Chapter 5
Planning and Goal Setting
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Read “Benchmarking” p. 159
1.
2.
Is Nintendo successful?
How has Nintendo used innovative
ideas to create new products?
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Goals and Plans
Goal
A desired future state that the organization attempts to
realize.
Plan
A blueprint specifying the resource allocation, schedules,
and other actions necessary for attaining goals.
Planning is considered the most fundamental management
function – and the most controversial. Why?
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Are you an Effective Planner?
1.
2.
3.
4.
5.
6.
Give an example of a personal goal.
Do you use a calendar/ scheduler/ appt.
book?
Do you set priorities? Give an example.
Do you set deadlines? Give an example.
Are most your days hectic & disorderly?
Do you believe you are a good planner?
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Ex. 5.1
Levels of Goals/Plans and Their Importance
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Mission Statement
What is a mission statement?
* What the organization stands for
* Describes values and aspirations
* Focuses on customers, values, product
quality, and attitude toward employees.
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Ben & Jerry’s Mission


To make, distribute, & sell the finest quality
all natural ice cream & euphoric concoctions
with continued commitment to incorporating
wholesome, natural ingredients and promoting
business practices that respect the Earth and
the Environment.
What does this statement really tell you about
the company?
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Purposes of Goals and Plans
 Legitimacy/mission statement
 Source of motivation and commitment
 Rationale for decisions
 Guides to action
 Resource allocation
 Standard of performance
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Goals and Plans
Strategic Goals
 Where the organization wants to be in the future.

Pertain to the organization as a whole.
Strategic Plans
 Action Steps.

Blueprint that defines the organizational activities and
resource allocations.
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Tactical Goals and Plans
Tactical Goals
Goals that define the outcomes that major divisions
and departments must achieve.
Tactical Plans
Plans designed to help execute major strategic plans.
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Operational Goals and Plans
Operational Goals
Specific, measurable results expected from
departments, work groups, and individuals.
Operational Plans
Organization’s lower levels that specify action
steps toward achieving operational goals.
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Characteristics of Effective Goal
Setting
Ex. 5.4
Goal Characteristics
Specific and measurable.
Cover key result areas.
Challenging but realistic.
Defined time period.
Linked to rewards.
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Planning Types




Management by Objectives (MBO)
Single Use Plans
Standing Plans
Contingency Plans
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Ex. 5.5
Model of the MBO Process
Step 1: Setting Goals
Corporate Strategic Goals
Departmental Goals
Individual Goals
Step 2: Developing Action Plans
Action Plans
Review Progress
Step 3:
Reviewing Progress
Take Corrective
Action
Appraise Performance
Step 4: Appraising Overall
Performance
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MBO Benefits and Problems
Benefits
Ex. 5.6




Manager and employee efforts are focused on
activities that will lead to goal attainment.
Performance can be improved at all company levels.
Employees are motivated.
Departmental and individual goals are aligned with
company goals.
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MBO Benefits and Problems (contd.)
Problems
Ex. 5.6





Constant change prevents MBO from taking hold.
An environment of poor employer-employee
relations reduces MBO effectiveness.
Strategic goals may be displaced by operational
goals.
Mechanistic organizations and values that
discourage participation can harm the MBO process.
Too much paperwork saps MBO energy.
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Plans – see Exhibit 5.7, page 165



Single-Use
Standing
Contingency

Crisis Management
Three Stages



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Prevention
Preparation
Containment
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Strategic Management
Set of decisions and actions used to formulate
and implement strategies that will provide a
competitively superior fit between the
organization and its environment so as to
achieve organizational goals
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Strategic Management Questions




What changes and trends are occurring?
Who are our customers? What do they want?
What products/services should we offer?
How can we offer these products/services
efficiently?
Did Nintendo do a good job with Strategic
Management?
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Strategic Management



What does “competitive” mean?
What is a “competitive advantage”?
What is a “core competency”?
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5-20
Ex. 5.10
The Strategic Management Process
Scan External
Environment
•National
Identify Strategic
Factors
•Opportunities
•Global
•Threats
Evaluate Current:
•Mission
•Goals
Define New:
•Mission
SWOT
•Goals
•Strategies
•Grand Strategy
Scan Internal
Environment
•Core
Competence
Identify
Strategic:
•Corporate
•Business
•Functional
Implementing Strategy
via Changes in:
•Structure
•Human resources
•Information &
control systems
Identify Strategic
Factors
•Strengths
•Weaknesses
•Synergy
•Value Creation
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Southwest Airlines – SWOT
SWA is a low cost, short haul, point-to-point air
carrier.
Primary Goal: LOW cost/customer service
Internal Strengths_____________
Internal Weaknesses ______________
External Opportunities _____________
External Threats _____________
Resulting Strategies:
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Kraft Foods - SWOT
Read “Kraft Foods”, p. 177
1. List one Kraft strength: _____________
2. List one Kraft weakness: ____________
3. List one Kraft opportunity: _____________
4. List one Kraft threat: _______________
5. List one Kraft Strategy resulting from these
events: _____________________________
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Formulating Strategies



How do we decide what strategies work best?
Create strategies based on assessment of the
competitive forces that effect the business.
Porter’s 5 Forces Model (See exhibit 5.12, pg.
178)
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Porter’s Competitive Forces
Threat of substitute products
Potential new entrants
Rivalry among competitors
Bargaining power of buyers
Bargaining power of suppliers
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The Five Forces Affecting
Industry Competition
Ex. 5.12
SOURCES: Based on Michael
E. Porter, Competitive
Strategy: Techniques for
Analyzing Industries and
Competitors (New York: Free
Press, 1980); and Michael E.
Porter, “Strategy and the
Internet,” Harvard Business
Review (March, 2001), 63-78.
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Competitive Strategies (see exhibit 5.14, p.
180)
1. Differentiation: how will you make your product
different from the competition? Ex. Auto
industry.
2. Cost Leadership: how will you aggressively cut
costs and produce more efficiently? Ex. Walmart
3. Focus: how can you concentrate on a specific
market or group, adopting a Niche Strategy? Ex.
SAS
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Tools for Putting
Strategy into Action
Ex. 5.15
SOURCE: Adapted from Jay R. Galbraith and Robert K. Kazanjian, Strategy Implementation: Structure, Systems, and Process, 2d ed. (St. Paul, Minn.: West, 1986), 115. Used
with permission.
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Conclusion






Why do we need goals?
What do we need in addition to goals?
What is strategic management?
What is SWOT analysis?
What are the 3 competitive strategies?
How do companies “Win” in the
marketplace?
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