Unit 7: Planning and Strategy Formulation
Managers plan and coordinate the work of others so that an organization can achieve its goals. In their planning function, managers identify needed resources (e.g. people, finances, equipment, etc.) and organize them so that employees can accomplish activities and meet set objectives.
In addition to setting company-wide strategy and long-term goals, managers also create interim, short-term goals as a means of focusing the activities of an organization and providing direction to employees.
Completing this unit should take you approximately 5 hours.
Upon successful completion of this unit, you will be able to:
- examine the importance of developing clearly identified goals and objectives;
- illustrate the components of business strategy;
- explain how to develop and achieve organizational goals, objectives, and vision statements; and
- analyze the significance of properly planning and executing change in an organization.
7.1: Planning and Strategy
7.1.1: Case Study: Transforming the Textbook Industry
Read the introduction and section 5.1, which presents a case study of an online publishing company that used the P-O-L-C framework to support the development of its business strategy and create a new way to access college textbooks. The ability to strategize is a skill that a manager must possess to be successful.
7.1.2: Management Strategy Frameworks
Read this section, which discusses how to apply strategic management techniques within the P-O-L-C framework, emphasizes the inputs that affect the formulation of a strategy, and provides a framework for performing a SWOT analysis. Developed in the early 1970s, the SWOT analysis technique is an essential tool in the strategic planning process.
Read this article, which explains the strategic planning process. Pay special attention to why and when organizations should engage in strategic planning.
Read this article, which describes how to analyze an external environment and create a SWOT analysis.
Read this article, which describes how to utilize an organization's valuable resources to create a long-term sustainable strategy.
Read this article and consider the following questions: What is the knowledge-based view (KBV) of business strategy formulation? What three intangible resources serve as the foundation for developing an organizational strategy using the KBV? What is the most critical component in developing a competitive advantage strategy using the KBV? Why?
7.1.3: Intended and Realized Strategies of Managers
Read this section, which focuses on the essence of how strategy is made. Keep in mind that there is a difference between what a manager plans to happen and what actually unfolds – identifying and analyzing intended versus realized strategies. A manager should know the best way to make a strategy.
7.1.4: Managers Have To Make Choices
Read this section, which discusses different schools of thought regarding strategy, emphasizing strategic focus within an organization. Managers need to focus on a specific strategy for an organization to achieve any level of success. Still, they also need to be flexible to meet the ever-changing demands of a business. This section will help you identify the trade-offs associated with strategy and outline how to create a competitive advantage. Pay particular attention to this section's discussion of Michael Porter's generic strategies.
Read this article, which encourages you to recognize the consequences of your strategic choices and how they impact your overall production and organization.
Read this article, which describes Michael Porter's three competitive strategies: cost leadership, differentiation, and market segmentation.
7.2: Setting and Achieving Goals and Objectives
7.2.1: Case Study: Nucor Aligns Company Goals with Employee Goal
Read the introduction and section 6.1, which includes a case study that discusses Nucor Corp's efforts to align company and employee goals through its policy of treating employees as if they are owners of the company as well as its implementation of a highly effective bonus program.
7.2.2: How Should Managers Define Goals and Objectives?
Read this section, which introduces the difference between a goal and an objective. Broadly speaking, goals are wider in scope, and objectives are more focused. It is very important for a manager to be able to distinguish between these two concepts. As you read, make sure to take detailed notes comparing and contrasting goals and objectives and describing how goals and objectives work within the P-O-L-C framework.
Read this article, which discusses how organizations can create objectives that enable them to achieve industry success.
7.2.3: Managers Must Understand the Measurement of Goals and Objectives
Read this section, which introduces a variety of measurement tools that can be used to establish and manage goals and objectives. It is a manager's job to keep track of project performance and to identify areas of opportunity. A manager uses a management measurement tool to readily identify these areas and to provide a means by which he or she can develop appropriate strategic responses to changing goals and objectives.
7.2.4: How To Identify Successful Goals and Objectives
Read this section, which explains setting attainable goals and objectives and identifies the tools necessary to troubleshoot issues in the goal-setting process. Any time a manager makes a decision, there is the possibility of an ethical, economic, or moral challenge to that decision. Knowing how to troubleshoot will help a manager to address such challenges better.
7.2.5: Managers Use Goals and Objectives for Employee Performance Evaluations
Read this section, which discusses how a manager can use goals and objectives to better analyze employee performance. Knowing these strategies will help you to better identify the areas in which an employee needs to improve. As you have learned from your work in this course, it is a manager's job to maximize the use of resources. Knowing how to align human capital performance with organizational goals and objectives will help you to support the improvement of workplace relationships and productivity.
7.2.6: Connecting Goals and Objectives with Corporate Social Responsibility
Read this section, which discusses how to use goals and objectives in support of organizational strategies as they relate to social responsibility and environmental issues. Organizations make use of the balanced scorecard approach, which incorporates both financial and non-financial indicators to evaluate the effectiveness of an organization's corporate social responsibility activities.
7.2.7: Defining Your Own Goals and Objectives Makes You a Better Manager
Read this section, which discusses the balanced scorecard method. This method links a company's vision, mission, and strategy with the goals and objectives that its individual employees seek to achieve. Do the exercise that asks you to develop your own balanced scorecard.
7.2.8: An Overview of Goal-Setting Strategies
Read this article and think about your past goal-setting activities. Have you used an effective process for setting your goals? Have you shared your goals with others to help keep you accountable? Have you kept your desired goals, or have you lowered your standards as some level of success was achieved? Will you take some time to re-evaluate how you go about setting your goals? If so, how?
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7.3: How Do Managers Develop Strategy?
7.3.1: The Components of a Business Strategy
Watch this short video, which sets the stage for our discussion of business strategy.
Read this article and, if applicable, think about one of your own past experiences with strategic planning. Were you aware of your specific role in helping the organization achieve its goals? Did the organization implement its plan effectively? Was the company flexible enough to adapt to marketplace changes as they occurred? Did the organization take appropriate measures to monitor the plan and evaluate its success or failure in achieving its stated goals?
7.3.2: Strategy Is Essential for Management Success
Read this section, which further explores the importance of well-thought-out managerial strategies. You will learn how to evaluate resources, potential capabilities, and core competencies, and then use them to support the development and implementation. This section focuses on identifying what your company does better than its competition and how you can use this insight to your advantage when developing a business strategy. As a manager, you will need to understand your company's best assets and use them to meet business needs. Pay attention to the VRIO (valuable, rare, inimitable, organization) framework for internal analysis. This tool will help you to determine whether a company has identified its true core competencies.
Read this section, which covers the external environmental forces that impact the strategy and success of an organization. It is important for you to note that as a manager, you likely will be unable to control many influential elements that are external to your organization. Therefore, you must gather as much information as possible in any relevant situation in order to meet challenges that may arise from you external environment. Keep in mind that not all external factors have a negative impact; some may actually present opportunities.
Read this section, which discusses how to identify whether or not a manager has presented a well-crafted and concise strategy. Pay special attention to the strategy diamond presented in the text; it is a strong visual resource for determining the characteristics of a solid strategy.
Read this article, which describes how organizations can develop effective strategies that enable them to achieve their goals. This article provides an excellent example of how a fictional community coalition might develop strategies to meet its goal of reducing teen pregnancy.
7.3.3: Discussing the Five Competitive Forces of Strategy
This video features Professor Michael Porter of Harvard Business School. Porter is a leading thinker in the field of management. In this video, he discusses his Five Forces model and uses the airline and soft drink industries to reinforce and illustrate this model. Using this information, how might you use the Five Forces as a tool to improve strategy in your own organization (or one you are familiar with)?
Unit 7 Assessment
- Receive a grade
Take this assessment to see how well you understood this unit.
- This assessment does not count towards your grade. It is just for practice!
- You will see the correct answers when you submit your answers. Use this to help you study for the final exam!
- You can take this assessment as many times as you want, whenever you want.