2. Planning Definition  defining the organization's goals  establishing an overall strategy  developing a hierarchy of plans to achieve goals

3. Formal vs. Informal  Informal - very little written down - objectives are rarely verbalized - small businesses  Formal - specific objectives are written down & made available to its members

4.  Because of the dynamic & unpredictable business environment, it is important that managers plan and plan well.

5. Reasons for Planning  1) Provides Direction - managers & non; greater co-operation  2) Reduces the impact of Change - forces managers to look ahead, anticipate change & develop appropriate responses  3) Minimizes waste & redundancy - wasteful and inefficient activities can be prevented  4) Sets standards to facilitate control - planning establishes objectives & in the controlling process, performance is compared against the objectives

6. Criticisms of formal Planning  1) Planning may create rigidity - may not take into account possible changes in environment; doesn't allow for flexibility  2) Formal planning reinforces success - success may breed failure in an uncertain environment ; successful plans may provide "false sense of security", generating more confidence than they deserve

7. Does Planning Improve Performance?  Studies have shown mostly positive financial results

8. Types of Planning  Strategic - apply to entire organization  - establish overall objectives  - long-term  Tactical - specify HOW the overall objectives are to be achieved  - short-term  Short Term Plans - less than 1 year  Long Term Plans - extend beyond 5 yr  *The greater the uncertainty, the more plans should be of the short-term as they allow for better flexibility to meet changing demands.

9.  Specific Plans - clearly defined objectives  Directional Plans - plans that identify general guidelines  ** When uncertainty is high and flexibility is needed directional plans are preferable.  Single-use plans - used to meet the needs of a particular or unique situation i.e. students planning a special event  Standing plan - ongoing, guides for actions that are performed repeatedly in an organization i.e. graduation exercises

10. The Strategic Management Process  A 9-step process which involves strategic planning, implementation & evaluation (senior management)  1) Identify current mission, objectives & strategies  mission statement - defines an organization's purpose (WHY)  next, company can develop objectives & strategies to achieve the business outcomes

11.  2) Analyze the environment  - in order to anticipate changes in environment  environmental scanning - screening large amounts of information to detect emerging trends i.e. Competitive intelligence  i.e. information on the actions of competitors, gov't legislation, preferences of customers, supply of labour (workers)

12. Steps 3,4,5 (external factors & internal resources)  3) Identify Opportunities & Threats - assess the + opportunities and - threats that face organization  ** What one organization sees as a threat may in fact be an opportunity for another company  4) Analyze the organization's resources - $, workers' skills

13.  5) Identify Strengths & Weaknesses  - once organization looks at internal resources it can determine the strengths & weaknesses of those resources. From this the organization will be able to identify its core competency (the strengths that will provide the company with a competitive edge)

14.  6) Reassess the organization's mission & objectives  Are they realistic?  Do they need to be modified?  If no changes are necessary, ready to begin next step  7) Formulate Strategies  - strategies need to be set for all levels in organization

15. The 4 Grand Strategies Theory  a) Growth  - attempts to increase the level of its operations (i.e. more employees, more sales revenues)  i) direct expansion  - does not involve other firms  ii) merger - 2 companies combine their resources to form a new company  iii) acquisition - when larger company buys smaller one & incorporates the acquired company's operations into its own

16.  b) stability strategy  - stays the same  c) retrenchment strategy  - organization reduces its size or sells off less profitable product lines  d) combination strategy  - the pursuit of 2 or more strategies i.e. one part of organization may be pursuing a growth strategy while another is retrenching

17.  8) Implement Strategies  - strategic plan is put into action  9) Evaluate Results  - How effective have the strategies been?  - What adjustments, if any, are necessary?