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Planning and Strategic Management

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1 Planning and Strategic Management
Chapter 04

2 Learning Objectives LO1 Summarize the basic steps in any planning process LO2 Describe how strategic planning should be integrated with tactical and operational planning LO3 Identify elements of the external environment and internal resources of the firm to analyze before formulating a strategy LO4 Define core competencies and explain why they provide the foundation for business strategy

3 Learning Objectives LO5 Summarize the types and choices available for corporate strategy LO6 Discuss how companies can achieve competitive advantage through business strategy LO7 Describe the keys to effective strategy implementation

4 Decision Making Stages and Formal Planning Steps
Figure 4.1

5 Planning Planning conscious, systematic process of making decisions about goals and activities that an individual, group, work unit, or organization will pursue in the future. a purposeful effort that is directed and controlled by managers and often draws on the knowledge and experience of employees throughout the organization.

6 The Basic Planning Process
Step 1 Situational Analysis Step 2 Alternative Goals and Plans Step 3 Goal and Plan Evaluation Step 4 Goal and Plan Selection Step 5 Implementation Step 6 Monitor and Control 4-6

7 Situational Analysis Situational analysis
A process planners use, within time and resource constraints, to gather, interpret, and summarize all information relevant to the planning issue under consideration.

8 Alternative Goals and Plans
Should stress creativity and encourage managers and employees to think in broad terms about their jobs. Goal A target or end that management desires to reach Specific, measurable, attainable, relevant, time-bound - SMART

9 Question ___________ are the actions or means managers intend to use to achieve organizational goals. Missions Plans Strategies Services The correct answer is b – plans. See next slide 4-9

10 Alternative Goals and Plans
The actions or means managers intend to use to achieve organizational goals Contingency plans sets of actions to be taken when a company’s initial plans have not worked well or if events in the external environment require a sudden change

11 Goal and Plan Evaluation
Managers will evaluate the advantages, disadvantages, and potential effects of each alternative goal and plan. Must prioritize those goals and even eliminate some of them. Managers must consider carefully the implications of alternative plans for meeting high priority goals.

12 Goal and Plan Selection
Managers will select the option that is most appropriate and feasible The evaluation process will identify the priorities and trade-offs among the goals and plans Scenario A narrative that describes a particular set of future conditions.

13 Implementation Managers and employees must understand the plan, have the resources to implement it, and be motivated to do so Successful implementation requires a plan to be linked to other systems in the organization, particularly the budget and reward systems

14 Monitor and Control Managers must continually monitor the actual performance of their work units against the unit’s goals and plans. Manager’s also need to develop control systems to measure that performance and allow them to take corrective action when the plans are implemented improperly or when the situation changes

15 Strategic Planning Strategic planning Strategic goals
A set of procedures for making decisions about the organization’s long-term goals and strategies Strategic goals major targets or end results that relate to the long-term survival, value, and growth of the organization.

16 Strategic Planning Strategy
A pattern of actions and resource allocations designed to achieve the organization’s goals

17 Strategic Planning Where will we be active? How will we get there?
How will we win in the marketplace? How fast will we move and in what sequence will we make changes? How will we obtain financial returns

18 Hierarchy of Goals and Plans
Figure 4.2

19 Tactical and Operational Planning
Tactical planning A set of procedures for translating broad strategic goals and plans into specific goals and plans that are relevant to a distinct portion of the organization, such as a functional area like marketing.

20 Tactical and Operational Planning
The process of identifying the specific procedures and processes required at lower levels of the organization.

21 The Strategy Map Figure 4.3

22 Strategic Planning Strategic management
A process that involves managers from all parts of the organization in the formulation and implementation of strategic goals and strategies.

23 The Strategic Management Process
Figure 4.4

24 Question An organization’s __________ is the basic purpose and scope of operations. Mission Strategy Goal Policy The correct answer is a - mission. See next slide 4-24

25 Establishment of Mission, Vision, and Goals
An organization’s basic purpose and scope of operations.

26 Environmental Analysis
Table 4.1

27 Analysis of External Opportunities and Threats
Stakeholders Groups and individuals who affect and are affected by the achievement of the organization’s mission, goals, and strategies

28 Analysis of Internal Strengths and Weaknesses
Resources Inputs to a system that can enhance performance Tangible, intangible assets

29 Internal Resource Analysis
Table 4.2

30 Resources and Core Competencies
Figure 4.5

31 Analysis of Internal Strengths and Weaknesses
Benchmarking process of assessing how well one company’s basic functions and skills compare with those of another company or set of companies. goal of benchmarking is to thoroughly understand the “best practices” of other firms and to undertake actions to achieve both better performance and lower costs

32 SWOT Analysis and Strategy Formulation
A comparison of strengths, weaknesses, opportunities, and threats that helps executives formulate strategy.

33 SWOT Analysis and Strategy Formulation
Corporate strategy The set of businesses, markets, or industries in which an organization competes and the distribution of resources among those entities Concentration A strategy employed for an organization that operates a single business and competes in a single industry.

34 Summary of Corporate Strategies
Figure 4.6

35 SWOT Analysis and Strategy Formulation
Vertical integration The acquisition or development of new businesses that produce parts or components of the organization’s product Concentric diversification A strategy used to add new businesses that produce related products or are involved in related markets and activities.

36 SWOT Analysis and Strategy Formulation
Low-cost strategy A strategy an organization uses to build competitive advantage by being efficient and offering a standard, no-frills product Differentiation strategy A strategy an organization uses to build competitive advantage by being unique in its industry or market segment along one or more dimensions.

37 Strategy Implementation
Define strategic risks Assess organization capabilities Develop an implementation agenda Create an implementation plan

38 Strategic Control Strategic control system
A system designed to support managers in evaluating the organization’s progress regarding its strategy and, when discrepancies exist, taking corrective action.

39 BCG Matrix Figure 4.7

40 Destination CEO: V.F. Corp.
What is a key strength of V.F. Corp.? Discuss the pros and cons of moving manufacturing facilities overseas. BusinessWeek TV’s Destination CEO Name: VF Corp. CEO of Company: Mackey McDonald Themes: Planning and Strategic Management Suggested chapters: 4 Short paragraph about the video. Check your closet, and most likely you will find something made by V.F. Corp. While you might not know the name, you know its brands. They include Wrangler, Lee, North Face, Vans, Reef, and Nautica; to name a few. CEO Mackey McDonald grew up in Georgia, and worked at a men’s clothing store while in high school. After graduating from college, he spent time in Vietnam and later worked at Hanes before coming to V.F. McDonald credits planning and preparation as a key lessons he learned early. He is well known for his knack for branding, and he had made V.F. into a “lifestyle” apparel company with strong consumer recognition. McDonald has faced his share of challenges at V.F. One example is when the company cut 13,000 jobs and moved manufacturing overseas to better compete. The company continues to search for new brands to acquire in order to grow. V.F. trades under the symbol of VFC on the NYSE. Note: In April 2007, VF Corp sold its women’s intimate apparel line to Fruit of the Loom. 3-4 multiple choice questions with answers regarding video topics V.F. brands include all of the following except: Lee Nautica Lucky North Face Before coming to V.F., McDonald was employed at what company? Tommy Hilfiger Ralph Lauren Fruit of the Loom Hanes Which of the following was identified as a key strength of V.F. Corp.? advertising branding manufacturing communicating 2-3 essay or discussion questions with suggested answers regarding video topics Conduct research on V.F. Corp. Has the company acquired new brands? If so, name them. Student responses will vary. In September 2007, VF acquired trendy jeans maker Seven for All Mankind. What V.F. brands do you own? Student responses will vary. Most likely, students will identify with several of the V.F. brands. Discuss the pros and cons of moving manufacturing facilities overseas. Student responses will vary. Labor savings is the main reason why companies choose to relocate manufacturing facilities overseas. One con is the loss of U.S. jobs. Yet management often maintains that it is creating more jobs for the company by cutting labor costs. Companies must also consider reliability and delivery when moving manufacturing overseas. Management control is significantly reduced when manufacturing relocates. Political risk is also a major consideration in some countries. Product piracy can be an issue in countries such as Viet Nam, China, and Indonesia.

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