Contemporary Management Chapter 6

Topics: Strategic management, Management, Strategic planning Pages: 15 (4668 words) Published: January 21, 2013
Chapter Six:
The Manager as a Planner and Strategist

The Nature of the Planning Process:
Planning is a process that managers use to identify and select appropriate goals and courses of action for an organization. The cluster of decisions and actions that managers take to help an organization attain its goals is its strategy. Thus, planning is both a goal-making and a strategy-making process. Planning is a three-step activity:

1)Determining the organization’s mission and goals: A mission statement is a broad declaration of an organization’s purpose that identifies the organization’s products and customers and distinguishes the organization from its competitors. 2)Formulating Strategy: Managers analyze the organization’s current situation and then convince 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 between people and groups within the organization.

Levels of Planning:
In large organizations planning takes place at three levels of management: Corporate Level, Business or Division Level, and Department or Functional Level. The Corporate-level plan contains top management’s decisions pertaining to the organization’s mission and goals, overall strategy, and structure. Corporate-level strategy indicates in which industries and national markets an organization intends to compete. The corporate-level plan provides the framework within which divisional managers create their business-level plans. A division is a business unit that has its own set of managers and functions or departments and competes in a distinct industry. Divisional managers are those who control the various divisions of an organization. At the business level, the managers of each division create a Business-level plan that details long-term goals that will allow the division to meet corporate goals and the division’s business-level strategy and structure. Business-level strategy states the methods a division or business intends to use to compete against its rivals in an industry. The business-level plan provides the framework within which functional managers devise their plans. A Function is a unit or department in which people have the same skills or use the same resources to perform their jobs. Functional managers are those who supervise the various functions such as manufacturing, accounting, and sales within a division. A Functional-level plan states the goals that functional managers propose to pursue to help the division attain its business-level goals, which, in turn, allow the organization to achieve its corporate goals. Functional-level strategy sets forth the actions that managers intend to take at the level of departments to allow the organization to attain its goals. An important issue in planning is ensuring consistency in planning across the three different levels. Functional goals and strategies should be consistent with divisional goals and strategies, which in turn should be consistent with corporate goals and strategies, and vice versa. Once complete, each function’s plan is normally linked to its division’s business-level plan, which, in turn, is linked to the corporate plan.

Who Plans?
In general, corporate-level planning is the primary responsibility of top managers. Corporate-level managers are responsible for approving business and functional-level plans to ensure that they are consistent with the corporate plan. Corporate planning decisions are not made in a vacuum. Other managers do have input to corporate-level planning. Even though corporate-level planning is the responsibility of top managers, lower-level managers can and usually are given the opportunity to become involved in the process.

At the business level, planning is the responsibility of divisional managers, who also review functional plans. Functional managers also participate in...
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