PLANS AND PLANNING TECHNIQUE

Chapter 5

HOW DO MANAGERS USE THE PLANNING PROCESS?

Planning is one of the four functions of management

Planning is the process of setting objectives and identifying how to achieve them Steps in the Planning Process: Step 1: Define your objectives Step 2: Determine where you stand vis a vis objectives Step 3: Develop premise regarding future conditions

Step 4: Make a plan Step 5: Implement the plan and evaluate results Objectives: specific results that one wishes to achieve Plan : statement of intended means for accomplishing objectives

Good planning makes us Action Oriented Priority Oriented Advantage Oriented Change Oriented Planning provides focus and orientation The complacency trap is being lulled into inaction by current successes or failures

Planning improves coordination and control

In a hierarchy of objectives, lower-objectives help achieve higher-level ones

Planning improves time management

WHAT TYPES OF PLANS DO MANAGERS USE?

Managers use short-range and long-range plans Short-range plans covers a year or less Long-range plans- covers three years or more Strategic plans identifies long-term decisions for the organization Vision clarifies purpose of the organization and expresses what it hopes to be in the future

Operational Plan/ Tactical Plans : sets out ways to implement a strategic plans Functional Plans: identifies how different parts of an enterprise will contribute to accomplishing strategic plans Organizational policies and procedures are plans Policy: standing plans that communicates broad guidelines for decisions and action

Procedure/ Rule: precisely describes actions to take in specific situations Budgets are plans that commit resources to activities Zero-based resources: allocates resources as if each budget was brand-new Forecasting tries to predict the future Contingency planning creates backup plans for when things go wrong

Scenario planning crafts plans for alternative future conditions Benchmarking identifies best practices used by others Participatory planning improves implementation capacities

Goal setting helps align plans and activities throughout an organization Stretch goals are performance targets that we have to work extra hard and stretch to reach

CONTROLS AND CONTROL SYSTEMS

Chapter 6

HOW AND WHY DO MANAGERS USE THE CONTROL PROCESS?

Controlling is one of the four functions of management Controlling: the process of measuring performance and taking action to ensure desired results After-action review: structured review of lessons learned and results accomplished through a completed project, task force assignment or special operations

Control begins with objectives and standards

Output standards: measures performance results in terms of quantity, quality, cost or time Input standards: measures work effort that goes into a performance task Control measures actual performance Control compares results with objectives and standards

Control takes corrective actions as needed Management by exception: focuses attention on differences between actual and desired performance

WHAT TYPES IF CONTROLS ARE USED BY MANAGERS?

Managers use feedforwad, concurrent, and feedback results

Feedforward: ensures clear directions and needed resources before the work begins Concurrent control: focuses on what happens during the work process Feedback: takes place after completing an action Managers use both external and internal controls

Internal control/ self control: occurs as people exercise self-discipline in fulfilling job expectations External control: occurs through direct supervision or administrative systems Bureaucratic control: influences behavior through authority, policies, procedures, job descriptions, budgets, and day-to-day supervision

Clan control: influences behavior through social norms, and peer expectations Market control: the influence of market competition on the behaviors of organizations and their members

Managing objectives is a way to integrate planning and controlling

Managing by objectives: a process of joint objective setting between a superior and a subordinate Improvement objectives: documents intentions to improve performance in a specific way Personal development objectives: documents intentions to improve personal growth, such as expanded job knowledge or skills

WHAT ARE SOME USEFUL CONTROL TOOLS AND TECHNIQUES?

Quality control is a foundation of modern management Total Quality Management (TQM): commits to quality objectives, continuous improvement and doing things right the first time Continuous improvement: involves always searching for new ways to improve work quality and performance Control charts: graphical ways of displaying trends so that exceptions to the quality standards can be identified

Six sigma: quality standard of 3.4 defects or less per million products or service deliveries Gantt Chart and CPM/PERT are used in project management and control Project: one time activities with many competent tasks that must be completed in proper order and according to budget Project management: makes sure activities required are to complete a project are planned well and accomplished on time

Gantt Chart: graphically displays the scheduling of tasks required to complete the project CPM/PERT: is a combination of critical path method and program evaluation and review technique. Critical path: the pathway from project start to conclusion that involves activities with the longest completion times

Critical path

Inventory controls help save costs Inventory control: ensures that inventory is only big enough to meet immediate needs Economic order quantity method: places new orders when inventory levels fall to predetermined points Just in Time (JIT) scheduling: routes materials to workstations just in time of use

Breakeven analysis shows where revenues will equal costs Breakeven point: occurs where revenues equal costs Breakeven analysis performs what-if calculations under different revenue and cost conditions.

Financial ratios measure key areas of financial performance

Balanced scorecards help top managers exercise strategic control Balanced scorecard: measures performance on financial, customer service, internal process, and innovation and learning goals

STRATEGY AND STRATEGIC MANAGEMENT

Chapter 7

WHAT TYPES OF STRATEGIES ARE USED BY ORGANIZATIONS?

Strategy is a comprehensive plan for achieving competitive advantage. Corporate strategy: sets long term direction for total enterprise Business strategy: identifies how a division or strategic business unit will compete in its product or service domain Functional strategy: guides activities within ne specific area of operations

Growth strategies focus on expansion Functional strategy: guides activities within one specific area of operations Restructuring and divestiture strategies focus on consolidation Retrenchment strategy: changes operations to correct weakness Liquidation: occurs when business closes and sells its assets to pay creditors

Restructuring: reduces the scale or mix of operations Chapter 11 bankruptcy: protects an insolvent firm from creditors during a period of reorganization to restore profitability Downsizing: decreases the size of operations Divestiture: involves selling off parts of the organization to refocus attention on core business areas

Global strategies focus on international business incentives Global strategy: adopts standardized products and advertising for use worldwide Transnational firm tries to operate globally without having a strong national identity

Cooperative strategies focus on alliances and partnerships Strategic allegiance: organizations join together in partnership to pursue an area of mutual interest Co-opetition: working with rivals on projects with mutual benefit

E-business strategies focus on using the internet for business strategies

B2B Business strategy: uses IT and Web portals to link organizations vertically in supply chains B2C Business strategy: uses IT and Web portals to link businesses with customers Social media strategy: uses social media to better engage with an organizations customers, clients and external audiences in general Crowdsourcing: strategic use of internet to engage customers and potential customers in providing opinions and suggestions on products and their designs

HOW DO MANAGERS FORMULATE AND IMPLEMENT STRATEGIES?

The strategic management process formulates and implements strategies

Strategic management: process of formulating and implementing strategies Strategic formulation: process of creating strategies Strategic implementation: process of putting strategies into action

Strategy formulation begins with organization's mission and objectives Mission: organization's reason for existence in society Operating objectives: specific results that organizations wish to accomplish SWOT analysis identifies strengths, weaknesses, opportunities and threats Core competencies: special strength that gives an organization a competitive advantage

Porters Five-process model examines industry attractiveness

Porters competitive strategies model examines business or product strategies Differentiation strategy: offers products that are unique and different from those of the competition Cost leadership strategy: seeks to operate with lower costs than competitors Focused differentiation strategy: offers unique products to a special market segment Focused cost leadership strategy: seeks the lowest cost of operations within a special market segment

Portfolio planning examines strategies across multiple businesses or products BCG Market analyzes business opportunities according to market growth rate and market share

Strategic

leadership ensures strategy implementation and control Strategic leadership: inspires people to implement organizational strategies Strategic control: makes sure that strategies are well implemented and that poor strategies are scrapped or changed