The Manager as

a Planner
and Strategist
Chapter Eight
Copyright 2014 by The McGraw-Hill Education. All rights reserved.
Learning Objectives
1. Identify the three main steps of the planning
process and the relationship between planning and
strategy.
2. Describe some techniques managers can use to
improve the planning process so they can better
predict the future and mobilize organizational
resources to meet future contingencies.
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Learning Objectives (cont.)
3. Differentiate between the main types of business-
level strategy and explain how they give an
organization a competitive advantage lead to
superior performance.
4. Differentiate between the main types of corporate-
level strategies and explain how they are used to
strengthen a companys business-level strategy and
competitive advantage
5. Describe the vital role managers play in
implementing strategies to achieve an
organizations mission and goals
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Planning and Strategy
Planning
Identifying and selecting appropriate goals and
courses of action for an organization.
The organizational plan that results from the
planning process details the goals and the specific
strategies managers will implement to attain those
goals
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Planning and Strategy
Strategy
A cluster of decisions
about what goals to
pursue, what actions
to take, and how to
use resources to
achieve goals.
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Planning and Strategy
Mission Statement
A broad declaration of an organizations purpose
that identifies the organizations products and
customers and distinguishes the organization
from its competitors.
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Example Facebook Mission
Statement
Facebook's mission is to
give people the power
to share and make the
world more open and
connected.
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Three Steps in Planning
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Figure 8.1
The Nature of the Planning Process
To perform the planning task, managers:
1. Establish and discover where an organization
is at the present time
2. Determine its desired future state
3. Decide how to move it forward to reach that
future state

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Why Planning is Important
1. Necessary to give the organization a sense of
direction and purpose
2. Useful way of getting managers to participate in
decision making about the appropriate goals
and strategies for an organization
3. Helps coordinate managers of the different
functions and divisions of an organization
4. Can be used as a device for controlling
managers
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Why Planning is Important
Unity
at any one time only
one central, guiding
plan is put into
operation


Continuity
planning is an ongoing
process in which
managers build and
refine previous plans
and continually modify
plans at all levels

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Why Planning is Important
Accuracy
managers need to
make every attempt to
collect and utilize all
available information
at their disposal
Flexibility
plans can be altered
and changed if the
situation changes

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Levels of Planning at
General Electric
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Figure 8.2
Levels and Types of Planning
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Figure 8.3
Levels of Planning
Corporate-Level Plan
Top managements decisions pertaining to the
organizations mission, overall strategy, and
structure.
Provides a framework for all other planning.
Corporate-Level Strategy
A plan that indicates in which industries and
national markets an organization intends to
compete.
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Levels of Planning
Business-Level Plan
Long-term divisional goals that will allow the
division to meet corporate goals
Divisions business-level and structure to achieve
divisional goals
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Levels of Planning
Business-Level Strategy
Outlines the specific methods a division, business
unit, or organization will use to compete
effectively against its rivals in an industry

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Levels of Planning
Functional-Level Plan
Goals that the managers of each function will
pursue to help their division attain its business-
level goals
Functional Strategy
A plan of action to improve the ability of each of
an organizations functions to perform its task-
specific activities in ways that add value to an
organizations goods and services.
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Time Horizons of Plans
Time Horizon
Period of time over which they are intended to
apply or endure.

Long-term plans are usually 5 years or more.
Intermediate-term plans are 1 to 5 years.
Short-term plans are less than 1 year.
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Types of Plans
Standing Plans
used in programmed decision situations

Policies - general guides to action
Rules - formal written specific guides to action
Standard operating procedures (SOP) - specify an
exact series of actions to follow
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Types of Plans
Single-Use Plans
Developed to handle non-programmed decision-
making in one-of-a-kind situations

Programs - integrated plans achieving certain goals.
Project - specific action plans to complete programs.

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Scenario Planning
Scenario Planning (Contingency Planning)
The generation of multiple forecasts of future
conditions followed by an analysis of how to
effectively respond to those conditions.
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Determining the Organizations
Mission and Goals
Defining the Business
Who are our customers?
What customer needs are being satisfied?
How are we satisfying customer needs?
Establishing Major Goals
Provides the organization with a sense of
direction
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Three Mission Statements
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Figure 8.4
Establishing Major Goals
Strategic leadership
The ability of the CEO and top managers to
convey a compelling vision of what they want the
organization to achieve to their subordinates
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Formulating Strategy
Strategic Formulation
The development of a set of corporate, business,
and functional strategies that allow an
organization to accomplish its mission and
achieve its goals
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Formulating Strategy
SWOT Analysis
A planning exercise in which managers identify
organizational strengths (S) and weaknesses (W)
and environmental opportunities (O) and
threats (T).
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Questions for SWOT Analysis
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Planning and Strategy Formulation
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Figure 8.5
The Five Forces
Level of rivalry in an industry
Potential for new entrants
Power of large suppliers
Power of large customers
Threat of substitute products
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The Five Forces
Hypercompetition
industries that are characterized by permanent,
ongoing, intense, competition brought about by
advancing technology or changing customer
tastes and fads and
fashions
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Formulating Business-Level
Strategies
Low-Cost Strategy
Driving the
organizations total
costs down below the
total costs of rivals.

Differentiation
Distinguishing an
organizations products
from the products of
competitors on
dimensions such as
product design,
quality, or after-sales
service.
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Formulating Business-Level
Strategies
Stuck in the Middle
Attempting to simultaneously pursue both a low
cost strategy and a differentiation strategy.
Difficult to achieve low cost with the added costs
of differentiation.
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Formulating Business-Level
Strategies
Focused Low-Cost
Serving only one
market segment and
being the lowest-cost
organization serving
that segment.
Focused
Differentiation
Serving only one
market segment as the
most differentiated
organization serving
that segment.


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Principal Corporate-Level
Strategies
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Concentration on a single industry
Vertical integration
Diversification
International expansion
Related Diversification
Synergy
Obtained when the value created by two divisions
cooperating is greater than the value that would
be created if the two divisions operated
separately
and independently
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International Expansion
Multi-domestic Strategy
Customizing products and marketing strategies to
specific national conditions
Helps gain local market share
Raises production costs
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Four Ways to Expand
Internationally
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Figure 8.7
Planning and Implementing
Strategy
1. Allocate implementation responsibility to the
appropriate individuals or groups.
2. Draft detailed action plans for implementation.
3. Establish a timetable for implementation
4. Allocate appropriate resources
5. Hold specific groups or individuals responsible for
the attainment of corporate, divisional, and
functional goals.
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Video: Free for All
How does free work as a business model?
How does Google leverage its ownership of
YouTube?
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