5.1 Planning and Strategy?
Planning is used in conjunction with strategy and strategic management
Planning: Coping with Uncertainty
Planning - setting goals and deciding how to achieve them
oAnother definition: planning is coping with uncertainty by formulating future
courses of actions to achieve specified results
Plan - a document that outlines how goals are going to be met
Business Plan - outlines a proposed firm’s goals, the strategy for achieving
them, and the standards for measuring success
Business Model - outlines to the operations of the business, its components and
functions, as well as the expected revenues and expensive
oHow the firm will market to customers
oThe firm's expected re venues and expenses
oA description of the industry the firm is entering
Strategy: Setting Long-Term Direction
Strategy (Strategic plan) - sets the long-term goals and direction for an
organization
oEducated guess
oExample: “grow the business organically” however this strategy will
change over time and/or the company’s goals change
Strategic Management - a process that involves managers from all parts of the
organization in the formulation and implementation of strategies and strategic
goals
oThis involves all the managers from all the parts of the organization
Why Planning and Strategic Management are Important
An organization should adopt planning and strategic management for three
reasons:
1. Providing Direction and Momentum
Using a plan to head the right direction and not fail
2. Encouraging New Ideas
Strategy innovation
3. Developing a Sustainable Competitive Advantage
Being more effective than competitors
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