Planning is a process Identifying and Defining the Business

selecting appropriate goals and courses of Managers must ask three related questions about
Chapter 8:
action; one of the four principal tasks of a company’s products: (1) Who are our
management.
The Manager as a Planner and Strategist customers? (2) What customer needs are being
satisfied? (3) How are we satisfying customer
Strategy is a cluster of decisions about needs? to identify the customer needs that the
what goals to pursue, what actions to take, Levels and Type of Planning Determining the
The Nature of the organization satisfies and how the organization
and how to use resources to achieve goals. Planning Process Corporate-level Plan, Top management’s Organization’s satisfies those needs.
Mission Statement is a broad declaration decisions pertaining to the organization’s Missions and Goals
Establishing Major Goals
of an organization’s purpose that identifies mission, overall strategy, and structure.
Strategic Leadership, The ability of the CEO
the organization’s products and customers Corporate-level Strategy, A plan that
and top managers to convey a compelling vision
and distinguishes the organization from its indicates in which industries and national
Formulsting of what they want the organization to achieve to
competitors. markets an organization intends to
their subordinates.
compete. Strategy
Planning task; managers (1) establish and discover where an
Business-level Plan, Divisional managers’
organization is at the present time; (2) determine where it should be
decisions pertaining to divisions’ longterm
in the future, its desired future state; and (3) decide how to move it
goals, overall strategy, and structure.
forward to reach that future state. Business-level Strategy, A plan that
indicates how a division intends to
Why is Planning Important?
compete against its rivals in an industry.
 Give a sense of direction and purpose
 Getting managers to participate in decision making Functional-level Plan, Functional
 Helps coordinate managers managers’ decisions pertaining to the goals
that they propose to pursue to help the
Time Horizons of Plans : The intended duration of plans. division attain its business-level goals.
Standing Plans and Single-Use Plans Functional-level Strategy, A plan of action
Scenario Plans : The generation of multiple forecasts of future conditions to improve the ability of each of an
followed by an analysis of how to respond effectively to each of those organization’s functions to perform its
conditions. task-specific activities in ways that add The Five Forces Model
value to an organization’s goods and  The level of rivalry among organizations in an industry
Concentration on a Single Industry : Reinvesting a
 The potential for entry into an industry
company’s profits to strengthen its competitive position in
 The power of large suppliers
its current industry.
 The power of large customers
Vertical Integration : Expanding a company’s operations  The threat of substitute products
either backward into an industry that produces inputs for its Hypercompetition, Permanent, ongoing, intense competition brought about
products or forward into an industry that uses, distributes, in an industry by advancing technology or changing customer tastes.
or sells its products.
Formulating Corporate-Level Strategy
Formulating Business-Level
Strategy
Diversification : Expanding a company’s business operations into a new industry in order to produce new kinds of valuable goods or Low-cost strategy : Driving Focused low-cost Strategy :
services. the organization’s costs down Serving only one segment of the
 Related Diversification, Entering a new business or industry to create a competitive advantage in one or more of an organization’s below the costs of its rivals. overall market and trying to be the
existing divisions or businesses. lowest-cost organization serving
Synergy, Performance gains that result when individuals and departments coordinate their actions. Differentiation Strategy : that segment.
 Unrelated Diversification, Entering a new industry or buying a company in a new industry that is not related in any way to an Distinguishing an
organization’s current businesses or industries. organization’s products from Focused Differentiation Strategy :
the products of competitors Serving only one segment of the
International Expansion on dimensions such as overall market and trying to be the
Global Strategy : Selling the same standardized product and using the same basic marketing approach in each national market. product design, quality, or most differentiated organization
Multidomestic Strategy : Customizing products and marketing strategies to specific national conditions. after-sales service. serving that segment.
 Formulating Corporate-
Level Strategy

Choosing a Way to Expand Internationally

Importing and Exporting

Exporting : Making products at home and selling them abroad.
Importing : Selling products at home that are made abroad.

Licensing and Franchising

Licensing : Allowing a foreign organization to take charge of
manufacturing and distributing a product in its country or world region
in return for a negotiated fee.
Franchising : Selling to a foreign organization the rights to use a brand
name and operating know-how in return for a lump-sum payment and a
share of the profits.

Strategic Alliance
Strategic Alliance : An agreement in which managers pool or share
their organization’s resources and knowhow with a foreign company,
and the two organizations share the rewards and risks of starting a new
venture.
Joint Venture : A strategic alliance among two or more companies that
agree to jointly establish and share the ownership of a new business.

Wholly Owned Foreign Subsidiary : Production operations established

in a foreign country independent of any local direct involvement.

Mufidah Sa’idah
16/397050/EK/21006