John Wutivongthanakorn
AMM103.0061
Exam III
Benefits of Planning
Planning is the process of setting up ideas of what to do in the future and how to
achieve them. Planning is a way to organize objectives to be done later on, if not than,
reorganizing will be on a regular basis. There are a few different ways to plan with their
own benefit. One of which is Formal Planning, which is a written documented that plan
to developed through an identifiable process. An example is when a manager organizes a
well-developed plan that is though thoroughly. Another type is Functional Plans, which is
the type that are sales and marketing, production, financial and personnel.
Next is the planning horizon, which has three different plans, one of which is
short-range plans, long-range plans and intermediate plans. The short-range plan is
“generally cover up to one year.” The long-range plan is “typically span at least three to
five years” and some time up to 20 years. The intermediate plans cover the time span
between short-range and long-range plans.
Another is Operational Plans and Strategic Plans, which operation planning is a
“short-range planning and concentrates on the formulation of functional plan.” Strategic
planning is analogous to top-level, long range planning. Where it’s “the planning process
applied at the highest levels of the organization, covering a relatively long period and
affecting many parts of the organization.”
The last type of planning is Contingency plan, which address the what-ifs of the
manager’s job; gets the manager in the habit of being prepared and knowing what to do if
something does go wrong. An example of contingency planning is when managers should
“identify the most critical assumptions of the current plan” and develop a reasonable
solution of solving it.
Establishing Objectives
Objectives are “statements outlining what the organization is trying to achieve;
give an organization and its member’s direction.” Objectives can either be long-range or
short-range. Long-range objectives “go beyond the organization’s current fiscal year. It
“must support and not conflict with the organizational mission.” As for short-range,
“generally tied to a specific time period of a year or less and are derived from an in-depth
evaluation of long-range objectives.”
The areas for establishing objectives in most organizations are profitability, which
“measures the degree to which the firm is attaining an acceptable level of profits.”
Second is market, which reflects the firm’s position in its marketplace, expressed in terms
of share of the market, dollar or unit volume in sales, or niche in the industry.” Third is
productivity, which measures the efficiency of internal operations expressed as a ratio of
inputs to outputs, such as number of items or services produced per unit of time.” Fourth
is product, which describes the introduction or elimination of products or services.”
Where product or service will be introduced or dropped. Fifth is a financial resource,
which “reflects goals relating to the funding needs of the firm.” Sixth is a physical
facility, which “describes the physical facilities of the firm.” Seventh is research and
innovation, where it “reflects the research, development, or innovation aspirations of the
firm.” It “usually expressed in terms of dollars to be expended.” Eighth is organization
structure, where it describe the objectives relating to changes in the organizational
structure and related actives.” Ninth are the human resources, which describes the human
resource assets of the organization” The last one is social responsibility, which “refers to
the commitments of the firm regarding society and the environment.”
Management by objectives (MBO)
Management by objectives is a “philosophy based on converting organizational
objectives into personal objectives. It assumes that establishing personal objectives elicits
employee commitment, which leads to improved performance.” This work best “when
the objectives of each organization unit are derived from the objectives of the next higher
unit in the organization.”
Levels of strategy
There are three primary levels in an organization and they are corporate (grand),
business and functional strategies. The corporate strategies, which have growth, stability,
defensive or retrenchment and combination strategies, which “address which businesses
an organization will be and how resources will be allocated among those businesses.”
Business strategies are “the second primary level of strategy formulation,” which “focus
on how to compete in a given business.” Finally functional strategies, which include
production, marketing finance and personnel, which “deal with the activities of the
different functional areas of the business.”
Growth, stability and defensive strategies
Growth strategies are “used when the organization tries to expand in terms of
sales, product line, number of employees, or similar measures.” “An organization can
grow through concentration of current businesses, vertical integration and
diversification.”
Stability strategies are “used when the organization is satisfied with its present
course.” This work best in a slow environment where “management will make efforts to
eliminate minor weaknesses, but generally its actions will remain the status quos.”
Defensive strategies are “sued when a company wants or needs to reduce its
operations.” There are three popular types, one of which is turnaround, which designed to
reverse a negative trend and get the organization back to profitability.” Another is
divestiture, where “the company sells or divests itself of a business or part of business or
part of a business.” Last one is liquidation, where the “entire company is sold or
dissolved.”
Mission Statement
The mission “defines the basic purpose or purposes of the organization,” meaning
why the organization exists. “Usually includes a description of the organization’s basic
products and or services and a definition of its markets and or sources of revenue.”
Peter Drucker
Peter Drucker is the one who “emphasized that an organization’s purpose should
be examined and defined not only at its inception or during difficult time but also during
successful periods.” His argues was that “an organization’s purpose is determined not by
the organization itself but by its customers.” It is more about the customer satisfaction
towards the organization’s product or service than the name or statutes of the
organization. There were three questions Drucker have as an outline, the first one is:
“where they are, how they buy, and how they can be reached.” The second is: “for
instance, does the Rolls-Royce owner buy transpiration or prestige?” The third and final
one is: what is the customer looking for in a product?” All of them are for manager must
identity about the customer.
Porter’s Five Forces Model
There are five forces model that was developed by Michael Porter to help
managers analyze their competitive environment. The five major forces are suppliers,
buyers, competitive rivalry among firms currently in the industry, product or service
substitutes and potential entrants into the industry. This falls into SWOT analysis, which
stand for Strengths, Weakness, Opportunities and Threats. Strengths are the things that
the company is strong in and does not need to improve much on. Weaknesses are things
that company should work on to improve on. Opportunities are the things that the
company can expand on growing into it’s own area of the company. Threats is somewhat
the same as weaknesses, if it’s not improved than it could have a big impact on the
company.