88Chapter

The Manager as a Planner The Manager as a Planner and Strategistand Strategist

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Chapter #8 Learning ObjectivesChapter #8 Learning ObjectivesChapter #8 Learning ObjectivesChapter #8 Learning Objectives

• By the conclusion of this discussion you will By the conclusion of this discussion you will understand:understand:Why planning is important and the process Why planning is important and the process

through which effective planning takes place.through which effective planning takes place.The ingredients to creating effective missions The ingredients to creating effective missions

and goals as well as formulating and and goals as well as formulating and implementing different strategies.implementing different strategies.

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Why Planning is ImportantWhy Planning is ImportantWhy Planning is ImportantWhy Planning is Important

• Planning determines where the organization is Planning determines where the organization is now and where it will be in the future. now and where it will be in the future.

• Good planning provides:Good planning provides:ParticipationParticipationSense of direction & purposeSense of direction & purposeCoordinationCoordinationControlControl

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Three Steps in PlanningThree Steps in PlanningThree Steps in PlanningThree Steps in Planning

Figure 8.1

Planning ProcessPlanning ProcessPlanning ProcessPlanning Process

Determining the Organization’s mission and goals

(Define the business)

Strategy Formulation(Analyze current situation &

develop strategies)

Strategy Implementation(Allocate resources & responsibilities

to achieve strategies)

Figure 7.1

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Planning Process StagesPlanning Process StagesPlanning Process StagesPlanning Process Stages

• Organizational mission: a broad declaration of Organizational mission: a broad declaration of the overriding purpose (both current and the overriding purpose (both current and future)future)Mission Statement:Mission Statement:

• Identifies product and customersIdentifies product and customers

• MotivatesMotivates

• Identifies value-addedIdentifies value-added

• Communicates direction (internal and external)Communicates direction (internal and external)

• Bumper sticker lengthBumper sticker length

Mission StatementsMission StatementsMission StatementsMission Statements

The mission of Southwest Airlines is dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride,and Company Spirit.

Our mission is to bring value to patients and customers. We want to have a positive impact on lives and to discover, develop and successfully market innovative products to cure diseases and enhance the quality of life. We also want to provide a shareholder return that reflects outstanding performance and to build a reputation for an exciting marketplace where people can realize their professional ambitions and where creativity is encouraged. We also care about our world and society and want to operate sustainably.

McDonald's vision is to be the world's best quick service restaurant experience. Being the best means providing outstanding quality, service, cleanliness and value, so that we make every customer in every restaurant smile. To achieve our vision, we are focused on three worldwide strategies: Be the best employer for our people in each community around the world. Deliver operational excellence to our customers in each of our restaurants. Achieve enduring profitable growth by expanding the brand and leveraging the strengths of the McDonald's system through innovation and technology.

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Planning Process StagesPlanning Process StagesPlanning Process StagesPlanning Process Stages

• Organizational goals: identifies major focus of Organizational goals: identifies major focus of organizational resourcesorganizational resourcesChallenging but realisticChallenging but realisticAchievableAchievableTime frameTime frameStretch organization to new heightsStretch organization to new heights

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Strategy FormulationStrategy FormulationStrategy FormulationStrategy Formulation

• Formulating strategy: managers analyze Formulating strategy: managers analyze current situation and develop strategies current situation and develop strategies needed to achieve the mission.needed to achieve the mission.SWOT analysis: SWOT analysis:

• Strengths and Weaknesses (organization)Strengths and Weaknesses (organization)

• Opportunities and Threats (environmental)Opportunities and Threats (environmental)

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Planning and Strategy FormulationPlanning and Strategy FormulationPlanning and Strategy FormulationPlanning and Strategy Formulation

Figure 8.5

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The Five Forces ModelThe Five Forces ModelThe Five Forces ModelThe Five Forces Model

The Threat ofSubstitute Products

The Power of

Suppliers

The Level of Rivalry Among Organizations

in an Industry

The Power of

Customers

The Potential for Entry into an Industry

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Corporate-Level StrategiesCorporate-Level StrategiesCorporate-Level StrategiesCorporate-Level Strategies

• Concentrate in single business: Concentrate in single business: McDonalds focuses in the fast food business.McDonalds focuses in the fast food business.

• Diversification: Organization moves into new Diversification: Organization moves into new businesses and services.businesses and services.Related diversification Related diversification Unrelated diversificationUnrelated diversification

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Corporate-Level StrategiesCorporate-Level StrategiesCorporate-Level StrategiesCorporate-Level Strategies

• International Expansion: To what extent do International Expansion: To what extent do we customize products and marketing for we customize products and marketing for different national conditions?different national conditions?Global strategyGlobal strategyMulti-domestic strategyMulti-domestic strategy

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Corporate Level StrategiesCorporate Level StrategiesCorporate Level StrategiesCorporate Level Strategies

• Vertical Integration: adding more value by Vertical Integration: adding more value by producing its own inputs or distributing its producing its own inputs or distributing its products.products.Backward vertical integrationBackward vertical integrationForward vertical integrationForward vertical integration

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Stages in a Vertical Value ChainStages in a Vertical Value ChainStages in a Vertical Value ChainStages in a Vertical Value Chain

Figure 8.6

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Business-level StrategiesBusiness-level StrategiesBusiness-level StrategiesBusiness-level Strategies

Low-CostLow-Cost DifferentiationDifferentiation

FocusedLow-Cost

FocusedFocusedDifferentiatedDifferentiated

Strategy

Many

Few

Low Cost Differentiation

Nu

mb

er o

fm

ark

et s

egm

ents

Table 7.2

Stuck in Middle

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Functional-level StrategiesFunctional-level StrategiesFunctional-level StrategiesFunctional-level Strategies

• Seeks to have each department add value to Seeks to have each department add value to a good or service.a good or service.

• Marketing, service, production all add value Marketing, service, production all add value to a good or service.to a good or service. Value is added in two ways: Value is added in two ways:

1. lower the operational costs of providing the value in 1. lower the operational costs of providing the value in products.products.

2. add new value to the product by differentiating.2. add new value to the product by differentiating.

Functional strategies must fit with business Functional strategies must fit with business level strategies. level strategies.

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Goals for Successful Functional Goals for Successful Functional StrategiesStrategies

Goals for Successful Functional Goals for Successful Functional StrategiesStrategies

1.1. Attain superior efficiency Attain superior efficiency as a measure of as a measure of outputs for a given unit of input.outputs for a given unit of input.

2.2. Attain superior quality Attain superior quality by producing reliable by producing reliable products that do their intended job.products that do their intended job.

3.3. Attain superior innovation Attain superior innovation developing new developing new and novel features that can be added to the and novel features that can be added to the product or process.product or process.

4.4. Attain superior responsiveness Attain superior responsiveness to customers to customers by acknowledging their needs and fulfilling by acknowledging their needs and fulfilling them.them.

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ImplementationImplementationImplementationImplementation

• Implementing strategy: managers must decide Implementing strategy: managers must decide how to allocate resources between groups to how to allocate resources between groups to ensure the strategy is achieved.ensure the strategy is achieved.Assign responsibilityAssign responsibilityDraft action plansDraft action plansEstablish timetablesEstablish timetablesAllocate resourcesAllocate resourcesEvaluate and measureEvaluate and measure

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Levels and Types of PlanningLevels and Types of PlanningLevels and Types of PlanningLevels and Types of Planning

Figure 8.2

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Scenario PlanningScenario PlanningScenario PlanningScenario Planning

• Scenario Planning (Contingency Planning)Scenario Planning (Contingency Planning)The generation of multiple forecasts of future The generation of multiple forecasts of future

conditions followed by an analysis of how to conditions followed by an analysis of how to effectively respond to those conditions.effectively respond to those conditions.

Planning seeks predict the future, but the Planning seeks predict the future, but the future is unknowable.future is unknowable.

• By generating multiple possible “futures,” a firm can By generating multiple possible “futures,” a firm can see how its plans might work in each and prepare for see how its plans might work in each and prepare for the possible outcomes.the possible outcomes.

Scenario planning is a learning tool to Scenario planning is a learning tool to improve strategic planning results.improve strategic planning results.

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ConclusionConclusionConclusionConclusion

• Planning is a necessary managerial function Planning is a necessary managerial function regardless of your level in the organization.regardless of your level in the organization.

• Planning involves carefully designing a Planning involves carefully designing a mission statement and identifying goals.mission statement and identifying goals.

• Strategy formulation is done through careful Strategy formulation is done through careful SWOT analysis at each business level.SWOT analysis at each business level.

• Strategies must have an implementation plan Strategies must have an implementation plan in order for plans to be realized.in order for plans to be realized.