MANAJEMEN DAN BISNIS – MN0001

PLANNING

ACCOUNTING PROGRAM
Contents
The What and Why of Planning
Goals and Plans
Setting Goals and Developing Plans
Strategic Management
The Strategic Management Process
Corporate Strategies
Competitive Strategies
Current Strategic Mnagement Issues
Strategic Management
The Strategic Management Process
Corporate Strategies
Planning Work Activities
 The What and Why of Planning
Boeing called its new 787 aircraft the
Dreamliner, but the project turned into more of a
nightmare for managers. The company’s newest
plane has been its most popular product ever, mostly
because of its innovations, especially in fuel
efficiency. However, the plane was delivered three
years behind schedule. Boeing admitted the project’s
timeline was way too ambitious, even though every
detail had been meticulously planned. Some
customers (the airlines who ordered the jets) got
tired of waiting and canceled their orders. Could
Boeing’s managers have planned better?
What Is Planning?
 Why Do Managers Plan?
Planning seems to take a lot of effort. So why should
managers plan? We can give you at least four
reasons:
1. Planning provides direction to managers and
nonmanagers alike. When employees know what
their organization or work unit is trying to
accomplish and what they must contribute to reach
goals, they can coordinate their activities, cooperate
with each other, and do what it takes to accomplish
those goals. Without planning, departments and
individuals might work at crosspurposes and prevent
the organization from efficiently achieving its goals.
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2. Planning reduces uncertainty by forcing managers to
look ahead, anticipate change, consider the impact of
change, and develop appropriate responses. Although
planning won’t eliminate uncertainty, managers plan so
they can respond effectively.
3. Planning minimizes waste and redundancy. When
work activities are coordinated around plans,
inefficiencies become obvious and can be corrected or
eliminated.
4. Planning establishes the goals or standards used in
controlling. When managers plan, they develop goals and
plans.
 Planning and Performance
Is planning worthwhile? Numerous studies have
looked at the relationship between planning and
performance. Although most have shown generally positive
relationships, we can’t say that organizations that formally
plan always outperform those that don’t plan. But what can
we conclude? First, generally speaking, formal planning is
associated with positive financial results—higher profits,
higher return on assets, and so forth. Second, it seems that
doing a good job planning and implementing those plans play
a bigger part in high performance than how much planning is
done. Next, in those studies where formal planning didn’t
lead to higher performance, the external environment often
was the culprit. When external forces—think governmental
regulations or powerful labor unions—constrain managers’
options, it reduces the impact planning has on an
organization’s performance. Finally, the planning-performance
relationship seems to be influenced by the planning time
frame.
 Goals and Plans
Planning is often called the primary
management function because it establishes the
basis for all the other things managers do as they
organize, lead, and control. It involves two important
aspects: goals and plans. Goals (objectives) are
desired outcomes or targets. They guide
management decisions and form the criterion
against which work results are measured. That’s why
they’re often described as the essential elements of
planning.
Types of Goals
We can classify most company’s goals as either
strategic or financial. Financial goals are related to
the financial performance of the organization, while
strategic goals are related to all other areas of an
organization’s performance. For instance,
Volkswagen states that its financial target (to be
achieved by 2018) is to sell 10 million cars and trucks
annually with a pretax profit margin over 8 percent.6
And here’s an example of a strategic goal from
Uniqlo, Asia’s biggest apparel chain: It wants to be
the number-one apparel retailer in the United States
Types of Plans

The most popular ways to describe organizational plans

are breadth (strategic versus operational), time frame
(short term versus long term), specificity (directional
versus specific), and frequency of use (single use versus
standing). As Exhibit 8-1 shows, these types of plans
aren’t independent. That is, strategic plans are usually
long term directional, and single use whereas operational
plans are usually short term, specific, and standing. What
does each include?
Strategic plans are plans that apply to the entire
organization and establish the organization’s overall
goals. Plans that encompass a particular operational area
of the organization are called operational plans. These
two types of plans differ because strategic plans are
broad while operational plans are narrow.
 Approaches to Setting Goals
As we stated earlier, goals provide the direction
for all management decisions and actions and form the
criterion against which actual accomplishments are
measured. Everything organizational members do should
be oriented toward achieving goals. These goals can be
set either through a traditional process or by using
management by objectives.
In traditional goal-setting, goals set by top
managers flow down through the organization and
become subgoals for each organizational area. This
traditional perspective assumes that top managers know
what’s best because they see the “big picture.” And the
goals passed down to each succeeding level guide
individual employees as they work to achieve those
assigned goals.
Managing Strategy
 Strategic Management
• Domino’s Pizza reported a 7.4 percent increase in revenue in
2013 (about $123.8 million), and most of it, surprisingly,
didn’t come from selling more pizzas but selling more pizza
ingredients.
• Unilever and Procter & Gamble, fierce competitive rivals
across many personal care product lines, are waging a
shampoo price war.
• Zynga releases a mobile FarmVille game, a new and much-
needed approach for the struggling video game maker.
• Taco Bell is launching a new fast-casual upscale concept
restaurant chain called U.S. Taco, which will offer 10 kinds of
premium tacos, spicy thick-cut fries, and shakes.
• Sony Corporation is downsizing at its two most troubled
electronics units by eliminating 5,000 jobs
 What Is Strategic Management?
Strategic management is what managers do to
develop the organization’s strategies. It’s an
important task involving all the basic management
functions—planning, organizing, leading, and
controlling. What are an organization’s strategies?
They’re the plans for how the organization will do
whatever it’s in business to do, how it will compete
successfully, and how it will attract and satisfy its
customers in order to achieve its goals.
Why Is Strategic Management Important?

Why is strategic management so important? There

are three reasons. The most significant one is that it can
make a difference in how well an organization performs.
Why do some businesses succeed and others fail, even
when faced with the same environmental conditions?
(Remember our Walmart and Kmart example.) Research
has found a generally positive relationship between
strategic planning and performance. In other words, it
appears that organizations that use strategic
management do have higher levels of performance. And
that fact makes it pretty important for managers!
 The Strategic Management Process

The strategic management process (see Exhibit

9-1) is a six-step process that encompasses strategy
planning, implementation, and evaluation. Although
the first four steps describe the planning that must
take place, implementation and evaluation are just as
important! Even the best strategies can fail if
management doesn’t implement or evaluate them
properly.
Step 1: Identifying the Organization’s Current Mission,
Goals, and Strategies

Every organization needs a mission—a statement

of its purpose. Defining the mission forces managers to
identify what it’s in business to do. But sometimes that
mission statement can be too limiting. For example, the
cofounder of the leading Internet search engine Google
says that while the company’s purpose of providing a
way to categorize and organize information and “making
it universally accessible and useful” has served them
well, they failed to see the whole social side of the
Internet and have been playing catch-up. What should a
mission statement include? Exhibit 9-2 describes some
typical components.
 Step 2: Doing an External Analysis

What impact might the following trends have for

businesses?
• With the passage of the national health care legislation,
every big restaurant chain must now post calorie
information on their menus and drive-through signs.
• Cell phones are now used by customers more for data
transmittal and retrieval than for phone calls and the
number of smartphones and tablet computers
continues to soar.
• More young adults are earning college degrees
according to data released from the
• U.S. Department of Education.
 Step 3: Doing an Internal Analysis
Now we move to the internal analysis, which provides
important information about an organization’s specific
resources and capabilities. An organization’s resources are its
assets—financial, physical, human, and intangible—that it
uses to develop, manufacture, and deliver products to its
customers. They’re “what” the organization has. On the other
hand, its capabilities are its skills and abilities in doing the
work activities needed in its business—“how” it does its work.
The major value-creating capabilities of the organization are
known as its core competencies. Both resources and core
competencies determine the organization’s competitive
weapons.
After completing an internal analysis, managers should
be able to identify organizational strengths and weaknesses.
Any activities the organization does well or any unique
resources that it has are called strengths. Weaknesses are
activities the organization doesn’t do well or resources it
needs but doesn’t possess.
 Step 4: Formulating Strategies

As managers formulate strategies, they should

consider the realities of the external environment
and their available resources and capabilities in order
to design strategies that will help an organization
achieve its goals. The three main types of strategies
managers will formulate include corporate,
competitive, and functional. We’ll describe each
shortly.
 Step 5: Implementing Strategies

Once strategies are formulated, they must be

implemented. No matter how effectively an
organization has planned its strategies, performance
will suffer if the strategies aren’t implemented
properly.
 Step 6: Evaluating Results

The final step in the strategic management

process is evaluating results. How effective have the
strategies been at helping the organization reach its
goals? What adjustments are necessary? For
example, after assessing the results of previous
strategies and determining that changes were
needed, Xerox CEO Ursula Burns made strategic
adjustments to regain market share and improve her
company’s bottom line. The company cut jobs, sold
assets, and reorganized management.
 Corporate Strategies

As we said earlier, organizations use three

types of strategies: corporate, competitive, and
functional. (See Exhibit 9-3.) Top-level managers
typically are responsible for corporate strategies,
middle-level managers for competitive strategies,
and lower-level managers for the functional
strategies. In this section, we’ll look at corporate
strategies.
 What Is Corporate Strategy?

A corporate strategy is one that determines

what businesses a company is in or wants to be in
and what it wants to do with those businesses. It’s
based on the mission and goals of the organization
and the roles that each business unit of the
organization will play. We can see both of these
aspects with PepsiCo, for instance. Its mission: To be
the world’s premier consumer products company
focused on convenient foods and beverages.
What Are the Types of Corporate
Strategy?

The three main types of corporate strategies

are:
growth,
stability, and
renewal.
Growth
Even though Walmart Stores is the world’s
largest retailer, it continues to grow internationally
and in the United States. A growth strategy is when
an organization expands the number of markets
served or products offered, either through its current
business(es) or through new business(es). Because of
its growth strategy, an organization may increase
revenues, number of employees, or market share.
Organizations grow by using concentration, vertical
integration, horizontal integration, or diversification.
Stability
As the global recession dragged on and U.S.
sales of candy and chocolate slowed down, Cadbury
Schweppes—with almost half of its confectionary
sales coming from chocolate—maintained things as
they were. A stability strategy is a corporate strategy
in which an organization continues to do what it is
currently doing. Examples of this strategy include
continuing to serve the same clients by offering the
same product or service, maintaining market share,
and sustaining the organization’s current business
operations. The organization doesn’t grow, but
doesn’t fall behind, either.
Renewal
In 2013, AMR (American Airlines’ parent) lost
almost $1.8 billion. Hewlett-Packard lost $12 billion,
JCPenney lost over $985 million, and many energy
and technology services companies faced serious
financial issues with huge losses. When an
organization is in trouble, something needs to be
done. Managers need to develop strategies, called
renewal strategies, that address declining
performance. The two main types of renewal
strategies are retrenchment and turnaround
strategies. A retrenchment strategy is a short-run
renewal strategy used for minor performance
problems.
Thankyou