Fundamentals of Management: 3-1Gao Junshan, UST Beijing Chapter 3 The Foundations of Planning

Fundamentals of Management: 3-2Gao Junshan, UST Beijing Where We Are Part 1 Introduction Part 2 Planning Part 3 Organizing Part 4 Leading Part 5 Controlling Chapter 3 Foundations of Planning Chapter 3 Foundations of Planning Chapter 4 Foundations of Decision Making Chapter 4 Foundations of Decision Making Part 2 Planning Chapter 3 Foundations of Planning Chapter 3 Foundations of Planning

Fundamentals of Management: 3-3Gao Junshan, UST Beijing Chapter Guide Planning and plans –Importance of Planning –Types and classification of plans Management by Objective Strategic management process Quality as strategic weapons –Benchmarking –ISO 9000 –Six Sigma

Fundamentals of Management: 3-4Gao Junshan, UST Beijing Planning is to Define an organization’s goals Establish an overall strategy Develop a comprehensive hierarchy of plan Planning is to Define an organization’s goals Establish an overall strategy Develop a comprehensive hierarchy of plan Requirements for organizational structure and employees Objectives for leading and directing Standards for controlling organization’s activities Planning and plans: importance

Fundamentals of Management: 3-5Gao Junshan, UST Beijing

Arguments Against Formal Planning May create rigidity and lock organization Cannot cope well the dynamic environment Leave no room for Intuition and creativity Push managers to focus on Today’s Competition, nor tomorrow's survival Reinforces success, which may lead to failure Planning and plans: importance Gao Junshan, UST BeijingFundamentals of Management: 3-6

Fundamentals of Management: 3-7Gao Junshan, UST Beijing Does Planning Improve Performance? Positive financial results Process of making and implementing means more Poor performance due to environmental factors Planning and plans: importance

Planning and plans: types and classification Fundamentals of Management: 3-8Gao Junshan, UST Beijing

Planning and plans: types and classification Fundamentals of Management: 3-9Gao Junshan, UST Beijing

Middle Managers First-Line Managers Operative Employees Top Managers Fundamentals of Management: 3-10Gao Junshan, UST Beijing Objectives Time Frame Scope How Do Strategic and Tactical Plans Differ? Planning and plans: types and classification

Fundamentals of Management: 3-11Gao Junshan, UST Beijing Chapter Guide Planning and plans –Importance of Planning –Types and classification of plans Management by Objective Strategic management process Quality as strategic weapons –Benchmarking –ISO 9000 –Six Sigma

Foundations of planning: MBO Fundamentals of Management: 3-12Gao Junshan, UST Beijing

Peter F. Drucker 1909 － 2005 Fundamentals of Management: 3-13Gao Junshan, UST Beijing The concept of management by objectives is generally attributed to Peter F. Drucker, The Practice of Management (New York: Harper & Row, 1954). MBO: concept and definition

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Fundamentals of Management: 3-15Gao Junshan, UST Beijing Common MBO Elements Goal Specificity Explicit Time Period Participative Decision Making Performance Feedback MBO: concept and definition

Fundamentals of Management: 3-16Gao Junshan, UST Beijing GoalDifficulty Does MBO Work? Does MBO Work? GoalSpecificity TopManagement ?Participation MBO: succeed factors

Setting Employee Objectives MBO: succeed factors Fundamentals of Management: 3-17Gao Junshan, UST Beijing

MBO: critics Fundamentals of Management: 3-18Gao Junshan, UST Beijing

Strategic Management Process Primary steps Environment tools SWOT analyses Grand strategy vs. Competitive strategy Foundations of planning: strategic management process Fundamentals of Management: 3-19Gao Junshan, UST Beijing

Fundamentals of Management: 3-20Gao Junshan, UST Beijing Chapter Guide Planning and plans Management by Objective Strategic management process –Primary steps –Environment tools –SWOT analyses –Grand strategy vs. Competitive strategy Quality as strategic weapons

Strategic Management Process: A nine-step process that involves strategic planning, implementation and evaluation Strategic management process: the process Fundamentals of Management: 3-21Gao Junshan, UST Beijing

Mission/Vision Objectives/Goals Strategies/Hierarchies of Plans Fundamentals of Management: 3-22Gao Junshan, UST Beijing

Fundamentals of Management: 3-23Gao Junshan, UST Beijing Defining the Organization’s reason for existence Important for profit and non-profit organizations Bases for development of all subsequent Plans Answering what businesses the organization are in Organizational Mission Strategic management process: Starting point

Fundamentals of Management: 3-24Gao Junshan, UST Beijing Competitive intelligence Competitive intelligence Environmental scanning Environmental scanning Analyzing the environment Strategic management process: Environment analysis

Fundamentals of Management: 3-25Gao Junshan, UST Beijing Screening large amount of information to detect emerging trends and create a set of scenarios. Information can be collected through newspapers, magazines, books, trade journals, advertisements, press releases, promotional materials, trade shows, sales personals, competitor’s products, industry studies, government papers and from WWW. Environmental scanning Strategic management process: Environment analysis

Fundamentals of Management: 3-26Gao Junshan, UST Beijing To seek basic information about competitors: –Who are they? –What are they doing? –How will they affect us? Most of the competitor-related information can be obtained from public accessible channel ----Competitive Intelligence is not organizational espionage Competitive intelligence Strategic management process: Environment analysis

Fundamentals of Management: 3-27Gao Junshan, UST Beijing SWOTAnalysis OpportunitiesWeakness Threats Strengths Strategic management process: SWOT analysis

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Fundamentals of Management: 3-29Gao Junshan, UST Beijing Retrenchment Combination The Grand Strategies Stability Growth Strategic management process: Strategies for whole

Strategic management process: external ways of growth Fundamentals of Management: 3-30Gao Junshan, UST Beijing

Fundamentals of Management: 3-31Gao Junshan, UST Beijing Determining A Competitive Strategy Strategic management process: Strategies for businesses Cost leadership strategy Differentiation strategy Focus strategy See: Porter, M. E. Competitive strategy: Techniques for Analyzing Industries and Competitors (New York: Free Press, 1980); Porter, M. E. Competitive Advantage: Creating and Sustaining Superior Performance (New York: Free Press, 1985).

Fundamentals of Management: 3-32Gao Junshan, UST Beijing Stuck in the middle problem Sustaining the competitive advantage Strategic management process: Strategies for businesses Further Discussions on Competitive strategies

Fundamentals of Management: 3-33Gao Junshan, UST Beijing Strategic management process: Strategies for businesses

Fundamentals of Management: 3-34Gao Junshan, UST Beijing Strategic management process: Implementation and evaluation Implementation Evaluation What Happens After Strategies Are Formulated?

Fundamentals of Management: 3-35Gao Junshan, UST Beijing Writing a Business Plan Describe your company’s background and purpose Identify your short and long term objectives Provide a thorough market analysis Describe your development and production emphasis Describe how you’ll market your product or service Establish your financial statements Provide an overview of the organization and its management Describe the legal form of the business Identify the critical risks and contingencies facing the organization Put the business plan together Developing your business plan skill

Quality As Strategic Weapon BenchmarkingBenchmarking ISO 9000ISO 9000 Six SigmaSix Sigma Fundamentals of Management: 3-36Gao Junshan, UST Beijing Foundations of planning: Quality as strategic weapon

Fundamentals of Management: 3-37Gao Junshan, UST Beijing Chapter Guide Planning and plans Management by Objective Strategic management process Quality as strategic weapons –Kaizen (Quality Movement) –Benchmarking –ISO 9000 –Six Sigma See chap 2: How have organizations show an concern with quality? (p64-66)

Quality weapons: continues improvement Fundamentals of Management: 3-38Gao Junshan, UST Beijing

Steps of Steps of Benchmarking Quality weapons: Benchmarking Form a team Identify gaps Collect data Plan and act ` Fundamentals of Management: 3-39Gao Junshan, UST Beijing

Fundamentals of Management: 3-40Gao Junshan, UST Beijing Honestly analyze a company’s current procedures and determine the areas to improve Carefully select competitors worthy of copying Design practical implementation measures and keep continuous improvements Quality weapons: Benchmarking Keys to Successful Benchmarking

Fundamentals of Management: 3-41Gao Junshan, UST Beijing It is a series of standards designed by the International Standard Organization based in Geneva, Switzerland It assures the customers that a company –Uses specific steps to test the product it sells –Continuously trains its employees –Maintains satisfactory records of its operations –Corrects problems when they occur Its certification shows an organization has met stringent international quality of standards and is becoming a dominant customer need in the global village What is ISO 9000 Series ? Quality weapons: ISO 9000

Fundamentals of Management: 3-42Gao Junshan, UST Beijing Statistical target of Six Sigma Statistical target of Six Sigma Fewer than 4 defects per million item produced Six Sigma as a philosophy Six Sigma as a philosophy Design, measure, analyze and control the input side of a production process Quality weapons: Six sigma

Steps of 6 Sigma Fundamentals of Management: 3-43Gao Junshan, UST Beijing

Fundamentals of Management: 3-44Gao Junshan, UST Beijing Chapter Summary