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Summary Unit 2 - Chapter 11 - Manager as Planner and Strategist
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- University Of Pretoria (UP)
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Part A: Organising and Controlling OBS 124Unit 2: Chapter 11
The Manager as a Planner and Strategist
Learning Objectives:
✓ Identify the three main steps of the planning process and explain the relationship
between planning and strategy.
✓ Describe some techniques managers can use to improve the planning process so
they can better predict the future and mobilize organisational resources to meet
future contingencies.
✓ Differentiate among the main types of business-level strategies and explain how
they give an organisation a competitive advantage that may lead to superior
performance.
✓ Differentiate among the main types of corporate-level strategies and explain how
they give an organisation a competitive edge that may lead to superior
performance.
✓ Describe the vital role managers play in implementing strategies to achieve an
organisation’s mission and goals.
Introduction
In a fast-changing, competitive environment, managers must continually evaluate
how well their products are meeting customer needs, and they must engage in
thorough, systematic planning to find new strategies to tailor their products to better
meet those needs.
Planning and strategy
Planning is a process managers use to identify and select appropriate goals and
courses of action for an organization.
The organisational plan that results from the planning process details the goals of
the organisation and the specific strategies managers will implement to attain those
goals.
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,A strategy is a cluster of related managerial decisions and actions to help an
organization attain one of its goals.
Thus, planning is both a goal-making and a strategy-making process.
Three steps in planning
In most organisations, planning is a three-step activity:
1. Determining the organisation's mission and goals
A mission statement is a broad declaration of an organization's overriding
purpose, what it is seeking to achieve from its activities; this statement also
identifies what is unique or important about its products to its employees and
customers; finally, it distinguishes or differentiates the organisation in some ways
from its competitors.
2. Formulating strategy
Managers analyse the organization's current situation and then conceive and
develop the strategies necessary to attain the organization's mission and goals.
3. Implementing strategy
Managers decide how to allocate the resources and responsibilities required to
implement the strategies among people and groups within the organization.
,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 where it should be in the future, its desired future state; and
3. decide how to move it forward to reach that future state.
When managers plan, they must forecast what may happen in the future to decide
what to do in the present.
• The better their predictions, the more effective will be the strategies they
formulate to take advantage of future opportunities and counter emerging
competitive threats in the environment.
• The external environment is uncertain and complex, and managers typically must
deal with incomplete information and “limitations on time, cognitive capacity, and
data”.
• This is why planning and strategy making are so difficult and risky, and if
managers' predictions are wrong and strategies fail, organizational performance
falls.
Why planning is important
Almost all managers participate in some kind of planning because they must try to
predict future opportunities and threats and develop a plan and strategies that will
result in a high-performing organization.
The absence of a plan often results in hesitations, false steps, and mistaken
changes of direction that can hurt an organization or even lead to disaster.
Planning is important for four main reasons:
1. Planning is necessary to give the organization a sense of direction and purpose.
• A plan states what goals an organization is trying to achieve and what
strategies it intends to use to achieve them.
, • Without the sense of direction and purpose that a formal plan provides,
managers may interpret their own specific tasks and jobs in ways that best
suit themselves.
• The result will be an organization that is pursuing multiple and often
conflicting goals and a set of managers who do not cooperate and work well
together.
• By stating which organizational goals and strategies are important, a plan
keeps managers on track so they use the resources under their control
efficiently and effectively.
2. Planning is a useful way of getting managers to participate in decision making
about the appropriate goals and strategies for an organization.
• Effective planning gives all managers the opportunity to participate in
decision making.
• At Intel, for example, top managers, as part of their annual planning process,
regularly request input from lower-level managers to determine what the
organization's goals and strategies should be.
3. A plan helps coordinate managers of the different functions and divisions of an
organization to ensure that they all pull in the same direction and work to achieve
its desired future state.
• Without a well-thought-out plan, for example, it is possible that the
manufacturing function will make more products than the sales function can
sell, resulting in a mass of unsold inventory.
• In fact, this happened when harsh winter storms in 2013-2014 slowed car
sales and left carmakers with unsold inventory.
• To sell the extra cars, many carmakers had to offer deep discounts to sell off
their excess stock.
4. A plan can be used as a device for controlling managers within an organization.
• A good plan specifies not only which goals and strategies the organization is
committed to but also who bears the responsibility for putting the strategies
into action to attain the goals.
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