Lesson 5 foundations of planning

1/29/20 Lesson Instructor: LTT Xuan 1 Define planning Explain the potential benefits of planning Identify the potential drawbacks of planning Distinguish between strategic and tactical plans State when directional plans are preferred over specific plans Define management by objectives and identify its common elements Outline the steps in the strategic management process Describe the four grand strategies Explain SWOT analysis 10 Compare how entrepreneurs and bureaucratic managers approach strategy Instructor: LTT Xuan 2 1/29/20 What is Planning? • Defining the organization’s goals, establishing an overall strategy, and developing a hierarchy of plans to achieve goals • Formal planning – Specific goals covering a specific time period – Written and shared with organizational members => Why managers plan? Instructor: LTT Xuan 3 Sets Standards to Facilitate Control Provides Direction Reasons for Planning Minimizes Waste and Redundancy Reduces the Impact of Change Instructor: LTT Xuan 4 1/29/20 May Create Rigidity Criticisms of Formal Planning Can’t Be Done in a Dynamic Environment Can’t Replace Intuition and Creativity Focus on Today’s Competition Reinforces Success Instructor: LTT Xuan 5 Does Planning Improve Performance? • Financial results • Environmental concerns • Quality and implementation Instructor: LTT Xuan 6 1/29/20 Key elements to a plan Objectives Actions Resources Implementation Core competencies: The unique skills and/or knowledge an organization possesses that give it an edge over competitors Instructor: LTT Xuan Instructor: LTT Xuan 8 1/29/20 The Time Frame of Planning Short-Term Plans Long-Term Plans Instructor: LTT Xuan 9 How Do Strategic and Tactical Plans Differ? Time Frame Scope Instructor: LTT Xuan Objectives 10 10 1/29/20 Specific Plans Low General Directional Plans High Flexibility Objectives Clear Instructor: LTT Xuan 11 11 Single-Use vs Standing Plans Unique Situations Ongoing Operations Instructor: LTT Xuan 12 12 1/29/20 Approaches to Setting Goals • Traditional goal-setting – an approach to setting goals in which top managers set goals that then flow down through the organization and become sub-goals for each organizational area • Means-ends chain – an integrated network of goals in which the accomplishment of goals at one level serves as the means for achieving the goals, or ends, at the next level • Management by objectives (MBO) – a process of setting mutually agreed upon goals and using those goals to evaluate employee performance What is a good objective? Instructor: LTT Xuan 13 Instructor: LTT Xuan 14 13 A good objective: 14 1/29/20 Setting goals Traditional goal setting Instructor: LTT Xuan 15 15 Steps in MBO Instructor: LTT Xuan 16 16 1/29/20 Setting goals What Is Management by Objectives? Organizational Objectives Divisional Objectives Departmental Objectives Individual Objectives Instructor: LTT Xuan 17 17 Common Elements of MBO • Goal specificity • Participative decision making • Set time period • Performance feedback Instructor: LTT Xuan 18 18 1/29/20 More Difficult Goals Lead To Higher Performance Specific Goals Lead to Better Results Support from Top Management Is Critical Participation Is Key Does MBO Work? Instructor: LTT Xuan 19 19 Problems with MBO • Efforts directed primarily toward output • Encourage individual rather than team efforts • Goals may discourage efforts for continuous improvement Steps in Goal-Setting Review the organization’s mission, or purpose Evaluate available resources Determine the goals individually or with input from others Write down the goals and communicate them to all who need to know Review results and whether goals are being met Instructor: LTT Xuan 20 20 10 1/29/20 Well-Written Goals Instructor: LTT Xuan 21 21 Managing strategy Instructor: LTT Xuan 22 22 11 1/29/20 Managing strategy Starting the Process Mission Strategies Objectives Instructor: LTT Xuan 23 23 Components of a Mission Statement Instructor: LTT Xuan Managing strategy 24 24 12 1/29/20 Analyzing the Environment Managing strategy Environmental Scanning Competitive Intelligence Instructor: LTT Xuan 25 25 Managing strategy Instructor: LTT Xuan 26 26 13 1/29/20 Managing strategy Identifying Business Opportunities Organization’s Resources Opportunities in the Environment Organization’s Business Opportunities Instructor: LTT Xuan 27 27 Group assignment • You are thinking about a new business you would like to start (Be as specific as possible) Conducting an environmental analysis for the chosen business Instructor: LTT Xuan 28 28 14 1/29/20 Types of organizational strategies Instructor: LTT Xuan 29 29 Types of Corporate Strategies • Growth • Stability • Renewal (Retrenchment and/or Turn-around) • Combination Instructor: LTT Xuan 30 30 15 1/29/20 Summary of Corporate strategy Instructor: LTT Xuan 31 31 Determining A Business-Level Strategy Cost Leadership Differentiation Focus Instructor: LTT Xuan 32 32 16 1/29/20 How Strategies Are managed? The Boston Consulting Group’s Growth-Share Matrix Instructor: LTT Xuan 33 33 After Strategies Are Formulated • Implementation • Evaluating results Instructor: LTT Xuan 34 34 17 1/29/20 Core competencies and competitive advantage • Core competencies: • From internal resources: tangible and intangible assets • Becomes competitive advantage when: • Instrumental for creating customers’ benefits • Rare • Difficult to imitate • Well-organized • Competitive advantage Instructor: LTT Xuan 35 35 Resources; Core competencies and competitive advantage Instructor: LTT Xuan 36 36 18 ... Provides Direction Reasons for Planning Minimizes Waste and Redundancy Reduces the Impact of Change Instructor: LTT Xuan 4 1/29/20 May Create Rigidity Criticisms of Formal Planning Can’t Be Done in... competitors Instructor: LTT Xuan Instructor: LTT Xuan 8 1/29/20 The Time Frame of Planning Short-Term Plans Long-Term Plans Instructor: LTT Xuan 9 How Do Strategic and Tactical Plans Differ?... through the organization and become sub-goals for each organizational area • Means-ends chain – an integrated network of goals in which the accomplishment of goals at one level serves as the means