Chapter 2 The Planning Function

I.I. Planning versus Brushfire Management II. Planning at 3 Levels III. Unique plans: Budgets, Programs, Projects IV. Strategic Planning V. Strategic Planning at Walmart VI. Case Studies

Brushfire Management vs. Planning

Brushfire Management: Waiting to see whats going to happen, then reacting Normal for Police and Firefighters * Planning: Anticipating how to perform in a future stuation, prepositioning resources and training personnel as to what to do to take advantage of opportunities, as well as solve problems

Reasons for Planning

To eliminate or reduce uncertainty To improve efficiency of the operation To obtain a better understanding of the organizations goals & objectives To provide a basis for monitoring and controlling work

Planning at Three Levels

Strategic Planning by Top Management Operational (Tactical) Planning by Middle Management Short-term management by Foremen and Supervisors

Standing Plans
Policies: General statements in force over a long period to guide repetitive decision making Procedures: A series of related steps to be followed for repetitive actions Rule: Statements that direct actions or prohibit them in frequently encountered situations

Single Use Plans

Budgets: How to spend money or resources over a given period Program: plan to achieve a specific goal and its objectives Project: a more narrow plan than a program, but often a part of a program (Programs may be supported by several projects)

Nature of Planning at the 3 Levels

Top Management: Strategic Planning for the long term (five or more years) Middle Management: Programs of a shorter term, usually no more than one year, to support the Strategic Plans Low Level Management: Day to day plans to support Programs

Strategic Management
Gives the organization a focus on what is most important while moving into the future Starts with a Mission Statement, which conveys the Vision of the Top Managers Supported by Goals and Objectives put forth in the Strategic Plan

TOWS or SWOT Analysis

Lets use TOWS because it first looks at the external environment T Threats in the external environment O Opportunities in the external environment W - Weaknesses in the internal (company) environment S - Strengths in the company

Goal & Objective Setting

Goals are directions for the future Objectives support goals but should be: 1. Specific and measurable 2. Challenging but realistic 3. Time specific 4. SMART?

Select Strategies
Strategies are the means and the actions to be taken to attain the goals and objectives determined to be possible from the TOWS analysis A company may choose more than one strategy to achieve its overall goals A multi-divisional company may have strategies that are aimed at each division

Aggressive Strategies
Growth: Adding more sales units in new territories Vertical Integration: Controlling suppliers & distributors Horizontal Integration: Buying competitors Diversification: Adding new lines of products and services Conglomerate Diversification: Buying unrelated companies

Walmart
Begun by brothers Sam & Bud Walton Homebase in Bentonville, Arkansas, USA In the 1960s they owned 16 Ben Franklin stores Discount stores started cutting into their profitability And then ???

Cases
The General Motors NUMMI and Saturn Decisions Springfield Remanufacturing Corp. International Business Machines