Professional Documents
Culture Documents
Planning and Strategic Management
Planning and Strategic Management
Planning
CHAPTER 3
Planning and
Strategic
Management
• Purposes of Goals
– They provide guidance and a unified direction for
people in the organization.
– Goal-setting practices strongly affect other aspects
of planning.
– Goals can serve as a source of motivation for an
organization’s employees.
– Goals provide an effective mechanism for evaluation
and control.
• Kinds of Goals
– Mission
• A statement of an organization’s fundamental purpose
• Identifies the scope of the business’s operations in product
and market terms
• To watch a video by Fast Company on how to write a
mission statement, visit YouTube (
https://www.youtube.com/watch?v=LJhG3HZ7b4o).
– Strategic goals
• Goals set by and for an organization’s top management
• Focus on broad, general issues
• Strategic plans
– General plans outlining decisions about the resource
allocation, priorities, and action steps necessary to
reach strategic goals
– Are set by the board of directors and top
management, generally have an extended time
horizon, and address questions of scope, resource
deployment, competitive advantage, and synergy
• Tactical Plans
– Plans aimed at achieving tactical goals and
developed to implement specific parts of a strategic
plan
– Typically involve upper and middle management
and, compared with strategic plans, have a
somewhat time horizon and a more specific and
concrete focus
• Operational plans
– Plans that focus on carrying out tactical plans to
achieve operational goals
– Developed by middle- and lower-level managers,
have a short-term focus, and are relatively narrow in
scope
• Diversification
– The number of different businesses that an
organization is engaged in and the extent to which
these businesses are related to one another
– There are three types of diversification strategies:
1. Single-product strategy
2. Related diversification
3. Unrelated diversification
• Single-product strategy
– A strategy in which an organization manufactures
just one product or service and sells it in a single
geographic market
– Strength:
• By concentrating its efforts so completely on one product
and market, a firm is likely to be very successful in
manufacturing and marketing that product.
– Weakness:
• If the product is not accepted by the market or is replaced
by a new one, the firm will suffer.
• BCG matrix
– A framework for evaluating businesses relative to the growth
rate of their market and the organization’s share of the market
– Classifies the types of businesses in which a diversified
organization can engage as:
• Dogs
– Businesses that have a very small share of a market that is not
expected to grow
• Cash cows
– Businesses that have a large share of a market that is not expected to
grow substantially
• Question marks
– Businesses that have only a small share of a fast-growing market
• Stars
– Businesses that have the largest share of a rapidly growing market
• GE Business Screen
– A method of evaluating businesses along two
dimensions: (1) industry attractiveness and (2)
competitive position; in general, the more attractive
the industry and the more competitive the position,
the more an organization should invest in a business
• Tactical plans
– Plans aimed at achieving tactical goals and
developed to implement parts of a strategic plan; an
organized sequence of steps designed to execute
strategic plans
• Basic guidelines:
– Tactical planning must address a number of tactical
goals derived from a broader strategic goal.
– Tactics must specify resources and time frames.
– Tactical planning requires the use of human
resources.
• Operational plans
– Are derived from tactical plans and are aimed at
achieving operational goals
– Tend to be narrowly focused, have relatively short
time horizons, and involve lower-level managers
– Two most basic forms:
• Single-use plans
• Standing plans
Plan Description
• Contingency planning
– The determination of alternative courses of action to
be taken if an intended plan is unexpectedly
disrupted or rendered inappropriate
• Crisis management
– The set of procedures the organization uses in the
event of a disaster or other unexpected calamity