1. PLANNING & STRATEGIC MANAGEMENT Chapter 10 Management Mrs. A
WHAT IS THE PLANNING PROCESS? Section 10.1
THE STRATEGIC MANAGEMENT PROCESS Section 10.2

2. WHY PLAN?? Section 10.1 The Internet!
To decide the company’s goals and ways to achieve those goals.
Prepares businesses for changes and crisis situations.
What is an example of a technological change businesses have had to adapt to? Hint: You probably use it every day to obtain and receive information.
The Internet!
Planning is the process that businesses use to decide the company’s goals for the future and ways to achieve those goals.
Change is inevitable i.e.. The change from profit max to trustee management to social responsibility in business ethics CH 4
Internet – Businesses can’t ignore the consumer base that shop on the net, so change the way they do business, start a dot com, catalogs on internet, buy and sell on net

3. EFFECTIVE PLANNING
Effective managers encourage employees to participate in planning. WHY?
Get employee buy-in
Employees have a better understanding of the company overall.
Employees feel they are part of the process and become committed to the plan.
Positive participation and pro-company attitudes of employees improved morale and loyalty to the organization.
How do you get employee buy in? Take employee input, ask for employee participation on planning teams
Why get employee buy in? More apt to accept the new goals, they are part of the decision making process, they are included.
Improve morale and loyalty to the company.
Example: Worked in ER, needed to get a new curtains to divide patients. My boss ordered striped ones. Catastrophe!!! Nurses very upset they didn’t get to pick the colors of the curtains.
Current laws and new technologies.
Formal Planning – study the issue and prepare a document on how to solve it. Short – 1 year, Long – 3-5 and/or up to 20 years
Intermediate – Between short and long, 1-3 yrs or 1-5 yrs.
Operational – short range planning focusing on forming ideas for dealing with specific function in the company, such as a new product.
Strategic – Long range planning done by Top level managers

4. FORMAL PLANNING IS…
A systematic study of an issue and the preparation of a written document to deal with the problem.
Short Range Plans
Long Range Plans
Intermediate Plans

5. OPERATIONAL VERSUS STRATEGIC PLANS
Operational Planning is…
Short range planning that focuses on forming ideas for dealing with a specific function in the company, such as the production of new products.
Strategic Planning is…
Long range planning done by the highest management levels in the company.

6. LEVELS OF STRATEGIES Grand or Corporate Strategies Business Strategies
What is a Strategy?
An outline of the basic steps management is going to take to achieve a goal.
3 levels of Strategies
Grand or Corporate Strategies
4 types
Business Strategies
3 types
Functional Strategies
5 types
What is a strategy? – outline of the basic steps management is going to take to achieve a goal.
1. Grand or corporate strategies – deals with the most important aspects of the company’s operations, the whole company.
What will be produced
# of employees
Salaries
Marketing
A. Growth – Expand sales, products or # of employees
Concentration – extend sale of current product
Vertical Integration – buy supplies
Diversification – similar bs with new products or services
B. Stability- operate at same level for years In non-changing environments.
C. Retrenchment – Losing # defensive strategy Plan to reverse negative trend
1. Turnaround – reduce costs
2. Divestiture- sell off portions of the company
3. Liquidation - sell off company
D. Combination Strategy – combo of 1-3
2. Business Strategies – Affect one to two departments
A. Overall Cost Leadership – produce and deliver a product at the lowest cost to beat out a competitor
B. Differentiation – make product unique
C. Focus – focus marketing and sales on one small section of the market
3. Functional - Short range operational plan that emphasizes practical implementation
A. Sales and Marketing
B. Production
C. Financial
D. R&D
E. Personnel

7. Grand Strategies
These strategies provide overall direction for the company.
Growth
Concentration
Vertical
Diversification
Stability
Retrenchment
Turnaround
Divestiture
Liquidation
Combination

8. Business Strategies
These types of strategies only affect one or two departments.
Overall Cost Leadership
Differentiation
Focus

9. Functional Strategies
These strategies are short-range operational plans that support business strategies.
Sales and Marketing
Production
Financial
Research and Development
Personnel

10. STRATEGIC MANAGEMENT PROCESS Section 10.2
What is Strategic Management?
Applying the planning process created by the top level managers.
3 Phases:
Formulation
Implementation
Evaluation
Strategic Management is the application of the planning process of the top level managers.
Strategic Plans
Three phases of Strategic Management Approach:
Formulate the Strategic Plan
Implementation of plan
Evaluation

11. STRATEGIC MANAGEMENT APPROACH
3 Phases of the Strategic Management Approach
1. Formulation – obtaining a clear understanding of the current position of the company.
Mission Statement
Identify and diagnose past and present strategies
Diagnosing past and present performance
Setting goals
Policies, procedures and rules
SWOT Analysis
Formulation: create the grand and business strategies to be used by the company
Mission Statement – outlines why the company exists, what is its purpose, and its objectives (what it wants to do) Sets a standard for the company
Goals – concise statements that provide direction for the employees and set standards for achieving the company’s strategic plan
Policies, procedures and rules –
1. Policies – broad general guides to action that establish boundaries within which employees must operate.
2. Procedures – Detailed series of related steps or tasks written to implement a policy
3. Rules – detail specific and definite corporate actions that employees must follow
SWOT Analysis – overall health of a company Internal) Strengths Weaknesses and External) Opportunities and Threats

12. STRATEGIC MANAGEMENT APPROACH (cont.)
2. Implementation
Taking Action
Making changes
3. Evaluation – “Post-Mortem Review”
Monitoring the company’s progress toward long-term goals
Basic Strategic Evaluation Activities
Reviewing External and Internal factors
Measuring performance
Taking corrective action
Implementation. Action stage of strategic management
VE 135 form – asked about how many students have taken more than 1 business course

13. SUMMARY Change is inevitable, be ready for it!
Planning and Strategic Management are vital to the survival and growth of a business.
Even more important is individual planning and strategic management for your life.
Planning enables you to set goals to strive toward. It gives you direction and purpose.
Change is inevitable, be ready for it!