G0206 Principles of
Management
1
7
Foundations
of Planning and
Strategy
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Learning Outcomes
 Discuss the nature and purposes of
planning.
 Explain what managers do in the strategic
management process.
 Compare and contrast approaches to goal
setting and planning.
 Discuss contemporary issues in planning.
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Discuss the nature
and purposes of
planning.
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What is Planning?
Planning:
the primary management function.
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Reasons for Planning
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Criticisms of
Formal Planning
• May create rigidity
• Can’t replace intuition and creativity
• Focuses attention on today’s success, not
tomorrow’s survival
• Reinforces success, which may lead to
failure
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Formal Planning and
Organizational Performance
Does it pay to plan?




Higher profits
Higher return on assets
Improved quality of planning
Appropriate implementation
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Explain what
managers do in the
strategic
management
process.
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Strategic Management
• What managers do to develop an
organization’s strategies
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The Importance of
Strategic Management
 It has a positive impact on organizational
performance
 It prepares managers to cope with changing
situations
 It guides managers to examine relevant
factors in planning future action
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Steps in the Strategic
Management Process
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Step 1: Identify Mission,
Goals and Strategies
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External and Internal Analyses
Step 2: External
Analysis
 Competition
 Components of
environment
 Threats and
opportunities
Step 3: Internal Analysis
 Resources
 Capabilities
 Core competencies
 Organizational
strengths and
weaknesses
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Formulating, Implementing,
and Evaluating Results
Step 4: Formulate
Strategies
 Corporate
 Business
 Functional
Step 5: Implement
Strategies
Step 6: Evaluate Results
 How effective have
strategies been?
 What adjustments
are necessary?
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Strategies Managers Use
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Stability and Renewal
Strategies
• Stability strategy
• Renewal strategy
•Organization continues •Organization
to do what it’s doing
addresses declining
organizational
performance
• Retrenchment
• Turnaround
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Competitive Strategy
Competitive strategy:
a strategy for how an organization will
compete in its business.
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Competitive Advantage
What sets an organization apart; its distinctive
edge that comes from its:
core competencies and resources
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Functional Strategy
•
Those strategies used by an
organization’s various functional departments
to support the competitive strategy
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Strategic Weapons
•
•
•
•
•
•
Customer service
Employee skills & loyalty
Innovation
Quality
Social media
Big data
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Compare and
contrast
approaches to goal
setting and
planning.
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Setting Goals and
Developing Plans
Types of goals
 Financial versus strategic
 Stated versus real
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Traditional Goal Setting
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Management by Objectives
•
•
•
•
Goal specificity
Participative decision making
Explicit time period
Performance feedback
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Steps in Goal Setting
1. Review the organization’s mission and
employees’ key job tasks.
2. Evaluate available resources.
3. Determine the goals individually or with input
from others.
4. Make sure goals are well-written and
communicate to all who need to know.
5. Build in feedback mechanisms to assess goal
progress.
6. Link rewards to goal attainment.
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Types of Plans
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Developing Plans
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Approaches to Planning
 Top-down traditional approach
 Development by organizational members
Organization plans can best be understood
by looking at who does the planning.
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Discuss
contemporary
issues in planning.
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Contemporary Issues
affecting Planning
 Planning in dynamic environments
 Environmental scanning
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Thank you.
Have a wonderful day!
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