Week 5
Planning: Establishes basis for all other things managers do – primary management function Concerned with means (how it’s to be done) and ends (what is to be done)
4 Reasons for planning: It...
1. Establishes coordinated effort 2. Reduces uncertainty
3. Reduces overlapping and wasteful activities
4. Establishes the goals or standards that facilitate control
Reasons for Planning
Criticisms of Formal Planning:
1. Planning may create rigidity
2. Formal plans can’t replace intuition and creativity
3. Planning focuses managers’ attention on today’s competition, not on tomorrow’s survival
4. Formal planning reinforces success, may lead to failure – success may breed failure in an uncertain environment
Strategic Management: What managers do to develop an organisation’s strategies
Strategies: Plans for how the organisation will do what it is set out to do, how it will compete successfully, and how it will attract its customers so as to achieve its goals Strategic Management Process: 6 Steps
1. Identifying Mission Goals & Strategies
Missions – Statement of organisations purpose
Capabilities – Organisations skills / abilities in the activities needed in a business Core Competencies – Major value-creating capabilities of an organisation
2. 3. SWOT Analysis – Internal & External analysis Strengths, Weaknesses Opportunities, Threats
4. Formulating Strategies:
Corporate Strategy – Organisational strategy which specifies what businesses a s company is in or wants to be in
Based on mission, goals and roles of the organisation 3 Types of Corporate Strategies:
Growth Strategy – Expands no. of markets served & products Strategies include: concentration, diversification Stability Strategy – Organisation continues in its current efforts Renewal Strategy –Look at declining organisational performance
Competitive Strategy – How an organisation will compete in its business Competitive Advantage – Sets an organisation apart; its distinctive edge Strategic Business Units (SBUs) – An organisation’s single businesses that are independent and formulate their own competitive strategy
3 Types of Corporate Strategies:
Cost Leadership Strategy – Having the lowest costs in market Differentiation Strategy – Competing via unique valued products Focus Strategy – Competing in a niche of a market
Functional Strategy – Strategies used in various functional departments to support the competitive strategy
Goals: Desired outcomes or targets
Stated Goals: Official statements of what an organisation says, and wants its stakeholders to believe, its goals are
Plans: Documents that outline how goals are going to be met Setting Goals:
Real Goals – Goals an organisation is pursuing – shown via what members are doing Traditional Goal Setting – Goals set by top manager’s flow down through the organisation and become sub-goals for each organisational area
Means End Chain – Integrated network of goals in which higher level goals are linked to lower-level goals, which serve as the means for their accomplishment
Management By Objectives (MBO) – process of setting mutually agreed-upon goals and using those goals to evaluate employee performance
4 Elements of MBO Programs:
1.Goal specificity 2.Participative decision making 3.Explicit time frame 4.Performance feedback