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
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
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
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
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
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
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
Everyone participatesEveryone participates
Top Management SupportTop Management Support
13. Successful Planning
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
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
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
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
20. Step -6Step -6
choosing alternative course ofchoosing alternative course of
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
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
24. Proper planning
accomplishes the following
Better FocusBetter Focus
Improves CoordinationImproves Coordination
Basis for ControlBasis for Control
Improves EffectivenessImproves Effectiveness
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
• 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
– 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
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
31. Benefits of Strategic Planning
• Defines mission, vision & values
• Establishes realistic goals, objectives &
• 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
What business are we in?
How do we compete?
Textiles Unit Chemicals Unit Auto Parts Unit
How do we support the business-level
Finance R&D Manufacturing Marketing
33. Level of Strategy Definition Example
Corporate strategy Market definition
new product or
Business strategy Market navigation
Attempts to secure
in existing product or
Support of corporate
strategy and business
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
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
• 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
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
• Efficiently utilizing specialists within the functional
• Integrating activities within the functional area
(e.g., coordinating advertising, promotion, and
marketing research in marketing; or purchasing,
inventory control, and shipping in
• Assuring that functional strategies mesh with
business-level strategies and the overall corporate-
40. Strategic Planning Process
Environment – Core
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 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.
• 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
47. Checklist for Analyzing
Organizational Strengths and Weaknesses
Management and Organization
Degree of centralization
Return on investment
Sales force turnover
Research and Development
Basic applied research
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
• Actual strategy of a company involves:
– Planned or Intended Actions (Deliberate &
– 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
– development of programs, policies, budgets &
• It can take several months to years to
51. Strategic Control &
• 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.
Notas do Editor
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.