Summary of Key Points

Summarize a general framework for planning and apply it to enhance your planning skills. A generalized planning model can be used for strategic planning, tactical planning, and operational planning. The model consists of seven related and sometimes overlapping elements: defining the present situation; establishing goals and objectives; analyzing the environment in terms of forecasting aids and barriers to goals and objectives; developing action plans; developing budgets; implementing the plan; and controlling the plan. Contingency plans should also be developed. Describe the nature of business strategy. The explanation of business strategy chosen here emphasizes four characteristics. First, strategy involves more than operational effectiveness. Second, strategy rests on unique activities. Third, a sustainable strategic position requires trade-offs. Fourth, fit among organizational activities drives both competitive advantage and sustainability. Explain how business strategy is developed,including a SWOT analysis. Business strategy usually develops from planning but can also stem from a vision. Strategy is influenced by values. Gathering multiple inputs, including the technique of crowdcasting, is important in developing strategy. Strategists must also analyze the realities of the business situation to guard against false assumptions about customers, production capability, and the relevant technology. Strategy development often begins with a SWOT analysis, but first the group must prepare for the analysis. The SWOT analysis considers the strengths, weaknesses, opportunities, and threats in a given situation. Identify levels of business strategy, competitive forces, and types of business strategies. In a diversified business firm, strategy is formulated at the corporate level, the business level, and the functional level. Competitive forces facing the firm include customers affecting pricing, suppliers influencing pricing, substitute products, existing competition,and new market entrants. Types of strategies are as follows: Corporate-level strategies include diversification,strategic alliances, diversification of goods and services, and adherence to core competencies. Business-level strategies include product differentiation, focus, and cost leadership. Functional-level strategies include finding and retaining the best people and moving at high speed.The right strategy or combination of strategies must be chosen with care. Current thinking suggests that strategic plans and strategy must remain flexible enough to adapt to changing circumstances.

Explain the use of operating plans, policies, procedures, and rules. Operating plans provide the details of how strategic plans will be accomplished or implemented. They deal with a shorter time span than do strategic plans. Policies are plans set in the form of general statements that guide thinking and action in decision making. Procedures establish a customary method of handling future activities. A rule sets a specific course of action or conduct and is the simplest type of plan. Present an overview of management by objectives. Management by objectives (MBO) is the most widely used formal system of goal setting, planning, and review. In general, it has six elements: establishing organizational goals, establishing unit objectives, obtaining proposals from group members about their objectives, negotiating or agreeing to proposals, developing action plans, and reviewing performance. After objectives are set, the manager must give feedback to team members on their progress toward reaching the objectives.