Unit 3 planning
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This document provides an outline on planning and strategy. It begins with defining planning as deciding in advance what to do and how to do it, noting that planning bridges the gap between the current situation and the desired future state. The document then discusses the planning process, which involves identifying opportunities, establishing objectives, evaluating alternatives, and implementing and following up on plans. It also discusses limitations of planning and how to make planning effective. Finally, it discusses different levels of strategy for organizations, including corporate, business, and functional strategies.
Unit 3 planning
- 1. PLANNINGPLANNING Prof. Preeti BhaskarProf. Preeti Bhaskar Symbiosis Centre for Management studiesSymbiosis Centre for Management studies
- 2. CHAPTER OUTLINECHAPTER OUTLINE Meaning, features and importanceMeaning, features and importance Planning processPlanning process Limitations of planningLimitations of planning Types of planningTypes of planning Strategy-Corporate level, Business level,Strategy-Corporate level, Business level, Functional levelFunctional level Strategic planning processStrategic planning process
- 3. PlanningPlanning ? 12 miles ?? 15 miles ? 7 miles
- 4. (Current status)(Current status) where we are ?where we are ? (future image) where(future image) where we want to go ?we want to go ? How to bridge the gap ?
- 6. MEANINGMEANING Planning is deciding in advance what to do andPlanning is deciding in advance what to do and how to do. It is one of the basic managerialhow to do. It is one of the basic managerial functions.functions. Before doing something, the manager mustBefore doing something, the manager must formulate an idea of how to work on a particularformulate an idea of how to work on a particular task.task. Thus, planning is closely connected with creativityThus, planning is closely connected with creativity and innovation.and innovation. It involves setting objectives and developingIt involves setting objectives and developing appropriate courses of action to achieve theseappropriate courses of action to achieve these objectives.objectives.
- 7. DEFINITIONDEFINITION According to Koontz & O’Donell ,According to Koontz & O’Donell , ““Planning is deciding in advance what to do,Planning is deciding in advance what to do, how to do and who is to do it. Planninghow to do and who is to do it. Planning bridges the gap between where we are to,bridges the gap between where we are to, where we want to go. It makes possiblewhere we want to go. It makes possible things to occur which would not otherwisethings to occur which would not otherwise occur”.occur”.
- 8. Characteristics of Planning Planning is goal-oriented.Planning is goal-oriented. Planning is looking ahead.Planning is looking ahead. Planning is an intellectual process.Planning is an intellectual process. Planning involves choice & decisionPlanning involves choice & decision making.making. Planning is the primary function ofPlanning is the primary function of management /management / Planning is a Continuous Process.Planning is a Continuous Process. Planning is all Pervasive.Planning is all Pervasive. Planning is designed for efficiency.Planning is designed for efficiency. Planning is Flexible.Planning is Flexible.
- 11. Making Planning EffectiveMaking Planning Effective Linked to Long term objectivesLinked to Long term objectives ConsistencyConsistency Everyone participatesEveryone participates FeasibleFeasible FlexibleFlexible Top Management SupportTop Management Support
- 13. Successful Planning Process Everyone participatesEveryone participates Board and staff educated about planningBoard and staff educated about planning Board and staff explore new ideasBoard and staff explore new ideas Board takes advantages of opportunitiesBoard takes advantages of opportunities Necessary resources availableNecessary resources available
- 15. Step -1Step -1 Identifying opportunitiesIdentifying opportunities In light of :In light of : The marketThe market CompetitionCompetition Customer needs wants & demandCustomer needs wants & demand Company strength and weaknessCompany strength and weakness
- 16. Step -2Step -2 Establishment of objectivesEstablishment of objectives Where we want to be ?Where we want to be ? What we want to accomplish ?What we want to accomplish ? When we want to accomplish ?When we want to accomplish ?
- 17. Step -3Step -3 Determining limitation or PremisesDetermining limitation or Premises Planning premises are assumptionPlanning premises are assumption relating to the future condition andrelating to the future condition and events which are likely to have an effectevents which are likely to have an effect on the achieving of goals.on the achieving of goals. In what environment (internal orIn what environment (internal or external ) will our plan operate ?external ) will our plan operate ?
- 18. Step -4Step -4 Identifying alternative course ofIdentifying alternative course of actionaction What are the most promisingWhat are the most promising alternatives to accomplish ouralternatives to accomplish our objectives ?objectives ? Such as :Such as : • By expanding the existing capacityBy expanding the existing capacity • By taking over some other enterpriseBy taking over some other enterprise • By producing new productsBy producing new products
- 19. Step -5Step -5 Evaluating alternative coursesEvaluating alternative courses Identifying the positive andIdentifying the positive and negative aspects of eachnegative aspects of each alternative or proposal arealternative or proposal are evaluatedevaluated Which alternative will give us theWhich alternative will give us the best chance of meeting our goalsbest chance of meeting our goals at the lowest cost and highestat the lowest cost and highest profit?profit?
- 20. Step -6Step -6 choosing alternative course ofchoosing alternative course of actionaction The various alternatives identified areThe various alternatives identified are evaluated and compared in terms of theirevaluated and compared in terms of their expected costs and benefits.expected costs and benefits. quantitative and qualitative techniques arequantitative and qualitative techniques are available to evaluate alternatives.available to evaluate alternatives.
- 21. Step -7Step -7 Formulating supporting plansFormulating supporting plans Selecting an alternative course ofSelecting an alternative course of action in case of failure in the mainaction in case of failure in the main plan?plan?
- 22. Step -8 Implementing plansStep -8 Implementing plans Plan is put into action.Plan is put into action. Plan is communicated by managers toPlan is communicated by managers to all the employees very clearly toall the employees very clearly to motivate them.motivate them.
- 23. Step -9Step -9 Follow up and actionFollow up and action To ensure the plans are proceeding alongTo ensure the plans are proceeding along the right lines, the actual performance isthe right lines, the actual performance is compared with the planned performance.compared with the planned performance. In this way, any short coming can beIn this way, any short coming can be noted and suitable remedial action can benoted and suitable remedial action can be taken.taken.
- 24. Proper planning accomplishes the following : UncertaintyUncertainty Better FocusBetter Focus Improves CoordinationImproves Coordination Basis for ControlBasis for Control Improves EffectivenessImproves Effectiveness
- 25. Plan yourPlan your work.work. Work yourWork your plan.plan.
- 26. STRATEGY
- 27. What’s Strategy? • Strategy is management’s overall plan and actions for deploying resources and skills taking into consideration opportunities and threats in the environment – to achieve it’s mission, vision and objectives – to establish a favorable competitive position. • Strategy involves: – An organization’s goals – A series of related decisions & actions – Takes into account key internal strengths & weaknesses and external opportunities threats
- 28. Importance of Strategy • Provides systematic approach to uncertainties that organizations face – Competitive & global environment are dynamic – Change, whether significant of minor, must be recognized and analyzed, & dealt with – Strategic management allows for the analysis of the situation (identifying the sources of change in environment)
- 29. Strategic planning • Strategic planning is an organization's process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy • Used by community groups, government departments, organizations and businesses to develop blueprint for action and change
- 30. Strategic planning deals three key questions: •"What do we do?“ •"For whom do we do it?“ •"How do we excel?"
- 31. Benefits of Strategic Planning • Defines mission, vision & values • Establishes realistic goals, objectives & strategies • Ensures effective use of resources • Provides base to measure progress • Develops consensus on future direction • Builds strong teams • Solves major problems
- 32. Three Levels of Strategy in Organizations 32 Corporate-Level Strategy: What business are we in? Corporation Business-Level Strategy: How do we compete? Textiles Unit Chemicals Unit Auto Parts Unit Functional-Level Strategy: How do we support the business-level strategy? Finance R&D Manufacturing Marketing
- 33. Level of Strategy Definition Example Corporate strategy Market definition Diversification into new product or geographic markets Business strategy Market navigation Attempts to secure competitive advantage in existing product or geographic markets Functional strategy Support of corporate strategy and business strategy Information systems, human resource practices, and production processes that facilitate achievement of corporate and business strategy
- 34. Corporate-Level Strategy • Corporate level strategy fundamentally is concerned with selection of businesses in which your company should compete and with development and coordination of that portfolio of businesses. • Corporate level strategy occupies the highest level of strategic decision-making and covers actions dealing with the objective of the firm, acquisition and allocation of resources and coordination of strategies of various SBUs for optimal performance.
- 35. Corporate-Level Strategy • What should be the scope of operations; i.e.; what businesses should the firm be in? • How should the firm allocate its resources among existing businesses? • What level of diversification should the firm pursue; i.e., which businesses represent the company's future?
- 36. Business-Level Strategy: • Business-level strategy is – applicable in those organizations, which have different businesses-and each business is treated as strategic business unit (SBU). • The fundamental concept in SBU is to identify the discrete independent product/market segments served by an organization. • Since each product/market segment has a distinct environment, a SBU is created for each such segment
- 37. Business-Level Strategy: • For example, • Reliance Industries Limited operates in textile fabrics, yarns, fibers, and a variety of petrochemical products. For each product group, the nature of market in terms of customers, competition, and marketing channel differs.
- 38. Functional-Level Strategy • Concerned with coordinating the functional areas of the organization (marketing, finance, human resources, production, research and development, etc.) so that each functional area upholds and contributes to individual business-level strategies and the overall corporate-level strategy. • This involves coordinating the various functions and operations needed to design, manufacturer, deliver, and support the product or service of each business within the corporate portfolio.
- 39. Functional-Level Strategy are primarily concerned with: • Efficiently utilizing specialists within the functional area. • Integrating activities within the functional area (e.g., coordinating advertising, promotion, and marketing research in marketing; or purchasing, inventory control, and shipping in production/operations). • Assuring that functional strategies mesh with business-level strategies and the overall corporate- level strategy.
- 40. Strategic Planning Process Implement Strategy via Changes in: Leadership culture, Structure, HR, Information & control systems SWOT Formulate Strategy – Corporate, Business, Functional Define new Mission Goals, Grand Strategy Identify Strategic Factors – Strengths, Weaknesses Identify Strategic Factors – Opportunities, Threats Scan Internal Environment – Core Competence, Synergy, Value Creation Evaluate Current Mission, Goals, Strategies Scan External Environment – National, Global
- 41. Mission, Vision & Objectives • A company’s mission is a statement of – the basic purpose or reason for its existence • The vision goes beyond the mission statement – clarifies the long-term direction of the company (where the company is going) – reflects management’s aspirations for the company
- 42. Mission, Vision & Objectives • Objectives are yardsticks for tracking a company’s performance or end result. – Financial performance objectives (e.g., ROA, ROI, ROE, Dividend growth, Stock price, etc.). – Strategic performance objectives (e.g., market share, growth, innovation leader, customer service, community & environmental responsibility, etc.)
- 43. Examples of Mission & Vision • Southwest Airlines: – Mission: To provide high quality service at a lower price in the airline industry. – Vision: Opening air travel to a wider group of leisure travelers while infusing the organization with a sense of fun. • Apple Computer: – Mission: To bring the best personal computing products and support to consumers around the world. – Vision: One person, one computer.
- 44. Environmental Analysis • Involves the evaluation of the business environment of the organization. – All external influences that impact a company’s decision and performance. • Environment of firm classified by proximity into (1) Macro-environment; and (2) Micro-environment or task environment.
- 45. Cont.….. • The macro-environment consists of – The international/national economy; changes in demographic structures; social and political trends; technology; and the natural environment. • The micro-environment consists of – The industry environment such as competitors, suppliers, customers; unions and employees; owners and shareholders, etc.
- 46. Internal Analysis • Involves the evaluation of the inventory of the firm’s resources and capabilities. • Resources/Capabilities can be classified as: – Tangible resources: Financial or physical assets – Intangible resources: brand name, reputation (product & firm), organizational culture, etc. – Capabilities or competencies: managerial ability, specialized skill & knowledge base of employees, etc.
- 47. Checklist for Analyzing Organizational Strengths and Weaknesses 47 Management and Organization Management quality Staff quality Degree of centralization Organization charts Planning, information, control systems Finance Profit margin Debt-equity ratio Inventory ratio Return on investment Credit rating Marketing Distribution channels Market share Advertising efficiency Customer satisfaction Product quality Service reputation Sales force turnover Production Plant location Machinery obsolescence Purchasing system Quality control Productivity/efficiency Human Resources Employee experience, education Union status Turnover, absenteeism Work satisfaction Grievances Research and Development Basic applied research Laboratory capabilities Research programs New-product innovations Technology innovations
- 48. Strategy Formulation • The strategy formulation process – involves designing a course of action for addressing strategic issues facing the firm after going through the external and internal evaluation processes. • Actual strategy of a company involves: – Planned or Intended Actions (Deliberate & purposeful actions). – Reactive or Emergent Actions (As-need reactions to unanticipated events in firm’s micro
- 49. Strategy Formulation • Strategy formulation is concerned with the following parts of a company: – Corporate (whole company) -- Corporate strategies: Deals with businesses company wants to be in & how to manage those businesses – Businesses -- Competitive strategies: How to compete in specific business or industry – Functional areas -- Functional strategies: short goal- directed decisions & actions of an organization’s
- 50. Strategy Implementation • Strategy implementation is the process of putting a company’s various strategies into action – development of programs, policies, budgets & procedures. • It can take several months to years to complete.
- 51. Strategic Control & Evaluation • Process by which desired outcomes (mission, vision, & objectives) are compared with realized outcomes to determine if there are gaps. • Initiate corrective actions by monitoring changes in environment - competitor actions, new market opportunities, customer needs & expectations.
Editor's Notes
- #4: There is a saying that goes If you don’t know where you are going, any road will get you there. No matter how you get a training assignment, once you accept the challenge the next step is to create a plan. Let’s discuss the six steps of planning. We will be creating a diagram of the six steps of planning. We will provide you with a copy at the conclusion.
- #32: Participant Manual Page 9