Presentation on theme: "Principles of Management"— Presentation transcript:
1 Principles of Management Goals and PlansGoalA desired future state that the organization wants to achieve.What do we want?PlanA blueprint of the actions necessary to reach the desired goal.How do we get there?
2 Planning Planning Dimensions The level of management developing the planThe type of plan (strategic or operational)The scope of the plan (broad or narrow)The time horizon of the plan (short- or long-term)The plan’s repetitiveness (standing or single-use)
4 Levels of Goals/Plans - NASA Planning DimensionsLevels of Goals/Plans - NASAA Mission Statement describes our purpose.Mission StatementEverything we do is focused on getting there.Strategic level is the “Big Picture”.Corporate StrategyStrategic PlansTake a man to the moon by 1970.Senior ManagementTactics break strategies into steps.Business Tactical GoalsTactical PlansBuild a rocket and launch pad.Middle ManagementAnd smaller steps.Functional GoalsFunctional PlansBuild part of a rocket.Lower Management
5 Types of Plans Standing Plans Policies, procedures, and rules developed for handling repetitive situations.PoliciesGeneral guidelines to be followed when making decisions.ProceduresA sequence of actions to be followed in order to achieve an objective.RulesA statement of exactly what should or should not be done.
6 Types of Plans (cont’d) Single-Use PlansPrograms and budgets developed for handling nonrepetitive situations.ProgramA set of activities designed to accomplish an objective over a specified period of time.Program developmentSet project objectives.Break the project down into a sequence of steps.Assign responsibility for each step.Establish starting and ending times.Determine the resources needed for each step.
7 Types of Plans (cont’d) Single-Use PlansBudgetRepresents the funds allocated to operate a unit for a fixed period of time.Is a planning tool initially and becomes a control tool after implementation of the plan.
9 Types of Plans (cont’d) Contingency PlansAlternative plans to be implemented if uncontrollable events occur.Developing a contingency planWhat might go wrong in my department?How can I prevent it from happening?If it does occur, what can I do to minimize its effect?Why Managers Don’t PlanClaimed lack of timeTendency toward action
10 Strategic and Operational Planning Strategic PlanningThe process of developing a mission and long-range objectives and determining in advance how they will be accomplished.Operational PlanningThe process of setting short-range objectives and determining in advance how they will be accomplished.StrategyA plan for pursuing the mission and achieving objectives.
12 Strategic Planning Corporate-Level Strategy Business-Level Strategy The plan for managing multiple lines of businessesBusiness-Level StrategyThe plan for managing one line of businessFunctional-Level StrategyThe plan for managing one area of the business
14 Industry and Competitive Situation Analysis Draws out those features in a company’s environment that most directly frame its strategic window of options and opportunities.Five Competitive Forces (Porter)Rivalry among competing sellers in the industryThreat of substitute products and servicesPotential new entrantsPower of suppliersPower of buyers
16 Company Situation Analysis Steps 1. Assessment of the present strategy based on performance.2. SWOT analysis.3. Competitive Strength Assessment (competitive advantage).4. Conclusions concerning competitive position.5. Determination of the strategic issues and problems that need to be addressed through strategic processes.Exhibit 5–6
17 Strategic Management Process Situation Analysis via SWOT Identify Strategic FactorsStrengthsWeaknessesScan Internal EnvironmentCore CompetenceSynergyValue CreationIdentifyStrategic:CorporateBusinessFunctionalDefine New:MissionGoalsGrand StrategyEvaluate Current:Scan External EnvironmentNationalGlobalOpportunitiesThreatsSWOTImplementing Strategy via Changes in:StructureHuman resourcesInformation & control systems
19 Competitive Strength Assessment for Starbucks Coffee Exhibit 5–8
20 Competitive Advantage Core CompetencyA functional capability (strength) that the firm does well and one that creates a competitive advantage for the firm.BenchmarkingThe process of comparing an organization’s products or services and processes with those of other companies.Environmental ScanningSearching the external environment for opportunities and threats.
21 Setting Objectives Objectives Goals State what is to be accomplished in singular, specific, and measurable terms with a target date.GoalsAre general targets to be accomplished that are translated into actionable objectives.
22 Criteria That Objectives Should Meet Exhibit 5–9
23 Management by Objective (MBO) Management by ObjectivesStep 1. Set individual objectives with plans jointly with employees.Step 2. Give feedback and evaluate.Step 3. Reward performance according to results.
24 Model of the MBO Process Step 1: Setting Goals& Developing Action PlansCorporate Strategic Goals Departmental Goals Individual GoalsAction PlansReview ProgressStep 2:Reviewing ProgressCorrective ActionAppraisal of Overall PerformanceStep 3: Reward Positive Performance
25 MBO Benefits and Problems Principles of ManagementBenefits of MBOProblems with MBO1. Manager and employee efforts are focused on activities that will lead to goal attainment.1. Constant change prevents MBO from taking hold.2. An environment of poor employer-employee relations reduces MBO effectiveness.2. Performance can be improved at all company levels.3. Strategic goals may be displaced by operational goals.3. Employees are motivated4. Mechanistic organizations and values that discourage participation can harm the MBO process.4. Departmental and individual goals are aligned with company goals.5. Too much paperwork saps MBO energy.
26 Corporate-Level Strategy Grand StrategiesGrowthStabilityTurnaround and retrenchmentCombinationGrowth StrategiesConcentrationBackward and forward integrationRelated and Unrelated diversification
27 Corporate Grand and Growth Strategies Exhibit 5–10
29 Competitive Strategies DifferentiationCompeting on the basis of features that distinguish one firm’s products or services from those of another.Cost LeadershipThe firm with the lowest total overall costs has a competitive advantage in price-sensitive markets.FocusConcentrating competitive efforts on a particular market segment, product line, or buyer group.
31 Functional-Level Operational Strategies MarketingWhich products to produce; how will they be packaged, advertised, distributed, and priced?OperationsWhich processing systems to use to convert inputs into outputs with quality and efficiency?Human ResourcesHow to recruit, select, train, evaluate, and compensate the workforce?
32 Functional-Level Operational Strategies (cont’d) FinanceHow to acquire the necessary equity or debt capital, meet the investment returns expectations of investors and shareholders; maintain an accounting system that optimizes the use of financial resources.Other Functional StrategiesResearch and development (R&D) is important to remaining competitive.