Chapter 8
The Manager as a Planner
and Strategist
Planning and Strategy

Planning
– Identifying and selecting appropriate
goals and courses of action

Strategy
– The cluster of decisions
and actions that
managers take to help
reach those goals
MGMT 321 – Chapter 8
Three Steps in Planning
MGMT 321 – Chapter 8
The Planning Process

To perform the planning task,
managers:
– Establish where an organization is at the
present time
– Determine its desired future state
– Decide how to move it forward to reach
that future state
MGMT 321 – Chapter 8
Why Planning is Important
Gives a sense of direction and purpose
 Encourages managers to participate in
decision making
 Helps coordinate managers of the
different functions and divisions
 Can be used to control managers
 Provides unity and continuity

MGMT 321 – Chapter 8
Levels and Types of Planning
MGMT 321 – Chapter 8
Types of Plans

Standing Plans
– Use in programmed decision situations

Single-Use Plans
– Developed for a one-time, nonprogrammed issue

Scenario (Contingency) Planning
– Generating multiple forecasts of future
conditions followed by an analysis of how
to effectively respond to those conditions
MGMT 321 – Chapter 8
Mission Statements
An organization’s overriding purpose
MGMT 321 – Chapter 8
Determining the Organization’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
– Encourages higher levels of performance
– Goals must be challenging but realistic with a
definite period in which they are to be achieved
MGMT 321 – Chapter 8
Planning and Strategy Formulation
MGMT 321 – Chapter 8
The Five Forces
Competitive Forces
Level of Rivalry
Increased competition results in lower
profits.
Potential for Entry
Easy entry leads to lower prices and profits.
Power of Suppliers
If there are only a few suppliers of important
items, supply costs rise.
Power of Customers
If there are only a few large buyers, they can
bargain down prices.
Substitutes
More available substitutes tend to drive
down prices and profits.
MGMT 321 – Chapter 8
The Five Forces

Hypercompetition
– industries that are characterized by
permanent, ongoing, intense, competition
brought about by advancing technology or
changing customer
tastes and fads and
fashions
MGMT 321 – Chapter 8
Business-Level Strategies

Low-Cost

Differentiation

“Stuck in the Middle”

Focused Low-Cost

Focused Differentiation
MGMT 321 – Chapter 8
Corporate-Level Strategies

Concentration in Single Business
– Developing new kinds of products or expanding its
locations
– Appropriate when managers see the need to
reduce the size to increase performance

Vertical integration
– A company expands its business operations
either:
• Backward into a new industry that produces inputs or
• Forward into a new industry that uses, distributes, or
sells the company’s products
MGMT 321 – Chapter 8
Stages in a Vertical Value Chain
MGMT 321 – Chapter 8
Corporate-Level Strategies

Diversification
– Expanding a company’s operations into a new
industry
– Related Diversification
• Entering a new industry and establishing a new business
division that is linked to a company’s existing divisions
– Synergy
• When the value created by two divisions cooperating is
greater than the value created independently
– Unrelated Diversification
• Establishing divisions or buying companies in new
industries not linked to a company’s existing divisions
MGMT 321 – Chapter 8
Corporate-Level Strategies

International Expansion
– To what extent do we customize products and
marketing for different national conditions?

Global strategy
– Undertaking very little customization to suit the
specific needs of customers in different countries.

Multi-domestic strategy
– Customizing products and marketing strategies to
specific national conditions
MGMT 321 – Chapter 8
International Expansion

Exporting
 Importing
 Strategic alliance
 Joint venture
 Licensing
 Franchising
 Wholly owned
subsidiary
MGMT 321 – Chapter 8
Functional-Level Strategies

A plan that indicates how a function
intends to achieve its goals
– Seeks to have each department add value to a
good or service
– Value of a good or service is added through:
• Lowering the costs of providing the products
• Adding new value by differentiating
– Must fit with business level strategies
MGMT 321 – Chapter 8
Planning and Implementing Strategy

Allocate implementation responsibility to
the appropriate individuals or groups
 Draft detailed action plans for
implementation
 Establish a timetable for implementation
 Allocate appropriate resources
 Hold specific groups or individuals
responsible for the attainment of goals
MGMT 321 – Chapter 8