North Central Mindanao College MODULE WEEK NO.

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Purok-Lemon Tree, Maranding, Lala, Lanao del Norte
Tel. No. (063) – 388 – 7213

College of Business Administration and Accountancy

BM7: Organizational Management
1st Semester of A.Y. 2021-2022

Topic: PLANNING ESSENTIALS

Rationale

Planning helps an organization chart a course for the achievement of its goals. The process
begins with reviewing the current operations of the organization and identifying what needs
to be improved operationally in the upcoming year. From there, planning involves envisioning
BM7 COURSE MODULE

the results the organization wants to achieve, and determining the steps necessary to arrive
at the intended destination – success, whether that is measured in financial terms, or goals
that include being the highest-rated organization in customer satisfaction.

Intended Learning Outcomes

At the end of this module, you should be able to:

 Summarize a general framework for planning and apply it to enhance your planning
skills.
 Describe the nature of business strategy.
 Explain how business strategy is developed, including SWOT analysis.
 Identify levels of business strategy, competitive forces, and types of business strategies.
 Explain the use of operating plans, policies, procedures, and rules.
 Present an overview of management by objectives.

Activity
Online Lecture Quiz

Discussion

A General Framework for Planning

PLANNING -is a complex and comprehensive process involving a series of overlapping and
interrelated elements or stages, including strategic, tactical, and operational planning.

1. STRATEGIC PLANNING – establishes master plans that shape the destiny of the firm.
2. TACTICAL PLANNING –translates strategic plans into specific goals that are most
relevant to a particular organizational unit. It also provide details of how the company
or business unit will compete within its chosen business area
3. OPERATIONAL PLANNING –identifies the specific producers and actions required at
lower levels in the organization.

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A Framework for Planning

1. Define the present situation.
2. Establish goals and objectives.
3. Analyze environment in terms of aids and barriers to goals.
4. Develop actions plans to reach goals and objectives.
5. Develop budget.
6. Implement the plans.
7. Control the plans.

Action plan—consist of the specific steps necessary to achieve a goal or objective.

Contingency plan –an alternative plan to be used if the original plan cannot be
implemented or a crisis develops.

THE NATURE OF BUSINESS STRATEGY

Strategy -- the organizations plan, or comprehensive program, for achieving its vision, mission,
and goals in its environment.

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1. Strategy involves more than operational effectiveness.

2. Strategy rests on unique activities.
3. A sustainable strategic position requires trade –offs
4. Fit drives both competitive advantage and sustainability.

THE DEVELOPMENT OF BUSINESS STRATEGY

Strategic planning encompasses those activities that lead to the statement of goals
and objectives and the choices of strategies to achieve them. The final outcomes of
strategic planning are the statements of vision, mission, policy, and strategy.

Vision -- an idealized picture of the future of an organization.

Mission – the firm purpose and where it fits into the world.
Strategy often stems from planning, yet many firms choose a strategy prior to strategic
planning. Once the firm has a strategy, a plan is developed to implement it.

The gathering multiple inputs to formulate strategy

Strategic managers and leaders are often thought of as mystics who work
independently and conjure up great schemes for the future. In reality, many strategic leaders
arrive at their ideas for the organization’s future by consulting a wide range of parties with
interest.

Analyzing the realities of the business situation

To develop an effective business strategy, the strategist must make valid assumptions
about the environment. When the assumptions are incorrect the strategy might backfire.
SWOT ANALYSIS-- a method of considering the strengths, weaknesses, opportunities, and
threats in a given situation.

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PREPARING FOR THE ANALYSIS
FIRST- it is important to be clear about what you are doing and why
SECOND – it is important to select appropriate contributors.
THIRD – allocate research and information-gathering tasks.
FOUR – create a workshop environment by encouraging open communication
among participant.

Conducting the Analysis

 STRENGHTS—What are the good points about a particular alternative? Use your
judgment and intuition; ask knowledgeable people.
 WEAKNESSES—Consider the risks of pursuing a particular course of action, such as
getting into a business you do not understand.
 OPPURTUNITIES—Think of the opportunities that welcome you if you choose a
promising strategic alternative. Use your imagination and visualize the opportunity.
 THREAT—every alternative has its own downside, so it is important to think ahead to
allow for contingency planning. Ask people who have tried in the past what you are
attempting now.
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LEVELS OF STRATEGY COMPETITIVE FORCES, AND TYPES OF STRATEGY

LEVELS OF BUSINESS STRATEGY

A strategy chosen to reach an important goal depends considerably on the level it

serves within the organization.

Two major concerns of corporate-level strategy are the total direction of the enterprise
and the selection of the specific business.

Business-level strategy focuses on the question of how to compete in each of our business.

Functional-level strategy are formulated to specify actions required to successfully implement

strategies at the corporate and business levels.

THE FIVE COMPETITIVE FORCES

1. The power of costumer to affect pricing and reduce profit margins.

2. The power of suppliers to influence the company‘s pricing.
3. The threat of similar or substitute products to limit market freedom and reduce prices
and thus profits.
4. The level of existing competition that affects investment in marketing and research
and thus erodes profits.
5. The threat of new market entrants to intensity competition and further affect pricing
and profitability.

TYPES OF BUSINESS STRATEGIES

Companies use a variety of strategies to survive and prosper, and these strategies
have been classified in several ways.

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A. Corporate-level Strategies
1. Strategic alliances. A widely used business strategy calls for forming alliances or sharing
resources with other companies to exploit a market opportunity.
2. Diversification of goods and services. One of the many reasons that diversification is an
effective strategy is that it serve as a hedge in case the market for one group of
products or services softens. Another advantage of diversification is that it can lead to
immediate growth at the same time.
3. Sticking to core competencies. It may be valuable not only to avoid putting all your
eggs in one basket, but also to guard against spreading yourself too thin. Many firms of
all sizes believe that they will prosper if they will confine their efforts to business activities
they perform best—their core competencies.

B. Business-level Strategies

1. Product Differentiation. A differentiation strategy attempts to find .a niche of offer a

product or services perceived by the costumer as different from available alternatives.
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Blue ocean strategy—an extension of the product differentiation strategy is to

create a new market in which competition does not exist
2. Focus. A focus strategy is the organization concentrates on a specific regional or
buyer market. To gain market share, the company uses either a differentiation or low-
cost approach in a targeted market.
3. Cost Leadership. The cost leader provides a product or service at a low price in order
to gain market shape.

C. Functional-level Strategy

1. Find and retain the best people. A foundation strategy for becoming and remaining a
successful organization is to find and retain competent.
2. High Speed. High speed managers focus on speed in all of their business activities
including product development, sales response and customer service.

OPERATING PLANS, POLICIES , PROCEDURES, AND RULES.

Operating Plans– are the means through which the strategic plans alter the destiny of the
firm. Operating plans involve organization efficiency (doing things rights) whereas strategy
plans involve effectiveness (doing the right things).

Policies – are general guidelines to follow in making decisions and taking action; as such, they
are plans. Many policies are written, some are written or implied.

Procedure – A customary method for handling an activity. It guides action rather than
thinking.

Rules– A specific course of action or conduct that must be followed .it is the simplest type of
plan.

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Two examples of rules to follow:
 Any employee engaged in an accident while in a company vehicle must report
that accident immediately to his or supervisor.
 No employee is authorized to use company photocopying machines for personal
use, even if he or she reimburses the company for the cost of the copies.

MANAGEMENT BY OBJECTIVES (MBO) is a systematic application of goal setting and planning

to help individuals and firms be more productive. The system began in the 1950s and
continues to organizational objectives.

THE SIX ELEMENTS OF MANAGEMENT BY OBJECTIVES

 Establishing Organizational goals. Top level managers set organizational goals to

begin the entire MBO process.
 Establishing with Objectives. Unit heads then establish objectives for their units.
 Reviewing group member’s proposals. Group members make proposals about how
they will contribute to unit objectives.
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 Negotiating or agreeing. Managers and team members confer together at this

stage to either agree on the objectives set by the team members or negotiate
further.
 Creating action plans to achieve objectives. After the manager and team
members agree upon objectives, action plans must be defined.
 Reviewing Performance. Performance reviews are conducted at agreed upon
intervals.