REVIEW CHAPTER 4

CHAPTER 4 : PLANNING AND STRATEGIC MANAGEMENT

An Overview of Planning Fundamental

            Planning provides individuals and work units with a clear man to follow their future activities.

The Basic Planning Process

            Specific formal planning steps divided by sixth steps,these are :

            Step 1 : Situational Analysis. Situational analysis is a process planners use, within time and resource constraints,to gather,interpret, and summarize all information relevant to the planning issue under consideration.

Step 2 :Alternative Goals and Plans. The planning process should generate alternative goals that may be pursued in the future and the alternative plans that may be used to achieve those goals.

Step 3 : Goal and Plan Evaluation. Next managers will evaluate the advantages,disadvantages, and potential effects of each alternative goal and plan.

Step 4 : Goal and Plan Selection. Once managers have assessed the various goals and plans, they will select the one that is most appropriate and feasible.

Step 5 : Implementation. Once managers have selected the goals and plans, they must implement the plans designed to achieve the goals.

Step 6 : Monitor and Control. Although it is sometimes ignored,the sixth step in the formal planning process-monitoring and controlling-is essential.

Levels of Planning

Strategic Planning

            A strategy is a patern of actions and resource allocations designed to achieve the goals of the organization. Strategic planning is a set of procedures for making decisions about the organization’s long-term goals and strategies. Strategic goals are major targets or end results relating to the organization’s long-term survival,value,and growth.

Tactical and Operational Planning

            Tactical planning 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. Operational planning is the process of identifying the specific procedures and processes required at lower levels of the organization.

Aligning Tactical,Operational, and Strategic Planning

            To be fully effective, the organization’s strategic, tactical, and operational goals and plans must be aligned-that is, they must be consistent,mutually supportive, and focused on achieving the common purpose and direction.

Strategic Planning

The strategic management process has six major components :

1.      Establishment of mission, vision, and goals.

Mission is an organization’s basic purpose and scope of operations. Vision is the reason of companies want to have a clear . Goals are a targets or end that management desires to reach.

2.      Analysis of external opportunities and threats.

The mission and vision drive the second components of the strategic management process analysis of the external environment.

3.      Analysis of internal strengths and weaknesses.

As managers conduct an external analysis,they will also asses strengths and weaknesses of major functional areas inside their organization.

·           Resources and core competencies. Resources are inputs to production (recall systems theory) that can be accumulated overtime to enhance the performance of a firm. Core competencies is something a company does especially well relative to its competitors.

·           Benchmarking. To assess and improve performance, some companies use benchmarking, the process of assessing how well one company’s basic function and skills compare with those of another company or set of companies.

4.      SWOT analysis and strategy formulation.

SWOT analysis is a comparison of strengths,weaknesses,opportunities, and threats that helps executives formulate strategy.

·           Corporate strategy , is the set of businesses,markets,or industries in which an organization comperes and the distribution of resources among those entities.

·           Business strategy , is the major actions by which a business competes in a particular industry or market.

·           Functional Strategy , is strategies implemented by each functional area of the organization to support the organization’s business strategy.

5.      Strategy implementation.

Strategic managers also must ensure that the new strategies are implemented effectively and afficiently. In general, strategy implementation involves four related steps :

1)             Define strategic task

2)             Assess organization capabilities

3)             Develop an implementation agenda

4)             Create an implementation plan

6.      Strategy control.

Strategic control system is a system designed to support managers in evaluating the organization’s progress regarding its strategy and, when discrepancies exist,taking correcting action.