Copyright © Glencoe/McGraw-Hill Slide 1 of 12 BUSINESS MANAGEMENT Real-World Applications & Connections GLENCOE Section 10.1 What Is the Planning Process? In this section: Strategic planning is one of the functions of management. This section discusses: Why Plan? Strategy
Copyright © Glencoe/McGraw-Hill Slide 2 of 12 BUSINESS MANAGEMENT Real-World Applications & Connections GLENCOE Section 10.1 What Is the Planning Process? What You’ll Learn Why businesses use strategic planning. The difference between formal and functional planning. How to define short-range, intermediate, and long-range plans. How to differentiate between operational and strategic plans. How grand, business, and functional strategies work in a company.
Copyright © Glencoe/McGraw-Hill Slide 3 of 12 BUSINESS MANAGEMENT Real-World Applications & Connections GLENCOE Section 10.1 What Is the Planning Process? Why It’s Important Strategic planning develops a course of action for the future in spite of changing economic and social conditions.
Copyright © Glencoe/McGraw-Hill Slide 4 of 12 BUSINESS MANAGEMENT Real-World Applications & Connections GLENCOE Section 10.1 What Is the Planning Process? Key Terms formal planning defensive or retrenchment strategy operational planning combination strategy strategic planning business strategies grand or corporate strategies overall cost leadership growth strategy differentiation stability strategy functional strategies
Copyright © Glencoe/McGraw-Hill Slide 5 of 12 BUSINESS MANAGEMENT Real-World Applications & Connections GLENCOE Section 10.1 What Is the Planning Process? Why Plan? Planning is the process that businesses use to decide the company’s goals for the future and ways to achieve those goals. Planning prepares managers and businesses to meet the challenges of economic, social, technological and political changes. Without plans, companies would not know how to handle crisis situations. They would also be unable to deal with new developments, such as changes in technology or increased competition.
Copyright © Glencoe/McGraw-Hill Slide 6 of 12 BUSINESS MANAGEMENT Real-World Applications & Connections GLENCOE Section 10.1 What Is the Planning Process? Formal Planning 1. Short-range plans cover one year. 2.Long-range plans cover three to five years, but some cover as far as 20 years. 3.Intermediate plans cover the time span between short- and long-range plans, usually from one to three or one to five years. Formal planning is the systematic studying of an issue and preparation of a written document to deal with the problem. There are three basic time spans for developing business plans:
Copyright © Glencoe/McGraw-Hill Slide 7 of 12 BUSINESS MANAGEMENT Real-World Applications & Connections GLENCOE Section 10.1 What Is the Planning Process? Operational and Strategic Plans Operational planning is short-range planning that focuses on forming ideas for dealing with specific functions in the company. Strategic planning is long-range planning done by the highest management levels in the company.
Copyright © Glencoe/McGraw-Hill Slide 8 of 12 BUSINESS MANAGEMENT Real-World Applications & Connections GLENCOE Section 10.1 What Is the Planning Process? Strategy Grand (or Corporate) Strategies Business Strategies Functional Strategies Strategy is a course of actions. Strategies exist at three primary levels in a company:
Copyright © Glencoe/McGraw-Hill Slide 9 of 12 BUSINESS MANAGEMENT Real-World Applications & Connections GLENCOE Section 10.1 What Is the Planning Process? Fig 2-1 Grand Strategies Growth strategy Stability strategy Retrenchment strategy Combination strategy Grand strategies provide overall direction for the company. They deal with the most important aspects of the company’s operation.
Copyright © Glencoe/McGraw-Hill Slide 10 of 12 BUSINESS MANAGEMENT Real-World Applications & Connections GLENCOE Section 10.1 What Is the Planning Process? Business Strategies Overall cost leadership strategy Differentiation strategy Focus strategy Business strategies affect only one or two departments and can be classified as:
Copyright © Glencoe/McGraw-Hill Slide 11 of 12 BUSINESS MANAGEMENT Real-World Applications & Connections GLENCOE Section 10.1 What Is the Planning Process? Functional strategies Functional Strategies Functional strategies are short-range operational plans that support business strategies by emphasizing practical implementation. The most common functional plans are: Sales and marketing Production Finance Research and development Personnel
Copyright © Glencoe/McGraw-Hill Slide 12 of 12 BUSINESS MANAGEMENT Real-World Applications & Connections GLENCOE Section 10.1 What Is the Planning Process? Fact and Idea Review 1.What is planning, and what questions does it answer? 2.What is the difference between strategic planning and operational planning? Between long-range and short-range planning? 3.What is the difference between vertical integration and diversification? 4.Under what circumstances would a business adopt a retrenchment strategy. 5.List the three classifications of business strategies.