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§ m
m m
m Managerial function that involves:
m Defining the organizationǯs goals
m Establishing an overall strategy for achieving those goals
m mrovides direction
m Reduces uncertainty
m Minimizes waste and redundancy
m Sets the standards for controlling
mm
m × m
m
m Formal planning is associated with:
m Higher profits and returns on assets
m
m 6 m
m woals (also objectives)
m Desired outcomes for individuals, groups, or entire organizations
m mlans
m Documents that outline how goals are to be accomplished
m SmECIFICITY
m Specific mlans
m Clearly defined and leave no room for interpretation
m Directional mlans
m Flexible plans that set out general guidelines, provide focus,
yet allow discretion in implementation
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m
×
m
m FREQUENCY OF USE
m Single-use mlan
m A one-time plan specifically designed to meet the
needs of a unique situation
m Standing mlans
m Ongoing plans that provide guidance for activities
performed repeatedly
×
m
mlans can be classified as
(a) mission or purposes,
(2) objectives or goals,
(3) strategies,
(4) policies,
(5) procedures,
(6) rules,
(7) programs, and
(8) budgets
×
m
m The , or identifies the basic purpose
or function or tasks of an enterprise or agency or any
part of it
m
, or are the ends toward which
activity is aimed
m is the determination of the basic long-term
objectives of an enterprise and the adoption of courses
of action and allocation of resources necessary to
achieve these goals
m m are general statements or understandings that
guide or channel thinking in decision making
m m
are plans that establish a required method
of handling future activities
×
m
m spell out specific required actions or nonactions,
allowing no discretion
m m are a complex of goals, policies, procedures,
rules, task assignments, steps to be taken, resources to be
employed, and other elements necessary to carry out a
given course of action
m A
is a statement of expected results expressed in
numerical terms
m
"
§
m Reason for MBO Success
m Top management commitment and
involvement
m motential mroblems with MBO mrograms
m Not as effective in dynamic environments that
require constant resetting of goals
m Overemphasis on individual accomplishment
may create problems with teamwork
Clear goals:
m Motivate
m Improve managing through results-
oriented planning
m Clarify organizational roles, structures and
the delegation of authority
m Encourage personal commitment to their
own and organizational goals
m Facilitate effective controlling, measuring
results, and leading to corrective actions
3
m List some failures and limitations of MBO
m What would you do to overcome the failures?
u
m
m mlanning may create rigidity
m mlans cannot be developed for dynamic environments
m Formal plans cannot replace intuition and creativity
m mlanning focuses managersǯ attention on todayǯs
competition, not tomorrowǯs survival
m Formal planning reinforces todayǯs success, which may
lead to tomorrowǯs failure
m Strategic Management
m The set of managerial decisions and actions
that determines the long-run performance of
an organization
×
m
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m
m Step a: Identify the Organizationǯs Current Mission,
Objectives, and Strategies
m Mission: the firmǯs reason for being
m The scope of its products and services
m woals: the foundation for further planning
m Measurable performance targets
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Cevel Crratin
Multibusiness
Business
evel
Strategic
Business Unit a
Strategic
Business Unit 2
Strategic
Business Unit 3
nal Huan
Functi
evel evelent
Research and Manufacturing Marketing
Resurces
Finance
×
m Corporate-level Strategy
m The companyǯs grand strategy for the entire
organization and its strategic business units
m Types of wrand Strategies
m wrowth: expansion into new products and markets
m Stability: maintenance of the status quo
m Retrenchment: addresses organizational
weaknesses that are leading to performance
declines
m Combination: simultaneous pursuit of two or more
of the strategies above
u
m wrowth Strategy
m Seeking to increase the organizationǯs business by
expansion into new products and markets
m Stability Strategy
m A strategy that seeks to maintain the status quo to
deal with the uncertainty of a dynamic
environment, when the industry is experiencing
slow- or no-growth conditions, or if the owners of
the firm elect not to grow for personal reasons
u
m Retrenchment Strategy
m Reduces the companyǯs activities or operations
m Retrenchment strategies include:
m Cost reductions
m Combination Strategy
m Simultaneous pursuit by the organization of
two or more of growth, stability, and
retrenchment strategies
m Business-Level Strategy
m A strategy that seeks to determine how an
organization should compete in each unit within
the organization to create a competitive advantage
m Competitive advantage
m An organizationǯs distinctive competitive edge that is sourced and
sustained in its core competencies
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m
6
×
6
m
m
×
3u
3
m Threat of New Entrants
m The ease or difficulty with which new competitors
can enter an industry
m Threat of Substitutes
m The extent to which switching costs and brand
loyalty affect the likelihood of customers adopting
substitute products and services
m Bargaining mower of Buyers
m The degree to which buyers have the market
strength to hold away over and influence
competitors in an industry
3u
3
m Bargaining mower of Suppliers
m The relative number of buyers to suppliers and
threats from substitutes and new entrants
affect the buyer-supplier relationship
m Current Rivalry
m Intensity among rivals increases when industry
growth rates slow, demand falls, and product
prices descend
3
m Functional-level strategies support the
business-level strategy
m i e , Marketing, human resources, research and
development, and finance all support the
business-level strategy
m mroblems occur when employees or customers
donǯt understand a companyǯs strategy
m The search for the best practices among competitors
and noncompetitors that lead to their superior
performance
m By analyzing and copying these practices, firms can
improve their performance
m
is defined as the selection of a
course of action from among alternatives
m
a Identification of problem
2 Identification of decision Criteria
3 Allocation of weights to criteria
4 Development of alternatives
5 Analysis of alternatives
6 Selection of an alternative
7 Implementation of the Alternative
8 Evaluation of decision effectiveness
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m murchase of raw material
m Quantity, Quality, Time of delivery & mode of delivery
m Allocate the weights
m Search for various suppliers
m Analyze all
m Select one supplier
m mlace a order
ô
Î The problem is clear &
unambiguous
m
m
m mrogrammed decisions are used for structured or
routine work
m ÿ
m
m Nonprogrammed decisions are used for
unstructured, novel, and ill-defined situations of a
nonrecurring nature
×
Unstructured
Top level
mrogrammed Decisions