1. The Manager as a Planner and Strategist
chapter eight
The Manager as a Planner and Strategist
McGraw-Hill/Irwin
Contemporary Management, 5/e
Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved.

2. OVERVIEW OF PLANNING
Planning - The process of identifying and selecting appropriate goals and courses of action for an organization so it can reach its objectives. .

3. The Nature of the Planning Process
To perform the planning task, managers:
Establish where an organization is at the present time
Determine its desired future state
Decide how to move it forward to reach that future state
Q. Why should managers plan?

4. Why Should Managers Spend Time Planning?
Why Plan?
Helps managers be future-looking
Keeps managers focused on the org’s primary objectives
Action is more likely to happen when there’s a plan to follow
Necessary to give the org a sense of direction and purpose
Helps coordinate managers of the different functions and divisions of an organization
Potential Disadvantage - Takes time away from Organizing/Leading/Controlling .

5. Qualifications of Good Planners
1. Have lots of practical experience within their organization (ideally in different departments)
2. Can see the big picture, and don’t favor their main area
3. Have extensive knowledge in social, political, technical, and economic trends
4. Work well with others
5. Are good communicators .

6. Types of Planning Strategic planning
Done at the Top-levels of the organization
Long-range planning (1 – 20 years in the future)
Affects many parts of the organization.
Tactical planning
Done primarily by middle- to lower-level managers.
Short-range planning (1 year or less).
Concentrates on the formulation of functional plans.
Contingency plans
Gets the manager in the habit of being prepared and knowing what to do if something does go wrong.
McGraw-Hill/Irwin
© 2005 The McGraw-Hill Companies, Inc. All rights reserved.

7. Major Differences Between Strategic and Tactical Planning
Area of Difference Strategic Planning Tactical Planning
Individuals involved Developed mainly Developed mainly
by upper-level management by lower-level mgmt
Facts on which Facts are relatively Facts are relatively
to base planning difficult to gather easy to gather
Amount of detail Plans contain Plans contain
in plans relatively little detail substantial amounts
Length of time Plans cover Plans cover
plans cover long periods of time short periods of time

8. PLANNING AND LEVELS OF MANAGEMENT
Increase in planning time as manager moves
from lower-level to upper-level management .

9. The Three Stages in Planning
Figure 8.1

10. Planning Process Stages
Determine the Org’s Mission and Goals
Defining the organization’s overriding purpose (mission) and its goals (objectives).
Formulate strategy
Managers analyze current situation and develop the strategies needed to achieve the mission.
Implement strategy
Managers must decide how to allocate resources between groups to ensure the strategy is achieved.

11. First Stage in Planning: Develop a Mission Statement and Objectives
Mission Statement – Formal written statement laying out why an organization exists. It seeks to distinguish or differentiate the organization from its competitors .

12. Mission Statements The Importance of a Mission Statement:
Helps focus all employees in a common direction
Helps managers decide how to allocate resources
Helps managers identify the critical jobs to do
Helps establish the culture of an organization .

13. Three Mission Statements

14. ORGANIZATIONAL OBJECTIVES
Organizational Objectives (Goals) - Targets toward which management is directed
Objectives flow from the organization’s mission statement .

15. Some Types of Organizational Objectives
Profitability
Markets – Geographic or Customer type
Productivity
Product offerings
Physical facilities
Research and innovation
Human resources – Staffing, Training, Compensation
Social responsibility
McGraw-Hill/Irwin
© 2005 The McGraw-Hill Companies, Inc. All rights reserved.

16. Time Horizons of Objectives
Time Horizon - Period of time over which objectives are intended to apply or endure.
Long-term objectives are usually 5 years or more.
Intermediate-term objectives are 1 to 5 years.
Short-term objectives are less than 1 year.
Corporate and business-level goals and strategies require long- and intermediate-term plans.
Functional plans focus on short-to intermediate-term plans
Most organizations have a rolling planning cycle to amend plans constantly.

17. Establishing Quality Objectives -- S.M.A.R.T Objectives
Specific – Is it clear what needs to be done?
Measurable – Can success be measured?
Attainable – Is it fair?
Relevant – Is it in line with the org’s goals?
Time-sensitive – Does it state how long?
Can be used for High level organizational objectives (slide 18) or even for individual performance objectives.

18. S.M.A.R.T Objectives Used for Employee Performance
Example 1: Nordstrom shoe salesperson
Sell 150 pairs of men’s shoes per month during the 1st quarter of 2010
Specific – Is it clear what needs to be done?
Measurable – Can success be measured?
Attainable – Is it fair?
Relevant – Is it in line with the org’s goals?
Time-sensitive – Does it state how long?

19. SMART Objectives Exercise: Employee Performance Objectives
You are the manager of a new Krispy Kreme franchise in Charlotte, supervising all 10 employees of the store.
You need to develop performance objectives for all of your employees related to sales, customer treatment, employee professionalism, productivity, and profitability.
Your employees include bakers, packagers, cashiers, & assistant managers.
Your Assignment: Write 3 objectives for any combination of employees – 2 S.M.A.R.T. objectives and 1 “dumb” objective.
Indicate whether the objective is S.M.A.R.T. or dumb & who the employee is. It should look like this:
“Smart #1 – Baker – Blah Blah Blah”

20. The 2nd Stage in Planning – Formulate Strategy
Formulate Strategy: Managers work to develop the set of strategies (corporate, divisional, and functional) that will allow an organization to accomplish its mission and achieve its goals.

21. Corporate Strategies
Corporate strategies - Address which businesses an organization will be in and how resources will be allocated among these businesses.
Four types of Corporate Strategies:
Growth strategies - Used when the organization tries to expand, as measured by sales, product line, number of employees, or similar measures.
Stability (status quo) strategies - Used when the organization is satisfied with its present course.
Defensive (retrenchment) strategies - Used when a company wants or needs to reduce its operations.
Combination strategies - Used when an organization simultaneously employs different strategies for different parts of the company.
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© 2005 The McGraw-Hill Companies, Inc. All rights reserved.

22. Business Strategies
Business strategies - Focus on how to compete in a given business.
Three types:
Cost leadership
Usually attained through a combination of experience and efficiency.
Usually requires that the company develop some unique advantages over competitors.
Differentiation
Making product(s) unique to allow company to charge higher-than-average prices.
Aimed to build brand loyalty and lower sensitivity to prices.
Focus
Company directs its attention to a narrow market segment.
McGraw-Hill/Irwin
© 2005 The McGraw-Hill Companies, Inc. All rights reserved.

23. Functional Strategies
Functional strategies – aka “tactics”
Concerned with the activities of different functional areas of the business.
Narrower in scope than business strategies.
Primarily concerned with how-to issues.
Usually in effect for a relatively short period, often one year or less.
McGraw-Hill/Irwin
© 2005 The McGraw-Hill Companies, Inc. All rights reserved.

24. Formulating Strategy SWOT Analysis
A planning exercise in which managers identify:
internal organizational strengths and weaknesses.
Strengths (e.g., superior marketing skills)
Weaknesses (e.g., outdated production facilities)
external opportunities and threats.
Opportunities (e.g., entry into new related markets).
Threats (increased competition)

25. Global Expansion Strategies
Basic Question: To what extent do we customize products and marketing for different national conditions?
Global strategy - Undertaking very little customization to suit the specific needs of customers in different countries. “One size fits all”
Standardization provides for lower production cost.
Multi-domestic Strategy - Customizing products and marketing strategies to specific national conditions.
Helps gain local market share.
Raises production costs.

26. Going Global Key decisions before expanding overseas include:
Determining which foreign market(s) to enter
Analyzing the expenditures required
Deciding on the best strategy for doing business in each country:
Licensing
Franchising
Forming Joint Ventures
Opening Subsidiaries
Exporting
1. determine which foreign market(s) to enter – by conducting extensive research on local demand, availability of needed resources, and ability of local workforce,
2. analyze the expenditures required to enter a new market - including tariff rates, currency stability, investment barriers
3. decide on the best way to organize the overseas operations

27. Strategies for Reaching Global Markets
Licensing – granting the right to a foreign company to build your product or use your trademark for a fee
Pro’s
Earn fees with little/no investment or risk
Con’s
Don’t make revenues from product sales
When license expires, foreign firm may end up competing with your firm

28. Strategies for Reaching Global Markets
2. Franchising – When a company sells the right to use their business’s name and products to other business owners.
Pro’s
Earn fees and royalties with minimal costs
Sell supplies and equipment to the franchisee
Con’s
Don’t make direct revenues from product sales
Don’t fully control the management of operations

29. Strategies for Reaching Global Markets
3. Forming Joint Ventures – Companies form partnerships to operate a business together
Pro’s
May be the only way to have ownership in a foreign market
Can keep your fair share of profits
Con’s
One partner may be weaker than the other
Not all marriages are meant to be

30. Strategies for Reaching Global Markets
4. Opening Subsidiaries – Purchasing or starting a business, whereby you have full ownership
Pro’s
Company maintains complete control of operations
Get to keep all of the profits
Con’s
Huge risk in owning a business in another country (laws, politics, culture, infrastructure)

31. International Expansion
5. Exporting - making products at home and selling them abroad
Importing - selling at home products that are made abroad

32. The 3rd Step in the Planning Process – Implement the Strategy
Allocate implementation responsibility to the appropriate individuals or groups.
Draft detailed action plans for implementation.
Establish a timetable for implementation
Allocate appropriate resources
Hold specific groups or individuals responsible for the attainment of corporate, divisional, and functional goals.

33. Q. Why do plans fail?

34. WHY PLANS FAIL
Plans aren’t integrated into the overall company’s objectives/mission
There haven’t been contributions from enough of the right people
Planning is (wrongly) done solely by the planning department
Management underestimates the amount of effort necessary
Management fails to stick to the plan
Plans may be based on bad information .