1. The Manager as a Planner and Strategist8
Chapter
The Manager as a Planner and Strategist

2. Chapter #8 Learning Objectives
By the conclusion of this discussion you will understand:
Why planning is important and the process through which effective planning takes place.
The ingredients to creating effective missions and goals as well as formulating and implementing different strategies.
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3. Why Planning is Important
Planning determines where the organization is now and where it will be in the future.
Good planning provides:
Participation
Sense of direction & purpose
Coordination
Control
Participation: all managers are involved in setting future goals.
Sense of direction & purpose: Planning sets goals and strategies for all managers.
Coordination: Plans provide all parts of the firm with understanding about how their systems fit with the whole.
Control: Plans specify who is in charge of accomplishing a goal.
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4. Three Steps in Planning
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Figure 8.1

5. Planning Process Determining the Organization’s mission and goals
(Define the business)
Strategy Formulation
(Analyze current situation &
develop strategies)
Planning is the process used by managers to identify and select goals and courses of action for the organization.
The organizational plan that results from the planning process details the goals to be attained.
The pattern of decisions managers take to reach these goals is the organization’s strategy.
Strategy Implementation
(Allocate resources & responsibilities
to achieve strategies)
Figure 7.1

6. Planning Process Stages
Organizational mission: a broad declaration of the overriding purpose (both current and future)
Mission Statement:
Identifies product and customers
Motivates
Identifies value-added
Communicates direction (internal and external)
Bumper sticker length
This is the first step of the planning process and is accomplished by:
A. Define the business: seeks to identify our customer and the needs we can and should satisfy.
This also pinpoints competitors.
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7. Mission Statements
The mission of Southwest Airlines is dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride,and Company Spirit.

8. Our mission is to bring value to patients and customers
Our mission is to bring value to patients and customers. We want to have a positive impact on lives and to discover, develop and successfully market innovative products to cure diseases and enhance the quality of life. We also want to provide a shareholder return that reflects outstanding performance and to build a reputation for an exciting marketplace where people can realize their professional ambitions and where creativity is encouraged. We also care about our world and society and want to operate sustainably.

9. McDonald's vision is to be the world's best quick service restaurant experience. Being the best means providing outstanding quality, service, cleanliness and value, so that we make every customer in every restaurant smile. To achieve our vision, we are focused on three worldwide strategies: Be the best employer for our people in each community around the world. Deliver operational excellence to our customers in each of our restaurants. Achieve enduring profitable growth by expanding the brand and leveraging the strengths of the McDonald's system through innovation and technology.

10. Planning Process Stages
Organizational goals: identifies major focus of organizational resources
Challenging but realistic
Achievable
Time frame
Stretch organization to new heights
This is the first step of the planning process and is accomplished by:
A. Define the business: seeks to identify our customer and the needs we can and should satisfy.
This also pinpoints competitors.
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11. Strategy Formulation
Formulating strategy: managers analyze current situation and develop strategies needed to achieve the mission.
SWOT analysis:
Strengths and Weaknesses (organization)
Opportunities and Threats (environmental)
Strengths: manufacturing ability, marketing skills.
Weaknesses: high labor turnover, weak financials.
Opportunities: new markets.
Threats: economic recession, competitors
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12. Planning and Strategy Formulation
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Figure 8.5

13. The Five Forces Model The Threat of Substitute Products
The Power of Suppliers
The Level of Rivalry Among Organizations in an Industry
The Power of Customers
The Potential for Entry into an Industry
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14. Corporate-Level Strategies
Concentrate in single business:
McDonalds focuses in the fast food business.
Diversification: Organization moves into new businesses and services.
Related diversification
Unrelated diversification
Can become very strong, but can be risky.
Synergy: two divisions work together to obtain more than the sum of each separately.
Build a portfolio of unrelated firms to reduce risk or trouble in one industry. Very hard to manage.
Related diversification: firm diversifies in similar areas to build upon existing divisions.
Unrelated diversification: buy business in new areas.
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15. Corporate-Level Strategies
International Expansion: To what extent do we customize products and marketing for different national conditions?
Global strategy
Multi-domestic strategy
Standardization provides for lower cost.
Ignore national differences that others can address.
Customization provides for higher costs.
Embraces national differences and depends on them for success.
Global strategy: a single, standard product and marketing approach is used in all countries.
Multi-domestic strategy: products and marketing are customized for each country of operation
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16. Corporate Level Strategies
Vertical Integration: adding more value by producing its own inputs or distributing its products.
Backward vertical integration
Forward vertical integration
McDonalds grows its own potatoes.
Can lower the cost of supplies.
McDonalds owns the final restaurant.
Firm can lower costs and ensure final quality.
Backward vertical integration: the firm produces its own inputs.
Forward vertical integration: the firm distributes its outputs or products.
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17. Stages in a Vertical Value Chain
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Figure 8.6

18. Business-level Strategies
Low-Cost
Differentiation
Many
Stuck in
Middle
market segments
Number of
Focused
Low-Cost
Focused
Differentiated
Few
Also created by Michael Porter.
Low-cost: gain a competitive advantage by driving down organizational costs.
Managers manufacture at lower cost, reduce waste.
Lower costs than competition mean lower prices.
Differentiation: gain a competitive advantage by making your products different from competitors.
Differentiation must be valued by the customer.
Successful differentiation allows you to charge more for a product.
Stuck in the middle: It is difficult to simultaneously become differentiated and low cost.
Firms also choose to serve the entire market or focus on a few segments.
Focused low-cost: try to serve one segment of the market but be the lowest cost in that segment.
Cott Company seeks to achieve this in large retail chains.
Focused differentiated: Firm again seeks to focus on one market segment but is the most differentiated in that segment.
BMW provides a good example.
Low Cost
Differentiation
Strategy
Table 7.2
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19. Functional-level Strategies
Seeks to have each department add value to a good or service.
Marketing, service, production all add value to a good or service.
Value is added in two ways:
1. lower the operational costs of providing the value in products.
2. add new value to the product by differentiating.
Functional strategies must fit with business level strategies.
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20. Goals for Successful Functional Strategies
Attain superior efficiency as a measure of outputs for a given unit of input.
Attain superior quality by producing reliable products that do their intended job.
Attain superior innovation developing new and novel features that can be added to the product or process.
Attain superior responsiveness to customers by acknowledging their needs and fulfilling them.
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21. Implementation
Implementing strategy: managers must decide how to allocate resources between groups to ensure the strategy is achieved.
Assign responsibility
Draft action plans
Establish timetables
Allocate resources
Evaluate and measure
Time horizon: refers to how far in the future the plan applies.
Long-term plans are usually 5 years or more.
Intermediate-term plans are 1 to 5 years.
Corporate and business level plans specify long and intermediate term.
Short-term plans are less than 1 year.
Functional plans focus on short to intermediate term.
Most firms have a rolling planning cycle to amend plans constantly.
Standing plans: for programmed decisions.
Managers develop policies, rules, and standard operating procedures (SOP).
Policies are general guides to action.
Rules are a specific guide to action.
Single-use plans: developed for a one-time, nonprogrammed issue. Usually consist of programs and projects.
Programs: integrated plans achieving specific goals.
Project: specific action plans to complete programs.
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22. Levels and Types of Planning
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Figure 8.2

23. Scenario Planning Scenario Planning (Contingency Planning)
The generation of multiple forecasts of future conditions followed by an analysis of how to effectively respond to those conditions.
Planning seeks predict the future, but the future is unknowable.
By generating multiple possible “futures,” a firm can see how its plans might work in each and prepare for the possible outcomes.
Scenario planning is a learning tool to improve strategic planning results.
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24. Conclusion
Planning is a necessary managerial function regardless of your level in the organization.
Planning involves carefully designing a mission statement and identifying goals.
Strategy formulation is done through careful SWOT analysis at each business level.
Strategies must have an implementation plan in order for plans to be realized.
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