Planning

and Strategic
Management
JEWEL JOANNA S. CABARDO

Department of Agribusiness Management and Entrepreneurship

College of Economics and Management
University of the Philippines Los Baňos
J.J.S. CABARDO. PLANNING AND DECISION MAKING 1
PLANNING AND GOALS
The most fundamental function of management – often referred to
as the primary management function
Goals and Plans
ØGoals are desired future state; statements of what an organization
wants to achieve
ØPlans are blueprints for meeting goals
• Specifies the resources, tasks, activities of organizations

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OVERVIEW OF PLANNING
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 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

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IMPORTANCE OF PLANNING
Planning defines an organization’s goals and the means for achieving
these goals
Purposes of goals and plans
◦ Give the organization legitimacy to its stakeholders
◦ Serve to motivate and increase commitment among employees
◦ Serve as roadmaps or guides to action – towards a targeted outcome
◦ Serve as basis for decision-making and reduces uncertainty of decisions
◦ Provide a set standard of performance or performance criteria
◦ Guide to resource allocation

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CHARACTERISTICS OF WELL-DEFINED GOALS
oWritten in terms of outcomes rather than actions
oMeasurable and quantifiable
oChallenging yet attainable
oClear as to the time frame
oCommunicated to all necessary organizational members
oWritten down
oCover key areas
oLinked to rewards

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LEVELS OF PLANNING
STRATEGIC PLAN OPERATIONAL PLAN
Covers the entire organization Covers specific units within
organizations
Sets unit or divisional
Sets overall organizational goals
organizational goals
Shorter time frame – less than 3
Longer time frame (over 3 years) years
Top Level Management Lower Level Management

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TACTICAL PLANNING & OPERATIONAL
PLANNING
§ Tactical Plans are 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 is the process of identifying the specific
procedures and processes required at lower levels of the
organization.

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ALIGNING DIFFERENT PLANNING
LEVELS

To be fully effective, the organization’s strategic,

tactical, and operational goals and plans must be
aligned
◦Consistent
◦Mutually supportive
◦Focused on achieving the common purpose and
direction
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PLANNING TYPES/APPROACHES
Management by Objectives
◦ Objective setting at different levels, units, individuals. Objectives
set is used as basis for performance
◦ Four MBO activities
◦ Goal setting – starts from the top up to the lowest level (goal specificity)
◦ Developing action plans/courses of action to meet the goals – participative
decision-making
◦ Reviewing progress
◦ Appraising overall performance – performance feedback

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PLANNING TYPES/APPROACHES
Single Use Plans
◦ Developed to achieve objectives that are not likely to be repeated
in the future – e.g. programs & projects
Standing Plans
◦ Used to provide guidance for tasks that are performed repeatedly
e.g. policies, rules, procedures
Contingency Plans
◦ Define scenarios or actions that are taken in cases of
emergencies.
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CONTINGENCY FACTORS IN PLANNING
o Level in organization – higher level do most strategic plan; lower
level do most operational plans
o Degree of environmental uncertainty – the more uncertain the
environment, the more flexible the plans should be. Plans should
be specific but flexible.
o Length of future commitments - plans should extend far enough to
meet those commitments when plans are developed
(commitment concept)

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CONTEMPORARY ISSUES IN PLANNING
o Criticism in planning – planning my create rigidity.
o Plans cannot be developed for dynamic environment.
o Formal plans cannot replace intuition and creativity.
o Planning focuses manager’s attention on today’s competition, not
on tomorrow’s survival.
o Formal planning reinforces success which may lead to failure.
o Just planning is not enough.

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STRATEGIC PLANNING DEFINED
§ A set of procedures for making decisions about the
organization’s long-term goals and strategies
§ Strategic goals are major targets or end results relating to
the organization’s long-term survival, value, and growth
§ Strategy is a pattern of actions and resource allocations
designed to achieve the organization’s goals

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STRATEGIC PLANNING
Historically strategic planning emphasized a top-down
approach—senior executives and specialized planning units
developed goals and plans for the entire organization
Today senior executives increasingly are involving managers
throughout the organization in the strategy formation
process

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STRATEGIC PLANNING
Strategic management – decisions and actions used to formulate and
implement strategies that provide a superior fit between the
organization and its environment to achieve organizational goals.
Management concern – strategically position the organization
within the environment

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IMPORTANCE OF STRATEGIC MANAGEMENT
Provides organizations with a unified mission and overall direction
Helps organizations to cope better in uncertain environments
Establishes a game plan or roadmap for organizations

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LEVELS OF STRATEGIES
Grand Strategy – general plan of action by which a firm achieves its
long-term objectives
Categories:
◦ Growth strategies:
◦ Intensive growth; integrative growth, diversification
◦ Stability strategy – pause strategy – maintain status quo or grow slowly
◦ Retrenchment (downsizing/rightsizing) – going through a period of forced
decline by shrinking or liquidating current businesses.

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STRATEGIC MANAGEMENT: STEP 1
Identification of organizational mission, goals and
strategies
◦ Mission is an organization’s basic purpose and scope of
operations
◦ Answers the question: “What is the reason for being in the
business”

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 STRATEGIC MANAGEMENT: STEP 1
◦ Mission
◦ States the organization’s values, aspirations and reason for existence
◦ Components of mission statements:
◦ Customers/markets
◦ Products/services
◦ Technology
◦ Corporate values
◦ Product quality
◦ Attitude toward employees
◦ Social responsibility

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CEBU PACIFIC MISSION
Why We Fly: Our ​Mission
"Why everyone flies.​" ​ ​
Cebu Pacific brings people together through safe, affordable, reliable, and fun-filled air
travel.
We are committed to innovation and excellence in everything we do.
We are an employer of choice providing opportunities for professional and personal
growth.
We have a deep sense of family values throughout our airline.
We enhance the quality of life of the communities we serve and are an active partner in
our nation's progress.
We offer our shareholders a fair return on their investments..

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Cebu Pacific Vision

The most successful low-cost carrier in

the world​​

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STRATEGIC MANAGEMENT: STEP 2
External Environment Analysis
◦Managers should examine forces in the environment, such
as macroeconomic conditions and industry environment
◦One critical task is forecasting future trends
◦Opportunities and threats should also be identified
◦ Opportunities – positive trends in the external environment
◦ Threats – negative trends in the external environment

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STRATEGIC MANAGEMENT: STEP 3
Internal Environment Analysis
◦This kind of internal analysis provides strategic decision
makers with an inventory of the organization’s existing
functions, skills, and resources as well as its overall
performance level
◦This step will also include looking at the firms resources
and core competencies
◦A final area may include benchmarking with other firms

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STRATEGIC MANAGEMENT: STEP 3
Strengths and weaknesses are identified through evaluation of resources
and organizational capabilities.
• Resources – assets used by an organization to develop, manufacture &
deliver products or services to their customers
• Capabilities – skills and abilities in doing work activities needed in their
business.
• Strengths – what an organization does well or any unique resources
that it has.
• Weakness – what an organization does not do well, and resources that
are lacking

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STRATEGIC MANAGEMENT: STEP 4
SWOT Analysis and Strategy Formulation
◦By completing steps 2 and 3 managers will be able to
analyze the companies strengths, weaknesses,
opportunities and threats (SWOT)
◦Once the SWOT has been completed management will be
able to begin to formulate a strategy

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STRATEGIC MANAGEMENT: STEP 5
Formulation of Strategies
◦Corporate Strategies – determines what businesses the
company is in, should be in, wants to be in & what it
wants to do with those businesses.
◦Business Strategies – major actions of a business to
compete in a particular industry or market.
◦Functional strategies – strategies adopted by each
functional area in the organization

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CORPORATE STRATEGY
o Concentration - A strategy employed for an organization that
operates a single business and competes in a single industry
o Concentric Diversification - A strategy used to add new
businesses that produce related products or are involved in
related markets and activities
o Vertical Integration - The acquisition or development of new
businesses that produce parts or components of the
organization’s product

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BUSINESS STRATEGY
Low-cost Strategy is a strategy that an organization uses to build
competitive advantage by being efficient and offering a standard, no
frills product.
Differentiation Strategy is a strategy that an organization uses to
build competitive advantage by being unique in its industry or
market segment along one or more dimensions.

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FUNCTIONAL STRATEGIES
o Designed and implemented in the different business
functions - marketing, production, personnel, finance
o Supports the business level strategies
o Strategies implemented by functional departments
o Examples are pricing and promotion strategies by the
marketing department; use of innovation and automation
by the production department

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 STRATEGIC MANAGEMENT: STEP 6
Implementation
There are two major trends related to implementation
◦ Organizations are adopting a more comprehensive view of
implementation
◦ Managers at all levels of the organization are being involved with
the implementation process
Implementation generally involves four related steps
◦ Define strategic tasks
◦ Assess organization capabilities
◦ Develop an implementation agenda
◦ Create an implementation plan
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STRATEGIC MANAGEMENT: STEP 7
Strategic Control
◦ A system designed to support managers in evaluating the
organization’s progress regarding its strategy and, when
discrepancies exist, taking corrective action
◦ The organization must develop performance indicators, an
information system, and specific mechanisms to monitor progress
◦ Normally includes a budget

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STRATEGIC MANAGEMENT AND TODAY’S
ORGANIZATION
Need for strategic flexibility – the ability to recognize
major external environmental changes, to quickly commit
resources and to recognize whether a strategic decision is
not working.
Important strategies of today’s organization
◦ eBusiness strategies
◦ Customer service stragies
◦ Innovative strategies

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Classic Strategy vs. Adaptive Strategy

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PLANNING TOOLS AND TECHNIQUES
◦Techniques for assessing the environment
◦Environmental Scanning
◦Forecasting
◦Competitor Intelligence
◦Benchmarking

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PLANNING TOOLS AND TECHNIQUES
Techniques for Allocating Resources
◦ Budgeting
◦ Budget is a numerical plan for allocating resources to specific
activities

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PLANNING TOOLS & TECHNIQUES
Techniques for allocating resources continued…
◦Scheduling
◦Gantt Charts – schedule of activities
◦Load Charts - list entire departments or specific
resources for capacity utilization

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PLANNING TOOLS & TECHNIQUES
PERT (Program Evaluation Review Technique) Network
analysis
◦PERT network is a flowchart diagram that depicts the
sequence of activities needed to complete a project and
time or costs associated with each activity.
◦Break-even analysis – used to determine break-even point
◦Linear programming – used for resource allocation
problem

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CONTEMPORARY PLANNING TECHNIQUES
Project Management
◦ Task of getting a project’s activities done on time, within budget
and according to specifications.
Scenario Planning
◦ Can also be described as contingency planning
◦ Likely future actions and events or “scenarios” are determined and
evaluated.

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Decision-making Process
1. Identification of a Problem
2. Identification of Decision Criteria
3. Allocation of Weights to Criteria
4. Development of Alternatives
5. Analysis of Alternatives
6. Selection of an Alternative
7. Implementation of the Alternative
8. Evaluating Decision Effectiveness
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REFERENCES
Mojica, L.E. Lecture Notes. 2016.
Robbins, Stephen & Mary Coulter. Management. 9th ed. Prentice
Hall. 2007.
Bateman, Thomas & Scott A. Snell. Management: Leading and
Collaborating in a Competitive World. 7th ed. McGraw Hill. 2007.
Daft, Richard L. Management. 6th ed. Thomson. 2003.
Bartol Kathryn M. & David Martin. Management. 3rd ed. McGraw
Hill. 1998.

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