Chapter 8: The Manager as a Planner and Strategist PDF

Because learning changes everything.® Chapter 8 The Manager as a Planner and Strategist © 2022 McGraw Hill. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent o...

Because learning changes everything.® Chapter 8 The Manager as a Planner and Strategist © 2022 McGraw Hill. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw Hill.  Learning Objectives 1 1. Identify the three main steps of the planning process, and explain 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. © McGraw Hill 2  Learning Objectives 2 3. Differentiate among the main types of business- level strategies, and explain how they give an organization a competitive advantage that may lead to superior performance. 4. Differentiate among the main types of corporate- level strategies, and explain how they are used to strengthen a company’s business-level strategy and competitive advantage. 5. Describe the vital role managers play in implementing strategies to achieve an organization’s mission and goals. © McGraw Hill 3  Planning and Strategy 1 Planning: The organizational plan that results from Identifying and the planning process selecting appropriate details the goals and goals and courses of the specific action for an strategies managers organization. will implement to attain those goals. © McGraw Hill 4  Planning and Strategy 2 Strategy: A cluster of decisions about what goals to pursue, what actions to take, and how to use resources to achieve goals. © McGraw Hill 5  Planning and Strategy 3 Mission statement: A broad declaration of an organization’s purpose that identifies the organization’s products and customers and distinguishes the organization from its competitors. © McGraw Hill 6  Figure 8.4 Mission Statements for Three Internet Companies COMPANY MISSION STATEMENT Facebook: “To give people the power to build community and bring the world closer together.” Twitter: “To give everyone the power to create and share ideas and information instantly, without barriers.” Google: “To organize the world’s information and make it universally accessible and useful.” Sources: Facebook's mission: https://investor.fb.com; Twitter's mission: https://investor.twitterinc.com; Google's mission: https://about.google, accessed February 20, 2020. © McGraw Hill 7  Figure 8.1 Three Steps in Planning Access the text alternative for slide images. © McGraw Hill 8  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. © McGraw Hill 9  Why Planning Is Important 1 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. © McGraw Hill 10  Why Planning Is Important 2 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. © McGraw Hill 11  Why Planning Is Important 3 Accuracy: Managers need to make every attempt to collect and utilize all available information at their disposal. Flexibility: Plans can be altered if the situation changes. © McGraw Hill 12  Figure 8.2 Levels of Planning at General Mills Access the text alternative for slide images. © McGraw Hill 13  Figure 8.3 Levels and Types of Planning Access the text alternative for slide images. © McGraw Hill 14  Levels and Types of Planning 1 Corporate-level plan: Top management’s decisions pertaining to the organization’s mission, overall strategy, and structure. General Mill’s seeks to increase market share in the organic/natural food sector. Corporate-level strategy: A plan that indicates in which industries and national markets an organization intends to compete. Functional strategy: A plan of action to improve the ability of each of an organization’s functions to perform its task-specific activities in ways that add value to an organization’s goods and services. General Mill’s invests in state-of-the-art manufacturing facilities to achieve business level strategy of increasing production by 20% over next 3 years. © McGraw Hill 15  Levels and Types of Planning 2 Business-level plan: Long-term divisional goals that will allow the division to meet corporate goals. Division’s business-level strategy and structure to achieve divisional goals. Business-level strategy: This strategy outlines the specific methods a division, business unit, or organization will use to compete effectively against its rivals in an industry. General Mills’ Beyond Meat, Kite Hill, and Blue Buffalo. Functional-level plan: Goals that the managers of each function will pursue to help their division attain its business-level goals. © McGraw Hill 16  Time Horizons of Plans Time horizon: Period of time over which plans 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. © McGraw Hill 17  Types of Plans 1 Standing plans: Used in situations in which programmed decision making is appropriate. Policies are general guides to action. Rules are formal written guides to action. Standard operating procedures (SOP) are written instructions describing the exact series of actions that should be followed in a specific situation. © McGraw Hill 18  Types of Plans 2 Single-use plans: Developed to handle non-programmed decision-making in unusual or one-of-a-kind situations. Programs: Integrated sets of plans achieving certain goals. Project: Specific action plans to complete various aspects of a program. © McGraw Hill 19  Scenario Planning Scenario planning (contingency planning): The generation of multiple forecasts of future conditions followed by an analysis of how to respond effectively to each of those conditions. Shell’s oil market scenario planning. © McGraw Hill 20  Determining the Organization’s 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. © McGraw Hill 21  Establishing Major Goals Strategic leadership: The ability of the CEO and top managers to convey to their employees a compelling vision of what they want the organization to achieve. Motivates employees. © McGraw Hill 22  Formulating Strategy 1 Strategy formulation: The development of a set of corporate, business, and functional strategies that allow an organization to accomplish its mission and achieve its goals. © McGraw Hill 23  Formulating Strategy 2 SWOT analysis: A planning exercise in which managers identify internal organizational strengths (S) and weaknesses (W) and external environmental opportunities (O) and threats (T). © McGraw Hill 24  Figure 8.5 Planning and Strategy Formulation Access the text alternative for slide images. © McGraw Hill 25  Formulating Business-Level Strategies 2 Low-cost strategy: Driving the organization’s total costs down below the total costs of rivals. Differentiation: Distinguishing an organization’s products from the products of competitors on dimensions such as product design, quality, or after-sales service. © McGraw Hill 26  Formulating Business-Level Strategies 3 Focused low-cost: Serving only one segment of the overall market and trying to be the lowest-cost organization serving that segment. Focused differentiation: Serving only one segment of the overall market and trying to be the most differentiated organization serving that segment. © McGraw Hill 27  Formulating Corporate-Level Strategies 1 Concentration on a single industry: Reinvesting a company’s profits to strengthen its competitive position in its current industry. Vertical integration: Expanding a company’s operations either backward into an industry that produces inputs for its products or forward into an industry that uses, distributes, or sells its products. © McGraw Hill 28  Figure 8.6: Stages in a Vertical Value Chain Access the text alternative for slide images. © McGraw Hill 29  Formulating Corporate-Level Strategies 2 Diversification: Examples: Expanding a PepsiCo’s diversification company’s business into the snack food operations into a new business with the purchase industry in order to of Frito Lay. produce new kinds of valuable goods or Cisco’s diversification into services. consumer electronics with its purchase of Linksys. © McGraw Hill 30  Diversification 1 Related diversification: Entering a new business or industry to create a competitive advantage in one or more of an organization’s existing divisions or businesses. 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. © McGraw Hill 31  Diversification 2 Unrelated diversification: Entering a new industry or buying a company in a new industry that is not related in any way to an organization’s current businesses or industries. Portfolio strategy. But there can be too much diversification. © McGraw Hill 32  International Expansion 1 Global Strategy: Little to no customization to suit specific needs of customers in different countries. Lowers production cost. Ignores national differences that local competitors can address to their advantage. Example: Panasonic. © McGraw Hill 33  International Expansion 2 Multidomestic Strategy: Customizing products and marketing strategies to specific national conditions. Helps gain local market share. Raises production costs. Example: Unilever. © McGraw Hill 34  Figure 8.7 Four Ways to Expand Internationally Access the text alternative for slide images. © McGraw Hill 35  Choosing a Way to Expand Internationally Managers need to analyze the forces in the country the organization is contemplating expanding into in order choose the correct method and the most appropriate way. Exporting and importing: The least complex. Licensing: The foreign organization takes charge. Franchising: The foreign organization buys the rights to use brand name and operations know-how. Strategic alliances: The organization shares with the foreign company. Wholly owned foreign subsidiaries: The organization invest in established production operations in a foreign country, independent of any local direct involvement. © McGraw Hill 36  Planning and Implementing Strategy 1. Allocate responsibility for implementation to the appropriate individuals or groups. 2. Draft detailed action plans that specify how a strategy is to be implemented. 3. Establish a timetable for implementation that includes precise, measurable goals linked to the attainment of the action plan. 4. Allocate appropriate resources to the responsible individuals or groups. 5. Hold specific individuals or groups responsible for the attainment of corporate, divisional, and functional goals. © McGraw Hill 37 Because learning changes everything. ® www.mheducation.com © 2022 McGraw Hill. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw Hill.