CHAPTER 7: The Manager as a Planner and Strategist

Objectives: Describe the three steps of the planning process. Explain the relationship between planning and strategy. Explain the role of planning in predicting the future and in mobilizing organizational resources to meet future contingencies. Outline the main steps in SWOT analysis. Differentiate among corporate-, business-, and functional level strategies. Describe vital role played by strategy implementation in determining managers’ ability to achieve an organization’s mission and goals.

An Overview of the Planning Process

Important terms Planning- identifying and selecting appropriate goals and courses of action. Strategy- a cluster of decisions about what goals pursue, what actions to take, and how to use resources to achieve goals. Mission statement- a broad declaration of an organization’s purpose that identifies the organization’s product and consumers and distinguishes the organization from its competitors.

Three major steps in the planning process: 1.Formulating the Organization’s mission and goals - define the business. Establishing major goals. 2. Formulating Strategy - analyze the current situation and develop strategies. 3. Implementing strategy - allocate resources and responsibilities to achieve strategies.

LEVELS OF PLANNING

THREE LEVELS OF MANAGEMENT: 1. a.Corporate Level plan -To managers decisions pertaining to the organization’s mission, over-all strategy and structure. b.Corporate-Level Strategy -a plan that indicates in which industries and national markets an organization intends to compete. 2. a.Business-Level plan -Divisional managers’ decisions pertaining to division’s long term goals, overall strategy, and structure.

b.Business-level strategy -A plan that indicates how a division intends to compete against its rivals in an industry. 3. a.Functional-Level Plan -functional managers’ decisions pertaining t the goals that functional managers propose to pursue to help the division attain its business-level goals. b. Functional-level strategy - a plan that indicates how a function intends to achieve its goals.

TIME HORIZONS OF PLANS

-the intended duration of a plan. Time Horizon -the intended duration of a plan. Long-term plans - five years or more Intermediate-term plans – between 1 to 5 years Short-term plans – one year or less. STANDING PLANS -used in situations in which programmed decision making is appropriate. -policies, SOP’s, standing operating procedures.

SINGLE-USE PLANS -are developed to handle nonprogrammed decision making in unusual or one-of-a-kind situations. -programs, projects

WHY PLANNING IS IMPORTANT

It’s a useful way of getting managers to participate in decision making about the appropriate goals and strategies for an organization. It is necessary to give the organization a sense of direction and purpose. A plan helps coordinate managers of different functions and divisions of an organization to ensure that they all pull in the same direction. A plan can be used as a device for controlling managers within an organization.

SCENARIO PLANNING

Scenario Planning - The generation of multiple forecasts of future conditions followed by analysis of how to respond effectively to each of those conditions; also called contingency planning.

SWOT ANALYSIS Discover new opportunities, Manage and Eliminate threats

SWOT Analysis is the Key Component of Strategic Development SWOT Analysis is the Key Component of Strategic Development. It can prompt actions and responses. is based on the assumption that if managers can carefully review such strengths, weaknesses, opportunities, and threats, a useful strategy for ensuring organizational success will become evident to them.

Ability is evaluated on 3 counts: Strengths Two factors contribute to your strengths: ability and resources available. Ability is evaluated on 3 counts: Versatility: your ability to adapt to an ever changing environment. Growth: your ability to maintain a continuing growth. Markets: your ability to penetrate or create new markets. The strength of resources has three dimensions: Availability: your ability to obtain the resources needed. Quality: the quality and up-to-dateness of the resources employed. Allocation: your ability to distribute resources both effectively and efficiently.

Weaknesses Your weaknesses are determined through failures, defeats, losses and inability to match up with the dynamic situation and rapid change. The weaknesses may be rooted in  lack of managerial skills, insufficient quality, technological backwardness, inadequate systems or processes, slow deliveries, or shortage of resources. There are three possible outcomes to the analysis of your weaknesses.1 Correction of an identified defect. Protection through cover-up and prevention strategies to reduce the exposure of your weaknesses. Aggression to divert the attention from your weaknesses

Opportunities Opportunities are abundant. You must develop a formula which will help you define what comes within the ambit of an opportunity to focus on those areas and pursue those opportunities where effectiveness is possible. The formula must define product/service, target market, capabilities required and resources to be employed, returns expected and the level of risk allowed. Weaknesses of your competitions are also opportunities for you. You can exploit them in two following ways: Marketing warfare: attacking the weak leader's position and focusing all your efforts at that point, or making a surprise move into an uncontested area. Collaboration: you can use your complementary strengths to establish a strategic alliance with your competitor.

Threats External threats arise from political, economic, social, technological (PEST) forces. Technological developments may make your offerings obsolete. Market changes may result from the changes in the customer needs, competitors' moves, or demographic shifts. The political situation determines government policy and taxation structure.