module ii planning
TRANSCRIPT
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PlanningPlanning is the process of setting goals
and choosing the means to achieve
those goals. It can be informal orformal. Formal are;
Strategic plans : Designed by topmanagement and define the broadgoals for the organization.
Operational plans : detailed plan tocarry out day to day actions of strategic
plan.
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Strategic v/s operational plan Time horizons
Scope
Degree of details
interdependence
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Types of plan
Missions or purpose
Objectives or Goals
Strategies
Policies
Procedures
Rules
Programs
Budgets
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Mission statement
Google's mission is to organize the
world's information and make ituniversally accessible and useful.
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Purpose of Planning Provides directions
Reduces uncertainty
Minimize waste and redundancy
Sets the standards used in controlling.
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Planning processAnalyze external environment & internal
resources
Set objective
Develop action plan
Monitor outcomes
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Objective Objective is an verifiable end towards which
organizational and individual activities aredirected.
Hierarchy of objectives : objective for variouslevel of authorities, Top to down and bottomto top process.
Key areas : Market standing, Innovation,
productivity, physical & financial resources,profitability, manager performance &development, workers performance &attitude, public responsibility, service , quality
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Setting Objective SMARRT Specific
Measurable Achievable
Relevant
Realistic
Time based
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MBOA system in which specific performance
objectives are jointly determined by
subordinates and their supervisors,progress towards objective isperiodically reviewed and rewards are
allocated on the basis of that progress
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Elements of MBO system Commitment to program: to achieve
personal and organizational objectives
Top level goal setting
Individual goals
Participation
Autonomy in implementation of plans
Self control
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Limitations
1. It over-emphasizes the setting of goalsover the working of a plan as a driver ofoutcomes.
Employees tend to focus on the goals by
which they are going to be judges so theydirect their efforts towards quantityrather than means or quality
It encourages individual approach thanteam approach.
Employees tend see goals as ceiling ratherthan floor thus limits their efforts.
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StrategyIt is determination of the basic long term
goals and objectives of an enterprise
and the adoption of courses of actionand the allocation of recoursesnecessary for carrying out these goals
Courses of action
Process ofseekingkey ideas ( as compare to routineimplementation)
How strategies are formulated ( not whatit turn out to be)
Policies are general statements or understandings thatguide the managers thinking in decision making
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Types of Strategy
Corporate level strategy
Business level strategy
It can be further classified as internal & externalstrategy
Internal strategies Domain choice,Recruitment, buffering, smoothing, Rationing,
Geographic dispersion External Advertising, contracting, co-opting,
lobbying
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Strategic dimensions
Innovation
Marketing differentiation
Breadth
Cost control
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Theories of strategy Alfred Chandlers strategy structure thesis
unless structure follows strategy,
inefficiency results Miles & Snows four strategic types
Defenders, Prospectors, Analyzers & reactors
Porters competitive strategy Costleadership, Differentiation & Focus
Millers Integrative frame work
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Strategic managementprocess
Identifying current mission goals &strategies
Doing external analysis & internalanalysis
Formulate strategies
Implement strategies
Evaluate results & corrective actions
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TOWS MatrixInternal
External
Internalstrength (S)
Internalweakness (W)
Externalopportunities(O)
SO strategies
Maxi Maxi
WO strategies
Mini Maxi
External threats
(T)
ST strategies
Maxi Mini
WT strategies
Mini Mini
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Portfolio matrix - BCG
Star Question mark
Cash cows Dogs
HIGH
LOW
Strong Weak
Business
Growth
rate
Marketshare
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Porter corporate strategymodel
Bargainingpower
Of suppliers
Threat ofsubstitutes
Bargainingpower of
Customers
Threat of newentrants
RivalryAmong
competitors
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The purpose ofFive-Forces Analysis
The five forces are environmental forcesthat impact on a companys ability tocompete in a given market.
The purpose of five-forces analysis is todiagnose the principal competitivepressures in a market and assess howstrong and important each one is.
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Threat ofNew
Entrants
Threat of
New
Entrants
Porters Five Forces
Model of Competition
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Threat of New Entrants
Barriers to
Entry
Expected Retaliation
Government Policy
Economies of ScaleProduct Differentiation
Capital Requirements
Switching Costs
Access to Distribution Channels
Cost Disadvantages Independent
of Scale
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Bargaining
Power of
Suppliers
Threat ofNew
Entrants
Threat of
New
Entrants
Porters Five Forces
Model of Competition
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Bargaining Power of Suppliers
Suppliers exert power
in the industry by:
* Threatening to raise
prices or to reduce quality
Powerful suppliers
can squeeze industry
profitability if firms
are unable to recover
cost increases
Suppliers are likely to be powerful if:
Supplier industry is dominated by afew firms
Suppliers products have few substitutes
Buyer is not an important customer tosupplier
Suppliers product is an importantinput to buyers product
Suppliers products are differentiatedSuppliers products have highswitching costs
Supplier poses credible threat of
forward integration
i
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Bargaining
Power of
Buyers
Threat ofNew
Entrants
Threat of
New
Entrants
Bargaining
Power of
Suppliers
Porters Five Forces
Model of Competition
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Bargaining Power of Buyers
Buyers compete
with the supplying
industry by:
*Bargaining down prices
* Forcing higher quality
* Playing firms off of
each other
Buyer groups are likely to be powerful if:
Buyers are concentrated or purchases
are large relative to sellers sales
Purchase accounts for a significantfraction of suppliers sales
Products are undifferentiated
Buyers face few switching costs
Buyers industry earns low profits
Buyer presents a credible threat ofbackward integration
Product unimportant to quality
Buyer has full information
P Fi F
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Threat of
Substitute
Products
Threat ofNew
Entrants
Threat ofNew
Entrants
Bargaining
Power of
Buyers
Bargaining
Power of
Suppliers
Porters Five Forces
Model of Competition
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Threat of Substitute Products
Products
with similar
functionlimit the
prices firms
can charge
Keys to evaluate substitute products:
Products with improving
price/performance tradeoffs
relative to present industryproducts
Example:
Electronic security systems inplace of security guards
Fax machines in place of
overnight mail delivery
P t Fi F
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Threat of
Substitute
Products
Threat ofNew
Entrants
Threat of
New
Entrants
Rivalry Among
Competing Firms
in Industry
Bargaining
Power of
Buyers
Bargaining
Power of
Suppliers
Porters Five Forces
Model of Competition
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Rivalry Among Existing Competitors
Intense rivalry often plays out in the following ways:
Jockeying for strategic position
Using price competition
Staging advertising battles
Making new product introductions
Increasing consumer warranties or service
Occurs when a firm is pressured or sees an opportunity
Price competition often leaves the entire industry worse off
Advertising battles may increase total industry demand, but
may be costly to smaller competitors
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Cutthroatcompetition is more likely to occur when:
Rivalry Among Existing Competitors
Numerous or equally balanced competitors
Slow growth industry
High fixed costs
Lack of differentiation or switching costs
High storage costs
Capacity added in large increments
High strategic stakes
High exit barriers
Diverse competitors
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Porter strategies
Overall cost leadership
Differentiation strategy
Focus strategy
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Premising & Forecasting
Planning premises are the anticipatedenvironment in which plans are
expected to operate. These are economic, Social,
political/legal, Technological.
Delphi technique - used fortechnological forecast
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Decision Making
It is the process of identifying andselecting a course of action to solve a
specific problem. Time and human relationship are crucial
elements in process.
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Problem threshold
Setting priority Is problem easy to deal with?
Might the problem resolve it self? Is this my decision to make?
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Over view of Managerialdecision making process
Types of problem & decision
Well structured programmedUnstructured non programmed
Decision maker styleLinear thinking style
Non linear
Decision making approachRationality
Bounded rationalityintuition
DecisionChoosing best alternative,
maximizing, satisfyingImplementing
evaluatingDecision making condition
CertaintyRisk
uncertainty
Decision makingprocess
Decision makingerror & biases
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Rational Decision making process
1. Investigate the situation
2. Identification of decision criteria
allocation of weight
3. Developing alternatives
4. Evaluate alternatives and select themost appropriate
5. Implement and monitor.
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Rational Decision makingexample of CCD
Situation The sales report as of Dec31, 2009, on desk of GM Sales indicated
decrease in over sales wrt targetplanned
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ccd
Stage I :Investigate situation Define problem the reduction is due which
product line in which area in which month Diagnose causes Is it due to (1) own coffee
shop (2)loose coffe beans thru retail outlets(3)accessories
Decision objective It is about reduction insales volume of coffee beans thru retail out letsin south zone
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Ccd
Stage II: Develop Alternatives Increase outlets
Cover more area Increase ad/ promotion budget
Offer special discount/ volume discount todealers.
Product modifications add different flavors,different applications
Reduce price
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CCD
Sage III : Evaluation Is it feasible?
Is it satisfactory? What are possible consequences?
Stage IV : Implement & Monitor