Copyright ©2015 Pearson Education, Inc. 5-1 Chapte r 4 Foundatio ns of Planning
Jan 12, 2016
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Chapter4Foundationsof Planning
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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5.1Discuss 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 PerformanceDoes 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 5: Implementing Strategies
Step 6: Evaluating Results •How effective have strategies been?•What adjustments are necessary?
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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. Customer service2. Employee skills & loyalty3. Innovation4. Quality5. Social media6. Big data
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Strategic Weapons (cont.)
5. Social Media•Help people connect•Reduce costs and/or increase revenue.
6. Big DataTranslate 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 PlansFinancial versus strategic
Stated versus real
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Traditional Goal Setting
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Management by Objectives
1. Goal specificity2. Participative decision making3. Explicit time period4. 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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5.4Discuss contemporary issues in planning.
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Contemporary Issues
• Planning in dynamic environments
• Environmental scanning
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