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Chapter 4 Planning
What’s the planning of organizations?
Management by objectivesThe strategic management process
Benchmarking / ISO9000 series /six sigma
Entrepreneurship: a special case of strategic planning
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What’s the planning of organizations?
The content of planning
Advantages and disadvantages of planning
Types of plans
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Planning Encompasses:
Defining the organization’s objectives or goals.
Establishing an overall strategy for achievingthose goals.
Developing a comprehensive hierarchy of plans to
integrate and coordinate activities.
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Advantages of Planning
It gives direction to managers and nonmanagers
alike.
Planning can reduce the impact of change.
It minimize waste and redundancy.
Planning establishes objectives or standards that
facilitate control.
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Disadvantages of Planning Planning may create rigidity.
Plans can’t be developed for a dynamic
environment.
Formal plans can’t replace intuition and creativity.
Planning focuses managers’ attention on today’s
competition, not on tomorrow’s survival. Formal planning reinforces success, which may
lead to failure.
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Exhibit 4-1 Types of Plans
Breadth Time frame Specificity Frequency of use
Strategic Long term Directional Single use
Tactical Short term Specific Standing
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Strategic and Tactical Plans Strategic plans are plans that apply to the enti re organization ,
establish the organization’s overall objectives , and seek to
position the organization in terms of its environment.Tactical plans (sometimes referred to as operational plans )
specify the details of how the overall objectives are to be
achieved.
Strategic and tactical plans differ in three primary ways — their time frame, scope, and whether they include a known
set of organizational objectives.
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Short-term and Long-term Plans Short-term plans are plans that cover less
than one year .
Long-term plans are plans that extend beyond five years .
Their differences lie in the length of future
commitments and the degree of variabi l i ty organizations face.
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Specif ic and Directional Plans
Specific plans have clearly defined objectives
and leave no room for misinterpretation.
Directional plans are flexible plans that set
out general guidelines.
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Single-use and Standing Plans
Single-use plans are used to meet the
needs of particular or unique situation.Standing plans are ongoing, and provide
guidance for repeatedly performed actions
in an organization.
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Chapter 4 Foundation of Planning
What’s the planning of organizations?
Management by objectivesThe strategic management process
Benchmarking / ISO9000 series /six sigma
Entrepreneurship: a special case of strategic planning
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Management by Organization
What is MBO?
The common elements in a MBO program
How does a manager set employee
objectives?
Potential problems
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What I s MBO?
MBO is a system in which specific performance
objectives are jointly determined by subordinates
and their supervisors, progress toward objectives
is periodically reviewed, and rewards are
allocated on the basis of that progress.
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Cascading of Objectives
Overall
organizational
objectives
Divisionalobjectives
Departmental
objectives
Individual
objectives
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The Common Elements in a
MBO Program
Goal specificityParticipative decision making
An explicit time period
Performance feedback.
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How does a manager set employee
objectives?
Identify an employee’s key job tasks.
Establish specific and challenging goals for each key task.
Allow the employee to actively participate.
Prioritize goals.
Build in feedback mechanism to assess goal
progress.
Link rewards to goal attainment.
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Potential Problems Employees tend to focus on the goals by
which they will be judged .
Specific goals encourage individual
achievement rather than a team focus.
Specific goals may have a tendency to l imit
employees’ potential and discourage efforts for
continuous improvement .
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Chapter 4 Foundation of Planning What’s the planning of organizations?
Management by objectivesThe strategic management process
Benchmarking / ISO9000 series /six sigma
Entrepreneurship: a special case of strategic planning
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Identify the
organization’s
current mission,
objectives, andstrategies
Analyze theenvironment
Identify
opportunities
and threats
Analyze theorganization’s
resources
Identifystrengths and
weaknesses
Reassess the
organization’s
mission and
objectives
Formulate
strategies
Implement
strategies
Evaluate
results
The Strategic Management Process
1.
2. 3.
4. 5.
6.
7. 8. 9.
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Environmental scanning refers to screening
large amounts of information to detect
emerging trends and create a set of scenarios. Competi tive intel l igence refers to accurate
information about competitors that allows
managers to anticipate competitors’ actions
rather than merely react to them.
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SWOT Analysis Opportunities are positive external environmental
factors, and threats are negative ones.
Strengths are internal resources that are availableor things that the organization does well.
Weaknesses are those resources that anorganization lacks or activities that it does not do
well. Core competency refers to any of the strengths that represent unique skills or resources that candetermine the organization’s competitive edge.
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Organization’s
resources
Opportunities
in the
environment
Organization’s
opportunities
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1.The growth strategyA strategy in which an organization attempts too increase the
level of its operates; can take the form of increasing sales
revenue, number of employees, or market share.
2.The stability strategy
A strategy that is character ized by an absence of signi f icant
change.
3.Retrenchment strategy
A strategy is reducing i ts size, usually in an environment of
decline.
4.Combination strategy
A strategy that is the simultaneous pursui t by an organization of
two or more of growth, stabil i ty, and retrenchment strategies.
Grand Strategies
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1. Cost leadership strategy(low-cost producer)
The strategy an organization follows when it wants to be
the lowest-cost producer in its industry.
2. Differentiation strategy The strategy an organization follows when it wants to be
unique in i ts industry within a broad market.
3.Focus strategy
The strategy an organization follows when i t wants to
establi sh an advantage in a narrow market segment.
Competitive strategies
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Chapter 4 Foundation of Planning
What’s the planning of organizations?
Management by objectivesThe strategic management process
Benchmarking / ISO9000 series /six sigma
Entrepreneurship: a special case of strategic planning
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Benchmarking involves the search for the
best practices among competitors or
noncompetitors that lead to their superior
performance. The basic idea underlying benchmarking is that management can
improve quality by analyzing and then
copying methods of the leaders in various fields.
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Chapter 4 Foundation of Planning
What’s the planning of organizations?
Management by objectivesThe strategic management process
Benchmarking / ISO9000 series /six sigma
Entrepreneurship: a special case of strategic planning
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What is entrepreneurship?Entrepreneurship is a process by which individuals pursue
opportunities , ful f i l l ing needs and wants through innovation ,
without regard to the resources they cur rentl y control.
The common characteristics of entrepreneurs
A high need for achievement; believing strongly that they can
contr ol their own destinies; and taking only moderate r isks.
How to write a business plan? Business plan is a document that explains the business
founder’s vision and describes the strategy and operations of
that business.
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How to write a business plan?
Understand grand strategies and
competitive strategiesWhat’s SWOT analysis? What is itspurpose?
What’s the common elements in a MBOprogram? What we should avoid duringthe period of applying MBO?
Study & Practice