4
Chapter
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: Mission, Goals & Strategies
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External and Internal Analyses
Step 2: External
Analysis
•Competition
•Components of
environment
•Threats and
opportunities
Step 3: Internal
Analysis
•Resources
•Capabilities
•Core competencies
•Organizational
strengths and
weaknesses
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Formulating, Implementing, and
Evaluating Results
Step 4:
Formulating Strategies
•Corporate
•Business
•Functional
Step 6: Evaluating
Results
•How effective have
strategies been?
•What adjustments are
necessary?
Step 5:
Implementing
Strategies
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Strategies Managers Use
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Stability and Renewal Strategies
Stability strategy:
Organization continues
to do what it’s doing
Renewal strategy:
Organization addresses
declining organizational
performance
• Retrenchment
• Turnaround
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Competitive Strategy
A competitive strategy is 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
1.
2.
3.
4.
5.
6.
Customer service
Employee skills & loyalty
Innovation
Quality
Social media
Big data
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Strategic Weapons (cont.)
5. Social Media
•Help people connect
•Reduce costs and/or
increase revenue.
6. Big Data
Translate business
knowledge into
improved decision
making and
performance.
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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 Plans
Financial versus strategic
Stated versus real
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Traditional Goal Setting
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Management by Objectives
1.
2.
3.
4.
Goal specificity
Participative decision making
Explicit time period
Performance feedback
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Well-Written Goals
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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. Build in feedback mechanisms to assess goal
progress.
6. Link rewards to goal attainment.
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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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