Chapter 8
The Manager as Planner
and Strategist
8-1
Learning Objectives
1.
2.
3.
4.
5.
6.
7.
Describe the three steps of the planning process and the
relationship between planning and strategy.
Differentiate between corporate-, business-, and functionallevel planning
Explain the concept of organizational mission and how it
influences goal setting and planning.
Explain the difference between single-use plans and
standing plans.
Define the characteristics of effective goals.
Describe the strategic planning process and SWOT analysis.
Describe corporate-level strategies.
8-2
Learning Objectives (contd.)
8.
9.
Describe business-level strategies, including Michael E.
Porter’s plan to gain competitive advantage.
Describe the role of functional-level strategy.
8-3
Why Plan?
Stephen Robbins and David DeCenzo use an example from Alice
in Wonderland to put the function of planning in perspective.
When Alice came to a fork in the road, she asked the Cheshire cat
for directions. The cat asked, “Where do you want to go?”
Alice replied that it didn’t matter. The cat said “Then either road
will take you there.”
If an organization doesn’t know where it wants to go – getting
“there” may prove difficult.
8-4
What are Some Problems with Formal
Planning?
 Plans can become rigid
Formal plans often do not hold up in a changing
environment
 Planning can sometimes focus more attention on
today’s competition and less on tomorrow’s
environment
 Planning isn’t a replacement for creativity
8-5
Planning Process
Identifies and selects appropriate goals and courses of
action for the organization
Goal
A desired future state that the organization attempts to
realize.
Strategy
The decisions and actions managers take to attain goals.
8-6
Three Steps in Planning
8-7
Levels and Types of Planning
8-8
Levels of Planning
Corporate Level - Large organizations which compete in
many different industries and markets
Business Level – An organization which competes within a
specific industry
Functional Level – A unit or department within a business
in which people have similar skills and resources such as
marketing, manufacturing,
8-9
Single-Use and Standing Plans

Single-Use Plans



Plans developed for goals which are unlikely to be
repeated – to meet a unique situation
Example: patching computer systems for change in
daylight savings dates, mergers of companies
Standing Plans


On-going policies, rules and procedures for activities
performed repeatedly – makes sense to have standing
procedures
Example: UPS package delivery procedures,
registration for classes.
8-10
Scenario Planning

Generate multiple possible “futures” and prepare
for possible outcomes (contingency planning).




Identify important factors which may occur in
environment – housing construction prepares for rise in
interest rates
Develop plans for organization’s response – focus on
worst case scenario alternative financing in housing
Scenario Building - Pentagon
Develop plans for crisis situations or emergencies
8-11
Purpose of Planning
 Legitimacy/mission statement
 Source of motivation and commitment
 Sense of direction and purpose
 Coordination of organizational functions
 Specifies responsibility
 Standard of performance
8-12
Determining Mission and Goals
Mission Statement
 General statement of organization’s reason for
being

Includes values and aspirations

Identifies products and customers
eBay: eBay's mission is to provide a global trading
platform where practically anyone can trade
practically anything.
Google: Google Corporate Information: Company
Overview
8-13
Determining Mission and Goals
College of Business Mission Statement
The College of Business seeks to bring the unchanging values of Auburn
University – Practical Education and Research, Honesty, and Hard
Work – to a changing world. Through the creation, application, and
dissemination of business knowledge, we fulfill the needs of our
many constituencies. Through professional programs that integrate
individual responsibility, initiative, and teamwork with essential
knowledge, we help students with diverse backgrounds become
Auburn Men and Women, able to succeed professionally without
compromising those values that make success worthwhile. Our
community of students, faculty, staff and alumni operates on the
shared principles of the Auburn Creed. We believe it is a lifelong
guide for an ethical personal and professional life.
8-14
Characteristics of Effective Goals
SMART Goals
Specific
Measurable
Attainable - challenging but realistic.
Results - oriented
Target dates
8-15
Formulating Strategy

Develop strategies to accomplish mission and goals



To position the organization to its best competitive
advantage in the environment
Analyze factors which affect the organization’s ability to
meet its goals
Strategies which



Focus on Core Competencies
Develop Synergy
Create value for Customers
8-16
Formulating Strategy

SWOT analysis




Strengths
Weaknesses
Opportunities
Threats
Internal analysis
External Environment
8-17
Formulating Strategy
8-18
Formulating Strategy

Internal Strengths and Weaknesses







Look at all aspects of the organization:
Management and organizational structure
Marketing
Human Resources
Finance
Production
Research and Development
8-19
Formulating Strategy

External Threats and Opportunities

General Environment (Chapter 6)






Technological
Socio-cultural
Economic
Political and Legal
Demographic
Task Environment




Customers
Competitors
Suppliers
Distributors
8-20
Formulating Strategy
Michael Porter’s Five Forces Model
Competitive Forces
Level of Rivalry
Increased competition results in lower
profits.
Potential for Entry
Easy entry leads to lower prices and profits.
Power of Suppliers
If there are only a few suppliers of important
items, supply costs rise.
Power of Customers
If there are only a few large buyers, they can
bargain down prices.
Substitutes
More available substitutes tend to drive
down prices and profits.
8-21