Planning and Goal Setting Chapter 5 Planning and Goal Setting Copyright © 2006 by South-Western, a division of Thomson Learning. All rights reserved.

Read “Benchmarking” p. 159 Is Nintendo successful? How has Nintendo used innovative ideas to create new products? © 2006 by South-Western, a division of Thomson Learning. All rights reserved.

Goals and Plans Goal A desired future state that the organization attempts to realize. Plan A blueprint specifying the resource allocation, schedules, and other actions necessary for attaining goals. Planning is considered the most fundamental management function – and the most controversial. Why? © 2006 by South-Western, a division of Thomson Learning. All rights reserved.

Are you an Effective Planner? Give an example of a personal goal. Do you use a calendar/ scheduler/ appt. book? Do you set priorities? Give an example. Do you set deadlines? Give an example. Are most your days hectic & disorderly? Do you believe you are a good planner? © 2006 by South-Western, a division of Thomson Learning. All rights reserved.

Ex. 5.1 Levels of Goals/Plans and Their Importance © 2006 by South-Western, a division of Thomson Learning. All rights reserved.

Mission Statement What is a mission statement? * What the organization stands for * Describes values and aspirations * Focuses on customers, values, product quality, and attitude toward employees. © 2006 by South-Western, a division of Thomson Learning. All rights reserved.

Ben & Jerry’s Mission To make, distribute, & sell the finest quality all natural ice cream & euphoric concoctions with continued commitment to incorporating wholesome, natural ingredients and promoting business practices that respect the Earth and the Environment. What does this statement really tell you about the company? © 2006 by South-Western, a division of Thomson Learning. All rights reserved.

Purposes of Goals and Plans Purposes of Goals and Plans Legitimacy/mission statement Source of motivation and commitment Rationale for decisions Guides to action Resource allocation Standard of performance © 2006 by South-Western, a division of Thomson Learning. All rights reserved.

Goals and Plans Strategic Goals Goals and Plans Strategic Goals Where the organization wants to be in the future. Pertain to the organization as a whole. Strategic Plans Action Steps. Blueprint that defines the organizational activities and resource allocations. © 2006 by South-Western, a division of Thomson Learning. All rights reserved.

Tactical Goals and Plans Tactical Goals and Plans Tactical Goals Goals that define the outcomes that major divisions and departments must achieve. Tactical Plans Plans designed to help execute major strategic plans. © 2006 by South-Western, a division of Thomson Learning. All rights reserved.

Operational Goals and Plans Operational Goals and Plans Operational Goals Specific, measurable results expected from departments, work groups, and individuals. Operational Plans Organization’s lower levels that specify action steps toward achieving operational goals. © 2006 by South-Western, a division of Thomson Learning. All rights reserved.

Ex. 5.4 Characteristics of Effective Goal Setting Ex. 5.4 Characteristics of Effective Goal Setting Goal Characteristics Specific and measurable. Cover key result areas. Challenging but realistic. Defined time period. Linked to rewards. © 2006 by South-Western, a division of Thomson Learning. All rights reserved.

Planning Types Management by Objectives (MBO) Single Use Plans Standing Plans Contingency Plans © 2006 by South-Western, a division of Thomson Learning. All rights reserved.

Ex. 5.5 Model of the MBO Process Step 1: Setting Goals Step 2: Developing Action Plans Corporate Strategic Goals Departmental Goals Individual Goals Action Plans Review Progress Step 3: Reviewing Progress Take Corrective Action Appraise Performance Step 4: Appraising Overall Performance © 2006 by South-Western, a division of Thomson Learning. All rights reserved.

Ex. 5.6 MBO Benefits and Problems Benefits Ex. 5.6 MBO Benefits and Problems Benefits Manager and employee efforts are focused on activities that will lead to goal attainment. Performance can be improved at all company levels. Employees are motivated. Departmental and individual goals are aligned with company goals. © 2006 by South-Western, a division of Thomson Learning. All rights reserved.

Ex. 5.6 MBO Benefits and Problems (contd.) Problems Ex. 5.6 MBO Benefits and Problems (contd.) Problems Constant change prevents MBO from taking hold. An environment of poor employer-employee relations reduces MBO effectiveness. Strategic goals may be displaced by operational goals. Mechanistic organizations and values that discourage participation can harm the MBO process. Too much paperwork saps MBO energy. © 2006 by South-Western, a division of Thomson Learning. All rights reserved.

Plans – see Exhibit 5.7, page 165 Plans – see Exhibit 5.7, page 165 Single-Use Standing Contingency Crisis Management Three Stages Prevention Preparation Containment © 2006 by South-Western, a division of Thomson Learning. All rights reserved. 18

Strategic Management Set of decisions and actions used to formulate and implement strategies that will provide a competitively superior fit between the organization and its environment so as to achieve organizational goals © 2006 by South-Western, a division of Thomson Learning. All rights reserved.

Strategic Management Questions What changes and trends are occurring? Who are our customers? What do they want? What products/services should we offer? How can we offer these products/services efficiently? Did Nintendo do a good job with Strategic Management? © 2006 by South-Western, a division of Thomson Learning. All rights reserved.

Strategic Management What does “competitive” mean? What is a “competitive advantage”? What is a “core competency”? © 2006 by South-Western, a division of Thomson Learning. All rights reserved.

Ex. 5.10 The Strategic Management Process Identify Strategic Factors Strengths Weaknesses Scan Internal Environment Core Competence Synergy Value Creation Identify Strategic: Corporate Business Functional Define New: Mission Goals Grand Strategy Evaluate Current: Strategies Scan External Environment National Global Opportunities Threats SWOT Implementing Strategy via Changes in: Structure Human resources Information & control systems © 2006 by South-Western, a division of Thomson Learning. All rights reserved.

Southwest Airlines – SWOT SWA is a low cost, short haul, point-to-point air carrier. Primary Goal: LOW cost/customer service Internal Strengths_____________ Internal Weaknesses ______________ External Opportunities _____________ External Threats _____________ Resulting Strategies: © 2006 by South-Western, a division of Thomson Learning. All rights reserved.

Kraft Foods - SWOT Read “Kraft Foods”, p. 177 List one Kraft strength: _____________ List one Kraft weakness: ____________ List one Kraft opportunity: _____________ List one Kraft threat: _______________ List one Kraft Strategy resulting from these events: _____________________________ © 2006 by South-Western, a division of Thomson Learning. All rights reserved.

Formulating Strategies How do we decide what strategies work best? Create strategies based on assessment of the competitive forces that effect the business. Porter’s 5 Forces Model (See exhibit 5.12, pg. 178) © 2006 by South-Western, a division of Thomson Learning. All rights reserved.

Porter’s Competitive Forces Porter’s Competitive Forces Threat of substitute products Potential new entrants Rivalry among competitors Bargaining power of buyers Beware Bargaining power of suppliers © 2006 by South-Western, a division of Thomson Learning. All rights reserved.

Ex. 5.12 The Five Forces Affecting Industry Competition Ex. 5.12 The Five Forces Affecting Industry Competition SOURCES: Based on Michael E. Porter, Competitive Strategy: Techniques for Analyzing Industries and Competitors (New York: Free Press, 1980); and Michael E. Porter, “Strategy and the Internet,” Harvard Business Review (March, 2001), 63-78. © 2006 by South-Western, a division of Thomson Learning. All rights reserved.

Competitive Strategies (see exhibit 5.14, p. 180) Competitive Strategies (see exhibit 5.14, p. 180) 1. Differentiation: how will you make your product different from the competition? Ex. Auto industry. 2. Cost Leadership: how will you aggressively cut costs and produce more efficiently? Ex. Walmart 3. Focus: how can you concentrate on a specific market or group, adopting a Niche Strategy? Ex. SAS © 2006 by South-Western, a division of Thomson Learning. All rights reserved.

Ex. 5.15 Tools for Putting Strategy into Action Ex. 5.15 Tools for Putting Strategy into Action SOURCE: Adapted from Jay R. Galbraith and Robert K. Kazanjian, Strategy Implementation: Structure, Systems, and Process, 2d ed. (St. Paul, Minn.: West, 1986), 115. Used with permission. © 2006 by South-Western, a division of Thomson Learning. All rights reserved.

Conclusion Why do we need goals? What do we need in addition to goals? What is strategic management? What is SWOT analysis? What are the 3 competitive strategies? How do companies “Win” in the marketplace? © 2006 by South-Western, a division of Thomson Learning. All rights reserved.