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Ch. 4 OutlineIntroduction to Planning

1. Planning Fundamentals

2. Levels of Planning

3. Strategic Planning

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Overview of Planning Fundamentals

• Planning is the conscious, systematic process of making decisions about goals and activities that an individual, group, work unit, or organization will pursue in the future

• Planning is a purposeful effort that is directed and controlled by managers and often draws on the knowledge and experience of employees throughout the organization

• Planning provides individuals and work units with a clear map to follow in their future activities

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Planning (another def.)

• Planning—A process that involves defining the organization’s goals, establishing an overall strategy for achieving those goals, and developing a comprehensive set of plans to integrate and coordinate organizational work (in order to achieve the goals).

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Levels of Planning

• Strategic Planning

• Tactical Planning

• Operational Planning

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Strategic Management: Step 1

• Establishment of mission, vision, and goals– Mission is an organization’s basic purpose

and scope of operations

– Strategic vision is the long-term direction and strategic intent of a company

– Strategic goals evolve from the mission and vision of the organization

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Strategic Management: Step 2

• Analysis of External Opportunities and Threats– Successful strategic management depends on an

accurate and thorough evaluation of the environment

– Begins with an examination of the industry

– Stakeholders are examined next

– Managers should also examine other forces in the environment, such as macroeconomic conditions and technological factors

– One critical task is forecasting future trends

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Strategic Management: Step 3

• Analysis of Internal Strengths and Weaknesses– This kind of internal analysis provides strategic

decision makers with an inventory of the organization’s existing functions, skills, and resources as well as its overall performance level

– This step will also include looking at the firms resources and core competencies

– A final area may include benchmarking with other firms

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Strategic Management: Step 4

• SWOT Analysis and Strategy Formulation– By completing steps 2 and 3 managers will be

able to analyze the companies strengths, weaknesses, opportunities and threats (SWOT)

– Once the SWOT has been completed management will be able to begin to formulate a strategy

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Corporate Strategy

• Corporate Strategy The set of businesses, markets, or industries in which an organization competes and the distribution of resources among those entities

• Concentration A strategy employed for an organization that operates a single business and competes in a single industry

• Concentric Diversification A strategy used to add new businesses that produce related products or are involved in related markets and activities

• Vertical Integration The acquisition or development of new businesses that produce parts or components of the organization’s product

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Strategic Management: Step 5 Implementation

• There are two major trends related to implementation– Organizations are adopting a more comprehensive view

of implementation– Managers at all levels of the organization are being

involved with the implementation process• Implementation generally involves four related

steps– Define strategic tasks– Assess organization capabilities– Develop an implementation agenda– Create an implementation plan

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Strategic Management: Step 6

• Strategic Control– A system designed to support managers in

evaluating the organization’s progress regarding its strategy and, when discrepancies exist, taking corrective action

– The organization must develop performance indicators, an information system, and specific mechanisms to monitor progress

– Normally includes a budget