Planning, Strategy, and Competitive Advantage Chapter 6 Planning, Strategy, and Competitive Advantage

Learning Objectives Identify the three main steps of the planning process and explain the relationship between planning and strategy Describe the different levels and types of planning and how they lead to competitive advantage

Planning and Strategy Planning Strategy Identifying and selecting appropriate goals and courses of action for an organization Strategy A cluster of decisions about what goals to pursue, what goals to pursue, what actions to take, and how to use resources to achieve goals

Question? What is a broad declaration of an organization’s purpose ? Company Bill of Rights Mission Statement Business Plan Executive Summary

Planning and Strategy 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

Three Steps in Planning Figure 6.1

Why Planning is Important Planning is necessary to give the organization a sense of direction and purpose Planning is a useful way of getting managers to participate in decision making about the appropriate goals and strategies for an organization

Why Planning is Important A plan helps coordinate managers of the different functions and divisions of an organization to ensure that they all pull in the same direction and work to achieve its desired future state A plan can be used as a device for controlling managers within an organization

Levels of Planning at General Electric Figure 6.2

Levels and Types of Planning Corporate-Level Plan Top management’s decisions pertaining to the organization’s mission, overall strategy, and structure. Provides a framework for all other planning. Corporate-Level Strategy A plan that indicates in which industries and national markets an organization intends to compete.

Levels and Types of Planning Business-Level Plan Divisional managers’ decisions pertaining to divisions long-term goals overall strategy, and structure Business-Level Strategy A plan that indicates how a division intends to compete against its rivals in an industry

Levels and Types of Planning Functional-Level Plan Functional managers’ decisions pertaining to the goals that they propose to pursue to help the division attain its business-level goals Functional Strategy A plan that indicates how functional managers intend to increase the value of the organization’s goods and services

Levels and Types of Planning Figure 6.3

Time Horizons of Plans Time Horizon The intended duration of a plan. 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.

Discussion Question Which type of plan is the most useful? Standing Plan Single-Use Plan Functional Plan Strategic Plan

Types of Plans Standing Plans Single-Use Plans Use in programmed decision situations Single-Use Plans Developed for a one-time, non-programmed issue

Standing Plans Policies Rules Standard operating procedures (SOP) general guides to action. Rules formal written specific guides to action. Standard operating procedures (SOP) specify an exact series of actions to follow.

Types of Plans Programs Project integrated plans achieving specific goals. Project specific action plans to complete programs.