Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall. PLANNING AND STRATEGY: BRINGING THE VISION TO LIFE Chapter 5 5–1

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall. Planning and Strategy  Planning └ Identifying and selecting appropriate goals and courses of action for an organization. The organizational plan that results from the planning process details the goals and specifies how managers/leaders will attain those goals. 5-2

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall. Planning and Strategy  Strategy └ A cluster of decisions about what goals to pursue, what actions to take, and how to use resources to achieve goals. 5-3

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall. Three Steps in Planning 5-4

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall. The Nature of the Planning Process To perform the planning task, managers should: 1. Establish where an organization is at the present time 2. Determine its desired future state 3. Decide how to move it forward to reach that future state 5-5

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall. Why Planning is Important 1. Necessary to give the organization a sense of direction and purpose 2. Useful way of getting managers to participate in decision making about the appropriate goals and strategies for an organization 3. Helps coordinate managers of the different functions and divisions of an organization 4. Can be used as a device for controlling managers 5-6

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall. 2.What Does Planning Look Like in Organizations? Types of Plans Used in Organizations Short-Term PlanTypically created for a period of one year or less; has a definite end point. Long-Term PlanOften in place for three or more years; end point not always determined; can be complex and require substantial resources. Single-Use PlanUsed once for a unique situation. Standing PlanDesigned for repeated, ongoing activities. 5–7

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall. 2.What Does Planning Look Like in Organizations? Types of Plans Used in Organizations Operational PlanDetailed outline of how goals are to be achieved. Strategic PlanA far-reaching plan articulating and synthesizing mission-driven, strategic goals. Financial PlanPlan for providing financial resources to support an organization’s activities. Contingency PlanPlan to respond to a crisis or a failed plan. Project PlanPlan that outlines specific actions, time frames, roles, responsibilities, objectives, and outcomes for particular work projects to be done by one or more people. 5–8

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall.  Mission Statement  Articulate Competitive Advantage  Create Rationale for Working Introduction  Vision  Often Articulated as a Vision Statement 4.What Is a Mission? Why Does Vision Matter? 5–9

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall. Planning and Strategy  Mission Statement └ A broad declaration of an organization’s purpose that identifies the organization’s products and customers and distinguishes the organization from its competitors. 5-10

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall. Determining the Organization’s Mission and Goals  Defining the Business └ Who are our customers? └ What customer needs are being satisfied? └ How are we satisfying customer needs?  Establishing Major Goals └ Provides the organization with a sense of direction 5-11

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall.  Clarity about purpose, difference  Choices Easier More logical More likely to lead to success Mission Clarity Leads to Better Choices 5–12 4.What Is a Mission? Why Does Vision Matter?

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall.  Successful Vision  Clear, Compelling, and Accessible  Both Aspirational and Inspirational  Can Be Accomplished with the Right Planning  Employees and Customers Alike Can Be Inspired Vision: Our Highest Aspiration  Who Establishes an Organization’s Mission and Vision?  Founder  Top Leaders  Sometimes Employees 4.What Is a Mission? Why Does Vision Matter? 5–13

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall. 5.What Is Strategy?  Strategy Defined  Creating a Strategy  Assessing, Challenging, Gaining Perspective, and Creating Alternatives  Taking Risks Introduction 5–14

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall. Establishing Major Goals  Strategic leadership └ the ability of the CEO and top managers to convey a compelling vision of what they want to achieve to their subordinates 5-15

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall.  Helps Organization Realize Its Mission and Vision  Strategies Are Complex  Complexity Multiplies Exponentially Strategy Links Mission, Vision, Goals, and Actions 5.What Is Strategy? 5–16 MissionVision Long Term Strategic Goals Short Term Goals and Subgoals Tactics and Actions Elements of Strategy

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall. 5.What Is Strategy? Types of Strategies: Corporate Strategies Corporate StrategyFocus Corporate-Level Strategy A plan that indicates in which industries and national markets an organization intends to compete and why Corporate-Level Plan Top management’s decisions pertaining to the organization’s mission, overall strategy, and structure. Provides a framework for all other planning 5–17

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall. 5.What Is Strategy? Types of Strategies: Corporate Strategies Business Level StrategyFocus Business-Level Strategy Outlines the specific methods a division, business unit, or organization will use to compete effectively against its rivals in an industry Business-Level Plan Long-term divisional goals that will allow the division to meet corporate goals Division’s business-level and structure to achieve divisional goals 5–18

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall. 5.What Is Strategy? Types of Strategies: Business Strategies Business StrategyFocus Low-Cost Driving the organization’s total costs down below the total costs of rivals Differentiation Distinguishing an organization’s products from the products of competitors on dimensions such as product design, quality, or after-sales service 5–19

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall. 5.What Is Strategy? Types of Strategies: Business Strategies Business StrategyFocus Stuck in the Middle Attempting to simultaneously pursue both a low cost strategy and a differentiation strategy. Difficult to achieve low cost with the added costs of differentiation 5–20

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall. 5.What Is Strategy? Types of Strategies: Business Strategies Business StrategyFocus Focused Low-Cost Serving only one market segment and being the lowest-cost organization serving that segment Focused Differentiation Serving only one market segment as the most differentiated organization serving that segment 5–21

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall. 6.What Needs to Be Considered in a Strategic Planning Process?  Strategic Planning  What Is the State of the Business?  What Goals?  What Activities and Tasks? Introduction 5–22

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall. 6.What Needs to Be Considered in a Strategic Planning Process? Environmental Scanning Economic Environment Sociocultural Environment Legal and Tax Environment Political Environment Technological Environment Natural Environment Industry Environment 5–23

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall. 6.What Needs to Be Considered in a Strategic Planning Process?  Industry Defined  Michael Porter, Five Forces Model  Competitive Rivalry within the Industry  Threat of New Entrants  Threat of Substitutes  Bargaining Power of Suppliers  Bargaining Power of Customers Industry Environment 5–24

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall. 6.What Needs to Be Considered in a Strategic Planning Process?  Stakeholders  Key Stakeholders  Primary Stakeholders  Secondary Stakeholders Stakeholder Analysis 5–25

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall.  Strategic Planning Process  Series of Sequential Steps  Each Step Must Be Completed to Advance to the Next Step Introduction 7.What Are the Steps in the Strategic Planning Process? 5–26

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall. 7.What Are the Steps in the Strategic Planning Process?  SWOT Analysis Steps 2 and 3: Conduct Internal and External Analyses 5–27

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall.  Implementation “Execution”  Assumptions  Assess Capability  Link Strategies  Coordinate Efforts  Create Clear Rewards  Challenging and Changing Assumptions Steps 5 and 6: Implement and Evaluate Strategies  Evaluation  Continual Process  Focus on a Few “Must- Win Battles” 7.What Are the Steps in the Strategic Planning Process? 5–28

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall.  HR’s Role in Strategy  Right People in Right Jobs  Help Realize the Organization’s Mission  Managing  Recruiting  Selection  Succession Planning Introduction 8.What Is HR’s Role in Strategy and Planning? 5–29

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall.  Growth Period  Constant Communication  Strong Recruiting Methods  Reduction Period  Layoff  For-Cause Termination Workforce Growth and Reductions  Craft the Workforce to Support the Organization  Size  Shape  Support Organization’s Strategy 8.What Is HR’s Role in Strategy and Planning? 5–30 Succession Planning

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall.  Defined  HR Inventory  Skills  Trainings Needs  Career Plans  Other Information Recruiting Employees  Selection  Criteria 8.What Is HR’s Role in Strategy and Planning? 5–31 Selecting the “Right” Employees