Planning Process & Organizational Responsibility- DQ

User Generated

XPnyynjnl40

Business Finance

Description

DQ#1 - Planning  Process 

What are the steps in the planning process? Which step is the most crucial? Why?


DQ#2- Organizational Responsibility

 What role does organizational responsibility and ethics play in the planning process in your organization? Explain.


Management_9e_Ch04.pdf  

Management_9e_Ch05 (1).pdf 


NOTE: There is no specific word count, and they do not need to be in APA Format. 

Unformatted Attachment Preview

P ART TWO PLANNING: DELIVERING STRATEGIC VALUE chapter 4 “ Planning and Strategic Management Manage your destiny, or someone else will. ” — Jack Welch, former CEO, General Electric LEARNING OBJECTIVES CHAPTER OUTLINE After studying Chapter 4, you will be able to: An Overview of Planning Fundamentals The Basic Planning Process LO 1 Summarize the basic steps in any planning process. p. 126 LO 2 Describe how strategic planning should be integrated with tactical and operational planning. p. 130 LO 3 Identify elements of the external environment and internal resources of the firm to analyze before formulating a strategy. p. 137 LO 4 Define core competencies and explain how they provide the foundation for business strategy. p. 140 LO 5 Summarize the types of choices available for corporate strategy. p. 145 LO 6 Discuss how companies can achieve competitive advantage through business strategy. p. 148 LO 7 Describe the keys to effective strategy implementation. p. 150 Levels of Planning Strategic Planning Tactical and Operational Planning Aligning Tactical, Operational, and Strategic Planning Strategic Planning Step 1: Establishment of Mission, Vision, and Goals Step 2: Analysis of External Opportunities and Threats Step 3: Analysis of Internal Strengths and Weaknesses Step 4: SWOT Analysis and Strategy Formulation Step 5: Strategy Implementation Step 6: Strategic Control Management Close-Up WHAT STRATEGIES CAN OLLI-PEKKA KALLASVUO USE TO KEEP NOKIA RINGING UP PROFITS? Nokia CEO Olli-Pekka Kallasvuo should have plenty of when it comes to smart phones in North America, both reasons to be happy these days. More than a billion reaApple’s iPhone and Research in Motion’s BlackBerry sons, you might say. Finland-based Nokia is the world’s models eclipse Nokia. Nokia’s strong overall position leading cell phone maker, and more than 1 billion peomay more than offset its lesser market share in the ple use its phones. Nokia leads the market in Europe, United States and Canada, but in the wireless world no Asia, the Middle East, and manufacturer can afford to be Africa, selling more than its top off its game. Wireless communication and the three competitors combined. Industry observers regarded Internet have transformed how the world In addition, the company reguNokia’s 2006 decision not to communicates, and new technologies larly wins praise from Greenproduce folding clamshell handare emerging almost daily. As you read peace and Fortune magazine for sets as a strategic error. Then this chapter, consider how Olli-Pekka its environmentally responsible in 2007 Apple made a splash Kallasvuo needs to bring a different kind practices. with the iPhone’s alphabetic of discipline to the planning at Nokia. However, Nokia doesn’t touch screen—a feature not have bragging rights in North available in Nokia phones. America. Although it posted worldwide sales of $74 When Google announced advancements in software billion in a recent year, Nokia has yet to capture the that would bring Internet capability to cell phones, hearts and wallets of U.S. and Canadian consumers. Nokia reacted coolly at first. How would the resulting Nokia’s high-end models with satellite mapping features buzz about convergence—the marriage of cell phone do well in Europe and Asia, and in developing countries mobility and Internet capability—influence the way its low-end phones have been wildly successful. But Nokia plans for the future?1 { } 126 Part Two Planning: Delivering Strategic Value To imagine cell phone giant Nokia—or any organization—dealing with the significant challenges it faces without developing a plan beforehand is almost impossible. Planning is a formal expression of managerial intent. It describes what managers decide to do and how they will do it. It provides the framework, focus, and direction required for a meaningful effort. Without planning, any improvements in an organization’s innovation, speed, quality, service, and cost will be accidental, if they occur at all. This chapter examines the most important concepts and processes involved in planning and strategic management. By learning these concepts and reviewing the steps outlined, you will be on your way to understanding the current approaches to the strategic management of today’s organizations. An Overview of Planning Fundamentals The importance of formal planning in organizations has grown dramatically. Until the mid-1900s, most planning was unstructured and fragmented, and formal planning was restricted to a few large corporations. Although management pioneers such as Alfred Sloan of General Motors instituted formal planning processes, planning became a widespread management function only during the last few decades. Initially, larger organizations adopted formal planning, but today even small firms operated by aggressive, opportunistic entrepreneurs engage in formal planning.2 Planning is the conscious, systematic process of making decisions about goals and activities that an individual, group, work unit, or organization will pursue in the future. Planning is not an informal or haphazard response to a crisis; it is a purposeful effort that is directed and controlled by managers and often draws on the knowledge and experience of employees throughout the organization. Planning provides individuals and work units with a clear map to follow in their future activities; at the same time this map may be flexible enough to allow for individual circumstances and changing conditions. LO 1 The Basic Planning Process Because planning is a decision process—you’re deciding what to do and how to go about doing it—the important steps followed during formal planning are similar to the basic decision-making steps we discussed in Chapter 3. Figure 4.1 summarizes the similarities between decision making and planning—including the fact that both move not just in one direction but in a cycle. The outcomes of decisions and plans are evaluated, and if necessary, they are revised. We now describe the basic planning process in more detail. Later in this chapter, we will discuss how managerial decisions and plans fit into the larger purposes of the organization—its ultimate strategy, mission, vision, and goals. situational analysis A process planners use, within time and resource constraints, to gather, interpret, and summarize all information relevant to the planning issue under consideration. Step 1: Situational Analysis As the contingency approach advocates, planning begins with a situational analysis. Within their time and resource constraints, planners should gather, interpret, and summarize all information relevant to the planning issue in question. A thorough situational analysis studies past events, examines current conditions, and attempts to forecast future trends. It focuses on the internal forces at work in the organization or work unit and, consistent with the open-systems approach (see Chapter 2), examines influences from the external environment. The outcome of this step is the identification and diagnosis of planning assumptions, issues, and problems. A thorough situational analysis will provide information about the planning decisions you need to make. For example, if you are a manager in a magazine company considering the launch of a sports publication for the teen market, your analysis will include such factors as the number of teens who subscribe to magazines, the appeal of the teen market to advertisers, your firm’s ability to serve this market effectively, Planning and Strategic Management Chapter 4 General decision-making stages Specific formal planning steps Identifying and diagnosing the problem Situational analysis Generating alternative solutions Alternative goals and plans Evaluating alternatives Goal and plan evaluation Making the choice Goal and plan selection Implementing Implementation Evaluation Monitor and control 127 FIGURE 4.1 current economic conditions, the level of teen interest in sports, and any sports magazines already serving this market and their current sales. Such a detailed analysis will help you decide whether to proceed with the next step in your magazine launch. Decision-Making Stages (Chapter 3) and Formal Planning Steps (Chapter 4) Step 2: Alternative Goals and Plans Based on the situational analysis, the planning process should generate alternative goals that may be pursued in the future and the alternative plans that may be used to achieve those goals. This step in the process should stress creativity and encourage managers and employees to think in broad terms about their jobs. Once a range of alternatives has been developed, the merits of these different plans and goals will be evaluated. Continuing with our magazine publishing example, the alternatives you might want to consider could include whether the magazine should be targeted at young men, young women, or both groups, and whether it should be sold mainly online, through subscriptions, or on newsstands. Goals are the targets or ends the manager wants to reach. To be effective, goals should have certain qualities, which are easy to remember with the acronym SMART: Specific—When goals are precise, describing particular behaviors and outcomes, employees can more easily determine whether they are working toward the goals. Measurable—As much as possible, the goal should quantify the desired results, so that there is no doubt whether it has been achieved. Attainable (but challenging)—Employees need to recognize that they can attain the goals they are responsible for, or else they are likely to become discouraged. However, they also should feel challenged to work hard and be creative. Relevant—Each goal should contribute to the organization’s overall mission (discussed later in this chapter), while being consistent with its values, including goal A target or end that management desires to reach. 128 Part Two Planning: Delivering Strategic Value ethical standards (see Chapter 5). Goals are most likely to be relevant to the organization’s overall objectives if they are consistent within and among work groups. Time-bound—Effective goals specify a target date for completion. Besides knowing what to do, employees should know when they need to deliver results. General Electric’s goal of being first or at least second in all its markets is a wellknown example of a goal that is specific, measurable, and challenging. SMART goals such as these not only point individual employees in the direction they should be going but also tend to be accepted by the managers and employees who are charged with achieving them. Thus, they both direct employees and motivate them (for more on the importance of motivation, see Chapter 13). plans Plans are the actions or means the manager intends to use to achieve goals. At a minimum, planning should outline alternative actions that may lead to the attainment The actions or means of each goal, the resources required to reach the goal through those means, and the managers intend to use to obstacles that may develop. IBM has goals to increase its profits, and the fastest-growing achieve organizational goals. area of growth is in software. To meet profit goals, the software unit acquires existing software companies that have high-potential products but lack the means to promote The bottom line them aggressively enough. IBM’s software group, under the leadership of Steve Mills, Service plans how its giant sales force will sell the new products. Those plans include training Contingency plans that the salespeople in what the new software does and how it can help IBM’s clients. To keep service levels high improve the effectiveness of the sales force, the software group planned a selling sys3 during a crisis can seal a tem for categorizing and keeping track of each salesperson’s leads. In this chapter we will talk about various types of plans. Some plans, called contincompany’s reputation for caring about customers. But gency plans, might be referred to as “what if ” plans. They include sets of actions to be this commitment requires taken when a company’s initial plans have not worked well or if events in the external highly dedicated and creative environment require a sudden change. Disasters of recent years, including the 2001 employees, and access to the terrorist attacks and Hurricanes Katrina and Rita, have reminded many businesses necessary resources can how important contingency planning can be. be expensive. Managers must Most major corporations now have contingency plans in place to respond to a major decide how crucial service is disaster—to make sure vital data are backed up and can be recovered in an emergency, to their strategy—and how willing customers will be to for instance, or that employees know what to do when a crisis occurs. But contingency forgive them for service lapses plans are important for more-common situations as well. For example, many busiunder pressure. nesses are affected by snowstorms, increases in gasoline prices, computer breakdowns, or changes in consumer tastes. JetBlue initially achieved success as an airline that would “bring humanity back to air travel” by caring about its customers and employees. But the airline was humiliated by its inability to cope with a February snowstorm during which at least one plane notoriously sat on a runway for 10 hours; Are small companies prepared?4 the company took days to recover, canceling a thousand flights.5 Step 3: Goal and Plan Evaluation Next, managers will Companies who report having a disasterpreparedness plan 58% No disasterpreparedness plan 42% evaluate the advantages, disadvantages, and potential effects of each alternative goal and plan. They must prioritize those goals and even eliminate some of them. Also, managers will consider carefully the implications of alternative plans for meeting highpriority goals. In particular, they will pay a great deal of attention to the cost of any initiative and Planning and Strategic Management Chapter 4 129 the investment return that is likely to result. In our magazine publishing example, your evaluation might determine that newsstand sales alone wouldn’t be profitable enough to justify the launch. Perhaps you could improve profits with an online edition supplemented by Podcasts. To decide, you would estimate the costs and expected returns of such alternatives, trying to following the decision steps advised in Chapter 3. Step 4: Goal and Plan Selection Once managers have assessed the various goals and plans, they will select the one that is most appropriate and feasible. The evaluation process will identify the priorities and trade-offs among the goals and plans. For example, if your plan is to launch a number of new publications, and you’re trying to choose among them, you might weigh the different up-front “Most discussions of decision making assume that only senior executives make investment each requires, the size decisions or that only senior executives’ decisions matter. This is a dangerous of each market, which one fits mistake.” best with your existing product Peter Drucker line or company image, and so on. Experienced judgment always plays an important role in this process. However, as you will discover later in the chapter, relying on judgment alone may not be the best way to proceed. Typically, a formal planning process leads to a written set of goals and plans that are appropriate and feasible for a particular set of circumstances. In some organizations, the alternative generation, evaluation, and selection steps generate planning scenarios, as discussed in Chapter 2. A different contingency plan is attached to each scenario. The manager pursues the goals and implements the plans associated with the most likely scenario. However, the manager will also be prepared to switch to another set of plans if the situation changes and another scenario becomes relevant. This approach helps the firm anticipate and manage crises and allows greater flexibility and responsiveness. The Hard Rock Café carries its strategy—to be identified with rock ‘n’ roll—through to its hotel signs. If a company hasn’t already considered relevant scenarios, managers have to be prepared to restart the planning process when an unexpected change brings disappointing results. This flexible approach to planning can help a company survive and even thrive in a turbulent environment. For example, when the economy recently took a downturn, major clients stopped calling on Cor Business, a management coaching firm, for help in developing their managers. Jeffrey Hull and the other partners of Cor Business realized their firm’s survival required a new plan for bringing in business. The partners brainstormed ideas for a new business plan. Looking over the prior year’s results, they noticed that most of Cor Business’s growth that year had come from small businesses, even though the partners had been directing most of their energy toward large companies like MasterCard and AT&T. As a matter of fact, as the economy had slowed, more and more nervous small-business owners had been looking for help from their firm. scenario A narrative that describes a particular set of future conditions. 130 Part Two Planning: Delivering Strategic Value Hull and the other partners drew up a new plan in which they would focus on serving small clients, helping them do what Cor Business’s managers were doing—move beyond their fear of change to find new opportunities in challenging times. Hull counseled the owner of a real estate investment company to set aside his fears about the real estate downturn, reevaluate his data on the prospects for converting a warehouse into a restaurant, and go ahead with plans for what was in fact a well-researched, practical idea.6 The bottom line COST Tying plans to a firm’s financials is a key element of success. Step 5: Implementation Once managers have selected the goals and plans, they must implement the plans designed to achieve the goals. Even the best plans are useless if they are not implemented properly. Managers and employees must understand the plan, have the resources to implement it, and be motivated to do so. Including employees in the previous steps of the planning process paves the way for the implementation phase. As we mentioned earlier, employees usually are better informed, more committed, and more highly motivated when a goal or plan is one that they helped develop. Finally, successful implementation requires a plan to be linked to other systems in the organization, particularly the budget and reward systems. If the manager does not have a budget with financial resources to execute the plan, the plan is probably doomed. Similarly, goal achievement must be linked to the organization’s reward system. Many organizations use incentive programs to encourage employees to achieve goals and to implement plans properly. Commissions, salaries, promotions, bonuses, and other rewards are based on successful performance. At Wells Fargo, Chairman of the board Dick Kovacevich saw that the bank—one of the nation’s largest—could stay competitive by excelling at “cross-selling,” the practice of encouraging the bank’s existing customers to use more of its financial services. Bank customers typically go to different institutions for different services, but Wells Fargo beat the odds by getting employees at all levels to focus on customer needs, rather than product lines. Tellers and branch managers receive training aimed at this goal, and pay systems reward employees for cross-selling. As a result, Wells Fargo customers use an average of 5.2 of the bank’s products, roughly double the average for the industry. Selling to existing customers is much more profitable than winning new ones, so this strategy might seem obvious. Perhaps it is, but Wells Fargo board member Robert Joss says, “It’s simple in concept but very hard in execution,” adding that this successful implementation reflects Kovacevich’s “great capacity to motivate people.”7 Step 6: Monitor and Control Although it is sometimes ignored, the sixth step in the formal planning process—monitoring and controlling—is essential. Without it, you would never know whether your plan is succeeding. As we mentioned earlier, planning works in a cycle; it is an ongoing, repetitive process. Managers must continually monitor the actual performance of their work units against the unit’s goals and plans. They will also need to develop control systems to measure that performance and allow them to take corrective action when the plans are implemented improperly or when the situation changes. In our magazine publishing example, newsstand and subscription sales reports are essential for letting you know how well your new magazine launch is going. If subscription sales aren’t doing as well as expected, you may need to revise your marketing plan. We will discuss the important issue of control systems in greater detail later in this chapter and in Chapter 16. Levels of Planning LO 2 In Chapter 1 you learned about the three major types of managers: top-level (strategic managers), middle-level (tactical managers), and frontline (operational managers). Because planning is an important management function, managers at all three levels Planning and Strategic Management use it. However, the scope and activities of the planning process at each level of the organization often differ. Strategic Planning Strategic planning involves making decisions about the organization’s long-term goals and strategies. Strategic plans have a strong external orientation and cover major portions of the organization. Senior executives are responsible for the development and execution of the strategic plan, although they usually do not formulate or implement the entire plan personally. Strategic goals are major targets or end results that relate to the long-term survival, value, and growth of the organization. Strategic managers—top-level managers— usually establish goals that reflect both effectiveness (providing appropriate outputs) and efficiency (a high ratio of outputs to inputs). Typical strategic goals include growth, increasing market share, improving profitability, boosting return on investment, fostering both quantity and quality of outputs, increasing productivity, improving customer service, and contributing to society. Organizations usually have a number of mutually reinforcing strategic goals. For example, a computer manufacturer may have as its strategic goals the launch of a specified number of new products in a particular time frame, of higher quality, with a targeted increase in market share. Each of these goals supports and contributes to the others. A strategy is a pattern of actions and resource allocations designed to achieve the goals of the organization. An effective strategy provides a basis for answering five broad questions about how the organization will meet its objectives: (1) Where will we be active? (2) How will we get there (e.g., by increasing sales or acquiring another company)? (3) How will we win in the marketplace (e.g., by keeping prices low or offering the best service)? (4) How fast will we move and in what sequence will we make changes? (5) How will we obtain financial returns (low costs or premium prices)?8 In setting a strategy, managers try to match the organization’s skills and resources to the opportunities found in the external environment. Every organization has certain strengths and weaknesses, so the actions, or strategies, the organization implements should help build on strengths in areas that satisfy the wants and needs of consumers and other key factors in the organization’s external environment. Also, some organizations may implement strategies that change or influence the external environment, as discussed in Chapter 2. Tactical and Operational Planning Once the organization’s strategic goals and plans are identified, they serve as the foundation for planning done by middle-level and frontline managers. As you can see in Figure 4.2, goals and plans become more specific and involve shorter periods of time as they move from the strategic level to the tactical level and then to the operational level. A strategic plan will typically have a time horizon of from three to seven years— but sometimes even decades, as with the successful plan to land a probe on Titan, Saturn’s moon. Tactical plans may have a time horizon of a year or two, and operational plans may cover a period of months. Chapter 4 131 strategic planning A set of procedures for making decisions about the organization’s long-term goals and strategies. The Chicago Sun-Times and the Chicago Tribune are the only two major daily newspapers that remain in Chicago, a city of 3 million. Both papers are in serious trouble from declining circulation and poor advertising revenues. What kind of new strategy do you think would help to ensure the survival of these two organizations? strategic goals Major targets or end results relating to the organization’s long-term survival, value, and growth. strategy A pattern of actions and resource allocations designed to achieve the organization’s goals. 132 Part Two Planning: Delivering Strategic Value Strategic Tactical FIGURE 4.2 Hierarchy of Goals and Plans tactical planning A set of procedures for translating broad strategic goals and plans into specific goals and plans that are relevant to a distinct portion of the organization, such as a functional area like marketing. operational planning The process of identifying the specific procedures and processes required at lower levels of the organization. Operational Managerial Level Level of Detail Time Horizon Top Low Long (3–7 years) Middle Medium Medium (1–2 years) Frontline High Short (
Purchase answer to see full attachment
User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service.

Explanation & Answer


Anonymous
Awesome! Made my life easier.

Studypool
4.7
Trustpilot
4.5
Sitejabber
4.4

Related Tags