8/16/2010 Free template from www.‡ PLANNING FOCUSES MANAGER¶S ATTENTION ON TODAY¶S COMPETITION. NOT ON TOMORROW¶S SURVIVAL ‡FORMAL PLANNING REINFORCES SUCCESS.brainybetty.com 59 .

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