Introduction To Management Chapter 5

Fundamentals of Management
Eleventh Edition
Chapter 5
Planning and Goal Setting
Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved
Learning Objectives
5.1 Discuss the nature and purposes of planning.
5.2 Explain what managers do in the strategic
management process.
5.3 Compare and contrast approaches to goal setting and
planning.
5.4 Discuss contemporary issues in planning.
What Is Planning?
Planning:
• The primary management function.
Reasons for Planning
Exhibit 5.1 Reasons for Planning
Criticisms of Formal Planning
• May create rigidity
• Can’t replace intuition and creativity
• Focuses attention on today’s success, not tomorrow’s
survival
• Reinforces success, which may lead to failure
Formal Planning and Organizational
Performance
Does it pay to plan?
• Higher profits
• Higher return on assets
• Improved quality of planning
• Appropriate implementation
What Is Strategic Management?
Strategic management:
• what managers do to develop an organization’s strategies
Strategies:
• plans for how the organization will do what it’s in business
to do, how it will compete successfully, and how it will
attract its customers in order to achieve its goals
The Importance of Strategic
Management
• It has a positive impact on organizational performance
• It prepares managers to cope with changing situations
• It guides managers to examine relevant factors in planning
future action
Steps in the Strategic Management
Process
Exhibit 5.2 The Strategic Management Process
Identify Mission, Goals, and
Strategies
Exhibit 5.3 Components of a Mission Statement
Source: Robbins, Stephen P., Coulter, Mary, Management, 13th Ed., © 2016, p. 238. Reprinted and electronically
reproduced by permission of Pearson Education, Inc., New York, NY.
External and Internal Analyses
Step 2: External Step 3: Internal Analysis
Analysis
• Resources
• Competition
• Capabilities
• Components of
• Core competencies
environment
• Organizational strengths and
• Threats and
weaknesses
opportunities
Formulating, Implementing, and
Evaluating Results
Step 4: Formulate Step 6: Evaluate Results
Strategies
• How effective have strategies
• Corporate been?
• Business • What adjustments are
necessary?
• Functional
Step 5: Implement
Strategies
Strategies Managers Use
Exhibit 5.4 Organizational Strategies
Growth Strategy
• An organization expands the number of markets served or
products offered
– Concentration
– Vertical integration
– Horizontal integration
– Diversification
Stability and Renewal Strategies
Stability strategy Renewal strategy
• Organization • Organization addresses
continues to do declining organizational
what it’s doing performance
– Retrenchment
– Turnaround
Competitive Strategy
Competitive strategy:
• a strategy for how an organization will compete in its
business.
Competitive Advantage
• What sets an organization apart; its distinctive edge that comes from its:
– core competencies and resources
Porter’s competitive strategies framework:
1 Cost leadership 2 Differentiation 4 Stuck in the

3 Focus strategy
strategy strategy middle
Having the lowest costs in Offering unique A cost advantage (cost What happens if
its industry and aimed at products that are focus) or a differentiation an organization
broad market. widely valued by advantage (differentiation can’t develop a
• Highly efficient. customers and aimed focus) in a narrow segment cost or
• Overhead kept to a at broad market. or niche (which can be differentiation
minimum. • Product based on product variety, advantage—bad
• Does everything it can differences: customer type, distribution place to be.
to cut costs. exceptionally high channel, or geographical
• Product must be quality, location).
A photo shows a pair of binoculars.
perceived as extraordinary
comparable in quality service,
to that offered by rivals innovative design,
or at least acceptable technological
to buyers. capability, or an
unusually positive
brand image.
Functional Strategy
Those strategies used by an organization’s various functional
departments to support the competitive strategy
Research and Manufacturing Marketing Human Resources Finance

Development
Strategic Weapons
• Customer service
• Employee skills & loyalty
• Innovation
• Quality
• Social media
• Big data/digital tools
Setting Goals and Developing Plans
Types of goals
• Financial versus strategic
• Stated versus real
Planning = goals + plans
Traditional Goal Setting
Exhibit 5.5 Traditional Goal Setting
Management by Objectives
• Goal specificity
• Participative decision making
• Explicit time period
• Performance feedback
Well-Written Goals
• Written in terms of outcomes rather than actions
• Measurable and quantifiable
• Clear as to a time frame
• Challenging yet attainable
• Written down
• Communicated to all necessary organizational members
Steps in Goal Setting
1. Review the organization’s mission and employees’ key
job tasks.
2. Evaluate available resources.
3. Determine the goals individually or with input from others.
4. Make sure goals are well written and communicate to all
who need to know.
5. Build in feedback mechanisms to assess goal progress.
6. Link rewards to goal attainment.
Types of Plans
Exhibit 5.7 Types of Plans
BREADTH OF USE TIME FRAME SPECIFICITY FREQUENCY OF USE
Strategic Long term Directional Single use
Tactical Short term Specific Standing
Flexibility Clarity
Developing Plans
Exhibit 5.8 Planning and Organizational Level
Approaches to Planning
• Top-down traditional
approach
• Development by
organizational members
Contemporary Issues
• Planning in dynamic environments
• Crisis situations
• Environmental scanning
Dynamic Environments and

Crisis Situations = Planning Challenges

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Fundamentals of Management

Porter’s competitive strategies framework:

1 Cost leadership 2 Differentiation 4 Stuck in the

Research and Manufacturing Marketing Human Resources Finance

Planning = goals + plans

BREADTH OF USE TIME FRAME SPECIFICITY FREQUENCY OF USE

Strategic Long term Directional Single use

Tactical Short term Specific Standing

Dynamic Environments and

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