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ลำดับตอนที่ #15 : [[R.S.]]Business Management Test::Chapter.10::31.1.12

Review Sheet of Business Management

Chapter 10 Test :: 31.Jan.11

Chapter.10 :: Planning and Strategic Management [[Page.226]]

10-1 What is the Planning Process? [[Page 228]]

-        Planning is the process that businesses use to decide the company’s goals for the future and ways to achieve those goals.

·       It prepares managers and businesses to meet the challenges of economic, social, technological, and political changes.

-        Everything that an effective manager does involves planning.

-        Active participation of employees in plan development benefits organization in several ways:

·       Good suggestions can come from any management level

·       Employees have better understanding of company’s overall direction

·       Employees feel they’re part of the process and become committed to the plan

·       Positive participation and pro-company attitudes improve morale and loyalty to the organization

-        The best way managers use to plan effectively is combinations of formal & informal planning.

-        Formal planning is the systematic studying of an issue and the preparation of a written document to deal with the problem.

·       Three basic ranges, or time spans, for developing business plans:

1.     Short-range plans cover a one-year period of time.

2.     Long-range plans cover a three-to-five year period of time, but some cover as far as 20 years in the future.

3.     Intermediate plans cover the time span between short-range and long-range, generally from one to three or one to five years.

·       There are 2 basic types of business plans:

1.     Operational planning is short-range planning which focuses on forming ideas for dealing with specific functions in the company.

2.     Strategic planning is long-range planning done by the highest management levels in the company.

-        In order to develop a plan, you need a course of action or strategy. A strategy is an outline of the basic steps management is going to take to achieve a goal. It exists at 3 primary levels:

1.     Grand or corporate strategies provide overall direction for the company. It include 4 basic grand strategy types:

1.1  Growth strategies = plans developed when a company tried to expand sales, products, or number of employees.

·       Concentration strategy extends the sale of current products or services to a company’s current market.

·       Vertical integration moves a company into a market it previously served either as a supplier or as a customer.

·       Diversification moves a company into a similar kind of business with new or different products or services.

1.2  Stability strategies = plans to keep the company operating at the same level that it has for several years. It will most likely succeed in slowly changing, work environments.

1.3  Defensive or retrenchment strategies = plans to reverse negative trends in a company.

·       Turnaround is used to regain success.

·       Divestiture is when a company sells some part of its business (often an unprofitable part or a unit that is not in the firm’s major line of business.

·       Liquidation is when the entire company is sold or dissolved.

1.4  Combination strategies = plans that employs several different strategies at once.

2.     Business strategies are plans that pertain to single departments or units within a company. They can be classified as:

2.1  An overall cost leadership strategy is designed to produce and deliver a product or service for a lower cost than the competition.

2.2  Differentiation is a strategy that strives to make the product or service unique.

2.3  A focus strategy directs marketing and sales towards a small segment of the market.

3.     Functional strategies are short-range operational plans that support business strategies by emphasizing practical implementation. The most common ones are:

·       Sales and marketing: developing new products/services and selling them

·       Production: producing products/services on time

·       Financial: dealing with the company’s expense

·       Research and development: developing new products, improving on product quality, or improving manufacturing processes to reduce costs

·       Personnel: managing human resource needs

Many functional plans are interrelated.

10-2 Strategic Management Process [[Page 236]]

-        Strategic management is the application of the basic planning process at the highest levels of the company.

·       The most important part of strategic management is developing strategic plans.

·       Successful strategic management involves many levels of management.

-        Most companies use strategic management approach that is made up of 3 phrases:

1.     Formulation, or developing the strategic plan

2.     Implementation, or putting the formulated plan to work

3.     Evaluation, or continuously evaluating and updating the strategic plan

-        Formulating strategy is developing the grand- and business-level strategies to be used by the company.

·       Identifying the mission statement.

ð  A mission statement outlines why the company exists.

ð  It describes the company’s basic product and/or services and defines markets and sources of revenue.

·       Identifying past and present strategies

ð  To plan for the future, companies need to understand and appreciate their corporate history.

·       Diagnosing the company’s past and present performance

ð  To evaluate how past strategies have worked and to determine if strategic changes are needed.

·       Setting objectives for the company’s operation

ð  Goals are concise statements that provide direction for employees and set standards for achieving the company’s strategic plans.

·       Policies, procedures, and rules

ð  Policies are broad general guides to action that establish boundaries within which employees must operate.

ð  A procedure is a detailed series of related steps or tasks written to implement a policy. It defines the methods through which policies are achieved.

ð  Rules detail specific and definite corporate actions that employees must follow. They permit no flexibility or deviation.

·       SWOT Analysis

ð  The most utilized process for determining a company’s overall heath is called SWOT analysis. SWOT is an acronym for Strengths, Weakness, Opportunities, and Threats.

ð  It is a technique that evaluates a company’s internal strengths and weaknesses and its external opportunities and threats.

-        Implementing strategy is the action stage of strategic management.

·       This can be the most difficult stage of strategic management.

·       Managers need to determine and implement the most appropriate company structure, motivate employees, develop short-range goals, and establish functional strategies.

·       The strategy must fit with current company policies, or the conflicting policies must be changed.

-        Evaluating strategy is the process of continuously monitoring the company’s progress toward its long-range goals and mission.

·       The 3 basic strategy evaluation activities are:

ð  Reviewing external and internal factors that are the bases for current strategies

ð  Measuring performance

ð  Taking corrective action

·       The emphasis on evaluating strategy is on making the company’s managers aware of the problems that are likely to occur and of the actions to take if they do arise.

-        Companies that forget the importance of strategic planning and strategic evaluation often find they have lost their ‘competitive edge.’

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