The Foundations

of Planning

©Prentice Hall, 2001 Chapter 3 1

 Learning Objectives
• Define planning

• Explain the potential benefits of planning

• Identify the potential drawbacks of planning

• Compare strategic and tactical plans

• Compare directional and specific plans

©Prentice Hall, 2001 Chapter 3 2

 Learning Objectives
• Discuss Management by Objectives
• Outline the strategic management process
• Describe the four grand strategies
• Explain SWOT analysis
• Learn how entrepreneurs and bureaucratic
managers approach strategy

©Prentice Hall, 2001 Chapter 3 3

 Set Control Provide
Standards Direction

Reasons
for Planning

Minimize Waste Reduce the

or Redundancy Impact of Change
©Prentice Hall, 2001 Chapter 3 4
 Rigid Assumptions
of Stability

Environmental
Arguments Turbulence
Against Intuition
and Creativity
Strategic
Focus on Today’s
Planning Competition

Preoccupation with
Current Success
©Prentice Hall, 2001 Chapter 3 5
 Does Planning Improve
Performance?
• Financial results

• Environmental concerns

• Quality and implementation

©Prentice Hall, 2001 Chapter 3 6

 How Do Strategic and
Tactical Plans Differ?

Time Frame Scope Objectives

©Prentice Hall, 2001 Chapter 3 7

 The Time Frame
of Planning

Short-Term Long-Term
Plans Plans

©Prentice Hall, 2001 Chapter 3 8

Objectives Clear Specific Plans Low

Flexibility
General Directional Plans High

©Prentice Hall, 2001 Chapter 3 9

 Single-Use
and Standing Plans

Unique Ongoing
Situations Operations

©Prentice Hall, 2001 Chapter 3 10

What Is Management by Objectives?

Organizational
Objectives

Divisional
Objectives

Departmental
Objectives

Individual
Objectives

©Prentice Hall, 2001 Chapter 3 11

 Common MBO Elements

Goal Participative
Specificity Decision Making

Explicit Performance
Time Period Feedback

©Prentice Hall, 2001 Chapter 3 12

 Goal Goal
Difficulty Specificity

Does MBO
Work?
Top
Participation
Management

©Prentice Hall, 2001 Chapter 3 13

 Setting Employee Objectives
• Identify key job tasks
• Set specific hard goals
• Let employees participate
• Prioritize goals
• Build in feedback
• Reward goal attainment
©Prentice Hall, 2001 Chapter 3 14
 The Downside of Objectives

Quality of Quantity of
Products Products

Individual
Team Focus
Effort

Potential Continuous
Improvement Improvement
©Prentice Hall, 2001 Chapter 3 15
The Strategic Management Process
Set Mission, Identify
Analyze the
Objectives, Opportunities
Environment
and Strategies and Threats

Identify Reassess
Analyze
Strengths and Mission and
Resources
Weaknesses Objectives

Formulate Implement Evaluate

Strategies Strategies Results

©Prentice Hall, 2001 Chapter 3 16

 Starting the Strategic
Management Process

Mission Objectives Strategies

©Prentice Hall, 2001 Chapter 3 17

Analyzing the
Environmental
Environment
Scanning

Competitive
Intelligence

©Prentice Hall, 2001 Chapter 3 18

 Strengths

SWOT
Threats Weaknesses
Analysis

Opportunities

©Prentice Hall, 2001 Chapter 3 19

 Identifying Opportunities

Organization’s Opportunities in
Resources the Environment

Organization’s
Opportunities
©Prentice Hall, 2001 Chapter 3 20
 Growth Stability

The Grand Strategies

Combination Retrenchment

©Prentice Hall, 2001 Chapter 3 21

 Determining A
Competitive Strategy

Cost
Differentiation
Leadership

Focus

©Prentice Hall, 2001 Chapter 3 22

 What Happens
After Strategies
Implementation
Are Formulated?

Evaluation

©Prentice Hall, 2001 Chapter 3 23

 Benchmarking

Quality As
A Strategic ISO 9000
Weapon

Six Sigma

©Prentice Hall, 2001 Chapter 3 24

 The Entrepreneurial
Personality

Common Three Other

Personality Critical Important
Traits Factors Factors

©Prentice Hall, 2001 Chapter 3 25

 Comparing Entrepreneurs and
Traditional Managers
Characteristics Managers Entrepreneurs
• Primary Motivation • Traditional Rewards • Personal Rewards

• Time Orientation • Short-Term Goals • Long-Term Goals

• Activity • Delegate/Supervise • Direct Involvement

• Risk Propensity • Low • Moderate

• View of Failure/Errors • Avoidance • Acceptance

©Prentice Hall, 2001 Chapter 3 26