1. Oct. 27, Weihua Gan

2. Contents Chapter1 Introduction to Management and Organization
Chapter2 Management Yesterday and Today
Chapter3 Management Decision Making
Chapter4 The Planning Function
Chapter5 The Organizing Function
Chapter6 Managerial Communication
Chapter7 Motivation
Chapter8 The Leading Function
Chapter9 The Controlling Function

3. The Planning Function
Chapter 4

5. Terms to Know External environment Internal environment Strategic plan
Planning
Strength
Weakness
Opportunity
Threat
SWOT analysis
External environment
Internal environment
Strategic plan
Operational plan

6. Chapter 4 The Planning Function
Learning objectives:
Define planning
Explain SWOT analysis
Describe the steps in the strategic management process
Differentiate corporate-, business-, and functional-level strategies
Describe the five competitive forces

7. Chapter 4 The Planning Function
Organization environment
External environment
politics, economics, science, etc.
Internal environment
culture, morality, system

8. Chapter 4 The Planning Function
The external environment includes all the forces acting on the organization from the outside.
The internal environment includes the day-to-day forces within the organization in which managers perform their functions.

9. Direct forces in the Organization’s External Environment
Direct forces have an immediate impact on the organization.
customers
Human resources
competitors
suppliers

10. The External Environment
General
Environment
Global
Suppliers
Customers
Economic
Political
The
Organization
Public
Pressure
Groups
Competitors
Demographic
Sociocultural
Specific
Environment
Technological

11. Chapter 4 The Planning Function
Indirect forces influence the climate in which the organization operates
technological
international
Economic
Cultural and social
Political,legal and regulatory

12. Direct &Indirect forces of the organization’s external environment
customers
economic
Political,legal,regulatory
suppliers
competitors
The manager and the organization
international
technology
Human resources
Cultural and social

13. General environment international customers competitors
Specific environment
Internal
environment
Human resources

14. PETS

15. Chapter 4 The Planning Function
Social forces are the norms and values that characterize a culture. Social forces have influenced management theory in areas such as motivation and leadership.

16. Chapter 4 The Planning Function
Economic forces are the ideas behind the concept of a market economy such as private ownership of property, economic freedom, competitive markets, and a limited role for government.

17. Chapter 4 The Planning Function
Political forces such as governmental regulations play a significant role in how organizations choose to manage themselves. Political forces have influenced management theory in the areas of environmental analysis, planning, control, organization design, and employee rights.

18. Chapter 4 The Planning Function
Questions typically asked about the environment.
What are the major forces affecting the institution?
How predictable are the external forces that affect the institution?
How friendly or hostile is the external environment?

19. Chapter 4 The Planning Function
Methods of gathering environmental data.
Ask for existing environmental scans for the institution.
Obtain scans from other research institutions in the country.
Read newspapers, magazines, historical analysis,etc.
Interview key informants inside the institution about the external factors influencing the institution.
Interview key informants outside the institution to understand how the external environment affects internal operations.
Ask those involved about key legal and governmental regulations that influence the institution (e.g. patent laws, development plans, etc.).
Analyze development plans and key policy documents.
Collect and analyze data on resource allocation trends for research and development in the country and region.

20. Chapter 4 The Planning Function
SWOT Analysis
Strengths, Weaknesses, Opportunities and Threats.
SWOT analysis requires managers to be honest, self-disciplined and thorough. Going on to strategy choices without a comprehensive SWOT analysis is risky.

21. Chapter 4 The Planning Function
SWOT Analysis
Strengths, Weaknesses, Opportunities and Threats.
SWOT analysis requires managers to be honest, self-disciplined and thorough. Going on to strategy choices without a comprehensive SWOT analysis is risky.

22. Chapter 4 The Planning Function
Strengths and weaknesses come from the internal environment of the firm.
Strengths can be exploited, built upon and made key to accomplishment of mission and objectives.
Weaknesses are internal characteristics that have the potential to limit accomplishment of mission and objectives.
Opportunities and threats are uncontrollable by management because they are external to the firm.
Opportunities provide the firm the possibility of a major improvement.
Threats may stand in the way of a firm reaching its mission and objectives.

23. Chapter 4 The Planning Function
SWOT Analysis
Strengths
Weakness
Opportunities
Threats

24. Case of SWOT

25. Planning What Is Planning?
involves defining the organization’s goals, establishing an overall strategy, and developing a comprehensive set of plans to integrate and coordinate organizational work
informal planning - nothing is written down
little or no sharing of goals
general and lacking in continuity
formal planning - written
defines specific goals
specific action programs exist to achieve goals
© Prentice Hall, 2002

26. planning establishes coordinated effort planning reduces uncertainty
Why Do Managers Plan?
Purposes of Planning
planning is the primary management function that establishes the basis for all other management functions
planning establishes coordinated effort
planning reduces uncertainty
planning reduces overlapping and wasteful activities
planning establishes goals and standards used in controlling
© Prentice Hall, 2002

27. stated goals - official statements of the organization’s goals
How Do Managers Plan?
The Role of Goals and Plans in Planning
Types of Goals
stated goals - official statements of the organization’s goals
real goals - those goals that an organization actually pursues
© Prentice Hall, 2002
7-27

28. strategic plans - apply to the entire organization
How Do Managers Plan?
The Role of Goals and Plans in Planning
Types of Plans
strategic plans - apply to the entire organization
establish organization’s overall goals
seek to position the organization in terms of its environment
operational plans - specify the details of how the overall goals are to be achieved
tend to cover short time periods
© Prentice Hall, 2002

29. Types Of Plans Frequency of Use Single use Standing Breadth Strategic
Operational
Time Frame
Long term
Short term
Specificity
Directional
Specific
© Prentice Hall, 2002

30. How Do Managers Plan? The Role of Goals and Plans in Planning
Types of Plans
long-term plans - time frame beyond three years
definition of long term has changed with increasingly uncertain organizational environments
short-term plans - cover one year or less
specific plans - clearly defined with little room for interpretation
required clarity and predictability often do not exist
directional plans - flexible plans that set out general guidelines
provide focus without limiting courses of action
© Prentice Hall, 2002

31. Specific Versus Directional Plans
© Prentice Hall, 2002
7-31

32. Planning In The Hierarchy Of Organizations
Strategic
Planning
Operational
Top
Executives
Middle-Level
Managers
First-Level
Managers

33. What Is Strategic Management?
A set of managerial decisions and actions that determines the long-run performance of an organization
Purposes of Strategic Management
involved in many decisions that managers make
companies with formal strategic management systems have higher financial returns than companies with no such system
important in profit and not-for-profit organizations
© Prentice Hall, 2002

34. The Strategic Management Process
© Prentice Hall, 2002
8-34

35. Levels of Organizational Strategy
© Prentice Hall, 2002
8-35

36. Types of Organizational Strategies
Corporate-Level Strategy
BCG matrix
strategic implications of the matrix
cash cows - “milk”
use cash to invest in stars and question marks
stars - require heavy investment
eventually will become cash cows
question marks - two strategies
invest to transform them into stars
divest
dogs - sold off or liquidated
© Prentice Hall, 2002

37. The BCG Matrix Market Share Anticipated Growth Rate High Low High Low
Stars
Question
Marks
Cash
Cows
Dogs
© Prentice Hall, 2002

38. Types Of Organizational Strategies
Business-Level Strategy
determines how an organization should compete in each of its businesses
strategic business units - independent businesses that formulate their own strategies
Role of Competitive Advantage
competitive advantage - sets an organization apart by providing a distinct edge
comes from the organization’s core competencies
not every organization can transform core competencies into a competitive advantage
once created, must be able to sustain it
© Prentice Hall, 2002

39. Types Of Organizational Strategies
Business-Level Strategy
Competitive Strategies
Michael Porter - industry analysis based on five competitive forces
Threat of new entrants - affected by barriers to entry
Threat of substitutes - affected by buyer loyalty and switching costs
Bargaining power of buyers - affected by number of customers, availability of substitute products
© Prentice Hall, 2002

40. Forces In The Industry Analysis
New
Entrants
Threat of
New Entrants
Bargaining
Power or
Suppliers
Industry
Competitors
Suppliers
Buyers
Current Rivalry
Bargaining
Power or
Buyers
Threat of
Substitutes
Substitutes
© Prentice Hall, 2002

41. Types Of Organizational Strategies
Business-Level Strategy
Competitive Strategies
Porter’s competitive forces analysis
Bargaining power of suppliers - affected by degree of supplier concentration
Existing rivalry - affected by industry growth rate, demand for firm’s product or service, and product differences
© Prentice Hall, 2002

42. Thanks!
Comments?