Why Plan?

Providing Direction and Momentum

• why are direction and momentum important?
  • unless a plan is in place, managers may focus on whatever is in front of them, just “putting out fires”
  • managers might be so preoccupied with day to day pressures that their organizations can lose momentum

Encouraging New Ideas

• strategy innovation: the ability to reinvent the basis of competition within existing industries
• bold new business models that put incumbents on the defensive

Developing a Sustainable Competitive Advantage

• competitive advantage: ability of an organization to produce goods or services more effectively than its competitors do, thereby outperforming them
• sustainable competitive advantage: when an organization is able to get ahead and stay ahead in 4 different areas:

1. in being responsive to customers
2. in innovating
3. in quality
4. in effectiveness

Fundamentals of Planning

• mission statement: “what is our reason for being?”
• vision statement: “what do we want to become?”
• values statement: “what values do we want to emphasize?”
• strategic planning: done by top managers for the next 1-5 years → goals→ action plans
• tactical planning: done by middle managers for next 6-24 months → goals → action plans
• strategic planning: done by top managers for the next 1-5 years

Mission, Vision, and Value Statements

• mission statement: expresses the purpose of the organization
  • what is our reason for being/why are we here?
• vision statement: it is a clear sense of the future and the actions needed to get there
  • what do we want to become/ where do we want to go?
• values statement: what the company stands for
  • its core priorities, the values its employees embody, and what its products contribute to the world
  • what values do we want to emphasize?