Principles of Management

Dyck / Neubert

Chapter 8
Setting Goals and
Making Plans

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Roadmap

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Introduction to Goals and Plans

Goals
The desired results or objectives that members in an
organization are pursuing.

Plans
Describe the steps and actions that are required to
achieve goals.

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The Planning Process

Steps in the Planning Process
1. Setting an organizations overarching mission and

vision.
2. Setting strategic goals and plans.
3. Taking the strategic goals and plans and putting them
into practice in everyday operations.
4. Implementing and monitoring the goals and plans.

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Figure 8.1: Overview of the

Four Steps of the Planning Process

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Organizational Goals and Plans

Ongoing Goals and Plans
Guide the continuing activities that are consistent
with the basic purpose of the organization.

Change-Oriented goals and Plans

Refer to new initiatives and changes to be made in
an organizations practices.

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Figure 8.2: The Five

Characteristics of Mainstream Goals

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The Mainstream Approach

to Goals and Plans (contd)
Stretch Goals (Jack Welch)
Are so difficult that people do not know how to reach
them.
Cannot be achieved simply by making incremental
changes to the status quo.
Require outside-the-box thinking that dramatically
improves productivity, efficiency, and profitability.

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Figure 8.3: Checklist

for Making a Plan

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Standardization and Standing Plans

Standardization
The process of developing uniform practices for
organizational members to follow in doing their jobs.

Standing Plans
Provide guidance for activities that are performed
repeatedly.

Types of Standing Plans

Standard Operating Procedures
Policies
Rules and Regulations

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Types of Standing Plans

Standard Operating Procedures
Outline specific steps that must be taken when
performing certain tasks.

Policies
Provide guidelines for making decisions and taking
action in various situations.

Rules and Regulations

Are prescribed patterns of behavior that guide
everyday work tasks.

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Digging Deeper
Contingency Plans
Lay out in advance how managers will respond to
possible future events that could disrupt existing
plans.

Limiting the Impact of a Crisis events that affect the org

Perform preventive work to avoid or minimize the
effects of a crisis.
Assemble information and define crisis
responsibilities and procedures.
Contain a crisis by making a timely response.

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Why Goals Arent Achieved

Unexpected changes in other parts of the
organization or in the larger environment
Some stakeholders are not convinced of the
legitimacy of a goal.
Too much emphasis placed on members
change-oriented goals rather than on their
ongoing goals.

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The Multistream
Approach to Goals and Plans
Multistream Approach
Emphasizes how managers and other stakeholders
carry out the steps.
Is concerned with sustenance economics issues and
the well-being of a variety of stakeholders.
Considers aspects of life that may be difficult to
measure, such as ecological well-being or social
justice.

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 Goal displacement- focused on specific goals

(operational goals) than overarching
goals(strategic goals)

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Figure 8.4: The Five

Characteristics of Multistream Goals

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Principles of Management
Dyck / Neubert

Chapter 9
Strategic Management

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Importance of Strategic Management

Why Is Strategic Management Important?
Because managers vary in how well they formulate
and implement strategies, and this affects their
organizations competitiveness.
Strategic management
The analysis and decisions that are necessary to formulate
and implement strategy.

Strategy
The combination of goals, plans and actions designed to
accomplish an organizations mission.

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Figure 9.1: Overview of the

Strategic Management Process

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SWOT Analysis

*industry-subset of org group together

*resources-asset source of competitive advantage

Strengths

Valuable or unique resources of an organization or any

activities that it does particularly well that can help
managers to achieve their strategic objectives.

Weaknesses

A lack of specific resources or abilities that an

organization needs in order for it to do well; a
characteristic that hinders the achievement of the
strategic objectives of an organization.

Opportunities

Conditions in the external environments that have the

potential to help managers meet or exceed
organizational goals.

Threats

Conditions in the external environments that have the

potential to prevent managers from meeting
organizational goals.

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Table 9.1: Overview of Porters Five

Competitive Forces and Strategic Management

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Industry Rivalry *economic sale-increase in volume yet

lower cost
*competitors-orgs offering same products
*substitutes-similar product from other industry

Rivalry intensity will increase when:

An organization has many competitors seeking

similar customers.
The industry growth rate slows or declines.
The industry has intermittent overcapacity.
Brand identity and switching costs are low.
A firms fixed costs are high or cannot be easily
converted to a new industry or product.
There is little ability to differentiate the product or
service being offered.

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Strategies
Competitive Strategy- parang cost leadership
A strategy that seeks to create value for customers
by providing low prices or unique features that are
not offered by rival organizations.

Sustained Competitive Advantage-parang

differentiation strategy
A competitive strategy that other organizations are
unable to duplicate.
*Core competency-strength central for achieving goals
*Distinctive competency- core compe that org has superior over
competitors
*resources-asset source of competitive advantage

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Table 9.2: Four Characteristics of Resources That

Help to Achieve Sustained Competitive Advantage

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Business-Level Strategies
Cost Leadership
Increase the profit margin by keeping overall costs
lower than competitors through efficiencies in
production and distribution.
Maintaining price and quality at roughly the same
level as competitors.
Gaining economies of scale as the market leader.

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Business-Level Strategies (contd)

Differentiation Strategy
Offering a product or service with a significant
difference for which buyers are willing to pay a higher
price than they would for a competitors product or
service.

Focus Strategy
Choosing a small niche in the overall market.
Strategy can be based on either cost leadership or
differentiation.

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Diversification Strategies
Related Diversification
Involves expanding an organizations activity in
industries related to its current activities.

Synergy
The performance gain that results from two or more
units working together is greater than the sum of their
individual contributions.

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Diversification Strategies (contd)

Horizontal Integration
Services and products are expanded or offered in
new markets.

Vertical Integration
Occurs when an organization produces its own inputs
(backward integration) or sells its own outputs
(forward integration).

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Diversification Strategies (contd)

Unrelated Diversification
Occurs when an organization grows by acquiring or
entering new industries unrelated to its current
activities.
Reasons for diversification:
When there are no opportunities for expansion in current
markets.
When current markets are beginning to decline.

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Business Portfolio Planning

BCG Matrix
Developed by the Boston Consulting Group.
Classifies portfolio businesses by relative market
share (strength) and market growth rate (potential).

Starshigh growth, high market share

Cash cowslow growth, high market share
Question markshigh growth, low market share
Dogslow growth, low market share

Is limited by its focusing exclusively on market share

and market growth.

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Figure 9.2: BCG Portfolio Matrix

for Managing Diversified Organizations

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