Management 4th Edition - Building Competitive Advantage
Bios about the authors - Bateman and Snell

Textbook Contents in Brief

"Foundations of Management" - Part One of the textbook. This part contains Chapters 1 - 3.
"Planning and Strategy" - Part Two of the textbook. This part contains Chapters 4 - 7.
"Organizing and Staffing" - Part Three of the textbook. This part contains Chapters 8 - 11.
"Leading" - Part Four of the textbook. This part contains Chapters 12 - 15.
"Control and Change" - Part Five of the textbook. This part contains Chapters 16 - 18.
Play the "Ultimate Challenges" game. This is a web based game for the textbook and contains study tips and multiple choice questions.
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Planning and Stategic Management Ethics and Corporate Responsibility International Management New Ventures
Key Learning Points
  • An overview of Planning Fundamentals
  • How strategic planning differs from tactical and operational planning
  • Strategic Planning:  Yesterday and Today
    • Step 1:  Establishment of Mission, Vision, and goals
    • Step 2:  Analysis of External Opportunities and Threats
    • Step 3:  Analysis of Internal Strengths and Weaknesses
    • Step 4:  SWOT Analysis and Strategy formulation
    • Step 5:  Strategy Implementation
    • Step 6:  Strategy Control

An Overview of Planning Fundamentals

Planning : Systematic process of making decisions about goals and activities that a group or organization or individual will pursue in the future

The basics planning process are:

    1. Situational analysis

      2. Planning should gather, interpret and summarize information which is relevant to the planning issues

    2. Alternative goals and plans

      3. Evaluate the advantages, disadvantages and potential effects of each alternative goal and plan.

    3. Goal and evaluation

      4. When performing evaluation, priority should be set in order to achieve goals and plans.

    4. Goal and plan selection

      5. After priority has been set, and evaluation has been conducted, the most feasible goals and plans must be selected accordingly. In some organization, this steps is called planning scenarios which describes a particular set of future conditions

    5. Implementation
    6. Monitor and control

This is an essential step because planning is ongoing and the process is repetitive. Thus manager should monitor and control the actual performance according to the unit’s goal and plans.

Level of Planning

The level of planning in consist of :

    1. Strategic planning

      2. Involves making decisions for the organization long term goals and strategies

      It has a strong external orientation.

      Strategic goal major targets relating to the organization’s long term survival, value and growth.

      Strategy is a pattern of actions and resource allocations designated to obtained the goal of the organization.

    2. Tactical and operational planning

This translates broad strategic goals and plans into specific goals and plans that are relevant to the organizations.

Tactical plans focus on the major actions to fulfill the strategic plan.

Operation planning identifies the specific procedures and processes required at lower levels of the organization.

Adidas bought out Salomon sports equipment, and with this purchase it makes adidas a second largest sports equipment to Nike.

Strategic Planning: Yesterday and Today

From 1960’s to 1980’s strategic planning generally emphasized a top-down approach to goal setting and planning. During this period individual companies and consulting firms innovated a variety analytical method and planning approaches.

Strategic management involves managers from all sections of organization in the formulation and implementation of strategic goal and strategies.

The six major components of the strategic management process are:

    1. Establishment of mission, vision and goals

      2. The first step is to establish mission.

      Mission is the basic purpose, scope and value of the organization.

      Second step is to establish Strategic vision

      It moves beyond the mission statement to provide a perspective to the organization goal.

    2. Analysis of external opportunities and threats

      3. Successful strategic management depends on an accurate evaluation of the environment. After environment has been analyzed, the industry is examined. The next is organizational stakeholder.

      Stakeholder is groups or individual who affect and are affected by the achievement of the mission, goal and strategy of the organization.

      Compaq has to segment its product to different kind of products according to customers’ need; Therefore, Compaq’s revenues are up about 50 percent.

    3. Analysis of internal strengths and weakness

The major or internal resource analysis are:
    • Financial analysis
    • Human resources assessment
    • Marketing audit
    • Operations analysis

Resources are inputs to a system that can enhance performance.

Resources can take many forms but tend to fall into two broad classifications:
    • Tangible assets

For instance: Real estate, Production facilities and raw materials
    • Intangible assets

For instance: Company reputation, culture, technical knowledge, and patents
  • Core competencies is the unique skills or knowledge that an organization possess to give an edge over competitors. 

 

  • Benchmarking is the process of estimating how well the company’s basic functions and skills compare to other companies.
    1. SWOT analysis and strategy

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

Strategy formulation moves from simple analysis to devising a coherent course of action.

Corporate strategy identifies the set of businesses, marketing or industries in which the organization competes among other businesses.

An organization has 4 basic corporate strategy alternatives ranging from very specialized to highly diverse.

A concentration is a strategy employed for an organization that operates a single business and competes in a single industry.

Vertical integration involves expanding the business to supply channels and distributors.

Concentric diversification used to add new business that produce related products, markets and activities

The opposite of concentric diversification is conglomerate diversification, defined as a corporate strategy that involves expansion into unrelated businesses.

BCG Matrix

The BCG’s matrix helps identify businesses that should be sold but it does not help managers of individual businesses to develop strategies to improve its competitiveness.

 

Trends in Corporate Strategy

Organization usually performs better if they implement a more concentric diversification strategy in which businesses are related or similar to one another. For instance, Disney spend $19 Million to merge with ABC/Cap cities.

Business Strategy

Defines the major actions that an organization builds and strengthens its competitive position in the marketplace.

Two generic business strategies are:
    1. Low – Cost Strategy

      2. Wal-Mart and Southwest Airlines peruse competitive advantages through low-cost strategies which is a strategy used by businesses by building competitive advantages by being efficient and offering a standard, no trills product.

    2. Differentiation strategy

Company attempts to be unique in its industry or market segment by using this strategy.

Functional Strategy

This is the final step in strategy formulation. In this strategy, each functional area of the organization is implemented to support the business strategy.

Company Profiles

Starbucks: Inside the coffee cult

StarBucks

Starbucks employed and trained the "tattooed kids" and paid them above the industry’s standard salary. They also gave their employees the opportunity to express their ideas to the company. In return, the company expects their employees to adhere to a fairly rigid dress code. The payoff of this human resources strategy is impressive because Starbucks generate revenues about $35 Million, and the company now is expanding their business to overseas.

    1. Strategy implementation

Strategic managers must ensure that the new strategies are implemented effectively and efficiently.

Strategy implementation reflected in two major trends:
    • Adopting a more comprehensive view of implementation
    • Extending the more participative strategic management
    1. Strategic control

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

Most strategic control systems include budgets to monitor and control major financial expenditures.

The dual responsibilities of the control system are efficiency and flexibility.

Dupont

DuPont has changed from a slow moving giant into a faster growing machine thanks to John A. Krol. He has done this by involving more people in the planning process, by listening to them and asking for input which has improved the quality of decisions made. To improve DuPonts position Krol’s plan to diversify its operations into life sciences such as biotech agriculture and pharmaceuticals. When these operations such as the their low margin medical products don’t go well, they sell them off. The overall plan of DuPont is the concentrate on faster growing markets that build on their core competencies.

Chapter 4 || Chapter 5 || Chapter 6 || Chapter 7