Fundamentals of Management PDF

Fundamentals of Management Robbin-Chapter 3, Page 73 Chapter 02 Planning and Strategic Management Learning Objectives 6.1 Discuss the nature and purposes of planning. 6.2 Explain what managers do in the strategic management process. 6.3 Com...

Fundamentals of Management Robbin-Chapter 3, Page 73 Chapter 02 Planning and Strategic Management 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. Arnold Schwarzegger Arnold Schwarzegger What Is Planning? All managers plan. Even if you’re not a manager, you’re likely to have to plan when, where, and how to get your work assignments done. Group Discussion: Suppose you arrange the product launching, Iphone 13? What would you plan for the event? What Is Planning? Planning: The primary management function. Involves defining goals, Establishing an overall strategy for achieving those goals. Developing a comprehensive hierarchy of plans to integrate and coordinate activities What is to be done and How it is to be done. – Graduation Dinner Party/Dance What Is Planning? Defines specific goals that are to be met in a specific time period. They are written down and made available to organization members Where little is verbalized or written down and the planning is general and lacks continuity Reasons for Planning Exhibit 6-1 Reasons for Planning Establishes the goals or Establishes coordinated effort standards that facilitate managerial control Reduces overlapping and Reduces uncertainty: wasteful activities. What managers need in a changing environment. Criticisms of Formal Planning May create rigidity- Firm Can’t replace intuition and creativity Focuses attention on today’s success, not tomorrow’s survival Reinforces success, which may lead to failure Criticisms of Formal Planning May create rigidity: – With goals and a timetable that are set under the assumption that the environment won’t change. – Managers need to remain flexible and not be tied to a course of action simply because it’s the plan. Criticisms of Formal Planning Can’t replace intuition and creativity: – Planning should enhance and support intuition and creativity, not replace it. – Someone’s Innovation Vision 1970s-1980s 1985 1990s 2000 Criticisms of Formal Planning Focuses attention on today’s success, not tomorrow’s survival – Focus on how best to capitalize on existing business opportunities instead of ways to reinvent the industry. – Formal plans with long timeframes may result in lost market share and high catch-up costs when other competitors take the lead. – Managers should plan with an eye to untapped opportunities. Criticisms of Formal Planning Reinforces success, which may lead to failure – It’s difficult to shift from the comfort of what works to the uncertainty of the unknown. – However, managers may need to face that unknown and do things in new ways to be even more successful until they are forced to do so by environmental changes. It may be late. What Is Strategic Management? Strategic management: What managers do to develop an organization’s strategies Strategies: Plans for how the organization will do what it’s in business to do, how it will compete successfully, and how it will attract its customers in order to achieve its goals. – IBM reached a deal with The Weather Company to exploit opportunities for providing and distributing weather data. This type of data partnership is part of IBM’s long-term strategy. The Importance of Strategic Management It has a positive impact on organizational performance It prepares managers to cope with changing situations It guides managers to examine relevant factors in planning future action to achieve goals. Steps in the Strategic Management Process Exhibit 6-2 The Strategic Management Process Identify Mission, Goals, and Strategies The Vision: What will this business be in the future? The Mission: What is our reason for being in business? Goals & Vision Strategies Mission Identify Mission, Goals, and Strategies Our vision Workers and workplaces safe and secure from injury, illness, and disease. Our mission To add value for workers and employers by: Assisting them to create a culture of health and safety in the workplace Delivering quality decisions and advice Providing compassionate and supportive service Ensuring solid financial stewardship now and in the future Identify Mission, Goals, and Strategies Exhibit 6-3 Components of a Mission Statement Source: Robbins, Stephen P., Coulter, Mary, Management, 13th Ed., © 2016, p. 238. Reprinted and electronically reproduced by permission of Pearson Education, Inc., New York, NY.  External and Internal Analyses Step 2: External Analysis Step 3: Internal Analysis Competition Resources: Finance/Human Components of Capabilities: Skill environment Core competencies Threats: Negative trends Organizational strengths and opportunities: Positive weaknesses trends Formulating, Implementing, and Evaluating Results Step 4: Formulate Step 5: Implement Strategies Strategies Action Corporate Business Step 6: Evaluate Results Functional How effective have strategies Develop and been? Evaluate Strategic What adjustments are and select strategies. necessary? Type of Org. Strategies Exhibit 6-4 Organizational Strategies Corporate Strategy: Growth Strategy: – Used when an organization wants to grow and does so by expanding the number of products offered or markets served, either through its current business(es) or through new business(es). – As a result of its growth strategy, the organization may increase sales revenues, number of employees, market share. Corporate Strategy: How they growth? An organization expands the number of markets served or products offered – Concentration ▪ Growth through concentration is achieved when an organization concentrates on its primary line of business and increases the number of products offered or markets served in this primary business. – Vertical integration ▪ Which is an attempt to gain control of inputs (backward vertical integration), outputs (forward vertical integration), or both ▪ Becoming its own supplier. – Horizontal integration ▪ Combining with other organizations in the same industry—that is, combining operations with competitors. – Diversification: Related Diversification / unrelated Stability and Renewal Strategies Stability strategy Renewal strategy Organization Organization addresses continues to do declining organizational what it’s doing performance – Retrenchment – Turnaround Competitive Strategy Competitive strategy: A strategy for how an organization will compete in its business. Differentiate Strategy Cost leadership Strategy Focus Strategy Stuck in the middle Strategy Competitive Advantage What sets an organization apart; its distinctive edge that comes from its: – core competencies and resources Porter’s competitive strategies framework: 2 Differentiation 4 Stuck in the 1 Cost leadership strategy 3 Focus strategy strategy middle Having the lowest costs in Offering unique A cost advantage (cost focus) What happens if an its industry and aimed at products that are or a differentiation advantage organization can’t broad market. widely valued by (differentiation focus) in a develop a cost or Highly efficient. customers and aimed narrow segment or niche differentiation Overhead kept to a at broad market. (which can be based on advantage—bad minimum. Product differences: product variety, customer place to be. Does everything it can to exceptionally high type, distribution channel, or cut costs. quality, extraordinary geographical location). Product must be perceived service, innovative as comparable in quality to design, technological that offered by rivals or at capability, or an least acceptable to buyers. unusually positive brand image. Functional Strategy Those strategies used by an organization’s various functional departments to support the competitive strategy  Functional Strategy Case Study: Air Canada attempted to compete as a low-cost competitor to WestJet through Zip. This low-cost division ceased operations due to poor marketing (lack of branding) and human resource strategies (Zip employees were paid less than Air Canada employees). By contrast, WestJet Airlines communicates a very clear strategy to its employees: enjoyable flights and an affordable experience for travellers. Employees are asked to implement this strategy by working to keep costs down and improve turnaround time. Aware of the strategy, all WestJet employees know what is expected of them in a crisis, and all employees help in whatever ways are necessary to meet this strategy. Strategic Weapons Customer service Employee skills & loyalty Innovation Quality Social media Big data/digital tools Thank You