MGMT1110 Topic 6 - Planning

Planning

Defining the organization's goals and establishing plans to achieve those goals.

Goals (Objectives, Targets)

The desired outcomes an organization aims to achieve.

Plans

Documents that outline how goals are going to be met.

Planning Fallacy

The tendency to systematically underestimate the time needed to complete a task or project.

Escalation of Commitment

Continuing to pursue a failing course of action because of prior investment.

Top-Down Strategic Planning

A rational, linear process where strategy is formulated by top management and flows down the hierarchy.

Top-Down Scenario Planning

A rational process where managers envision plausible future scenarios and formulate strategic responses in advance.

Strategy as Planned Emergence

A strategy process where bottom-up initiatives emerge from within the organization and are evaluated by top leadership.

Serendipity

Unplanned, random events that reveal unexpected strategic opportunities.

Resource Allocation Process (RAP)

The structured process by which a company allocates its resources, which can shape emergent strategy.

Autonomous Actions

Strategic initiatives taken by lower-level employees without central direction.

Corporate-Level Strategy

The overarching strategy that addresses the question of "where to compete?" (e.g., which industries).

Business-Level Strategy

The strategy for a single business unit that addresses "how to compete?" in a given industry.

Functional-Level Strategy

Strategies for departments (e.g., marketing, R&D) that address how to implement the business-level strategy.

SMART Goals

A framework for setting effective goals that are Specific, Measurable, Attainable, Relevant, and Time-bound.

Economic Value Added

The difference between a customer's maximum willingness to pay and the firm's cost to produce the good/service.

Differentiation Strategy

A business strategy focused on increasing the perceived value (willingness to pay) of products/services relative to competitors.

Cost Leadership Strategy

A business strategy focused on achieving the lowest cost structure in the industry while offering acceptable value.

Integration Strategy

A business strategy that attempts to simultaneously achieve differentiation and low cost.

Focused Strategies

Targeting/dominating a narrow market segment (niche) with either a differentiation or cost leadership approach. Done when there are distinct differentiation/cost advantage or when segment is sufficiently large.

"Stuck in the Middle"

A failed competitive position where a firm has neither a clear differentiation nor a cost advantage.

Value Innovation

Creating a leap in value for buyers and the company, often by eliminating trade-offs between differentiation and cost.

Diversification

Expanding a company's operations into a new industry.

Related Diversification

Expanding into a new industry that is logically linked to the company's existing operations (seeking synergies).

Unrelated Diversification

Expanding into a new industry with no logical connection to existing operations (often to spread risk).

Synergy

Performance gains that result from when a business shares resources common to different products

Horizontal Integration

Merging with or acquiring a competitor in the same industry to increase market share.

Vertical Integration

Expanding operations backward into an industry that supplies inputs (backward) or forward into an industry that distributes outputs (forward).

Merger & Acquisition (M&A)

The combining of two companies, either through a merger (joining) or an acquisition (purchase).

Strategic Alliance

A voluntary arrangement between firms to share knowledge, resources, and capabilities to develop processes, products, or services.

Liability of Foreignness

The inherent disadvantages a foreign firm faces when competing in a host country due to its non-native status.

Stars (BCG Matrix)

Business units in high-growth industries with high market share; require investment.

Cash Cows (BCG Matrix)

Business units in low-growth industries with high market share; generate cash to fund other units.

Question Marks (Problem Children)

Business units in high-growth industries with low market share; risky, require significant investment to grow.

Dogs (BCG Matrix)

Business units in low-growth industries with low market share; generate low profit, candidates for divestment.