CHAPTER 5.

PLANNING

NỘI DUNG KIẾN THỨC

1. What is planning
- Definition
- Outcomes: 3
- Importance of planning: 4 reasons
2. Outcome 1: GOAL
- Definition
- Types: According to Time / Aim / Function / Level
- Characteristics of a good goal SMART + WC
- Two ways to set up goals: Traditional + MBO
3. Outcome 2: PLAN
- Types: According to Time / Breadth of use / Specificity / Frequency of use
- Business plan
4. Outcome 3: STRATEGY
- Definition
- Strategic management process: 6 steps
- Strategic management analysis tool: SWOT matrix
- Value chain model
- Level of strategies (BCG matrix is used in the Corporate level)

CHI TIẾT BÀI GIẢNG VÀ BÀI TẬP TRÊN LỚP

1. WHAT IS PLANNING
a. Definition
- Planning is often called the the primary management function because it establishes the basis for
all the other things managers do.
- It’s concerned with ends (what is to be done) as well as with means (how it is to be done)

E1. FILL IN THE BLANK

1. Planning is a (1) ________ process of (2) ________ up the goals, (3) ________ strategies
and (4) ________ plans to achieve the goals.
2. Planning includes the answer for (5) ________.

b. Outcomes of planning:
- Goals (most important)
- Plans
- Strategies
c. Importance of planning

E2. WHY IS PLANNING IMPORTANT?

_____________________________________________________________________________
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_____________________________________________________________________________
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2. GOALS
a. Definitions

E3. FILL IN THE BLANK

1. Goal is the ______ (1) outcomes of ______ (2), _____ (3), and _______ (4).
2. Goal is the ______ (5) for other items of planning.

b. Types of goals
- According to TIMEFRAME:
Short-term goal (< 1 year) >> Mid-term goal (1 - 3 years) >> Long-term goal (> 3 years)
- According to AIMS:
+ Stated goals: Official statements of what an organization says, and wants its stakeholders to
believe, its goals are.
+ Real goals: Those goals an organization actually pursues as shown by what the organization’s
members are doing

E4. ANSWER THE QUESTIONS

1. What is the real goal of all enterprises?
____________________________________________________________________________

2. Why do firms need stated goals?

____________________________________________________________________________
____________________________________________________________________________

- According to FUNCTION:
Marketing goal / HR goal / Financial goal /…
- According to LEVEL:
Organizational goals >> Departmental goals >> Group goals >> Individual goals

c. Characteristics of a good goal

S M A R T W C
Specific Measurable Achievable Relevant Timebound Written down Challenging

Know Progress made Be sure the Be sure the Set time limits
exactly towards the set goal is goal is
what you goals must be something you something you
want to measureable have the ability can do and
achieve to accomplish within the
desired time

E5. APPLY SMART AND WC TO FIX THE FOLLOWING GOALS

1. I will study better.
____________________________________________________________________________
2. Our company will be the best.
____________________________________________________________________________
3. Answer the customers as soon as possible.
 ____________________________________________________________________________

d. Two ways of setting up goals

- Traditional goal setting:
+ Goals set by top managers flow down through the organization and become sub-goals for each
organizational area
+ Employees follow
+ Goals are general and do not follow SMART principle
- Management By Objectives (MBO) goal setting
+ A process of setting mutually agreed-upon goals and using those goals to evaluate employee
performance.
+ Employees involve in setting goals
+ Goals are specific and follow SMART principle

E6. COMPARE TRADITIONAL GOAL SETTING VS. MBO GOAL SETTING

Traditional goal setting MBO goal setting
____________________________________ ____________________________________
____________________________________ ____________________________________
____________________________________ ____________________________________
____________________________________ ____________________________________
____________________________________ ____________________________________
____________________________________ ____________________________________
____________________________________ ____________________________________

3. PLANS
a. Types of plan
- According to TIME
+ Short-term
+ Mid-term
+ Long-term
- According to BREADTH OF USE
+ Strategic plan: Influences the whole organization (top managers)
+ Tactical plan: Influences the whole department (middle managers)
+ Operational plan: Influences daily, specific activities (first-line managers and employees)
- According to SPECIFICITY
+ Directional plan: Flexible and set general guidelines
+ Specific plan: Clearly defined and leave no room for interpretation
- According to FREQUENCY OF USE
+ Single use: Plan is designed to use once
+ Standing use: Plan is used and reused multiple times
b. Business plans
- A written document that summarizes a business opportunity, and
- Defines and articulates how the identified opportunity is to be seized and exploited (legal
documents, risk management, competitive advantages, business model, etc.)

4. STRATEGY
a. Definitions

E7. FILL IN THE BLANKS

1. Strategy is a set of _____ (1) in a particular ______ (2) to achieve the goals in _____ (3).
2. Strategic Management is a ______ (4) of planning, ______ (5), ______ (6), and ______ (7)
the strategies to achieve the goals.
3. The aims of Strategic Management are to_____ (8) with rivals and ______ (9) the
customers.

b. Strategic management process

- STEP 1: Identifying the organization’s current mission, goals and strategies
- STEP 2: Doing an external analysis
- STEP 3: Doing an internal analysis
- STEP 4: Formulating the strategies
- STEP 5: Implementing strategies
- STEP 6: Evaluating results

E8. WHICH STEP IS THE MOST IMPORTANT? WHY?

____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________

c. Strategic management analysis tool 1 – SWOT MATRIX

- SWOT Matrix can be used in Step 2 and 3 for analyzing the environment, and in Step 4 for
formulating the strategies.
- SWOT matrix suggests that there are 4 strategies that can be applied:
(1) S-O (2) S-T (3) W-O (4) W-T
d. Strategic management analysis tool 2 – Value Chain model
- A contribution of Michael Porter
- The Model divides business activities into 2 categories:
+ Main activities:
(1) Inbound logistics;
(2) Operation;
(3) Outbound logistics;
(4) Marketing & Sales;
(5) Service
+ Supporting actitivies - Necessary for success implementation of main activities:
(1) Firm infrastructure;
(2) HR management;
(3) Technology development;
(4) Procurement
- Application of Value Chain Model:
+ Can be used in Step 3 for internal analysis to understand strengths and weaknesses as well as
competitive advantages of firms
+ Looking at this model will help find which stages the firm is good at to focus on, and which
stages the firm is not good at to outsource for more effective implementation.

e. Level of strategies: 3 levels of organizational strategies

(1) LEVEL 1: CORPORATE STRATEGIES
*Growth strategies:
- Strategies relating to the expansion of markets served / products offered either through current
business or though new business.
- Including:
+ Concentration growth: Firms concentrate on current market and main business (1 SBU only)
+ Diversification growth: (>= 2 SBUs)
  Classified into Related and Unrelated diversification (conglomerate)
 Including Opening new businesses in new fields / industries and M&A
+ Integration growth:
 Vertical integration: towards managing and controling the whole supply chain
 Horizontal integration: cooperate with another firms in the supply chain
*Stability strategies
- It is implemented when:
+ The environment is stable; and
+ The company does not have many strengths and weaknesses; or
+ [W-O] There are some opportunities, but the company is very weak; or
+ [S-T] The company has some strengths, but there are many threats.
- It is implemented when the company does not have much changes in size / product diversification.
* Renewal (Retrenchment) strategy
- It is implemented when there are many threats and the company is weak.
- When implementing this strategy, the company will close some branches or subsidiaries, or reduce
product diversification.

E9. WHICH GROWTH STRATEGY IS THIS?

1. Vietcombank opened new branches in Haiphong city.

2. Apple launched Ipads.
3. SHB merged with Habubank.
4. Kinh Do bought Wall ice-cream from Unilever.
5. FPT opened FPT University.
6. TH true milk opened a cow farm in Nghe An province.
7. HP merged with Compaq.
8. Coca Cola launched Dasani mineral water.
9. Sony cooperated with Erikson to produce cellphone.
10. Toyota and GM opened a factory in California to produce cars.

E10. FILL IN THE BLANKS

STABILITY STRATEGIES
1. It is implemented when the environment is ______ (1) and the company does not have
many ______ (2) as well as _______ (3), or there are some _______ (4), but the company
is very ______ (5), or the company has some _______ (6), but there are many ______ (7).
2. When implementing this strategy, the company does not have much changes in ______
(8) or product _______ (9).

E11. FILL IN THE BLANKS

RETRENCHMENT STRATEGIES
1. It is implemented when there are many _____ (1) and the company is ______ (2).
2. When implementing this strategy, the company will ______ (3) some _______ (4) or
subsidiaries, or __________ (5) product diversification.

E12. BGC MATRIX EXERCISE (Read the next page before doing this exercise)
 1. If relative market share is bigger than 1, what does it mean?
_________________________________________________________________________
__
2. If relative market share is 1, what does it mean?
_________________________________________________________________________
__
3. If relative market share is less than 1, what does it mean?
_________________________________________________________________________
__
4. Put the following products of Apple into the suitable position in BCG Matrix:
Ipad – Ipod – Iphone – Iwatch – Macbook

CORPORATE STRATEGY ANALYSIS TOOL: BCG MATRIX

Classify products into 4 categories based on the market growth rate and the relative market share.

*Market growth rate of the industry

implies the potential to growth in the
STAR QUESTION MARK industry.
MARKET GROWTH RATE

- High growth rate = Growing

High earnings Low, unstable earnings
Stategy applied: Invest Strategy: (?)
CASH COW
DOG
High & stable earnings
Low, unstable earnings
Strategy applied: Milk
Strategy applied: Divest
RELATIVE MARKET SHARE
industry
- Low growth rate = Declining
industry
*Relative market share
- Implies the company’s position in
the industry:
Strong >> Moderate >> Weak
- Can be calculated as the company

STRATEGIC CHOICE FOR EACH CATEGORIES:

(1) STAR – High growth High share
- Companies have lots of advantages in the industry
 - Should invest more for growth
- Strategies that can be applied:
+ Vertical & Horizontal integration
+ Market penetration and development
(2) CASH COW – Low growth High share
- Cash cows are the most profitable products and should be “MILKED” to provide as much cash
as possible. Cash gained grom Cows should be invested into STARS to support further growth.
- Should NOT invest for new growth, except for supporting current market share
- Strategies that can be applied:
+ Product development
+ Diversification
+ Divestiture & Retrenchment
(3) DOG – Low growth Low share
- In general: not worth investing in because generating low or negative cash returns
- Two situations:
+ If the DOG is completely useless and incurs losses  DIVESTITURE / LIQUIDATION
+ If the DOG is still profitable in the long run / useful in providing synergies for another SBUs
or acting as a defense for counter competitor moves  RETRENCHMENT
(4) QUESTION MARK – High growth Low share
- Hold low market share in fast growing markets with high costs and losses
- Has high potential to gain market share and become STAR
But also has high risk to fail and become a DOG
- Requires very close consideration to decide if they are worth investing in or not

(2) LEVEL 2 – COMPETITIVE STRATEGIES

Business-level strategies are also called competitive strategies
- Cost leadership: Competing on the basis of having the lowest costs in the industry.
- Differentiation: Competing on the basis of having unique products that are widely valued by
customers.
- Focus strategy: Competing in a narrow segment or niche with either a cost focus or a
differentiation focus.

E13. OPENING QUESTIONS ON COMPETITIVE STRATEGIES.

1. Competitive strategies are also called __________ strategies.
2. For Michael Porter, there are 2 sources of competitive advantages. What are they?
_________________________________________________________________________
3. Which tool that you have learnt can help firms find their competitive advantages?
_________________________________________________________________________
4. For the case of Apple, what are their competitive advantages?
_________________________________________________________________________

E14. FILL IN THE BLANKS

COST LEADERSHIP
 1. Business level strategies are also called ______(1) strategies.
2. Companies try to have the ______(2) cost compared to other competitors in the
______(3) with features which are accepted by _______ (4).
3. Companies will try to _____(5) costs of inputs or increase the ______(6) in management.
4. In retail industry in the US, the famous case of Cost Leadership Strategy is ________ (7).

E15. FILL IN THE BLANKS

DIFFERENTIATION
1. Companies try to create _____ (1) or _______ (2) characteristics for their product or
services.
2. Companies do not care much about _____ (3) and invest in _______ (4) and marketing
mainly to attract _______ (5).
3. An example of this strategy in laptop industry in the world is the case of ______(7).

E16. FILL IN THE BLANKS

FOCUS STRATEGY
1. Firms can choose to focus on ______(1) or _______(2).
2. However, firms do not compete in the whole market, they choose a specific ______(3).
3. A example of focus strategy in fashion ready to wear industry in Vietnam is ______(4). It is
not like the case of _____(5), Zara, UniQlo, or Canifa when they aim at _____(6).

(3) LEVEL 3 – FUNCTIONAL STRATEGIES

- The strategies used in an org.’s various functional departments to support the competitive strategy.

E17. THESE STRATEGIES ARE IN WHICH LEVEL?

1. Cost Leadership strategy
2. Diversification strategy
3. Marketing strategy
4. Differentiation strategy
5. Stability strategy
6. Human resource strategy
7. Focus strategy
8. Growth strategy
9. Retrenchment strategy
10. Integration strategy
_________________________________________
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Đáp án bài tập:
E1.
(1) Continuous
(2) Setting
(3) Establishing
(4) Making
(5) 5W1H
E2.
1. Planning sets up the goals as direction and outcomes for other activities
2. Planning establishes coordinated effort
3. Planning reduces uncertainty
4. Planning reduces overlapping and wasteful activities
5. Planning establishes the goals or standards that facilitate control
E3.
(1) Desired
(2) Individuals
(3) Groups
(4) Organization
(5) Direction / Orientation
E4.
1. Real goal of every company is the LONGTERM PROFIT MAXIMIZATION
2. Because:
- Stated goals convince and persuade stakeholders (both internal and external).
- Stated goals increase brand loyalty.
E5.
1. I will get grade A of 8.5 in Principles of Management in the end of this semester 19-20.
2. Our company will have the biggest market share of 51% in Vietnam market by 2022.
3. Answer FAQs of customes within 3 minutes.
E6.
None of them is better because each one fits in different situations:
Traditional goal setting MBO goal setting
 Downwards decision making:  Combine downwards & upwards decision making
 Top managers set up the goals  Top managers set up the goals
 Employees follow  Employees involve in setting goals
 General goals  Specific goals
 Appropriate when:  Appropriate when:
 X people  Y people
 Make quick decisions  Have time for employees to involve
 Important goals  Operational goals
E7.
(1) Actions (3) Future (5) Organizing (7) Controlling (9) Attract
(2) Ways (4) Process (6) Leading (8) Compete
E8. The first step is the most important because it provides the platform and direction for the following step.
E9.
- Concentration growth: 1
- Related diversification: 2, 3, 4, 7, 8
 - Unrelated diversification: 5
- Vertical integration: 6
- Horizontal integration: 9, 1
E10.
(1) Stable (3) Weaknesses (5) Weak (7) Threats (9) Diversification
(2) Strengths (4) Opportunities (6) Strengths (8) Size
E11.
(1) Threats (3) Downsize (5) Reduce
(2) Weak (4) Branches
E12.
1. This company is the biggest one (market share)
2. This company and the biggest rival share the biggest market share
3. This company is not the biggest one in the market. The smaller to 1, the smaller market share the
company has.
4. You can see the figure:

E13.
1. Business level
2. Cost and Differentiation
3. Value chain model: 10đ
4. Design; R&D or technology development (IOS); Cost: outsource assembly in China to save cost
E14.
(1) Competitive (3) Industry (5) Reduce (7) Walmart
(2) Lowest (4) Customers (6) Efficiency
E15.
(1) Unique (3) Cost (5) Customers
(2) Special/ Differentiative (4) R&D (6) Apple
E16. (1) Cost-leadership (2) Differentiation (3) Segment
(4) Ivy Moda/ 7 AM/ Elise/ Viettien/ May 10/Owen,… (5) H&M (6) Everyone/all
E17.
Corporate level: 2, 5, 8, 9, 10
Business level (competitive): 1, 4, 7
Functional level: 3, 6