Robbins Fom11 Im 05
Robbins Fom11 Im 05
Robbins Fom11 Im 05
LEARNING OUTCOMES
Management Myth
MYTH: Planning is a waste of time because no one can predict the future.
TRUTH: No matter how well you plan, there’s always the unexpected. Flexible planning that
includes multiple scenarios can prepare managers for a variety of situations.
SUMMARY
Organizations must develop goals, plans, and strategies for how best to achieve their purpose.
However, sometimes after evaluating the outcomes of those plans and strategies, managers have
to change direction as conditions change.
Teaching Tips:
Students should be encouraged to think about the advantage of long-term planning for
companies.
How do organizations plan in environments where technology is constantly changing?
Have students think of some innovations that were hot one day and then disappeared the
next. Why did these innovations not succeed in the long-term?
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Chapter 5 – Planning and Goal Setting
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Chapter 5 – Planning and Goal Setting
a) Formal planning efforts lock an organization into specific goals and specific
timetables.
b) The assumption may be that the environment won’t change during the time
period the objectives cover.
1) Forcing a course of action when the environment is fluid can be a recipe
for disaster.
2. Managers’ Response: Managers need to remain flexible and not be tied to a course
of action simply because it is the plan.
3. Criticism: Formal plans can’t replace intuition and creativity.
a) Visions have a tendency to become formalized as they evolve.
b) Formal planning efforts typically follow a methodology that reduces the vision
to a programmed routine.
4. Managers’ Response: Planning should enhance and support intuition and
creativity, not replace it.
5. Criticism: Planning focuses managers’ attention on today’s competition, not on
tomorrow’s survival.
a) Formal planning tends to focus on how to best capitalize on existing business
opportunities within the industry.
b) It often does not allow for managers to consider creating or reinventing the
industry.
6. Managers’ Response: When managers plan, they should be open to forging into
uncharted waters if there are untapped opportunities.
7. Criticism: Formal planning reinforces success, which may lead to failure.
a) Success may, in fact, breed failure in an uncertain environment.
b) It is hard to change or discard successful plans.
c) Successful plans may provide a false sense of security.
8. Managers’ Response: Managers may need to face that unknown and be open to
doing things in new ways to be even more successful.
D. Does Formal Planning Improve Organizational Performance?
1. Contrary to the critics, the evidence generally supports having formal plans.
2. However, organizations that formally plan do not always outperform those that
don’t.
3. Conclusions from studies of the relationship between planning and performance.
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a) There are generally higher profits, higher return on assets, and other positive
financial results with a formal planning process.
b) The quality of the process and appropriate implementation of the plans
probably contribute more towards high performance than does the extent of
planning.
c) Finally, in those organizations in which formal planning did not lead to higher
performance, the environment was typically the culprit.
1) Government regulations and similar environmental constraints leave
managers with fewer viable alternatives.
II. WHAT DO MANAGERS NEED TO KNOW ABOUT STRATEGIC MANAGEMENT?
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Chapter 5 – Planning and Goal Setting
4. Finally, it is important because organizations are complex and diverse and each
part needs to work together to achieve organizational goals.
5. All types of organizations can benefit from strategic plans.
C. What Are the Steps of the Strategic Management Process?
1. The six-step strategic management process involves strategic planning,
implementation, and evaluation.
2. See Exhibit 5-2.
3. Strategic planning encompasses the first four steps.
4. Step 1: Identify the organization’s current mission, objectives, and strategies. See
Exhibit 5-3.
a) Every organization has a mission statement that defines its purpose and answers
the question, “What business or businesses are we in?”
b) Determining the nature of one’s business is as important for not-for-profits as it is
for business firms.
c) Once its mission has been identified, the organization can begin to look outside
the company to ensure that its strategy aligns well with the environment.
5. Step 2: Analyze the external environment.
a) Organizations need an accurate grasp of the environment and important trends
that might affect the organization’s operations.
b) Opportunities are positive external environmental factors.
c) Threats are negative ones.
6. Step 3: Evaluate the organization’s internal resources.
a) This involves asking specific questions and analyzing the available information
about an organization’s resources and capabilities.
b) The analysis should lead to a clear assessment of the organization’s internal
resources—financial, physical, human, and intangible.
c) The capabilities include, how does the organization work?
7. Step 4: Formulate strategies with three main types—corporate, competitive, and
functional.
8. Step 5: Implement strategies. No matter how effectively an organization has planned
its strategies, performance will suffer if the strategies aren’t implemented properly.
9. Step 6: Evaluate the results to determine the effectiveness or whether changes need to
be made.
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a) Management can improve quality by analyzing and then copying the methods
of the leaders.
b) In 1979, Xerox undertook the first benchmarking effort in the United States.
c) Until then, the Japanese had been aggressively copying the successes of
others.
d) Xerox’s head of manufacturing took a team to Japan to make a detailed study
of its competition’s costs and processes at its own joint venture, Fuji-Xerox.
1) Its Japanese rivals were light-years ahead of Xerox in efficiency.
2) Benchmarking those efficiencies marked the beginning of Xerox’s
recovery.
5. Social media has become a tool that organizations can use as a strategic weapon.
a) Red Robin example.
b) Successful social media strategies should:
1) Help people inside and outside the organization connect.
2) Reduce costs or increase revenue possibilities or both.
6. Big data can also be used as a strategic weapon. Collecting data about customers,
partners, employees, markets, and other quantifiable areas can be used to respond to
the needs of these same stakeholders.
a) Managers can use digital tools - technology, systems, or software that
allow the user to collect, visualize, understand, or analyze data.
1) Data visualization tools
2) Cloud computing
3) Internet of things
MyLab Management Try It 1!: If your instructor has assigned this activity, go to
www.pearson.com/mylab/management to complete the Mini Sim.
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Discuss This:
What potential ethical dilemmas might there be in using a strategy of retail consumer tracking?
(Think in terms of the various stakeholders who might be affected by this decision.)
What factors might influence a business’s decision to use this strategy? Are possible ethical
considerations more important than these factors? How does a decision maker weigh these things?
Discuss these issues in your “assigned” group.
d) Means-ends chain is when higher-level goals (or ends) are linked to lower-
level goals, or goals achieved at lower levels become the means to reach the
goals (ends) at the next level.
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d) The commitment concept says that plans should extend far enough to meet
those commitments made when the plans were developed.
7. Two approaches to planning:
a) A formal planning department is a group of planning specialists whose sole
responsibility is to help write the various organizational plans.
1) Under this approach, plans developed by top-level managers flow down
through other organizational levels.
2) In a survey of managers about formal top-down organizational planning
processes, over 75 percent said that their company’s planning approach
was unsatisfactory.
b) Planning by organizational members.
1) In this approach, plans aren’t handed down from one level to the next, but
instead are developed by organizational members at the various levels and
in the various work units to meet their specific needs.
2) When organizational members are more actively involved in planning,
they see that the plans are used in directing and coordinating work.
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MyLab Management Try It 2!: If your instructor has assigned this activity, go to
www.pearson.com/mylab/management to complete the Mini Sim.
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Chapter 5 – Planning and Goal Setting
f) There’s often a fine line between what’s considered legal and ethical and
what’s considered legal, but unethical.
It may seem like a daunting task to monitor social media; however, businesses can use new
software tools and analytic techniques to learn about competitors, suppliers, and customers. For
example, software can be used to calculate “buzz volume,” which isolates relevant messages
about a specific company’s brand online.
To effectively gather business intelligence from social media, organizations should take a
strategic approach, otherwise it’s easy to get buried in the overwhelming amount of information
that exists. This unprecedented access to immediate and endless information could shift how
businesses do organizational planning. Managers must be able to shift plans quickly in
response to trends or other intelligence identified via social media scanning efforts.
Discuss This:
With so much information available through social media, how can businesses focus their
efforts to scan for relevant information?
How could managers determine if information gathered from social media is reliable and not
fake? In your “assigned group,” discuss ideas.
coordinated efforts, (2) it reduces uncertainty, (3) it reduces overlapping and wasteful
activities, and (4) it establishes the goals or standards that are used in controlling work.
Although criticisms have been directed at planning, the evidence generally supports the
position that organizations benefit from formal planning.
5-2 Explain what managers do in the strategic management process. Managers develop
the organization’s strategies in the strategic management process, which is a six-step
process encompassing strategy planning, implementation, and evaluation. The six steps
are as follows: (1) Identify the organization’s current mission, goals, and strategies; (2)
Do an external analysis; (3) Do an internal analysis—steps 2 and 3 together are called
SWOT analysis; (4) Formulate strategies; (5) Implement strategies; and (6) Evaluate
results. The end result of this process is a set of corporate, competitive, and functional
strategies that allow the organization to do what it’s in business to do and to achieve its
goals. Six strategic weapons are important in today’s environment: customer service,
employee skills and loyalty, innovation, quality, social media, and big data.
5-3 Compare and contrast approaches to goal setting and planning. Most company’s
goals are classified as either strategic or financial. We can also look at goals as either
stated or real. In traditional goal setting, goals set by top managers flow down through the
organization and become subgoals for each organizational area. Organizations could also
use management by objectives, which is a process of setting mutually agreed-upon goals
and using those goals to evaluate employee performance. Plans can be described in terms
of their breadth, time frame, specificity, and frequency of use. Plans can be developed by
a formal planning department or by involving more organizational members in the
process.
5-4 Discuss contemporary issues in planning. One contemporary planning issue is planning
in dynamic environments, which usually means developing plans that are specific but
flexible. Also, it’s important to continue planning even when the environment is highly
uncertain. Finally, because there’s little time in a dynamic environment for goals and
plans to flow down from the top, lower organizational levels should be allowed to set
goals and develop plans. Another contemporary planning issue is using environmental
scanning to help do a better analysis of the external environment. One form of
environmental scanning, competitive intelligence, can be especially helpful in finding out
what competitors are doing.
DISCUSSION QUESTIONS
5-1 Contrast formal with informal planning.
Answer: In informal planning, very little, if anything, is written down. In formal planning,
there are written plans at various levels, people are assigned responsibilities, there is a great
deal of detail, etc. Formal planning involves specific goals to be achieved within specific
timetables.
Learning Outcome 5-1: Discuss the nature and purposes of planning.
AACSB: Analytical thinking
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Answer: The strategic management process is made up of six steps: (1) identify the
organization’s current mission, objectives, and strategies, (2) analyze the external
environment by identifying the opportunities and threats in the environment, (3) analyze the
organization’s internal resources by identifying the organization’s strengths and weaknesses,
(4) formulate strategies, (8) implement strategies, and (9) evaluate results.
Learning Outcome 5-2: Explain what managers do in the strategic management process.
AACSB: Analytical thinking
5-5 “Organizations that fail to plan are planning to fail.” Do you agree or disagree with
this statement? Explain your position.
Answer: Students may agree or disagree. If they agree, they may argue that the discipline of
planning provides a framework for thinking through decisions and the future. Whether
students like or dislike planning, it does provide direction, measurements of progress, and a
framework for judging the success or failure of a venture. Not everything can be anticipated
but a plan is the best starting point.
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5-6 Under what circumstances do you believe MBO would be most useful? Discuss.
Answer: MBO is of value for converting overall objectives into specific objectives for
organizational units and individual members. MBO makes objectives operational by
cascading them down through the organization. Because lower-unit managers jointly
participate in setting their own goals, MBO works from the bottom up as well as from the top
down. The result is a hierarchy that links objectives at one level to those at the next level. For
the individual employee, MBO provides specific personal performance objectives.
Learning Outcome 5-3: Compare and contrast approaches to goal setting and planning.
AACSB: Analytical thinking
5-8 What types of planning do you do in your personal life? Describe these plans in
terms of being (a) strategic or operational, (b) short-term or long-term, (c) specific or
directional, and (d) single-use or standing.
Answer: Students’ responses to this question will, of course, vary. Students may mention the
planning process they use to meet educational and career goals. Encourage students to think
about their everyday lives and the types of daily, weekly, monthly, and yearly planning they
do.
Learning Outcome 5-3: Compare and contrast approaches to goal setting and planning.
AACSB: Analytical thinking
5-9 Do a personal SWOT analysis. Assess your personal strengths and weaknesses
(skills, talents). What are you good at? What are you not so good at? What do you enjoy
doing? Not enjoy doing? Then, identify career opportunities and threats by researching
job prospects in the industry you’re interested in. Look at trends and projections. You
might want to check out the information the Bureau of Labor Statistics provides on job
prospects. Once you have all this information, write a specific career action plan.
Outline five-year career goals and what you need to do to achieve those goals.
Answer: Responses will be specific to the respective student.
Learning Outcome 5-2: Explain what managers do in the strategic management process.
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Answer: Responses to this question will vary by student. Some might focus on the vast
quantity of information that is now available, especially via social media. Students may note
for example that the availability of information can make it easier to spot trends and respond
to them. Other students though may point out that while technology can facilitate planning,
especially in areas like efficiency, it can also be overwhelming in quantity, potentially
causing organizations to lose sight of their goals.
5-11 Will planning become more or less important to managers in the future? Why?
Answer: Responses to this question will vary based on student opinion. Many will probably
respond that the importance of planning will not change, but the nature of planning will
change.
5-12 How could the Internet be helpful to managers as they follow the steps in the strategic
management process?
Answer: Responses to this question will vary by student. Most students will note the value of
the Internet in understanding the opportunities and threats in the external environment.
Learning Outcome 5-2: Explain what managers do in the strategic management process.
AACSB: Analytical thinking
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Chapter 5 – Planning and Goal Setting
Managers often have to deal with ambiguous situations, which can make planning very
challenging. In this PIA, you’ll assess your level of tolerance for ambiguity.
Skill Basics
In addition to your own focus on goals, employees should also have a clear understanding
of what they’re attempting to accomplish. Managers have the responsibility to help
employees with this understanding as they set work goals. You can be more effective at
helping employees set goals if you use the following eight suggestions:
Identify an employee’s key job tasks.
Establish measurable, specific, and challenging goals for each key task.
Specify the deadlines for each goal.
Allow the employee to participate actively.
Prioritize goals.
Rate goals for difficulty and importance.
Build in feedback mechanisms to assess goal progress.
Link rewards to goal attainment.
Read through this scenario and follow the directions at the end of it:
You worked your way through college while holding down a part-time job bagging
groceries at the Food Town supermarket chain. You liked working in the food industry,
and when you graduated, you accepted a position with Food Town as a management
trainee. Three years have passed and you’ve gained experience in the grocery store
industry and in operating a large supermarket. Several months ago, you received a
promotion to store manager at one of the chain’s locations. One of the things you’ve liked
about Food Town is that it gives managers a great deal of autonomy in running their
stores. The company provides very good guidelines to its managers. Top management is
concerned with the bottom line: for the most part, how you get there is up to you. Now
that you’re finally a store manager, you want to establish an MBO-type program in your
store. You like the idea that everyone should have clear goals to work toward and then be
evaluated against those goals.
Your store employs 70 people, most work only 20 to 30 hours per week, except for the
managers. You have six people reporting directly to you: an assistant manager; a
weekend manager; and grocery, produce, meat, and bakery managers. The only highly
skilled jobs belong to the butchers, who have strict training and regulatory guidelines.
Other less-skilled jobs include cashier, shelf stocker, maintenance worker, and grocery
bagger.
Specifically describe how you would go about setting goals in your new position. Include
examples of goals for the job of butcher, cashier, and bakery manager.
Experiential Exercise
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Organizations of all types and sizes have (or should have) mission statements. Your
college/university likely has a mission or vision statement, as each department of your
college/university probably does. Mission statements are important because they compel
managers and decision makers to identify their reason for being in existence. Why does this
organization exist? What is its purpose? As we said in the chapter, knowing the mission is
important to planning efforts.
What about personal mission statements? Would having a personal mission statement be useful?
Experts say YES! A personal mission statement can be an important component of both your
personal and leadership development as you prepare for your future career. So, you’re going to
write one. Although this may sound simple to do, it’s not going to be simple or easy. Our hope is
that it will be something you’ll want to keep, use, and revise when necessary and that it will help
you be the person you’d like to be and live the life you’d like to live
.
We recommend starting by doing some research on personal mission statements. Your personal
mission statement may be one sentence or ten sentences, but it should identify your core values,
your goals, and what is important to you. There are some wonderful Web resources that can
guide you. Good luck! Your instructor will tell you what to do with your personal mission
statement once you’ve completed it.
Teaching Tip: Encourage students to explore the mission statements of both companies
and individuals as they begin the process of writing their own. Discuss how a personal
mission statement might change over time.
Discussion Questions
Learning Outcome 5-2: Explain what managers do in the strategic management process.
AACSB: Analytical thinking
5-15 How might SWOT analysis be helpful to Inditex executives? To Zara store managers?
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Learning Outcome 5-2: Explain what managers do in the strategic management process.
AACSB: Analytical thinking
5-16 What competitive advantage do you think Zara is pursuing? How does it exploit that
competitive advantage?
Answer: Responses to this question will vary by student. Many will focus on the speed that
allows Zara to identify a trend, create a relevant product, and get the product into its stores.
In an industry where that process can take months, Zara’s two- week turnaround time is a
very real advantage. Other students might focus on Zara’s superior logistical abilities or
design capabilities.
Learning Outcome 5-2: Explain what managers do in the strategic management process.
AACSB: Analytical thinking
5-17 Do you think Zara’s success is due to external or internal factors or both? Explain.
Answer: Responses to this question will vary based on student opinion, but many will
probably suggest that Zara’s success is due to both internal and external factors. Students
taking this perspective may note that Zara’s internal strengths have allowed it to capitalize
on external factors where other firms cannot. Students might also point out that advances in
technology have facilitated Zara’s success.
Learning Outcome 5-2: Explain what managers do in the strategic management process.
AACSB: Analytical thinking
5-18 Has Zara met its obligations to the workers who create their garments that are sold in their
stores? In your assigned group, discuss the social responsibility issues that Zara (and other
fast fashion retailers) face. What obligations DO they have, and how can they best meet
those obligations?
Answer: This question will likely generate some debate among students. Many will argue
that while it is sad that unscrupulous suppliers are cheating workers out of their wages, it is
a situation beyond the control of Zara. Others will contend that as an industry leader, Zara
has a responsibility to make it clear that it will only do business with suppliers that treat
their employees well.
Discussion Questions
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5-19 How is planning illustrated in this case story? How is strategic management illustrated in
this case story?
Answer: Students will approach this question differently. Some will suggest the efforts by
the new CEO at Ford to gather information on the company’s operations, brainstorm with
other executives, and visit an electric vehicle maker act as an informal SWOT analysis,
something that can be helpful in strategic management and planning. Others might focus on
the specific strategies Ford is pursuing and the planning that goes into those actions.
Learning Outcome 5-2: Explain what managers do in the strategic management process.
AACSB: Analytical thinking
5-20 The new CEO stated that the CEO’s job is to give employees a point of view. Explain what
you think he meant by this. Why is a “point of view” so important?
Answer: Responses to this question will vary by student. Many will agree that the CEO is
referring to sharing his vision for the company - what it is and where it should go. Students
taking this perspective will note that it would then form the foundation for planning and
strategic decision-making.
5-21 As the new CEO, why would you want to spend time - valuable time – gathering
information? Is this similar to SWOT analysis? Discuss.
Answer: Most students will liken the effort by the new CEO at Ford to gather information
as being similar to a formal SWOT analysis. A SWOT analysis provides an assessment of
the organization’s strengths, weaknesses, opportunities, and threats. Managers can use a
SWOT analysis to maximize strengths, capitalize on opportunities, and minimize
weaknesses and threats.
Learning Outcome 5-2: Explain what managers do in the strategic management process.
AACSB: Analytical thinking
5-22 Communicating these new goals, strategies, and plans to employees is obviously important
for guiding employee behaviors and actions. Whose responsibility is it to communicate
these things? What do you think would be the best way to do this? (Hint: It could be more
than one person’s responsibility!) Be prepared to discuss your ideas in your “assigned”
group.
Answer: Students will likely suggest that it is the role of senior management to lay out the
big picture vision for the organization, and for middle and lower level managers to
communicate the relevant aspects of that vision to employees.
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Learning Outcome 5-2: Explain what managers do in the strategic management process.
AACSB: Analytical thinking
Discussion Questions
5-23 What role do you think goals might play in planning for Domino’s future? List some goals
you think might be important. (Make sure these goals have the characteristics of well-
written goals.)
Answer: Responses to this question will vary by student. Students should demonstrate an
understanding of the characteristics of well-written goals as shown in Exhibit 5-6.
Learning Outcome 5-3: Compare and contrast approaches to goal setting and planning.
AACSB: Analytical thinking
5-24 What types of plans would be needed in an industry such as this one? (For instance, long-
term or short-term, or both?) Explain why you think these plans would be important.
Answer: Most students will probably suggest that both long-term and short-term plans are
important in the pizza industry and the restaurant industry in general. Short-term planning
deals with more immediate issues such as inventory ordering, staffing shits, and developing
marketing campaigns to attract customers in the near future. Longer-term goals might
include developing products designed to appeal to changing dietary trends or eating styles.
Learning Outcome 5-3: Compare and contrast approaches to goal setting and planning.
AACSB: Analytical thinking
5-25 What contingency factors might affect the planning Domino’s executives do? How might
those contingency factors affect the planning?
Answer: Responses to this question will vary by student. Students should demonstrate an
understanding of the contingency factors in planning at the organizational level, degree of
environmental uncertainty, and length of future commitments.
Learning Outcome 5-3: Compare and contrast approaches to goal setting and planning.
AACSB: Analytical thinking
5-26 Get in your assigned group and discuss the following: What competitive advantage(s) do
you think Domino’s has? What competitive challenges do you think the company faces?
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Answer: Responses to this question will depend on the perspectives of each group. Many
will suggest that some big challenges currently facing Domino’s is the healthy eating trend
and the independent, upscale pizza restaurant trend. Students may suggest that one of
Domino’s competitive advantages is its willingness to incorporate emerging technologies
into its business model.
Learning Outcome 5-2: Explain what managers do in the strategic management process.
AACSB: Analytical thinking
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