MGT 3013 1st EditionExam # 2 Study Guide Chapters 5 – 8Focus on highlighted portions! Chapter 5- Planning and Uncertaintyo Coping with uncertainty by formulating future courses of action to achieve specific resultso Setting goals and deciding how to achieve them - Planning and Strategic Managemento Establish the organization’s mission and vision Develop Competitive Advantageo Formulate the grand strategy o Formulate the strategic plans, then the tactical and operational planso Implement the strategic planso Control the strategy - Why not plan?o Planning requires you to set aside the time to do ito You may have to make some decisions without a lot of time to plan- How planning helps youo Helps you check on progresso Helps you coordinate activitieso Helps you think aheado Helps you cope with uncertainty - Four basic strategy types (Grand Strategies):o Defenders Expert at producing and selling narrowly defined productso Prospectors Focus on developing new products and in seeking out new markets, rather than waiting for things to happeno Analyzers Let other organizations take the risks of product development and marketing and then imitate what seems to work besto Reactors Make adjustments only when finally forced to by environmental pressures- The Adaptive Cycleo Businesses are continuously cycling through decisions about three kinds of business problems: Entrepreneurial Engineering Administrative- Making Planso Mission statement What is our reason for beingo Vision statement What do we want to becomeo Strategic planning Done by top managers for the next 1 – 5 years- Goals and Action planso Tactical planning Done by middle managers for the next 6 to 24 months- Goals and action planso Operational planning Done by first-line managers for the next 1 to 52 weeks- Goals and action plans- Mission and Vision Statementso Mission Statement Expresses the purpose of the organizationo Vision Statement Long-term goal describing “what” an organization wants to become Clear sense of the future and the actions needed to get there- 3 Types of Planning for 3 Levels of Managemento Strategic Planning Determine what the organization’s long-term goals should be for the next 1 to 5 years with the resources they expect to have available Top Management- Long-term decisions about overall direction of organization. Managers need to pay attention to environment outside the organization, be future oriented, deal with uncertain and highly competitive conditions o Tactical Planning Determine what contributions their departments or similar work units can make during the next 6 to 24 months  Middle Management- Implement policies and plans of top management, supervise and coordinate activities of first-line managers below, make decisions often without base of clearly defined information procedureso Operational Planning Determine how to accomplish specific tasks with available resources within the next 1 to 52 weeks  First-line management - Direct daily tasks of non-managerial personnel; decisions often predictable, following well-defined set of routine procedures - Goals, Action Plans, and Operating Plans o Goals Specific commitment to achieve a measurable result within a stated period of time Also known as an objective Strategic, tactical, operational o Strategic Goals Set by and for top management and focus on objectives for the organization as awholeo Tactical goals Set by and for middle managers and focus on the actions needed to achieve strategic goalso Operational goals Set by and for first-line managers and are concerned with short-term matters associated with realizing tactical goalso Action Plan Defines the course of action needed to achieve the stated goalo Operating Plan Designed for a 1-year period Defines how you conduct your business based on the action plan Identifies clear targets such as revenue, cash flow, and market share o Standing Plan Plans developed for activities that occur repeatedly over a period of time Consist of policies, procedures, and rules - Standing Plans: Policies, Procedures, and Rules o Policy Outlines the general response to a designated problem or situationo Procedure Outlines the response to a particular problem or circumstances o Rule Designates specific required action - Single-Use Plans: o Single-Use Plans Plans developed for activities that are not likely to be repeated in the future o Program Encompasses a range of projects or activitieso Project Plan of less scope and complexity than a program- SMARTo Specifico Measurableo Attainableo Results-orientedo Target dates- What is MBO?o Jointly set objectiveso Develop action plano Periodically review performanceo Give performance appraisal and rewards, if any - Three Types of Objectives Used in MBOo Improvement Objectives Purpose: - Express performance to be accomplished in a specific way for a specific area Examples- “Increase sport utility sales by 10%” “Reduce food spoilage by 15%”o Personal Development Objectives Purpose- Express personal goals to be realized Examples- “Attend five days of leadership training.” “Learn basics of Microsoft Office software by June 1”o Maintenance Objectives Purpose- Express the intention to maintain performance at previously established levels  Examples- “Continue to meet the increased sales goals specified last quarter” “Produce another 60,000 cases of wine this month”- Cascading Objectives: MBO from the Top Downo Top management must be committedo It must be applied organization-wideo Objectives must be “cascade”- The Planning/Control Cycleo Make the plano Carry out the plano Control the direction by comparing results with the plano Control the direction by taking corrective action in two ways Correcting deviations Improving future plans o Two Planning Steps Make the plan Carry out the plano The Two Control Steps Control the direction by comparing the results with the plan Control the direction in two ways- By correcting deviations in the plan being carried out (return to step to) or- By improving future plans (go to step 1 to start over)Chapter 6- The Dynamics of Strategic Planningo Strategy  Large-Scale action plan that sets the direction or an organizationo Strategic Management Process that involves managers from all parts of the organization in the formulation and the implementation of