Planning

Planning and Decision Making
• Planning within the organization

• Setting the context: Mission, Vision
• External and Internal Analysis
• SWOT analysis: Formulating Strategies
• Action Plans and Implementation
• Decision Making
Copyright © 2012 Pearson Education, Inc.

Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter
Publishing as Prentice©2012
HallPearson Education, Inc. publishing as Prentice Hall 8-1
What Is Planning?
• Planning - a primary managerial activity that

involves:
– Defining the organization’s goals
– Establishing an overall strategy for achieving
those goals
– Developing plans for organizational work
activities

Planning(contd)
• Accordingly , planning is
1. Future- oriented
successful managers must look into the future to
determine what need to be done and how it must be
done before the situation actually accrues.
2.Decision - oriented
the planning process involves decision –making that
specifies actions necessary to achieve future goals

Planning(contd)
3. Goals – oriented
The planning process is focused on those efforts
necessary to achieve future goals.

Why Do Managers Plan?
• Purposes of Planning
– Provides direction
– Reduces uncertainty
– Minimizes waste and redundancy
– Sets the standards for controlling

Planning and Performance
• Formal planning is associated with:
– Higher profits and returns on assets
– Positive financial results
– The quality of planning and implementation
affects performance more than the extent of
planning
– The external environment can reduce the impact
of planning on performance

Elements of Planning
• Goals (also Objectives)
– Desired outcomes for individuals, groups, or entire
organizations
– Provide direction and evaluation performance criteria
• Plans
– Documents that outline how goals are to be accomplished
– Describe how resources are to be allocated and establish
activity schedules

Exhibit 8-5:
Planning in the Hierarchy Organizations

Publishing as Prentice ©2012
Hall Pearson Education, Inc. publishing as Prentice Hall 8-8
What Is Strategic Management?
• Strategic management - what managers do to
develop the organization’s strategies.
• Strategies - the plans for how the organization
will do what it’s in business to do, how it will
compete successfully, and how it will attract
and satisfy its customers in order to achieve its
goals.
• Business model - how a company is going to
make money.
Why Is Strategic
Management Important?
1. It results in higher organizational

performance.
2. It requires that managers examine and adapt
to business environment changes.
3. It coordinates diverse organizational units,
helping them focus on organizational goals.

What is the Strategic
Management Process?
• Strategic management process - a six-step
process that encompasses strategic planning,
implementation, and evaluation.

Exhibit 9-1: Strategic
Management Process

Strategic Management Process
• Step 1: Identifying the organization’s current
mission, goals, and strategies
– Mission: a statement of the purpose of an organization
• The scope of its products and services
– Goals: the foundation for further planning
• Measurable performance targets
• Step 2: Doing an external analysis

– The environmental scanning of specific and general
environments
• Focuses on identifying opportunities and threats

• Step 3: Doing an internal analysis
– Assessing organizational resources, capabilities, and activities:
• Strengths create value for the customer and strengthen the competitive
position of the firm.
• Weaknesses can place the firm at a competitive disadvantage.
– Analyzing financial and physical assets is fairly easy, but assessing

intangible assets (employee skills, culture, corporate reputation, etc.)
isn’t as simple.
• Steps 2 and 3 combined are called a SWOT analysis. (Strengths,

Weaknesses, Opportunities, and Threats)

SWOT Analysis
• SWOT analysis - an analysis of the
organization’s strengths, weaknesses,
opportunities, and threats.
• Resources - an organization’s assets that are
used to develop, manufacture, and deliver a
product to its customers.
• Capabilities - an organization’s skills and
abilities in doing the work activities needed in
its business.
Strengths and Weaknesses
• Strengths - any activities the organization
does well or any unique resources that it has.
• Weaknesses - activities the organization does
not execute well or needed resources it does
not possess.
• Core competencies - the organization’s major
value-creating capabilities that determine its
competitive weapons.

• Step 4: Formulating strategies
– Develop and evaluate strategic alternatives.
– Select appropriate strategies for all levels in the
organization that provide relative advantage over
competitors.
– Match organizational strengths to environmental
opportunities.
– Correct weaknesses and guard against threats.

• Step 5: Implementing strategies
– Implementation - effectively fitting organizational
structure and activities to the environment.
– The environment dictates the chosen strategy; effective
strategy implementation requires an organizational
structure matched to its requirements.
• Step 6: Evaluating results

– How effective have strategies been?
– What adjustments, if any, are necessary?

Decision Making
• Decision - making a choice from two or more
alternatives.
• Problem - an obstacle that makes it difficult to
achieve a desired goal or purpose.

The Decision Making Process
1. Identifying a problem and decision criteria
and allocating weights to the criteria
2. Developing, analyzing, and selecting an
alternative that can resolve the problem
3. Implementing the selected alternative
4. Evaluating the decision’s effectiveness

Exhibit 7-1: Decision-Making Process

Step 1: Identifying a Problem
• Characteristics of Problems
– A problem becomes a problem when a manager
becomes aware of it.
– There is pressure to solve the problem.
– The manager must have the authority,
information, or resources needed to solve the
problem.

Step 2: Identifying Decision Criteria
• Decision criteria are factors that are important

(relevant) to resolving the problem, such as:
– Costs that will be incurred (investments required)
– Risks likely to be encountered (chance of failure)
– Outcomes that are desired (growth of the firm)

Exhibit 7-2: Important Decision Criteria

Step 3: Allocating Weights to the Criteria
• Decision criteria are not of equal importance:

– Assigning a weight to each item places the items
in the correct priority order of their importance in
the decision-making process.

Step 4: Developing Alternatives
• Identifying viable alternatives
– Alternatives are listed (without evaluation) that
can resolve the problem.

Exhibit 7-4: Evaluation of Alternatives

Step 6: Selecting an Alternative
• Choosing the best alternative
– The alternative with the highest total weight is
chosen.

Step 7: Implementing the
Alternative
• Putting the chosen alternative into action
- Conveying the decision to and gaining commitment
from those who will carry out the alternative

Step 8: Evaluating Decision
Effectiveness
• The soundness of the decision is judged by its
outcomes.
– How effectively was the problem resolved by
outcomes resulting from the chosen alternatives?
– If the problem was not resolved, what went
wrong?


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Planning and Decision Making

• Planning within the organization

Copyright © 2012 Pearson Education, Inc.

• Planning - a primary managerial activity that

Copyright © 2012 Pearson Education, Inc.

Copyright © 2012 Pearson Education, Inc.

Copyright © 2012 Pearson Education, Inc.

Copyright © 2012 Pearson Education, Inc.

Copyright © 2012 Pearson Education, Inc.

Copyright © 2012 Pearson Education, Inc.

Copyright © 2012 Pearson Education, Inc.

1. It results in higher organizational

Copyright © 2012 Pearson Education, Inc.

Copyright © 2012 Pearson Education, Inc.

Copyright © 2012 Pearson Education, Inc.

• Step 2: Doing an external analysis

Copyright © 2012 Pearson Education, Inc.

– Analyzing financial and physical assets is fairly easy, but assessing

• Steps 2 and 3 combined are called a SWOT analysis. (Strengths,

Copyright © 2012 Pearson Education, Inc.

Copyright © 2012 Pearson Education, Inc.

Copyright © 2012 Pearson Education, Inc.

• Step 6: Evaluating results

Copyright © 2012 Pearson Education, Inc.

Copyright © 2012 Pearson Education, Inc.

Copyright © 2012 Pearson Education, Inc.

Copyright © 2012 Pearson Education, Inc.

Copyright © 2012 Pearson Education, Inc.

• Decision criteria are factors that are important

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Copyright © 2012 Pearson Education, Inc.

• Decision criteria are not of equal importance:

Copyright © 2012 Pearson Education, Inc.

Copyright © 2012 Pearson Education, Inc.

Copyright © 2012 Pearson Education, Inc.

Copyright © 2012 Pearson Education, Inc.

Copyright © 2012 Pearson Education, Inc.

Copyright © 2012 Pearson Education, Inc.

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