Fundamentals of Management - Chapter 6 Planning and Goal Setting PDF

Fundamentals of Management Global Edition Chapter 06 Planning and Goal Setting Copyright © 2020 Pearson Education Ltd. All Rights Reserved. Learning Objectives 6.1 Discuss the nature and purposes of...

Fundamentals of Management Global Edition Chapter 06 Planning and Goal Setting Copyright © 2020 Pearson Education Ltd. All Rights Reserved. Learning Objectives 6.1 Discuss the nature and purposes of planning. 6.2 Explain what managers do in the strategic management process. 6.3 Compare and contrast approaches to goal setting and planning. 6.4 Discuss contemporary issues in planning. Copyright © 2020 Pearson Education Ltd. All Rights Reserved. What Is Planning? Planning: The most important management function. Planning establishes things managers do as they organize, lead, and control. Planning is getting the job done by establishing an overall strategy for achieving organisational goals. Copyright © 2020 Pearson Education Ltd. All Rights Reserved. Reasons for Planning (1 0f 3) Managers Plan for 4 reasons 1. Planning provide direction to both managers and non- managerial employees so each employees knows what and how he or she must contribute either individually or as a group to reach the organizational goals. Copyright © 2020 Pearson Education Ltd. All Rights Reserved. Reasons for Planning (2 0f 3) Managers Plan for 4 reasons 2. Planning reduces the impact of change (uncertainty).  It forces managers to look ahead, predict change, consider the impact of change, and develop appropriate responses. Copyright © 2020 Pearson Education Ltd. All Rights Reserved. Reasons for Planning (3 0f 3) Managers Plan for 4 reasons 3. Planning reduces overlapping and wasteful activities among employees. 4. Planning establishes standards that help managerial control. Copyright © 2020 Pearson Education Ltd. All Rights Reserved. Criticisms of Formal Planning Planning may create rigidity. Managers need to remain flexible with organizational planning. 1. Formal plans cannot replace creativity. Planning should enhance and support creativity. 2. Planning focuses managers’ attention on today’s competition, not on tomorrow’s survival. 3. Formal planning reinforces success, which may sometime too leads to failure. Copyright © 2020 Pearson Education Ltd. All Rights Reserved. Formal Planning and Organizational Performance Is it good to plan? 1. Plans generally translate into higher profits, higher return on assets, and other positive financial results. 2. the quality of the planning process and appropriate implementation of the plan probably contribute more to high performance than the extent of planning does. Copyright © 2020 Pearson Education Ltd. All Rights Reserved. What Is Strategic Management? Strategic management: Is what managers do to develop an organization’s strategies Strategies: plans for how the organization will need to do to compete successfully, and how it will attract its customers in order to achieve its goals Copyright © 2020 Pearson Education Ltd. All Rights Reserved. The Importance of Strategic Management 1. It has a positive impact on organizational performance 2. It prepares managers to cope with changing situations 3. It guides managers to examine relevant factors in planning future action Copyright © 2020 Pearson Education Ltd. All Rights Reserved. The Story of FedEx https://www.youtube.com/watch?v=L1p1RU4osRY Copyright © 2020 Pearson Education Ltd. All Rights Reserved. Steps in the Strategic Management Process Copyright © 2020 Pearson Education Ltd. All Rights Reserved. 1st: Identify Mission, Goals, and Strategies Customers : Who our customers? Market: Where our firm compete? Globally? Locally? Concern for Survival, Growth or Profit? Philosophy: What are our firm beliefs and values? Product or Services: What are our firm’s major product or services? Copyright © 2020 Pearson Education Ltd. All Rights Reserved. SWOT Analysis Copyright © 2020 Pearson Education Ltd. All Rights Reserved. External Analyses (1 of 5) Step 2: External Analysis Know what your competitor are doing Examine all components of environment: the economic, demographic, political, technological trends. Determine the opportunities the organization can benefit of and threats that organisation can reduce or get rid of. Copyright © 2020 Pearson Education Ltd. All Rights Reserved. Internal Analyses (2 of 5) Step 3: Internal Analysis Resources: company assets - financial, physical, human resources. Capabilities are skills and abilities in doing the work activities needed in achieving business goals. Core competencies are company’s unique abilities, or products and services that are better than their competitor. Organizational strengths that makes its unique & weaknesses that organization should overcome. Copyright © 2020 Pearson Education Ltd. All Rights Reserved. Formulating, Implementing, and Evaluating Results (3 of 5) STEP 4 is Formulating strategies.  Managers should consider the external environment and internal resources and capabilities to design strategies that will help their organization achieve its goals and compete. Copyright © 2020 Pearson Education Ltd. All Rights Reserved. Formulating, Implementing, and Evaluating Results (4 of 5) STEP 5 involves implementing strategies.  At this stage, managers will implement the formulated strategies. The organization performance will suffer if the strategies aren’t implemented properly. Copyright © 2020 Pearson Education Ltd. All Rights Reserved. Formulating, Implementing, and Evaluating Results (5 of 5) STEP 6 is evaluating results.  This is the final step in the strategic management process. Managers will evaluate the whole process and will do some adjustments if needed. Copyright © 2020 Pearson Education Ltd. All Rights Reserved. Types of Strategies Managers Use A corporate strategy is an organizational strategy that specifies what businesses a company is in. The three main types of corporate strategies are Growth, Stability, and Renewal. Copyright © 2020 Pearson Education Ltd. All Rights Reserved. A. 4 types of Growth Strategy 1.Concentration Strategy 2.Vertical Integration 3.Horizontal Integration 4.Diversification Copyright © 2020 Pearson Education Ltd. All Rights Reserved. A. 4 types of Growth Strategy 1. Concentration: increases the number of products offered or markets served in its primary business. 2. Vertical integration: A company can also grow by vertical integration, either backward, forward, or both. In backward vertical integration, the organization becomes its own supplier. In forward vertical integration, the organization becomes its own distributor. Copyright © 2020 Pearson Education Ltd. All Rights Reserved. 4 types of Growth Strategy ( 1 of 2) 3. Horizontal integration: a company buying or combining with its competitors. Copyright © 2020 Pearson Education Ltd. All Rights Reserved. 4 types of Growth Strategy ( 1 of 2) 4. Diversification: a. Related diversification is when a company combines with other companies in different, but related, industries. Copyright © 2020 Pearson Education Ltd. All Rights Reserved. 4 types of Growth Strategy ( 1 of 2) 4. Diversification: b. Unrelated diversification is when a company combines with firms in different and unrelated industries. Copyright © 2020 Pearson Education Ltd. All Rights Reserved. B. Stability and Renewal Strategies Stability strategy organization continues to do what it is currently doing, such as serving the same clients with the same product or service, and maintaining its market share. Copyright © 2020 Pearson Education Ltd. All Rights Reserved. B. Stability and Renewal Strategies Renewal strategy is when Organization react according to their organizational poor performance by: 1. Retrenchment strategy : a process where firm cut down products/services that aren't profiting their business financial stability. 2. Turnaround strategy: When organization’s problems are too serious, they cut costs and restructure organizational operations by getting rid of employees. Copyright © 2020 Pearson Education Ltd. All Rights Reserved. Competitive Strategy Competitive strategy: a strategy for how an organization will compete in its business. Competitive Advantage refers to the ways that a company can produce goods or deliver services better than its competitors core competencies and resources Copyright © 2020 Pearson Education Ltd. All Rights Reserved. Functional Strategy Those strategies used by an organization’s various functional departments to support the competitive strategy Copyright © 2020 Pearson Education Ltd. All Rights Reserved. Strategic Weapons To Achieve Firm Goals. Customer service Employee skills & loyalty Innovation Quality Social media Big data/digital tools Copyright © 2020 Pearson Education Ltd. All Rights Reserved. Traditional Goal Setting Exhibit 6-5 Traditional Goal Setting Copyright © 2020 Pearson Education Ltd. All Rights Reserved. Management by objectives (MBO) is a management technique for setting clear goals for a specific time period and monitoring the progress Goal specificity Participative decision making Explicit time period Performance feedback Copyright © 2020 Pearson Education Ltd. All Rights Reserved. Well-Written Goals Written in terms of outcomes rather than actions Measurable and quantifiable Clear as to a time frame Challenging yet attainable Written down Communicated to all necessary organizational members Copyright © 2020 Pearson Education Ltd. All Rights Reserved. Steps in Goal Setting 1. Review the organization’s mission and employees’ key job tasks. 2. Evaluate available resources. 3. Determine the goals individually or with others. 4. Make sure goals are well written and communicate to all employees. 5. Create feedback mechanisms. 6. Link rewards to goal achievement. Copyright © 2020 Pearson Education Ltd. All Rights Reserved. Types of Plans Exhibit 6-7 Types of Plans BREADTH OF USE TIME FRAME SPECIFICITY FREQUENCY OF USE Strategic Long term Directional Single use Tactical Short term Specific Standing Flexibility ↔ Clarity Copyright © 2020 Pearson Education Ltd. All Rights Reserved. Developing Plans Exhibit 6-8 Planning and Organizational Level Copyright © 2020 Pearson Education Ltd. All Rights Reserved. Approaches to Planning Top-down traditional approach Developed by organizational members Copyright © 2020 Pearson Education Ltd. All Rights Reserved. Contemporary Issues Planning in dynamic environments Crisis situations Environmental scanning Dynamic Environments and Crisis Situations = Planning Challenges Copyright © 2020 Pearson Education Ltd. All Rights Reserved.