CH-4 Planning and Strategic Management – Management: Leading and Collaborating in a Competitive World : Chapter Notes

Chapter 4 Planning and Strategic Management LEARNING OBJECTIVES 1 Summarize the basic steps in any planning process. 2 Describe how to integrate strategic planning with tactical and operational planning. 3 Identify elements of the external environment and internal resources of the firm to analyze before formulating a strategy. 4 Define core capabilities and explain how they provide the foundation for business strategy. 5 Summarize the types of choices available for corporate strategy. 6 Discuss how companies can achieve competitive advantage through business strategy. 7 Describe the keys to effective strategy implementation. CHAPTER OUTLINE An Overview of Planning Fundamentals The Basic Planning Process Levels of Planning Strategic Planning Tactical and Operational Planning Aligning Tactical, Operational, and Strategic Planning Strategic Planning Step 1: Establishment of Mission, Vision, and Goals Step 2: Analyzing External Opportunities and Threats Step 3: Analyzing Internal Strengths and Weaknesses Step 4: SWOT Analysis and Strategy Formulation Step 5: Strategy Implementation Step 6: Strategic Control CHAPTER RESOURCES Experiential Exercises 4.1 Business Strategies Need Adjusting Cases Wish You Wood Toy Store Social Enterprise Novo Nordisk Monitors Progress Its Triple Bottom Line Lecturettes LECTURETTE 4.1: It’s All in the Planning LECTURETTE 4.2: Preparing Your Business Plan KEY STUDENT QUESTIONS Strategic planning is not a topic that most students will intuitively understand. Typical undergraduates are not at a stage in their careers where they have had a lot of experience with strategic planning, so it is important to emphasize the basics in this chapter. 1. “Who does strategic planning?” 2. “What are the differences between strategic, operational, and tactical planning?” 3. “How do organizations determine what the best strategy is for them?” Like many other chapters, this one benefits from extensive examples. See the examples in the text, as well as those shown below in the Class Roadmap and Suggested Responses to Discussion Questions, for ideas. Teaching Tip Consider having students conduct a SWOT analysis as an exercise in class, using the university as the company being studied. Even in a large lecture section, you can have students call out Strengths, Weaknesses, Opportunities, and Threats, while you capture them on the board or on a PowerPoint slide. Then use what the students have developed and show them how strategy emerges from the information they have given you, or put them into groups and ask each group to come up with a strategy for the institution based on the information they have. If you do this, ask the groups to present their strategies to the class, and discuss which would be most effective and why. Once you have a strategy, it is also helpful to identify operational and tactical goals that would be associated with that strategy. CLASS ROADMAP POWERPOINTS Slide 1 Chapter title Slide 2 Chapter Introduction Slide Slide 3 Learning Objectives Slide 4 Decision Making and Formal Planning Steps MANAGEMENT IN ACTION How Walt Disney Company Scripts Its Own Success Walt Disney Company is a giant entertainment corporation with an excellent reputation for good management. With 160,000 employees, it earns revenues approaching $49 billion per year from five business divisions involved in nearly every kind of commercial entertainment. Robert Iger, CEO since 2005, has guided Disney through the upheaval the Internet has brought to the world of entertainment. Iger focuses on finding and pursuing new avenues of growth, particularly in cable television and interactive entertainment. Iger focuses on the company’s overall direction, while the leaders of each business unit have wide latitude to determine how their particular business should grow. Together, these executives must find a way to make Disney Interactive profitable while keeping more traditional forms of entertainment relevant. I. AN OVERVIEW OF PLANNING FUNDAMENTALS POWERPOINTS Slide 5 Planning Slide 6 The Basic Planning Process Slide 7 Situational Analysis Slide 8 Alternative Goals and Plan Slide 9 Plans and Contingencies Slide 10 Goal and Plan Evaluation Slide 11 Goal and Plan Selection Slide 12 Implementation Slide 13 Monitor and Control Slide 14 Social Enterprise LO 1: Summarize the basic steps in any planning process The stages in the general decision-making model are very similar to specific formal planning steps (Exhibit 4.1) A. The Basic Planning Process 1. Step one: situational analysis which process planners use, within time and resource constraints, to gather, interpret, and summarize all information relevant to the planning issue under consideration. 2. Step two: alternative goals and plans. a. Goals are the targets or ends the manager wants to reach. b. Plans are the actions or means the manager intends to use to achieve organizational goals. 3. Step three: goal and plan evaluation in which the decision-maker must evaluate the advantages, disadvantages, and potential effects of each alternative goal and plan. 4. Step four: goal and plan selection in which the evaluation process should identify the priorities and trade-offs among goals and plans and leave the final choice to the decision-maker. 5. Step five: implementation in which managers and employees must understand the plan have the resources necessary to implement it and be motivated to do so. 6. Step six: monitor and control is necessary because planning is an ongoing, repetitive process, managers must continually monitor the actual performance of their work units according to the unit’s goals and plans. Develop control systems that allow the organization to take corrective action when the plans are implemented improperly or when the situation changes. CONNECT Click and Drag: Steps in the Formal Planning Process (An alternative keyboard version is also available.) SUMMARY Planning is the conscious, systematic process of making decisions about goals and activities that an individual, group, work unit, or organization will pursue in the future. Planning is not an informal or haphazard response to a crisis; it is a purposeful effort that is directed and controlled by managers and often draws upon the knowledge and experience of employees throughout the organization. ACTIVITY The goal of this activity is to review the steps of a formal planning process by having students place the steps in the correct order. CLASS DISCUSSION IDEAS This exercise can be used to launch a discussion on how students may apply the planning process to their current context as a student. II. LEVELS OF PLANNING POWERPOINTS Slide 15 Strategic Planning Slide 16 Effective Strategies Answer Five Questions Slide 17 Hierarchy of Goals and Plans Slide 18 Tactical and Operational Planning Slide 19 Exhibit 4.4 The Strategy Map LO 2: Describe how strategic planning should be integrated with tactical and operational planning A. Strategic planning 1. Strategic planning involves making decisions about the organization’s long-term goals and strategies. 2. Strategic goals are major targets or end results that relate to the long-term survival, value, and growth of the organization. 3. A strategy is a pattern of actions and resource allocations designed to achieve the goals of the organization. CONNECT Video Case: Brewing a Better Starbucks SUMMARY Strategic planning is a vital and ongoing part of organizational success. Since its humble beginnings in 1971, Starbucks has grown into a global force in its industry. The five-minute video presents an interview with CEO Howard Schultz on the event of Starbucks’ 40th anniversary. He highlights many of the strategic initiatives the company has taken over the years. After some bumps in the road, Starbucks is reemphasizing quality and coffee, but their logo change suggests broader opportunities are in the future. ACTIVITY After viewing the video, students are directed to answer a series of multiple-choice questions. CLASS DISCUSSION IDEAS Instructors may wish to explore the role of leadership in the strategic planning process. Is Starbucks’ success the result of their planning, their CEO, or both? B. Tactical and operational planning 1. Tactical planning translates broad strategic goals and plans into specific goals and plans that are relevant to a definite portion of the organization, often a functional area like marketing or human resources. 2. Operational planning identifies the specific procedures and processes required at lower levels of the organization. Example 4.1 Tactical planning Gary Boomer, CPA, is the president of Boomer Consulting in Manhattan, Kansas. Gary states that other than costs there are tactical as well as strategic issues involved when making decisions. Gary also reflected that knowing the right questions to ask is very important. Some basic strategic questions would include what are the firm’s priorities, how will technology accelerate those projects, who are our peers and what are they doing, what are the latest trends in and outside of our industry, what is our charge-back and billing model return on investment? Some basic tactical questions would include what personnel resources do we have and what are their unique abilities, who is in charge and responsible for each project, should we outsource or staff the project internally, what is the timeline and budget, how much per charge hour are we spending on technology? Gary stresses the fact it requires a team in order to succeed—take the time to think, plan and grow. C. Aligning tactical, operational, and strategic planning 1. To be effective, tactical, operational, and strategic goals must be consistent, mutually supportive, and focused on achieving a common purpose and direction. 2. Companies frequently use strategic maps to align strategic and operational goals. (Exhibit 4.5) a. Strategy maps show the relationship between a firm’s practices and its long-term success. They include: i. financial goals ii. learning and growth goals iii. internal goals iv. customer goals Management in Action Progress Report Planning a Turnaround for Disney Interactive Walt Disney’s strategy is to lead in providing entertainment and information, especially for children and families. The way it implements the strategy varies by business unit. For interactive media, the challenge is how to build a profitable business in media where it so far plays a minor role. Its early attempts were slow moving by Internet standards. To become more agile, Disney acquired Playdom and made its CEO a co-president of Disney Interactive along with James Pitaro, recruited from Yahoo. • At which steps of the planning process would you say Disney Interactive most needs improvement? Why? Answers should refer to the steps in the planning process shown in Exhibit 4.6: situational analysis, alternative goals and plans, goal and plan evaluation, goal and plan selection, implementation, and monitoring and control. The case describes Disney Interactive as lagging behind innovations in online entertainment, which could signal problems at the stages of implementation and control. However, students also could make a case that Disney Interactive is choosing the wrong goals to pursue. • How can Pitaro ensure that tactical, operational, and strategic management are well aligned? To align goals and plans, Disney’s managers can create and use a strategy map. The map can be useful for developing the goals and for communicating them to employees at all levels. Managers would identify how goals and plans in each unit link to the others—or change them if they do not align. III. STRATEGIC PLANNING POWERPOINTS Slide 20 Exhibit 4.5 Strategic Management Slide 21 Establishment of Mission, Vision, and Goals Slide 22 Analysis of External Opportunities and Threats Slide 23 Establishment of Mission, Vision, and Goals Slide 24 Analysis of Strengths and Weaknesses Slide 25 Exhibit 4.8 Resources and Core Competencies Slide 26 Benchmarking Slide 27 SWOT Analysis Slide 28 Exhibit 4.10 Summary of Corporate Strategies Slide 29 Strategy Formulation Slide 30 Exhibit 4.11 BCG Matrix Slide 31 Business Strategy Slide 32 Functional Strategy Slide 33 Strategy Implementation Slide 34 Strategic Control Slide 35 Management in Action Slide 36 In Review D. Strategic management is a process that involves managers from all parts of the organization in the formulation and implementation of strategic goals and strategies. Steps in the strategic planning process include: (Exhibit 4.6) 1. Step 1: Establishment of mission, vision, and goals a. A mission is a clear and concise expression of an organization’s basic purpose and scope of operations. b. A strategic vision is a long-term direction and strategic intent of a company. c. Strategic goals evolve from the mission and vision of the organization. LO 3: Identify elements of the external environment and internal resources of the firm to analyze before formulating a strategy 2. Step 2: Analysis of external opportunities and threats a. Successful strategic management depends on an accurate and thorough evaluation of the environment. b. Stakeholders are groups and individuals who affect and are affected by the achievement of the organization’s mission, goals, and strategies. c. Tasks in the environmental analysis include (Exhibit 4.7) i. industry and market analysis ii. competitor analysis iii. political and regulatory analysis iv. social analysis v. human resources analysis vi. macroeconomic analysis vii. technological analysis Example 4.2 Evaluation of the environment Jason Black, Vice President of the Planning Institute of Australia and senior spatial planning consultant at MacroPlan, feels some of the key issues city planners are facing are movement to coastal areas, higher density inner-city living, the environmental sustainability and a long-term shortage of planners. Making recommendations for changes in the city requires an awareness of economic change, cultural difference and environmental social change. The city planning process begins with the analysis of these external and internal forces. 3. Step 3: Analysis of internal strengths and weaknesses a. Resources are inputs to a system that can be accumulated over time to enhance the performance of a firm. LO 4: Define core competencies and explain how they provide the foundation for business strategy b. Resources fall into two broad categories: i. Tangible assets such as real estate, production facilities, raw materials, etc. ii. Intangible assets such as company reputation, culture, technical knowledge, patents, as well as accumulated learning and experience. c. Internal Resource Analysis includes (Exhibit 4.8) i. financial analysis ii. human resources assessment iii. marketing audit iv. operations audit v. other internal resource analysis d. Resources are a source of competitive advantage only under certain circumstances i. The resource has to be instrumental in creating customer value. ii. Resources are rare and not equally available to all competitors. iii. Resources are difficult to imitate. iv. Resources are well organized. e. Core competencies are the unique skills or knowledge an organization possesses that give it an edge over competitors. f. Benchmarking is the process of assessing how well one company’s basic functions and skills compare to those of some other company or set of companies. Example 4.3 Benchmarking Every year, J.D. Power and Associates publish numerous rankings for the auto industry. Two of these, the Initial Quality Study, and the Vehicle Dependability Survey, (quality ratings after three years of ownership) illustrate both the internal and external factors that come into play when a company is developing strategy. For example, Lexus has been at the top of the list of the Vehicle Dependability Survey for 11 years. Lexus has also been at the top of the Initial Quality Survey for two years. It is safe to say that Lexus has quality as a core competence. However, the ratings for Lexus’ competitors also tell an interesting story. In 2004, Hyundai was ranked at #20, well below the average ranking in the Vehicle Dependability Study. But Hyundai is ranked at #10 in the 2005 Initial Quality Survey, which is above average. Kia was ranked at #24 in the 2006 Initial Quality Survey, but came in at #12 on the 2007 survey. What does this mean in terms of strategy? Simply that Lexus is being challenged in the strategy arena by cars with a much lower cost. While it is unlikely that Hyundai or Kia will take over Lexus anytime soon, Lexus may need to pay more attention to price, or compete on completely different criteria in the future. 4. Step 4: SWOT analysis and strategy formulation a. SWOT analysis is a comparison of strengths, weaknesses, opportunities, and threats that help executives formulate a strategy. Multiple Generations at Work Ernst & Young, an accounting and consulting firm, recently asked managers and employees across multiple generations and industries to describe the strengths and weaknesses commonly associated with works from other generational cohorts. The findings were fascinating and are captured in the graphic in the Multiple Generations at Work box. CONNECT Click and Drag: Internal Analysis for Planning at Organization Anywhere (An alternative keyboard version is also available. SUMMARY Managers conducting an internal resource analysis, assess the strengths and weaknesses of major functional areas inside their organizations. This analysis would consist of a financial analysis, a marketing audit, an operations analysis, a human resources assessment, and analysis of other important internal resources. The exercise presents a discussion during a pre-project meeting at Organization Anyplace. The characters (Ben, Melissa, Richard, Lorinda, Quinton, Carol, Norm, and Rena) touch on the internal capabilities of Organization Anyplace in their conversation. ACTIVITY After viewing the conversation, students are asked to match the internal resource analysis components to the character comments. CLASS DISCUSSION IDEAS Create groups, and have each group take a position on why a particular analysis area is important and to expand on what might be included in each. LO 5: Summarize the types of choices available for corporate strategy b. A corporate strategy is the set of businesses, markets, or industries in which an organization competes and the distribution of resources among those entities (Exhibit 4.9) i. Concentration is a strategy employed by an organization that operates a single business and competes in a single industry. ii. Vertical integration is the acquisition or development of new businesses that produce parts or components of the organization’s product. Example 4.4 Vertical integration Vertical integration, so far, seems to have worked for the RDF Meat Shop, Inc. of Pampanga. Starting out as a chicken contract farmer for three food stores, the company later became an independent grower of swine and chicken. Dr. Lo, the company’s proponent, recognized his margins were getting slimmer and his company relied heavily on middlemen to dispose of its livestock promptly. Dr. Lo decided to integrate both backward and forward by expanding operations to include feed milling, meat processing and the establishment of meat store in strategic areas. This movement required financial, technical and managerial resources – the company had all three critical elements. Today the company has 19 stand-alone outlets for its meat products that carry the name “Fresh Options.” iii. Concentric diversification is a strategy used to add new businesses that produce related products or are involved in related markets and activities. iv. Conglomerate diversification is a strategy used to add new businesses that produce unrelated products or are involved in unrelated markets and activities. c. When trying to manage the diversified businesses of an organization, it is useful to use the Boston Consulting Group (BCG) model. (Figure 4.10) i. Stars ii. Cash Cows iii. Question Marks iv. Dogs d. Trends in corporate strategy i. The value of implementing a diversified corporate strategy depends on individual circumstances. ii. The diversification efforts of an organization competing in a slow-growth, mature, or threatened industry often are applauded. CONNECT ISeeIt! Animated Video: BCG Matrix SUMMARY The BCG matrix was created by the Boston Consulting Group to categorize the projected performance of an organization along two dimensions: market share and industry growth. The BCG matrix includes four organizational positions formed on the basis of these two dimensions. The animated three-minute video describes the BCG matrix. ACTIVITY A series of multiple-choice questions are presented after the video summarizing the BCG matrix. CLASS DISCUSSION IDEAS The video can be used to present the topic in class or as an out-of-class review. Discussion may be expanded by offering companies for the students to place on the matrix. Or, alternatively, ask students to name companies for each quadrant of the matrix. LO 6: Discuss how companies can achieve competitive advantage through business strategy e. Business strategy – defines the major actions by which an organization builds and strengthens its competitive position in the marketplace. Example 4.5 Business strategy Most people know that Southwest Airlines is the low-cost flight leader in the United States, but fewer people will have heard of Spring, the first private low-cost airline in China. To keep its operating costs down, Spring only sells on the Internet, and it gives passengers bottled water instead of meals on its flights. i. Low-cost strategy is a strategy an organization uses to build competitive advantage by being efficient and offering a standard, no-frills product. ii. Differentiation strategy is a strategy an organization uses to build competitive advantage by being unique in its industry or market segment along one or more dimensions. f. Each functional area of the organization implements functional strategies to support the business strategy. LO 7: Describe the keys to effective strategy implementation 5. Step 5: Strategy implementation a. Managers must ensure that new strategies are implemented effectively and efficiently in addition to formulation of the appropriate strategies. b. Steps in Strategy Implementation i. Step 1. Define strategic tasks ii. Step 2. Assess organization capabilities iii. Step 3. Develop an implementation agenda iv. Step 4. Create an implementation plan. c. Six barriers to strategy implementation. (Table 4.3) i. Top down or laissez-faire senior management style ii. Unclear strategy and conflicting priorities iii. An ineffective senior management team iv. Poor vertical communication v. Poor coordination across functions, businesses, or borders vi. Inadequate down-the-line leadership skills and development Example 4.6 Barriers to strategy implementation Netflix recently made the decision to pursue original production, with the series House of Cards, recognizing the potential risk of their content owners increasing fees or deciding not to allow their content to be available on the Netflix viewing platform. However, some have criticized this move as risky, noting the high rate of failure of TV series, even among well-established producers. In addition, Netflix made the decision to release the entire series all at once, rather than on a week-by-week basis, which could reduce the social media engagement of the series. However, CEO, Reed Hastings, noted, “Linear channels must aggregate a large audience at a given time of day and hope the show programmed will actually attract enough viewers despite this constraint. With Netflix, members can enjoy a show anytime, and over time, we can effectively put the right show in front of members based on their viewing habits … For linear TV, the fixed number of prime-time slots mean that only shows that hit it big and fast survive … In contrast, Internet TV is an environment where smaller or quirkier shows can prosper because they can find a big enough audience over time. In baseball terms, linear TV only scores with home runs. We score with home runs, too, but also with singles, doubles, and triples.” 6. Step 6: Strategic control a. A strategic control system is designed to support managers in evaluating the organization’s progress with its strategy and, when discrepancies exist, in taking corrective action. b. Strategic control systems typically include budgets i. Strategic: creates and maintains long-term effectiveness (a flexible budget) ii. Operational: tightly monitored to achieve efficiency Management in Action Onward Walt Disney Company’s Strategy under Robert Iger Disney’s mission statement calls for the company to be a leading producer and provider of entertainment, as well as to grow and maximize earnings. As the company positions itself for a global and online world, it has made adjustments to its portfolio of businesses. The largest sources of revenue are cable networks and theme parks. • How clear is Walt Disney Company’s mission? How well does its strategy support the mission? Answers will vary. Although the mission statement is more complex than the legendary “Make people happy,” it does define a role in an industry, as well as concern for financial targets. Its strategy, as described in the case, is logically aligned with its mission, although in a practical sense, pursuing the strategy has not always delivered the desired growth. Students may note that the company does use its brands to differentiate its content (Disney princesses being one obvious example). • In the BCG matrix (Figure 4.10), where would you place Disney’s main businesses? • How well is Disney matching its strategic moves to businesses’ positions in the matrix? Disneys’ cable networks (especially ESPN) and theme parks hold strong competitive positions. Cable is a cash cow, but by moving the ESPN brand into new media, Disney is seeking to make it more of a star. Theme parks are a cash cow in the United States, and Disney is using the cash to expand into new international markets, making the business in locations such as China more of a star. Disney Interactive is also now moving into the star category as it is really producing results after years of losses. The movie studios are harder to place in the matrix: they are a relatively small unit in a mature industry but play an important role in building brands. In that sense, they function somewhat like a cash cow. The company’s strategic moves have been appropriate to its goals for moving businesses into the region of cash cows and stars. POWERPOINTS Slide 36 In Review BOTTOM LINE During a major storm, what services do you expect to be able to receive without interruption? Would you pay more to make the services more reliable? Answers will vary according to students’ preferences. Especially today, when the Internet makes price comparisons easy, consumers are demanding low prices without giving up the desire for good service. The challenge of meeting both expectations is one that today’s managers must constantly wrestle with. How might a plan to improve employees’ job satisfaction be tied to a company's financial measures? Answers will vary. The question encourages students to apply the general principle to a type of goal that many companies set: job satisfaction. One possible answer is that the company might set a goal of reducing employee turnover and the associated costs to replace employees who quit. Thus, greater satisfaction would be tied to lower expenses. Or the company might determine that satisfied salespeople sell more of its product, so achieving job satisfaction would be tied to increasing revenues. What could be the consequences if a company’s innovation practices were not aligned with its strategy? The company could wind up spending a lot of money and people’s time on innovations that do not position the company for greater success—and might even take away resources that could have been directed toward the strategy. Where do a company’s quality practices show up on the strategic map? Quality practices can improve the achievement of goals at all the levels feeding into financial goals. At the bottom level, for example, quality is needed in training programs and information systems. Innovations and operational processes need to be concerned with quality at the level of internal goals. And customers will be looking for high quality in all areas where the company serves them. What experiences might give frontline managers ideas that top-level executives haven't thought of? Frontline managers work directly with the employees who make products, serve customers, and provide support services to other employees. From this day-to-day direct contact, they are the managers most familiar with production issues, customer desires, and employees’ concerns. What are some resources Amazon needs in order to deliver these benefits? Answers will vary. Examples include innovative computer programs, plenty of computing power and data storage, efficient warehousing and distribution systems, talented employees, and strong relationships with suppliers and transportation services. In some famous benchmarking examples, businesses have learned from pit crews for race car teams. What kinds of bottom-line practices could such an organization demonstrate? Pit crews require a team whose members work together swiftly and seamlessly. They need systems to coordinate work and avoid mistakes. An organization whose employees can work as efficiently and avoid errors even at top speed would be a formidable competitor. Why might buying from a division of your company be less costly than buying on the open market? When one division sells to another in a vertically integrated company, the supplier doesn’t need to market its services in order to convince the buyer it is the best source. It also might be possible to set up more efficient billing, payment, and delivery systems for internal sales. Note, however, that it wouldn’t make much economic sense for a supplying division simply to lower its prices in order to give the purchasing division a better deal. In that case, the company is simply transferring profits from one division to another, not improving the company’s overall value. How do you think Wal-Mart keeps costs low? The company uses its size as a buyer to negotiate low-price contracts with suppliers of its merchandise. It runs a highly efficient distribution system, using computer systems to replenish inventory precisely when and where it is needed. It adjusts work schedules and pay rates to keep labor costs to a minimum. What would be hard about imitating Nordstrom's strategy for top-quality service? The text mentions Nordstrom’s personal shoppers; this kind of employee needs a level of skill that would be harder to hire and develop than with the typical store employee. The same is true of other practices, such as Nordstrom’s policy that store employees are empowered to make decisions to satisfy customers. Entrusting employees with this level of decision-making requires that the company recruit and retain a superior level of talent and reward a focus on customers. Other stores would need to figure out how to find and keep such employees. What is the best way to compete against a low-cost strategy so that a firm can continue to charge higher prices for its products or services? An organization would need to find differentiators between what is lost when a customer uses a competitor who has low cost. Is there a loss of quality or durability for a product? Is there an inferior level of service? Then the organization should target its marketing towards customer segments that are willing and able to pay a premium for the superior product or service. SOCIAL ENTERPRISE Novo Nordisk Monitors Progress with Its Triple Bottom Line 1. According to Novo Nordisk, only four companies have incorporated triple bottom line goals into their bylaws. Why do you think so few companies take this step? Many executives believe that investing in triple bottom line concepts will cost shareholders in profits and shy away from making such expenditures an official part of their bylaws. There may be a feeling of allegiance to shareholders and skepticism that triple bottom line concepts would lead to making more profit while keeping in line the social and environmental impacts of your actions. 2. Assume you want your employer to consider adopting a Triple Bottom Line philosophy. How would you pitch the idea? With whom would you speak? It is important to begin by speaking with your manager and getting his/her buy-in of your idea. That way your manager can advocate up the management chain. If the time comes for you to pitch the idea for executives, it would be important to focus on how an organization can maintain and increase profits while being socially and environmentally responsible. Specific examples should be thought of that would allow for your employer to make certain investments that would be good for the company’s bottom line while also making a positive social and environmental impact. LECTURETTES LECTURETTE 4.1: It’s All in the Planning Setting clear objectives and working them through could make or break a meeting. 1. When it comes to planning a big meeting or convention, it seems meeting planners all agree on one thing: setting a clear objective. The most important thing when starting to plan a meeting is setting a clear objective. Every decision made goes back to that objective. Joni Rowell, president of EventWorks, begins her event planning by developing an agenda (pre-event timeline) for the meeting or convention and then distributing it to all the managers involved. Keeping people informed is another important element of meeting planning. A plan for a meeting must include a purpose, and an agenda should be passed out to members or employees attending the meeting. This agenda should be passed out a minimum of one day prior to having a meeting. It is important to stay on track, follow the agenda, seek closure on each agenda item that is discussed, and remember to record action items and persons assigned to each item in a meeting. Whenever possible, Robert’s Rules of Order should be utilized. 2. Rowell says, “Plan your work and work your plan, at that point everything goes a lot smoother.” Many times there are different people planning various elements of an event. By keeping everyone informed of who is doing what, a lot of headaches can be avoided. A recommended plan is to keep everyone updated through communications and e-mail and to have one key contact person for the entire event. 3. Donna Myers, the owner of Custom Events, has tips for planning a meeting: invite the right people and have decision-makers there. It is also important to establish an agenda and time limits. Start promptly; wait no longer than five minutes in smaller meetings (for people to arrive). In larger meetings, some may wish to allow more time before beginning. A lot depends on the purpose of the meeting and what goals are to be accomplished. A best practices model is to begin your meetings precisely on time. This strategy will help you train everyone to be on time. This practice will allow you to see which employees are habitually late to meetings which may prompt you to check to see if there are other areas in which they underachieve 4. Communication help people and systems work effectively. Being organized, knowing what the budget is and knowing what is expected are some key elements to success. Good communication creates effective meetings. With good communication and a clear agenda, managers can do virtually anything. There are different types of meetings that can be conducted. When introducing a new product or a new service to customers, an information plan should be developed where information is provided pertaining to product features, attributes, and when a product is scheduled to be introduced. Another type meeting could be an information exchange where employees engage in discussions related to a problem or an opportunity that directly impacts employees. This type of meeting depends on employee participation because the problem or opportunity directly impacts them. A third type of meeting is based on employee questions and participation. This type of meeting is based on an upcoming event or activity that and employee participation is desired. 5. Pat Warren, senior events manager in industry and trade at the Mississippi Development Authority, says you should rely on notes from previous meetings to keep action items on track. Most meetings and conventions have many similarities and you can learn a lot by observing how the events that you attend are facilitated. The success of a meeting will depend upon the planning and preparation, the communication and the purpose of the meeting, and the notes that are relevant to the previous or current meeting being offered. LECTURETTE 4.2: Preparing Your Business Plan Most people plan more extensively for a vacation than they do for a new business. An entrepreneur should not quit his job until he researches the type of business enterprise he or she wants to start and creates a solid business plan for success. Unless the entrepreneur is pretty sure that over time he or she can earn a better salary by owning a business, the best advice may be to stay at the current job. Why take such a big risk? However, the proverbial saying is true – “no risk, no reward.” However, a business owner stands a good chance of generating considerable revenues and creating a very good income if they take the time to create a strong business plan and have a mentor and/or support system to guide them in starting and running the new business. A business plan is a document of approximately 40-50 pages that outlines the goals and plans for running your business. It serves as a guidebook for managing a business as it grows, as well as a reference manual for managers. Some sections of the plan may remain confidential (such as financial information, new technology overviews, or client data). However, the entrepreneur should assume that most of the plan will become public because it will be likely be shared with different investors. Some of the less-sensitive sections include information about personnel needs, products, and services, industry analyses, and other company information that normally appears in marketing literature. Why Prepare a Business Plan? Although entrepreneurs might have heard that you only need a business plan if you are trying to get financing to start a company, this is not true. There are several other reasons to write a business plan: 1. Putting goals and ideas down on paper helps to organize one’s thinking. 2. Writing down plans and goals demonstrates a commitment to business success, which makes a strong impression on potential investors, suppliers, and employees. 3. It provides a guide for measuring progress toward goals. 4. It helps focus the organization on its mission, reducing the chance that the business becomes sidetracked by less important activities. 5. Banks and other funding sources will use the plan to determine whether the entrepreneur is capable of starting and running a business. 6. The Small Business Administration will review the plan to make sure it will be profitable to make decisions about providing a guaranteed loan. Before beginning to write a business plan, one must learn as much as possible about the business: the market in which a company operates, the types of products or services offered, and customer needs. Organizations have a vested interest in helping you succeed at starting one’s own business such as the local Chamber of Commerce, entrepreneurial associations, and the Small Business Association. A business plan is typically broken into several sections. Each section deals with an important part of managing your business. A basic business plan contains the following basic elements: Table of Contents Executive Summary Market and Industry Analysis Business Description The Competition Marketing Strategy Operations Plan The Management Team Funding Needs Supplementary Materials Automation is wonderful for performing routine tasks such as an extensive number of crunching and the creation of standard section. Almost all business plans contain the same basic information, and the overall structure is fairly well defined. For this reason, one may find that business planning software will help you start writing your business plan. A number of business planning software packages on the market are designed to ask a question to fill in the blanks. The entrepreneur’s responses are then entered into the appropriate plan sections, and the plan contents are automatically created. On the flip side, the bad news is that no automated business planning computer software can add personality and motivation to the plan and the entrepreneur’s drive, communication, problem-solving skills, and perseverance are crucial to the success of the venture. In addition, nobody can predict all of the unique challenges that can occur. As a result, some topics probably will not be addressed, and some topics might be included that are not necessary. Finally, seasoned investors do not typically like to see the “plan-in-a-can” format that results from using one of these software packages. Instructor Manual for Management: Leading and Collaborating in a Competitive World Thomas S. Bateman, Scott A. Snell, Robert Konopaske 9781259927645, 9781259546945