CHAPTER 3

The Manager as a
Planner
and Strategist

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 Learning Objectives (1 of 2)

1. Identify the three main steps of the

planning process and the relationship
between planning and strategy.
2. Describe some techniques managers
can use to improve the planning process
so they can better predict the future and
mobilize organizational resources to
meet future contingencies.

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 Learning Objectives (2 of 2)
3. Differentiate among the main types of
business-level strategies and explain how they
give an organization a competitive advantage
that may lead to superior performance.
4. Differentiate among the main types of
corporate-level strategies and explain how they
are used to strengthen a company’s business-
level strategy and competitive advantage.
5. Describe the vital role managers play in
implementing strategies to achieve an
organization’s mission and goals.

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 Planning and Strategy (1 of 3)

Planning
• Identifying and selecting appropriate goals
and courses of action for an organization

The organizational plan that results from the

planning process details the goals and the
specific strategies managers will implement to
attain those goals.

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 Planning and Strategy (2 of 3)

Strategy
• A cluster of decisions about what goals
to pursue, what actions to take, and how
to use resources to achieve goals
• Example: Sorenson’s strategy at
Marriott

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 Planning and Strategy (3 of 3)

Mission statement
• A broad declaration of an organization’s
purpose that identifies the organization’s
products and customers and distinguishes the
organization from its competitors

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 Figure 8.1 Three Steps in Planning

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 Example – Nike’s Mission

to bring inspiration and innovation

to every athlete in the world

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 The Nature of the Planning Process

To perform the planning task, managers:

1. Establish and discover where an
organization is at the present time.
2. Determine its desired future state.
3. Decide how to move it forward to reach
that future state.

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 Why Planning Is Important (1 of 3)

1. Necessary to give the organization a sense of

direction and purpose
2. Useful way of getting managers to participate
in decision making about the appropriate goals
and strategies for an organization
3. Helps coordinate managers of the different
functions and divisions of an organization
4. Can be used as a device for controlling
managers

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 Why Planning Is Important (2 of 3)

Unity
• At any one time, only one central, guiding plan
is put into operation.
Continuity
• Planning is an ongoing process in which
managers build and refine previous plans and
continually modify plans at all levels.

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 Why Planning Is Important (3 of 3)

Accuracy
• Managers need to make every attempt to
collect and utilize all available information at
their disposal.
Flexibility
• Plans can be altered if the situation changes.

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 Figure 8.2 Levels of Planning at
General Mills

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 Figure 8.3 Levels and Types of
Planning

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 Levels and Types of Planning (1 of 4)
Corporate-level plan
• Top management’s decisions pertaining to the organization’s mission, overall
strategy, and structure
• General Mill’s seeks to increase market share in the organic/natural food sector

Corporate-level strategy
• A plan that indicates in which industries and national markets an
organization intends to compete

Functional strategy
• A plan of action to improve the ability of each of an organization’s
functions to perform its task-specific activities in ways that add value to
an organization’s goods and services
• General Mill’s invests in state-of-the-art manufacturing facilities to
achieve business level strategy of increasing production by 20% over
next 3 years.
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 Levels and Types of Planning (2 of 4)

Business-level plan
• Long-term divisional goals that will allow the
division to meet corporate goals
• Division’s business-level strategy and
structure to achieve divisional goals

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 Levels and Types of Planning (3 of 4)

Business-level strategy
• This strategy outlines the specific methods a
division, business unit, or organization will use
to compete effectively against its rivals in an
industry
• General Mills’ Asia and Latin America division
managers continue to develop growth
strategies for its Yoplait yogurt brand in the
Chinese market.

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 Levels and Types of Planning (4 of 4)

Functional-level plan
• Goals that the managers of each function will
pursue to help their division attain its
business-level goals

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 Time Horizons of Plans

Time horizon
• Period of time over which plans are intended
to apply or endure
Long-term plans are usually 5 years or more.
Intermediate-term plans are 1 to 5 years.
Short-term plans are less than 1 year.

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 Types of Plans (1 of 2)

Standing plans
• Used in situations in which programmed
decision making is appropriate

Policies are general guides to action.

Rules are formal written guides to action.
Standard operating procedures (SOP) are
written instructions describing the exact series of
actions that should be followed in a specific
situation.
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 Types of Plans (2 of 2)

Single-use plans
• Developed to handle non-programmed
decision-making in unusual or one-of-a-kind
situations
Programs — Integrated sets of plans achieving
certain goals
Project — Specific action plans to complete
various aspects of a program

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 Scenario Planning

Scenario planning (contingency

planning)
• The generation of multiple forecasts of future
conditions followed by an analysis of how to
respond effectively to each of those conditions
• Shell’s oil market scenario planning

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 Determining the Organization’s
Mission and Goals
Defining the business
• Who are our customers?
• What customer needs are being satisfied?
• How are we satisfying customer needs?
Establishing major goals
• Provides the organization with a sense of
direction

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 Figure 8.4 Mission Statements for
Three Internet Companies
COMPANY MISSION STATEMENT

Facebook: “To give people the power to build community and bring
the world closer together.”

Twitter: “To give everyone the power to create and share ideas and
information instantly, without barriers.”

Google: “To organize the world’s information and make it

universally accessible and useful.”

Sources: Facebook’s mission: https://newsroom.fb.com; Twitter’s mission: https://abouttwitter.com;

Google’s mission: https://google.com, accessed March 24, 2018.

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 Establishing Major Goals

Strategic leadership
• The ability of the CEO and top managers to
convey to their subordinates a compelling
vision of what they want the organization to
achieve
• Motivates subordinates

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 Formulating Strategy (1 of 2)

Strategy formulation
• The development of a set of corporate,
business, and functional strategies that allow
an organization to accomplish its mission and
achieve its goals

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 Formulating Strategy (2 of 2)

SWOT analysis
• A planning exercise in which managers
identify internal organizational strengths (S)
and weaknesses (W) and external
environmental opportunities (O) and
threats (T)

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 Figure 8.5 Planning and Strategy
Formulation

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 Table 8.1 Questions for
SWOT Analysis
Example of some questions to ask.
Potential Strengths Potential Potential Potential Threats
Opportunities Weaknesses
Well-developed Expand core Poorly developed Attacks on core
strategy? business(es)? strategy? business(es)?
Manufacturing Widen product Rising Increase in foreign
competence? range? manufacturing competition?
costs?
Brand-name Enter new related Loss of brand name? Potential for
reputation? businesses? takeover?
Ability to manage Apply-brand-name High conflict and Rising labor costs?
strategic change? capital in new areas? politics?
Other strengths? Other Other weaknesses? Other threats?
opportunities?

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 The Five Forces (1 of 2)

Level of rivalry in an industry

Potential for new entrants

Power of large suppliers

Power of large customers

Threat of substitute products

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 The Five Forces (2 of 2)

Hypercompetition
• Permanent, ongoing, intense competition
brought about in an industry by advancing
technology or changing customer tastes

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 Formulating Business-Level
Strategies (1 of 3)
Low-cost strategy
• Driving the organization’s total costs down
below the total costs of rivals
Differentiation
• Distinguishing an organization’s products from
the products of competitors on dimensions
such as product design, quality, or after-sales
service

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 Formulating Business-Level
Strategies (2 of 3)
“Stuck in the middle”
• Attempting to simultaneously pursue both a
low-cost strategy and a differentiation strategy
• Difficult to achieve low cost with the added
costs of differentiation

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 Formulating Business-Level
Strategies (3 of 3)
Focused low-cost
• Serving only one segment of the overall
market and trying to be the lowest-cost
organization serving that segment
Focused differentiation
• Serving only one segment of the overall
market and trying to be the most differentiated
organization serving that segment

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 Formulating Corporate-Level
Strategies (1 of 2)
Concentration on a single industry
• Reinvesting a company’s profits to strengthen
its competitive position in its current industry
Vertical integration
• Expanding a company’s operations either
backward into an industry that produces
inputs for its products or forward into an
industry that uses, distributes, or sells its
products

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 Formulating Corporate-Level
Strategies (2 of 2)
Diversification
• Expanding a company’s business operations
into a new industry in order to produce new
kinds of valuable goods or services
International expansion
• Expanding a company’s business into
international markets and decisions regarding
customization of product features and
marketing campaigns

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 Diversification (1 of 2)

Related diversification
• Entering a new business or industry to create
a competitive advantage in one or more of
an organization’s existing divisions or
businesses
Synergy
• Obtained when the value created by two
divisions cooperating is greater than the value
that would be created if the two divisions
operated separately and independently
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 Diversification (2 of 2)

Unrelated diversification
• Entering a new industry or buying a company
in a new industry that is not related in any way
to an organization’s current businesses or
industries

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 International Expansion (1 of 2)

Global Strategy
• Little to no customization to suit specific
needs of customers in different countries
• Lowers production cost
• Ignores national differences that local
competitors can address to their advantage

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 International Expansion (2 of 2)

Multi-domestic Strategy
• Customizing products and marketing
strategies to specific national conditions
• Helps gain local market share
• Raises production costs

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 Figure 8.7 Four Ways to Expand
Internationally

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 Planning and Implementing Strategy
1. Allocate responsibility for implementation to the
appropriate individuals or groups.
2. Draft detailed action plans that specify how a strategy is
to be implemented.
3. Establish a timetable for implementation that includes
precise, measurable goals linked to the attainment of
the action plan.
4. Allocate appropriate resources to the responsible
individuals or groups.
5. Hold specific individuals or groups responsible for the
attainment of corporate, divisional, and functional goals.

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 Video: Pillow Pets

What customer needs did Jennifer Telfer

seek to address?
What opportunities and threats did she face?

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 APPENDIX: IMAGE DESCRIPTION
FOR UNSIGHTED STUDENTS

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Appendix 1 Figure 8.1 Three Steps in
Planning, Text Alternative
The Three Steps in Planning
1. Determine the organization’s mission and
goals. Define the business. Establish the
goals.
2. Formulate strategy. Analyze the current
situation and develop strategies.
3. Implement strategy. Allocate resources
and responsibilities to achieve strategies.

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Appendix 2 Figure 8.2 Levels of Planning
at General Electric, Text Alternatives
GE has three main levels of management: corporate level,
business or divisional level, and functional level.
At corporate level are the CEO and the Corporate Office.
At business or division level are Digital, Aviation, Energy
Connections, Oil and Gas, Power, Health Care, Lighting,
Transportation, Capital, Renewable Energy.
At the functional level are manufacturing, marketing, human
resources, and R&D.

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 Appendix 3 Figure 8.3 Levels and
Types of Planning, Text Alternative
The graphic shows the three levels at the top and the three steps down the right side.
Goal setting at the corporate level: corporate mission and goals
Goal setting at the business level: divisional goals
Goal setting at the functional level: functional goals
Strategy formulation at the corporate level: corporate level-strategy
Strategy formulation at the business level: business-level strategy
Strategy formulation at the functional level: functional-level strategy
Strategy implementation at the corporate level: design of corporate structure control
Strategy implementation at the business level: design of business unit structure control
Strategy implementation at the functional level: design of functional structure control

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 Appendix 4 Figure 8.5 Planning and
Strategy Formulation, Text Alternative
S W O T Analysis: A planning exercise to identify strengths
and weaknesses inside an organization and opportunities
and threats in the environment
Corporate-level strategy: A plan of action to manage the
growth and development of an organization to maximize its
long-run ability to create value
Business-level strategy: A plan of action to manage the
growth and development of an organization to maximize its
long-run ability to create value
Functional-level strategy: A plan of action to improve the
ability of an organization’s departments to create value
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 Appendix 6 Figure 8.7 Four Ways to
Expand Internationally, Text Alternative
This graphic shows the level of foreign involvement
and investment and degree of risk, from low to
high.
The low end begins with Importing and exporting.
Next are licensing and franchising.
Next are strategic alliances and joint ventures.
At the top is wholly owned foreign subsidiary.

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