Chapter 4. Planning and Strategic Management

What is a strategic vision?

the long-term direction and strategic intent of a company • DuPont: "To be the world's most dynamic science company, creating sustainable solutions essential to a better, safer, and healthier life for people everywhere." • City of Redmond, Washington: "Together we create a community of good neighbors." • Great Lakes Naval Museum: "To enhance and become an integral part of the training mission of the Naval Service Training Command, Great Lakes, by instilling in our newest sailors a strong sense of tradition and heritage of naval service in the United States."

The strategic management process (six steps)

1. Establishment of mission, vision, and goals. 2. Analysis of external opportunities and threats. 3. Analysis of internal strengths and weaknesses. 4. SWOT (strengths, weaknesses, opportunities, and threats) analysis and strategy formulation. 5. Strategy implementation. 6. Strategic control.

What is a SWOT analysis?

A comparison of a company's strengths, weaknesses, opportunities, and threats that helps executives formulate strategy

What is a scenario?

A narrative that describes a particular set of future conditions

What is strategy?

A pattern of actions and resource allocations designed to achieve the organization's goals.

What is situational analysis?

A process planners use, within time and resource constraints, to gather, interpret, and summarize all information relevant to the planning issue under consideration

What is strategic planning?

A set of procedures for making decisions about the organization's long-term goals and strategies

What is a low cost strategy?

A strategy an organization uses to build competitive advantage by being efficient and offering a standard, no-frills product.

What is differentiation strategy?

A strategy an organization uses to build competitive advantage by being unique in its industry or market segment along one or more dimensions.

What is concentration?

A strategy employed for an organization that operated a single business and competes in a single industry.

What is concentric diversification?

A strategy used to add new businesses that produce related products or are involved in related markets and activities

What is conglomerate diversification?

A strategy used to add new businesses that produce unrelated products or are involved in unrelated markets and activities

What is a strategic control system?

A system designed to support managers in evaluating the organization's progress regarding its strategy and, when discrepancies exist, taking corrective action.

What is a goal?

A target or end that management desires to reach

What is a core capability?

A unique skill and/or knowledge an organization possesses that gives it an edge over competitors

What is a mission?

An organization's basic purpose and scope of operations. • "McDonald's: "To be our customers' favorite place and way to eat." • Google: "To organize the world's information and make it universally accessible and useful." • U.S. Air Force: "To fly, fight, and win ... in air, space, and cyberspace."

What are stakeholders?

Groups and individuals who affect and are affected by the achievement of the organization's mission, goals, and strategies.

What is tactical planning?

It is a set of procedures for translating broad strategic goals and plans into specific goals and plans that are relevant to a distinct portion of the organization, such as a functional area like marketing.

Strategy implementation (four steps)

Step 1: Define strategic tasks. Articulate in simple language what a particular business must do to create or sustain a competitive advantage. Define strategic tasks to help employees understand how they contribute to the organization, including redefining relationships among the parts of the organization. Step 2: Assess organization capabilities. Evaluate the organization's ability to implement the strategic tasks. A task force typically interviews employees and managers to identify specific issues that help or hinder effective implementation. Then the results are summarized for top management. In the course of your career, you will likely be asked to participate in a task force. We discuss working effectively in teams in Chapter 14. Page 144 Step 3: Develop an implementation agenda. Management decides how it will change its own activities and procedures; how critical interdependencies will be managed; what skills and individuals are needed in key roles; and what structures, measures, information, and rewards might ultimately support the needed behavior. A philosophy statement, communicated in terms of value, is the outcome of this process. Step 4: Create an implementation plan. The top management team, the employee task force, and others develop the implementation plan. The top management team then monitors progress. The employee task force continues its work by providing feedback about how others in the organization are responding to the changes.

What are functional strategies?

Strategies implemented by each functional area of the organization to support the organization's business strategy

What is vertical integration?

The acquisition or development of new businesses that produce parts or components of the organization's product

What is planning?

The conscious, systematic process of making decisions about goals and activities that an individual, group, work unit, or organization will pursue in the future. It is not an informal or haphazard response to a crisis; it is a purposeful effort that is directed and controlled by managers and often draws on the knowledge and experience of employees throughout the organization. It provides individuals and work units with a clear map to follow in their future activities; at the same time, this map may be flexible enough to allow for individual circumstances and changing conditions.

What are resources?

The inputs to a system that can enhance performance.

What is a business strategy?

The major actions by which a business competes in a particular industry or market

What is benchmarking?

The process of comparing performance with a pre-established standard or performance of another facility or group.

What is operational planning?

The process of identifying the specific procedures and processes required at lower levels of the organization.

What is a corporate strategy?

The set of businesses, markets, or industries in which an organization competes and the distribution of resources among those entities.

What are strategic goals?

They are major targets or end results relating to the organization's long-term survival, value, and growth. • Enhance citizen engagement in city issues. • Sustain the natural systems and beauty of the community. • Sustain a safe community with a coherent, comprehensive, cohesive approach to safety. • Maintain economic vitality.

What are plans?

They are the actions or means the manager intends to use to achieve organizational goals.

What is the BCG Matrix?

a means of evaluating strategic business units on the basis of (1) their business growth rates and (2) their share of the market

What is strategic management?

a process that involves managers from all parts of the organization in the formulation and the implementation of strategies and strategic goals

SMART goals

• Specific—When goals are precise, describing particular behaviors and outcomes, employees can more easily determine whether they are working toward the goals. • Measurable—As much as possible, each goal should quantify the desired results so there is no doubt whether it has been achieved. • Attainable (but challenging)—Employees need to recognize that they can attain the goals they are responsible for, or else they are likely to become discouraged. However, they also should feel challenged to work hard and be creative. • Relevant—Each goal should contribute to the organization's overall mission (discussed later in this chapter) while being consistent with its values, including ethical standards (see Chapter 5). Goals are most likely to be relevant to the organization's overall objectives if they are consistent within and among work groups. • Time-bound—Effective goals specify a target date for completion. Besides knowing what to do, employees should know when they need to deliver results.