Untitled Quiz

Chapter 6: Planning, Strategy, and Competitive Advantage

• The chapter focuses on planning, strategy, and competitive advantage in management.
• The learning objectives include identifying planning steps, explaining the relationship between planning and strategy, differentiating strategy types, understanding corporate-level strategies, and describing the managerial role in strategy implementation.
• Planning involves identifying and selecting appropriate goals and courses of action for an organization.
• Strategy is a cluster of decisions about organizational goals, actions, and resource allocation to achieve those goals.
• A mission statement broadly declares an organization's purpose, differentiating products and customers from competitors.
• The planning process has three main steps: determining organizational mission and goals, formulating strategy, and implementing strategy.

The Nature of the Planning Process

• The planning process begins by understanding where the organization currently stands.
• Next, a desired future state is defined.
• Finally, a plan to reach the desired state is developed.

Planning and Strategy

• Planning is the process of identifying and selecting appropriate goals and action sequences for an organization.
• Strategy is a collection of decisions related to goals pursuit, actions, and resource allocation for achieving those goals.

Mission Statement

•  A mission statement is a broad declaration outlining an organization's purpose.
• It identifies products, customers, and differentiates the organization from competitors.

Three Steps in Planning

• Determining the organization's mission and goals (defining the business, establishing major goals).
• Formulating strategy (analyzing the current situation, developing strategies).
• Implementing strategy (allocating resources and responsibilities to achieve strategies).

Why Planning is Important

• Planning provides direction and purpose for an organization.
• It facilitates manager participation in decision-making processes.
• A plan coordinates managers across departments toward organizational goals.
• Planning facilitates managerial control within an organization.

Levels of Planning

• Corporate level: Top management decisions regarding mission, strategy, and structure.
• Business or divisional level: Divisional managers' decisions about long-term goals, strategy, and structure related to a particular business unit.
• Functional level: Functional managers' decisions regarding the goals and efforts to reach business-level goals, within a particular functional area.

Levels and Types of Planning

• Figure 6.3 illustrates the relationships among corporate, business, and functional levels and planning.

Business-Level Strategies

• Business-level strategies outline methods for competing effectively within a specific industry.

Functional-Level Strategies

• Functional-level strategies focus on improving the performance of functional areas within an organization.

SWOT Analysis

• SWOT Analysis is a planning exercise identifying internal and external factors influencing an organization (strengths, weaknesses, opportunities, and threats).

The Five Forces Model

• The five forces model analyzes industry competition, including rivalry, potential for entry, supplier power, customer power, and substitute products.
• Hypercompetition is the ongoing, intense competition driven by rapidly changing technology and customer tastes.

Formulating Business-Level Strategies

• Porter's framework suggests two primary choices: differentiation or cost leadership.
• Four main business-level strategies exist: low-cost, differentiation, focused low-cost, and focused differentiation.

Formulating Corporate-Level Strategies

• Concentration on the current industry.
• Vertical integration (expanding backward or forward into related industries.)
• Diversification (expanding into entirely new industries).
• Related diversification (expanding into new businesses related to existing ones).
• Unrelated diversification (expanding into new unrelated businesses).

International Expansion

• Strategic approaches include global (standardized products and marketing), multidomestic (customized products and marketing), importing/exporting, licensing, franchising, strategic alliances/joint ventures, and wholly owned foreign subsidiaries.

Planning and Implementing Strategy

• Responsibility allocation for strategy implementation.
• Drafting detailed action plans for executing the strategy.
• Establishing a timetable for implementation with specific, measurable goals.
• Allocate necessary resources to teams/individuals responsible for executing the strategy.
• Hold specific individuals/teams accountable for achieving the pre-defined goals.

Be The Manager

• List local supermarket chains and analyze their strengths and weaknesses.