Chap 5 Planning

sustainable competitive advantage occurs when an organization is able to get and stay ahead in four areas:

(1) in being responsive to customers, (2) in innovating, (3) in quality, and (4) in effectiveness.

three reasons to adopt planning and strategic management

(1) provide direction and momentum, (2) encourage new ideas, and above all (3) develop a sustainable competitive advantage.

procedure

(or standard operating procedure) is a standing plan that outlines the response to particular problems or circumstances.

Why Planning and Strategic Management Are Important

1. Providing Direction and Momentum 2. Encouraging New Ideas 3. Developing a Sustainable Competitive Advantage

Cascading Goals: Making Lower-Level Goals Align with Top Goals

1. Top Management Must Be Committed 2. The Goals Must Be Applied Organizationwide 3. Goals Must "Cascade"—Be Linked Consistently Down through the Organization Cascading goals is the process of ensuring that the strategic goals set at the top level align, or "cascade," downward with more specific short-term goals at lower levels within an organization, including employees' objectives and activities.

Planning and strategic management

1. establish the mission and vision and values 2. assess the current reality 3. formulate the grand strategy and strategic, tactical , and operational plans 4.implement the strategy 5. maintain strategic control

business plan

a document that outlines a proposed firm's goals, the strategy for achieving them, and the standards for measuring success.

Management by objectives (MBO)

a four-step process in which (1) managers and employees jointly set objectives for the employee, (2) managers develop action plans, (3) managers and employees periodically review the employee's performance, and (4) the manager makes a performance appraisal and rewards the employee according to results. At the end of 6 or 12 months, you and your subordinate should meet to discuss results, comparing performance with initial objectives. Deal with results, not personalities, emotional issues, or excuses.

VRIO

a framework for analyzing a resource or capability to determine its competitive strategic potential by answering four questions about its Value, Rarity, Imitability, and Organization.

operating plan

a plan that "breaks long-term output into short-term targets" or goalsIn other words, operating plans turn strategic plans into actionable short-term goals and action plans.

Strategic management

a process that involves managers from all parts of the organization in the formulation and the implementation of strategies and strategic goals. top managers, middle managers, and first-line managers—in the formulation, implementation, and execution of strategies and strategic goals to advance the purposes of the organization. Thus, planning covers not only strategic planning (done by top managers) but also tactical planning (done by middle managers) and operational planning (done by first-line managers).

rule

a standing plan that designates specific required action

Standing plans

are plans developed for activities that occur repeatedly over a period of time. Standing plans consist of policies, procedures, and rules.

mission statement

expresses the purpose of the organization.

vision statement

expresses what the organization should become, where it wants to go strategically. A vision is a long-term goal describing "what" an organization wants to become. It is a clear sense of the future and the actions needed to get there

Long-term goals

generally referred to as strategic goals. They tend to span 1 to 5 years and focus on achieving the strategies identified in a company's strategic plan. An example is to increase revenue from new customers by 10% over the next 12 months.

policy

is a standing plan that outlines the general response to a designated problem or situations

strategic plan

or a strategy, sets the long-term goals and direction for an organization.

operating plan

plan that "breaks long-term output into short-term targets" or goals.

Single-use plans

plans developed for activities that are not likely to be repeated in the future. A program is a single-use plan encompassing a range of projects or activities. Example: The U.S. government space program has had several projects, including the Challenger project, the Hubble Telescope project, and the space shuttle project. A project is a single-use plan of less scope and complexity than a program. Example: The space shuttle project,

planning

setting goals and deciding how to achieve them. Another definition: planning is coping with uncertainty by formulating future courses of action to achieve specified results.

means-end chain

shows how goals are connected or linked across an organization. For example, a low-level goal such as responding to customer inquiries in less than 24 hours is the means to accomplishing a higher-level goal of achieving 90% customer satisfaction.

Short-term goals

sometimes referred to as tactical or operational goals, or just plain goals. They generally span 12 months and are connected to strategic goals in a hierarchy known as a means-end chain.

SMART goal

that is Specific, Measurable, Attainable, Results-oriented, and has Target dates.

competitive advantage

the ability of an organization to produce goods or services more effectively than its competitors do, thereby outperforming them. Sustainable competitive advantage occurs when an organization is able to get and stay ahead in four areas: (1) in being responsive to customers, (2) in innovating, (3) in quality, and (4) in effectiveness. Today technology has made achieving a sustainable competitive advantage nearly impossible in many industries, so the advantage may well be fleeting

action plan

the course of action needed to achieve a stated goal

the planning/ control cycle

the two planning steps: 1. make the plan 2.carry out the plan the two control steps: 3. control the direction by comparing the results with the plan 4. control the direction in two ways: a) by correcting deviations in the plan being carried out (return to step 2), or b) by improving future plans (go to step 1 to start over)

Operational planning by first-line management

they determine how to accomplish specific tasks with available resources within the next 1-52 weeks.

Tactical planning by middle management

they determine what contributions their departments or similar work units can make with their given resources during the next 6-24 months.

Strategic planning by top management.

they determine what the organization's long-term goals should be for the next one to five years with the resources they expect to have available.

values statement

which expresses what the company stands for, its core priorities, the values its employees embody, and what its products contribute to the world

business model

which outlines the need the firm will fill, the operations of the business, its components and functions, as well as the expected revenues and expenses.