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Chapter 3, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition Copyright 2008 Pearson Education Canada
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LEARNING OUTLINE
Follow this Learning Outline as you read and study this chapter
What Is Planning?
Define planning
Chapter 3, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition Copyright 2008 Pearson Education Canada
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Organizational Strategy
Define strategic management List the six steps in the strategic management process Describe what managers do when they do external and internal analyses Explain the role of resources, capabilities, and core competencies in the internal analysis
Chapter 3, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition Copyright 2008 Pearson Education Canada
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Chapter 3, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition Copyright 2008 Pearson Education Canada
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What Is Planning?
Planning
Managerial function that involves:
Defining the organizations goals Establishing an overall strategy for achieving those goals Developing a comprehensive set of plans to integrate and coordinate organizational work
Types of planning
Informal: not written down, short-term focus; specific to an organizational unit Formal: written, specific, and long-term focus, involves shared goals for the organization
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Chapter 3, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition Copyright 2008 Pearson Education Canada
Purposes of Planning
Provides direction Reduces uncertainty Minimizes waste and redundancy Sets the standards for controlling
Chapter 3, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition Copyright 2008 Pearson Education Canada
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The external environment can reduce the impact of planning on performance Formal planning must be used for several years before planning begins to affect performance
Chapter 3, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition Copyright 2008 Pearson Education Canada
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Plans
Documents that outline how goals are to be accomplished Describe how resources are to be allocated and establish activity schedules
Chapter 3, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition Copyright 2008 Pearson Education Canada
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Chapter 3, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition Copyright 2008 Pearson Education Canada
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Strategic Should we expand into overseas markets? Should we develop new products? How large would we like the company to be in five years?
Long term
Directional
Single use
Operational Should we order new equipment to produce our number-one product more efficiently? How many extra employees should we hire for the year-end sales rush? How can we improve quality control on the production line?
Short term
Specific
Standing
Chapter 3, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition Copyright 2008 Pearson Education Canada
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Types of Plans
BREADTH Strategic Plans
Apply to the entire organization Establish the organizations overall goals Seek to position the organization in terms of its environment Cover extended periods of time
Operational Plans
Specify the details of how the overall goals are to be achieved Cover short time period
Chapter 3, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition Copyright 2008 Pearson Education Canada
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Chapter 3, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition Copyright 2008 Pearson Education Canada
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Chapter 3, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition Copyright 2008 Pearson Education Canada
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Developing Plans
Contingency Factors in Planning
Degree of environmental uncertainty
Stable environment: specific plans Dynamic environment: specific but flexible plans
Chapter 3, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition Copyright 2008 Pearson Education Canada
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Criticisms of Planning
Planning may create rigidity Plans cannot be developed for dynamic environments Formal plans cannot replace intuition and creativity Planning focuses managers attention on todays competition, not tomorrows survival Formal planning reinforces todays success, which may lead to tomorrows failure
Chapter 3, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition Copyright 2008 Pearson Education Canada
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Organizational Strategy
Strategic Management
The set of managerial decisions and actions that determines the long-run performance of an organization
Chapter 3, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition Copyright 2008 Pearson Education Canada
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SWOT Analysis
Formulate Strategies
Implement Strategies
Evaluate Results
Chapter 3, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition Copyright 2008 Pearson Education Canada
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Chapter 3, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition Copyright 2008 Pearson Education Canada
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Steps 2 and 3 combined are called a SWOT analysis. (Strengths, Weaknesses, Opportunities, and Threats)
Chapter 3, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition Copyright 2008 Pearson Education Canada
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Organizations Opportunities
Chapter 3, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition Copyright 2008 Pearson Education Canada
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Manufacturing
Marketing
Finance
Chapter 3, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition Copyright 2008 Pearson Education Canada
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Corporate-Level Strategies
Growth Strategy
Seeking to increase the organizations business by expansion into new products and markets
Chapter 3, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition Copyright 2008 Pearson Education Canada
Growth Strategies
Concentration Focusing on a primary line of business and increasing the number of products offered or markets served Vertical Integration Backward vertical integration: attempting to gain control of inputs (become a self-supplier) Forward vertical integration: attempting to gain control of output through control of the distribution channel and/or provide customer service activities (eliminating intermediaries)
Chapter 3, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition Copyright 2008 Pearson Education Canada
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Unrelated Diversification
Growing by merging with or acquiring firms in unrelated industries where higher financial returns are possible
Chapter 3, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition Copyright 2008 Pearson Education Canada
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Chapter 3, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition Copyright 2008 Pearson Education Canada
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Chapter 3, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition Copyright 2008 Pearson Education Canada
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Chapter 3, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition Copyright 2008 Pearson Education Canada
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Business-Level Strategy
Business-Level Strategy
A strategy that seeks to determine how an organization should compete in each unit within the organization to create a competitive advantage Competitive advantage
An organizations distinctive competitive edge that is sourced and sustained in its core competencies
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Chapter 3, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition Copyright 2008 Pearson Education Canada
Source: Based on M. E. Porter, Competitive Strategy: Techniques for Analyzing Industries and Competitors (New York: Free Press, 1980).
Chapter 3, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition Copyright 2008 Pearson Education Canada
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Current Rivalry
Intensity among rivals increases when industry growth rates slow, demand falls, and product prices descend
Chapter 3, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition Copyright 2008 Pearson Education Canada
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Competitive Strategies
Cost Leadership Strategy Seeking to attain the lowest total overall costs relative to other industry competitors Differentiation Strategy Attempting to create a unique and distinctive product or service for which customers will pay a premium Focus Strategy Using a cost or differentiation advantage to exploit a particular market segment rather than a larger market Stuck in the Middle Organizations that are unable to develop a cost or differentiation advantage
Chapter 3, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition Copyright 2008 Pearson Education Canada
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Functional-Level Strategy
Functional-level strategies support the business-level strategy
i.e., Marketing, human resources, research and development, and finance all support the business-level strategy Problems occur when employees or customers dont understand a companys strategy
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Chapter 3, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition Copyright 2008 Pearson Education Canada
Chapter 3, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition Copyright 2008 Pearson Education Canada
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Benchmarking
The search for the best practices among competitors and noncompetitors that lead to their superior performance
By analyzing and copying these practices, firms can improve their performance
Chapter 3, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition Copyright 2008 Pearson Education Canada
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Chapter 3, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition Copyright 2008 Pearson Education Canada
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Six Sigma
Six Sigma
Is a philosophy and measurement process developed in the 1980s at Motorola that establishes a goal of no more than 3.4 defects per million parts or procedures
Chapter 3, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition Copyright 2008 Pearson Education Canada
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