4-1 Week 3 – Introduction to Management

4-2 Topics Planning Process Planning Steps Levels of Planning Strategic Planning Strategic Planning Process

4-3 Plans The actions or means managers intend to use to achieve organizational goals. Single-use plans: designed to achieve a set of goals that are not likely to be repeated in the future. Standing plans: focus on ongoing activities designed to achieve an enduring set of goals. Contingency plans: specify actions to take when a company’s initial plans have not worked well or events in the external environment require a sudden change.

4-4 SMART Goals Specific: Goals are precise, describing particular behaviors and outcomes. Measurable: Desired results can be quantified. Attainable (but challenging): Goals can be achieved, but challenging. Relevant: Contribute to the organization’s overall mission and be consistent with its values, including ethical standards. Time-bound: Specify a target date for completion.

4-5 Levels of Planning Top-level managers: Strategic planning Middle-level managers: Tactical planning Lower-level managers: Operational planning

4-6 Strategic Planning Strategic Planning: A set of procedures for making decisions about the organization’s long-term goals and strategies. Strategic goal: major targets or end results relating to the organization’s long- term survival, value and growth. Strategy: A pattern of actions and resource allocations designed to achieve the organization’s goals.

4-7 Formal Planning Steps Situational Analysis Alternative Goals and Plans Goal and Plan Evaluation Goal and Plan Selection Implementation Monitor and Control Step 1- Analyze the Situation Situational analysis: a process planners use, within time and resources constraints, to gather, interpret, and summarize all information relevant to the planning issue under consideration. Focuses on the internal forces at work in the organization and the influences from the external environment. Step 2: Generate alternative goals and plans Goals: Target or end that management desires to reach. Stresses creativity Encourages managers and employees to think broadly

4-8 Formal Planning Steps Situational Analysis Alternative Goals and Plans Goal and Plan Evaluation Goal and Plan Selection Implementation Monitor and Control Step 3- Evaluate Goals and Plans Evaluate advantages, disadvantages, and potential effects of each alternative goal and plan. Prioritize the goals Consider the costs of each initiative and the likely investment return. Step 4: Select goals and plans Select the most appropriate and feasible alternative. Identifies the priorities and trade-offs among the goals and plans. Step 5: Implement the goals and plans Key to achieving goals Managers and employees must understand the plan, have the resources to implement it, and be motivated to do so. Linking the plan to other systems in the organization, such as rewards, helps ensure successful implementation. Step 6: Monitor and control performance Monitor actual performance of employees against the goals and plans.

4-9 Strategic Planning Process

4-10 Step 1: Establish a mission, vision, and goals Mission: An organization’s basic purpose and scope of operations. Clear and concise expression of the organization’s basic purpose. Strategic vision: The long-term direction and strategic intent of a company. Points to the future Provides perspective on where the organization is headed and what it can become

4-11 Step 2: Analyze External opportunities and threats Industry profile Industry growth Industry forces Competitor profile Competitor analysis Competitor advantages Legislation and regulatory activities Political activity Social issues Social interest groups Labor issues Macroeconomic conditions Technological factors

4-12 Step 3: Analyze Internal Strengths and Weaknesses Internal resource analysis Financial analysis Human resources assessment Marketing audit Operations analysis Other internal resource analyses

4-13 Step 4- SWOT Analysis Strengths Skilled management Positive cash flow Well-known brands Weakness Lack of spare production capacity Absence of reliable suppliers Opportunities New technology Underserved market niche Threats Possibility of competitors entering underserved niche

4-14 Step 5: Implement the Strategy 1. Define strategic tasks. 2. Assess organization capabilities. 3. Develop an implementation agenda. 4. Create an implementation plan.

4-15 Step 6: Control Your Progress Strategic control system: -Designed to support managers in evaluating the organization’s progress with its strategy and, when discrepancies exist, taking corrective action. -Encourage efficient operations that are consistent with the plan while allowing flexibility to adapt to changing conditions. -Includes a budget to monitor and control major financial expenditures.

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4-17 Vision Statements Inspire organization members Offer a worthwhile target for the entire organization to work together to achieve.

4-18 Microsoft’s Mission Statement “ We work to help people and businesses throughout the world to realize their full potential.”

4-19 DuPont’s Vision Statement “ To be the world’s most dynamic science company, creating sustainable solutions essential to a better, safer and healthier life for people everywhere.”

4-20 Strategic goals Evolve from the organization’s mission and vision.

4-21 Stakeholders Groups and individuals who affect and are affected by the achievement of the organization’s mission, goals, and strategies. Buyers, suppliers, competitors, government and regulatory agencies, unions and employee groups, financial community, owners and shareholders, and trade associations.

4-22 Resources and Capabilities Resources: inputs to production that can be accumulated over time to enhance the performance of a firm. Tangible assets – real estate, production of facilities, raw materials Intangible assets- company reputation, culture, technical knowledge, and patents, accumulated learning and experience

4-23 Resources as a Source of Competitive Advantage Valuable: instrumental for creating customer benefits Rare: not equally available to all competitors Inimitable: interdependent variables and no obvious links between behaviors and desire outcomes Organized: efficient organization of resources

4-24 Core Competence A unique skill and/or knowledge an organization possesses that gives it an edge over competitors

4-25 Benchmarking Assess and improve performance by assessing how well one company’s basic functions and skills compare with those of another company or set of companies. Thoroughly understand the “best practices” of other firms To undertake actions to achieve better performance and lower costs

4-26 Business Strategy The major actions by which an organization competes in a particular industry or market. -Low-cost strategy: a strategy an organization uses to build competitive advantage by being efficient and offering a standard, no-frills product. -Differentiation: a strategy an organization uses to build competitive advantage by being unique in its industry or market segment along one or more dimensions.

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