CH-6-7 The Basics of Planning and Project Management – Management : Book Guide

This Document Contains Chapters 6 to 7 Chapter 6 The Basics of Planning and Project Management END OF CHAPTER FEATURES • Terms to Understand – encourage students to make use of the flashcards available on the student website. Also, suggest they visit the Manager’s Toolkit section on the website for tips and suggestions for aspiring managers. • Action Learning Exercise – How to Write Good Objectives and Plans (Plan= What + When + How). Encourage students to write a plan for all three areas of their lives. Remind them their plans are unique and personal to them, therefore are no right or wrong plans. However they need to conform in writing good objectives that are measurable and answer the What? When? And How? Questions. Have them respond to the questions for discussion that follow. • Ethics Exercise – Do the Right Thing, Death by Project? Wow! Do you think a manager would actually set Bob up for this type of failure? Have students respond to the questions that follow. A few possible responses they are likely to offer are included. What are the ethical implications of the following interpretations? 1. This dirty trick is clearly unethical, regardless of the people or circumstances involved. It should be avoided. Explain. Answer: Of course, responses will vary, from the student who thinks this is a brilliant way to get rid of a useless employee to the person who finds this unconscionable. Try to get students to reverse position and argue for the opposite side – it will be challenging but informative. 2. This could be a challenging make-or-break opportunity for someone who has been performing below his or her potential. Poor performers sometimes need a wake-up call. Explain your measured use of this tactic. Answer: This strategy will be fine if the employee is actually put on notice so they know it is do or die time. In addition, the manager should provide the employee with the necessary trainingtools to be successful. Then, they can truly say the “ball is in your hands”. 3. This is a good idea for that rare occasion when time is short and one individual is keeping a project from being successful. Explain. Answer: Yes, this may be a good idea or it could actually back fire with other employees losing respect and trust for the manager. In addition, if accurate records for the project are not recorded, the project could also become a mass of confusion. 4. Your own ethical interpretations? Answer: When framing my own ethical interpretations regarding management's social and ethical responsibilities, I believe that ethical management involves a commitment to transparency, fairness, and accountability. Managers must prioritize the well-being of employees, customers, and the community while making decisions that balance profit with social good. Ethical responsibilities also include respecting environmental sustainability, promoting diversity and inclusion, and upholding integrity in all business practices. Ultimately, ethical management requires a proactive approach to identifying and addressing ethical dilemmas, fostering a culture of ethical behavior, and ensuring that the organization contributes positively to society. • Managers-In-Action Video Case Study – Flight 001 CHAPTER 6 MANAGERS-IN-ACTION VIDEO: FLIGHT 001 – PLANNING FOR GROWTH Length: 7 minutes and 40 seconds Topics: Planning, Goal Setting, Employee Development, Expansion, Decision Making, Hiring, Inventory, Restructure, Management, Vision, Growth, Financial Planning, International, and Global. Company Background From Flight 001’s website January 10, 2010 http://www.flight001.com FLIGHT 001 (pronounced flight one) was conceived in 1998 aboard Air France flight 023 somewhere between New York and Paris. John Sencion and Brad John were two business travelers who had spent far too much time preparing for their trip envisioned a travel store as streamlined as flight itself. Luckily for travelers of every kind, their midair detour resulted in a jet setter's dream: an all-inclusive, retro modern retail experience that satisfies the frequent traveler's every need. For over 10 years now Flight 001 has been scouring the globe for products as functional and unique as the travelers that frequent the stores. When not curating the best travel products in the world, Flight 001 has and continues to develop travel products for the world. Flight 001 Exclusive Spacepak maximizes case space while achieving maximum compression so you can always carry on and avoid the baggage claim. Using this system allows garments to undergo double compression and organization with 1 side for clean laundry and 1 side for dirty laundry. Voted Travel + Leisure Magazine’s Product of the Year! Our Stewardess Collection will take you back to a time when flying was glamorous. Everything is in glossy vinyl and in brilliant blue or red colorways. You can choose from a train case or a hanging toiletry bag and take yourself back in time wherever you go! When you're packing a lot of stuff it's hard to keep it together and most importantly clean. Go Clean is the perfect system for the traveler who may not need a system as extensive as Spacepak but definitely needs something for the laundry, shoes, stuff, wetsuit or lingerie. 001 Country Per Year brings the world together by challenging its citizens to actively seek and experience new cultures. Everyone is born with the number 001, their country of origin. Go away and grow your number! Synopsis of Video Flight 001 Planning for Growth Flight 001 co-founders Brad John and John Sencion share their plans for growth, expansion, and recognition as the travel authority throughout the World. They discuss the impact the economic downturn has had on their strategic plan and the adjustments they have made. Crew development manager, Emily Griffin provides an overview of her role in helping the organization achieve their goals. She offers insights and shares how she learned to plan. Learn from this video how a relatively young, ambitious company is using strategic planning and goal setting to grow and achieve success. Previewing Questions 1. Describe what you think are the essential roles for project managers to play in an organization. Answer: Project managers are implementers, entrepreneurs, politicians, friends, marketers, and coaches. 2. Why is it important for managers to spend time planning? Answer: Planning provides managers with a pathway towards achieving the organization’s mission, vision and goals. A plan provides the answers to the questions of What? When? And How? Something is to be done. Without plans managers simply react, putting out the fires of the moment which leads to wasted time, money and resources. For a manager to be successful and to operate in an efficient & effective manner, planning is essential. 3. What are three types of planning used in most companies? Answer: Strategic (one-ten years) Intermediate (six months – two years) Operational (one week to one year) Postviewing Questions 4. How has Flight 001 demonstrated the concept that strategic plans are not just written every five years and left on a shelf, rather they are living documents that require monitoring and adjustments? Answer: Flight 001 refers to their strategic plan as their flight plan. They started with a clear vision to be the travel authority throughout the world. To achieve this they planned for several store openings and expansion. However, the economy created uncertainty in the market which forced Flight 001 to re-evaluate their plan. The impact on decision making was to hold off on hiring and purchasing inventory. Clearly, the fact that they monitored their plan and made the necessary adjustments in real time is one reason why they are still in business. 5. How did the crew development manager, Emily Griffin, learn to plan? What lessons can you learn from her approach to help you be a more efficient and effective manager and planner? Answer: Emily learned how to plan from experience. She learned from her mistakes, faulty judgment and being caught off-guard. To be more efficient and effective planners managers can learn from Emily’s mistakes. Rather than reacting, invite input and feedback from others. Ask questions of mentors and other leaders. Allocate time for planning as it is much more efficient to do something right the first time than to spend time correcting mistakes. 6. What are the keys to success for Flight 001 in implementing their strategic plan (flight plan)? Answer: To open 5-10 stores in a year is a stretch but sounds achievable. With their model of using existing leaders to manage each new opening to strive for 20 openings in a year is probably unrealistic. Having a plan and sharing that plan with all of their employees will be essential. In addition, as Emily put it, they need to continue to stock the fish pond. By developing their managers and having them learn the Flight 001 business and culture they will be prepared for subsequent store openings. 7. What will it take for Flight 001 to achieve their goals for growth, expansion, and recognition as the travel authority throughout the World? Answer: To be successful they will need to continue to be strategically agile and flexible. . They will also need to leverage lessons learned from previous store openings. From a product perspective – they will need to continue to offer unique and useful products. As they develop their own lines they will need to maintain high standards of quality and innovation to meet customer demands. Also, as Emily observed, they will need to restructure at the corporate level first to create the necessary infrastructure to support the growth and expansion plans. CLOSING CASE: SOLUTION FORD’S HYBRID SUV TEAM RACES TO THE FINISH 1. They are moving from conceptualization through planning to execution. Conceptualization is the specs for the car—36 mpg while not sacrificing either space or performance. Planning has been ongoing—how they are going to get the car from concept to the road. Execution is in all the little details—integrating different pieces of the puzzle, constant meetings to keep everyone connected. 2. Personal opinion question. Yes, I think so. The analogy to two engines is apt. Patil was inspirational, and during the creative phase of the project, his skills were critical. But once the team moved toward execution, they needed a doer—someone who understood how to get things done. 3. Personal opinion question. I think one of the toughest challenges is determining what needs to happen (as well as when) to meet the deadlines. As one team member put it, you can’t time an invention. There was a lot of uncertainty and only limited options for minimizing the risks. 4. Implementer was probably number one. Her primary goal was to get things organized to meet the project’s goals. 5. Personal opinion question. I would have and I wouldn’t have. I would have loved the creativity and energy, but those long hours were more tolerable in my twenties and thirties than they would be now. INSTRUCTIONAL TIPS 1. Outside reading can help your students better comprehend the four categories of organizational response to uncertainty: defenders, prospectors, analyzers, and reactors. Have each student read a hard-copy or online article about a specific company from a recent issue of Business Week, Fortune, Fast Company, Business 2.0, Inc., or the Wall Street Journal and decide whether that company is a defender, prospector, analyzer, or reactor. Students can then be asked to write down and/or present the rationale for their choice and to indicate the strengths and weaknesses of their company’s position. 2. Have your students look up mission statements for a variety of companies. (Corporate annual reports and Web sites often include them.) Discuss what the mission statements have in common, how clear they are, and whether they fit the perceived images of the companies involved. 3. Many everyday student activities involve simple project planning. Have your students consider a team research paper and presentation. Have them draw up a project plan, with goals, milestones, and accountabilities, and have them walk through the four stages of a project lifecycle, determining what is happening at each stage. Would this make a group project easier? 4. Have students create a flow chart in class for some simple activity such as making a peanut butter and jelly sandwich. Demonstrating the process step-by-step, using their flow charts, with peanut butter and jelly props can lead to entertaining results. This simple illustration can show students how difficult it can be to analyze a more complex and less familiar activity. ADDITIONAL DISCUSSION/ESSAY QUESTIONS 1. How is planning used today? How does that compare to its use in the past? Answer: Planning is a fundamental function of management that involves setting goals, determining actions to achieve those goals, and allocating resources effectively. In the past, planning was often seen as a more rigid and linear process, where detailed plans were created for extended periods, sometimes years in advance, with limited flexibility to adapt to changes. Today, planning is more dynamic and adaptable. Organizations recognize the need to be responsive to rapidly changing environments, such as market trends, technological advancements, and global competition. Planning now involves continuous monitoring and adjustment, often using tools like agile methodologies and scenario planning to anticipate and respond to changes quickly. Furthermore, modern planning emphasizes collaboration and integration across different functions and levels of an organization. It is not just the responsibility of top management but involves input and participation from employees at all levels, ensuring that plans are more realistic, feasible, and aligned with organizational goals. Overall, while the core principles of planning remain the same, its application and approach have evolved to be more agile, inclusive, and responsive to the dynamic nature of today's business environment. 2. What are the three types of uncertainty? What can managers do to help minimize their negative effects on the business? Answer: The three types of uncertainty in business are environmental uncertainty, state uncertainty, and effect uncertainty. 1. Environmental uncertainty refers to unpredictability in the external environment, such as changes in market conditions, technological advancements, or regulatory changes. To minimize its negative effects, managers can conduct regular environmental scanning to stay informed about potential changes, develop contingency plans to mitigate risks, and foster flexibility in organizational structures and processes to adapt quickly to unforeseen events. 2. State uncertainty is related to incomplete or ambiguous information about the current situation. Managers can minimize its negative effects by improving communication and information-sharing within the organization, investing in data analytics and decision support systems to enhance decision-making processes, and encouraging a culture that values transparency and openness in communication. 3. Effect uncertainty involves uncertainty about the consequences of decisions or actions. Managers can address this by conducting thorough risk assessments before making decisions, using scenario planning to anticipate potential outcomes, and establishing clear performance metrics to monitor the effects of decisions and adjust course if necessary. By addressing these types of uncertainty proactively, managers can help minimize their negative effects on the business and improve the organization's ability to navigate unpredictable environments. 3. Why is it helpful to view projects in terms of the project lifecycle? Answer: Viewing projects in terms of the project lifecycle is helpful because it provides a structured framework for planning, executing, and evaluating a project from start to finish. The project lifecycle typically consists of phases such as initiation, planning, execution, monitoring and controlling, and closure. By breaking down a project into these phases, managers can better manage resources, track progress, and identify potential risks and challenges at each stage. It also allows for better communication and coordination among team members and stakeholders, as everyone has a clear understanding of what needs to be done in each phase. Additionally, viewing projects in terms of the project lifecycle helps in setting realistic timelines and milestones, which can improve overall project efficiency and effectiveness. It also provides a basis for continuous improvement, as lessons learned from one project can be applied to future projects to enhance performance and outcomes. Overall, the project lifecycle approach provides a systematic and structured way to manage projects, helping to ensure they are completed on time, within budget, and meeting the desired objectives. 4. You are thinking of starting a company. How can a break-even analysis help with your planning? Answer: A break-even analysis can be incredibly helpful in planning for a new company. It helps you determine the point at which your total revenue equals your total costs, resulting in neither profit nor loss. This analysis is crucial because it provides insights into the minimum level of sales needed to cover all your costs, which is essential information for making informed business decisions. Here's how a break-even analysis can help in planning for a new company: 1. Setting Pricing Strategies: By understanding your break-even point, you can set prices that ensure you cover your costs and start generating profits. 2. Budgeting and Financial Planning: Break-even analysis helps you create realistic budgets and financial plans by providing a clear picture of your cost structure and revenue requirements. 3. Determining Profit Potential: Once you know your break-even point, you can estimate your profit potential at different levels of sales, helping you set realistic growth targets and assess the viability of your business idea. 4. Investment Decisions: Break-even analysis can help you determine the amount of investment needed to reach the break-even point, guiding decisions on funding sources and capital allocation. 5. Operational Efficiency: By identifying your fixed and variable costs, break-even analysis can highlight areas where you can improve operational efficiency to lower costs and improve profitability. In summary, a break-even analysis is a valuable tool for planning a new company as it provides insights into pricing, budgeting, profit potential, investment decisions, and operational efficiency, helping you make informed decisions and increase the chances of success for your new venture. Discussion Starter: Organizational Mission and Values Imagine for a moment that you just received a call from one of your best friends from college – they know you have outstanding management skills and they need your help. Recently she started her own coffee roasting business and café. Although she has a clear vision in her head for her company, for example, she told you she will only source coffee beans from fair trade growers. She has never written down your company mission statement or values. How will you help her get started? See below for questions she has for you. For Discussion: 1. Why is it important to involve as many employees as possible when creating a formal list of organizational values? Answer: Involving as many employees as possible when creating a formal list of organizational values is important for several reasons: 1. Increased Ownership and Buy-In: When employees are involved in the process of defining organizational values, they are more likely to feel a sense of ownership and commitment to those values. This can lead to greater buy-in from employees at all levels of the organization. 2. Alignment with Employee Values: Employees are more likely to align with and support organizational values that resonate with their own personal values. Involving employees in the process helps ensure that the values reflect the beliefs and principles of the entire workforce. 3. Enhanced Employee Engagement: Engaging employees in the process of defining organizational values can lead to increased engagement and morale. Employees who feel that their input is valued are more likely to be motivated and committed to their work. 4. Improved Organizational Culture: Organizational values play a key role in shaping organizational culture. By involving employees in defining these values, organizations can create a culture that is more inclusive, collaborative, and aligned with the overall mission of the organization. 5. Better Decision-Making: When employees understand and believe in the organizational values, they can use them as a guide for decision-making. This can lead to more consistent and aligned actions across the organization. Overall, involving as many employees as possible when creating a formal list of organizational values can lead to a more engaged workforce, a stronger organizational culture, and better decision-making, ultimately contributing to the overall success of the organization. 2. What is the key to making organizational values come to life? Answer: The key to making organizational values come to life lies in their integration into every aspect of the organization's operations, culture, and decision-making processes. Here are some key steps to achieve this: 1. Alignment with Actions: Organizational values should not just be words on a wall; they should be reflected in the actions and behaviors of everyone in the organization, from top leadership to frontline employees. Leaders must lead by example and demonstrate the values in their daily actions. 2. Communication and Reinforcement: Regular communication about the values and their importance is crucial. This can be done through meetings, internal communications, and recognition programs that highlight employees who embody the values. 3. Integration into Processes: Values should be integrated into various processes such as hiring, performance evaluations, and decision-making. For example, hiring criteria should include a candidate's alignment with the organization's values. 4. Training and Development: Employees should receive training on the values and how they can be applied in their roles. This helps ensure that everyone understands the values and knows how to incorporate them into their work. 5. Feedback and Evaluation: Regular feedback and evaluation should include an assessment of how well employees are living up to the values. This can help identify areas for improvement and reinforce the importance of the values. 6. Recognition and Reward: Recognizing and rewarding employees who exemplify the values reinforces their importance and encourages others to do the same. 7. Continuous Improvement: Organizational values should be dynamic and evolve with the organization. Regularly review and update the values to ensure they remain relevant and meaningful. By integrating these steps into the organization's culture and operations, organizational values can become more than just words; they can become a guiding force that shapes behavior, decision-making, and ultimately, the success of the organization. 3. Are there any generic values that virtually all organizations should adopt today? Explain. Answer: In today's dynamic business environment, there are several generic values that virtually all organizations should adopt to ensure sustainable growth and success: 1. Integrity: Upholding honesty, transparency, and ethical practices in all business dealings is essential. It builds trust among stakeholders and enhances the organization's reputation. 2. Innovation: Embracing a culture of innovation encourages continuous improvement and keeps the organization competitive. It involves exploring new ideas, technologies, and approaches to meet evolving customer needs. 3. Customer Focus: Placing customers at the center of operations is crucial. Understanding their needs, delivering value, and providing exceptional service are keys to long-term success. 4. Employee Empowerment: Empowering employees fosters a sense of ownership and commitment. Organizations should encourage autonomy, provide opportunities for growth, and recognize and reward achievements. 5. Social Responsibility: Embracing social responsibility involves contributing positively to society and the environment. This can include sustainable practices, community engagement, and ethical sourcing. 6. Adaptability: In today's fast-paced world, organizations must be adaptable to change. This includes being open to new ideas, markets, and ways of working to stay relevant and responsive. 7. Quality: Delivering high-quality products or services is non-negotiable. It requires a commitment to excellence, continuous improvement, and meeting or exceeding customer expectations. 8. Teamwork: Encouraging collaboration and teamwork fosters a positive work environment and enhances productivity. It involves valuing diverse perspectives and working towards common goals. By adopting these generic values, organizations can create a strong foundation for success, fostering a positive organizational culture and driving sustainable growth. BONUS VIDEOS BIZFLIX VIDEO CASES FROM THE TEXTBOOK WEBSITE Discussion Questions and Guide Video Case: Inside Man VIDEO CASE SYNOPSIS New York City detective Keith Frazier (Denzel Washington) leads an effort to remove Dalton Russell (Clive Owen) and his armed gang from the Manhattan Trust Bank building. Complexities set in when bank chairman Arthur Case (Christopher Plummer) seeks the help of power broker Madeline White (Jodie Foster) to prevent the thieves from getting a particular safe deposit box. This fast-paced action film goes in many directions to reach its unexpected ending. This BizFlix video case starts as Captain John Darius (Willem Dafoe) approaches the diner. Detectives Keith Frazier and Bill Mitchell (Chiwetlel Ejiofor) leave the diner to join Captain Darius. The scene ends after the three men enter the New York Police Department command post. Captain Darius says, “Your call.” The film cuts to Madeline White and Arthur Case walking along a river. VIDEO CASE DISCUSSION QUESTIONS AND SUGGESTED ANSWERS 1. Does this scene show strategic, intermediate, or operational planning? Answer: This scene shows operational planning. Captain John Darius describes the resources they have available to them, the tasks that have been and will be done, and the time frames in which they will be accomplished. 2. How would you describe this situation in terms of the project life cycle? Answer: Because this is a crisis situation, things are happening fast. The conceptualization stage is immediate: Free the hostages. However, Darius is already executing some portions of his plans while Frazier is still formulating other aspects. The line between these two stages--happening virtually simultaneously--are quite blurred. 3. What types of uncertainty are these characters experiencing? Answer: These hostage negotiators are actually experiencing all three types of uncertainty. Although they are doing what they can to obtain information, there is much they don’t know, thus they have state uncertainty. They also do not know what, if any, changes or events might occur, thus they are experiencing effect uncertainty. And finally, they do not know how the hostage takers will respond, so they have response uncertainty. BONUS LECTURE Time-Tested Time Management Tips From Alan Lakein to Stephanie Winston, time management and organization experts have been providing insights and suggestions to the disorganized masses for decades. But in spite of their best efforts, people are still wallowing behind desks covered with papers, staying late at work, and responding on a regular basis with the fatal words, “I just don’t have time.” Although it is unrealistic to expect people to switch from chaotic to methodic overnight, many of the tips provided by these “gurus of get it done” can benefit anyone. Listed below is one version of “Time Management’s Top Ten.” 1. Write it down. This includes everything from long-term goals to what you promised to do by Tuesday. By devising a simple system for reminding yourself of things, you no longer have to rely on memory to come through. This saves mistakes and lowers the tension. Once you write something down, you don’t have to worry about remembering it. Computer calendars and scheduling software can be helpful. 2. Keep lists. This is simpler and faster than a complete plan. Lists can include everything from the issues you want to cover in a meeting, the jobs you want to complete in a day, and the errands you want to run in the afternoon, to the clothes you want to take on vacation. A written list helps keep you focused on the things that are really important to complete, when the interruptions and frustrations of the day try to get in the way. There is also satisfaction in looking at a crossed-off list of accomplishments at the end of a long day. Today, many managers keep their lists on Palm Pilots and other handy information appliances. 3. Organize your physical space. This includes your desk, your files, your kitchen, and even your bathroom. In her book The Organized Executive, Stephanie Winston suggested a very effective way of determining the placement of papers and files, and it works for everything from office supplies to kitchen utensils. Essentially, everything that is used almost daily should be easily accessible (for example, without leaving your desk in your office). Items that are accessed less often can be farther away from your reach. If you use this system to evaluate your office space, you may be surprised at how much space in your immediate area is taken up with materials that you access only a few times a month or year. 4. When in doubt, throw it out. Most people save much more than they will ever use. Whether it is a stack of memos from the last five years or a stack of recipes that you want to try, be realistic about the value of each item for you. If you can get another copy easily, or if you think it will never be useful to you in the future, toss it. This is also true for objects, from old clothes to extra rubber bands. One way to encourage this perspective is to assume that everything will be thrown away and that you have to come up with a valid argument in its favor in order to keep something. Computer files also need to be culled out on a regular basis. 5. Control your own time. Your time is one area in which you have a right to be somewhat selfish. If you decide to waste time, fine, but don’t allow others to waste your time without your consent. This includes curbing interruptions, shortening pointless meetings and phone calls, discouraging and avoiding excessive and/or unnecessary e-mail and voice mail, and utilizing “wait” time for your own projects and activities. Every time management program has tips for personal time control. The key is to be polite but firm. (“I’m sorry, Aunt Mabel, I’d love to talk further, but my soufflé just has to come out of the oven now.” “Frank, I’m really enjoying this conversation, but this work just can’t wait.”) 6. Make big projects manageable. Most people are overwhelmed by some of their activities and responsibilities, and the natural response is to procrastinate. To help deal with this situation, develop your own set of psychological barrier breakers. This may vary from a chart of the entire project broken into sections that you can cross off or a system of interim rewards set at various points in the process, to simply setting a time and date when you will address the project. Don’t let fear of the project postpone effort to the point where you increase the odds of failure. 7. Keep your life balanced. Too much of anything is bad for you. Socrates used to say, “Moderation in all things.” The secret to success, low stress, and high productivity is keeping your life balanced. This includes the ability to stop working before you stop being productive, pacing your work, and giving yourself time to relax and have fun without feeling guilty. It also involves having a broad range of interests and activities. This helps keep the world in perspective and provides support from other areas when one area of your life gets out of kilter. 8. Be willing to say NO. Sometimes, no matter how hard we try, we cannot do everything we want to do or feel we should do. At those times, it is better simply to refuse than to make unrealistic promises to others or inflict unrealistic demands on ourselves. Time is a limited commodity. Recognize this and make decisions accordingly. 9. Set realistic goals. Joel Weldon, a motivational speaker, says that the danger of setting unrealistic goals is that you achieve them just often enough to make you believe they are realistic. Goals should be challenging but achievable without a Herculean effort. Goals that are unrealistically demanding can be demotivating rather than positive. 10. Little things add up to big things. Discovering ways of saving five minutes here and there can lead to saving hours. If you are 5 percent more productive at work than your colleagues, you have gained almost three weeks a year. Don’t underestimate the value of incremental improvements. The most important thing is to be headed in the right direction. BONUS DECISION CASE THE CASE OF THE CRISIS CATERER Two years ago Bill started a part-time job as a catering assistant for a local hotel. He was able to work only evenings and weekends during the school year, but he managed to learn a lot about the business. Currently, he serves as an assistant banquet manager on weekends. Although the department is fun and the work is interesting, Bill sometimes gets frustrated by the lack of planning and organization. In the last year, several events were almost disasters because of poor planning by the hotel. Friday night, Bill got to work at 4:30 p.m. The first event, an awards banquet, was supposed to start with a cocktail party at 6:30. As Bill walked in, Jim, one of the new catering assistants, rushed over to him and said, “Janice, this weekend’s catering manager, called in sick, and we’re in trouble. The sales staff oversold us tonight. The college alumni cocktail party scheduled for the courtyard has been rained out, and the back-up room is booked for a wedding.” Bill ran into the office and checked the event book. Sure enough, the rain had forced one event inside, making them one room short. He grabbed the phone, called the general manager, and explained the situation. “I’ll be down in ten minutes,” said the general manager. “I’ll have my secretary call the sales manager to bring the client list tonight and meet with us. We’ll figure out what we can do. See if you can come up with any suggestions in the meantime.” When Bill hung up the phone, he sat at his desk staring at the wall. He knew he had only ten minutes to come up with alternatives for the evening. Discussion Questions 1. Generate some alternatives for Bill to suggest at the meeting. What factors should he consider when making his recommendations? Answer: To generate alternatives for Bill to suggest at the meeting regarding the Crisis Caterer case, he should consider the following factors: 1. Increase Production Capacity: Bill could suggest increasing the production capacity by hiring temporary staff, renting additional equipment, or extending working hours to meet the increased demand during the crisis. 2. Outsource Production: Bill could recommend outsourcing part of the production to external caterers to help meet the demand. This could include partnering with other caterers or food suppliers to fulfill orders. 3. Focus on High-Demand Items: Bill could suggest focusing on producing only high-demand items to streamline operations and meet customer needs more efficiently. 4. Adjust Menu Options: Bill could propose temporarily adjusting the menu options to include more easily producible items or items that require less preparation time. 5. Implement Efficient Production Processes: Bill could recommend implementing more efficient production processes, such as batch cooking, to increase output without compromising quality. 6. Prioritize Orders: Bill could suggest prioritizing orders based on urgency or order size to ensure that the most critical orders are fulfilled first. 7. Communicate with Customers: Bill could propose improving communication with customers regarding order expectations, potential delays, and alternative options to manage customer expectations effectively. When making his recommendations, Bill should consider factors such as the cost implications, feasibility of implementation, impact on quality and customer satisfaction, and the long-term implications for the business. He should also assess the risks and benefits of each alternative to make an informed decision that aligns with the company's goals and values. 2. Saturday morning, the general manager approached Bill and said, “You handled the problem last night quite well. I want you to spend some time over the next week developing ideas on how we can avoid problems like that in the future.” Draw up the basics of a plan for handling events in catering. Answer: To develop a plan for handling events in catering and avoid problems like the Crisis Caterer faced, Bill could consider the following key components: 1. Risk Assessment and Management: Conduct a thorough risk assessment for each event, identifying potential issues such as supply chain disruptions, equipment failure, or staffing shortages. Develop strategies to mitigate these risks, such as having backup suppliers or equipment rental options. 2. Menu Planning and Flexibility: Create a diverse and flexible menu that can accommodate last-minute changes or dietary restrictions. Ensure that there are alternative options available in case of ingredient shortages. 3. Staff Training and Development: Invest in training programs for staff to improve their skills and knowledge in catering. This includes training on food safety, customer service, and crisis management. 4. Communication and Coordination: Establish clear lines of communication between all stakeholders, including clients, staff, and suppliers. Ensure that everyone is informed of any changes or updates regarding the event. 5. Logistics and Equipment Management: Develop a detailed plan for logistics and equipment management, including transportation, setup, and breakdown. Ensure that there are contingency plans in place for equipment failure or other unforeseen circumstances. 6. Customer Feedback and Continuous Improvement: Gather feedback from clients and staff after each event to identify areas for improvement. Use this feedback to continuously refine and enhance the catering process. 7. Budgeting and Financial Management: Develop a comprehensive budget for each event, including all costs and expenses. Monitor expenses closely and make adjustments as needed to ensure profitability. By implementing these strategies, Bill can help the Crisis Caterer avoid similar problems in the future and ensure that events are executed smoothly and successfully. 3. Once Bill develops a plan, what problems should he be prepared for when he tries to implement it? Consider problems within both the catering department and other departments at the hotel. Answer: When Bill tries to implement his plan for handling events in catering at the hotel, he should be prepared for the following problems within both the catering department and other departments: 1. Resistance to Change: Employees in the catering department and other departments may resist changes to established processes and procedures, especially if they perceive the changes as disruptive or unnecessary. 2. Resource Constraints: Bill may encounter challenges related to resource constraints, such as limited budget, staffing shortages, or lack of necessary equipment and supplies, which could impact the implementation of the plan. 3. Coordination Issues: Coordinating activities across different departments, such as catering, kitchen, housekeeping, and maintenance, can be challenging and may lead to delays or miscommunication. 4. Training Needs: Implementing new processes or procedures may require additional training for employees, which could be time-consuming and resource-intensive. 5. Customer Expectations: Meeting customer expectations for quality, service, and customization can be challenging, especially if the plan involves changes to the menu or event offerings. 6. Competing Priorities: Other departments within the hotel may have competing priorities that could impact the implementation of the catering plan, such as overlapping events or staffing conflicts. 7. Supply Chain Disruptions: Dependence on external suppliers for ingredients, equipment, or other supplies can lead to disruptions that could impact the implementation of the plan. 8. Health and Safety Regulations: Compliance with health and safety regulations, especially in the food service industry, is critical and could pose challenges during implementation if not properly addressed. By anticipating these potential problems and developing strategies to address them, Bill can increase the likelihood of successful implementation of his plan for handling events in catering at the hotel. DECISION CASE: ANSWERS TO DISCUSSION QUESTIONS THE CASE OF THE CRISIS CATERER 1. Possible alternatives: • Combining two groups for part of the evening • Finding alternative space in the hotel, perhaps by closing the bar or blocking off a particularly attractive part of the lobby • Obtaining space at another, comparable hotel and moving one group there • Setting up tents outside so that the outside group could still meet Issues to consider: • Which group’s event will be least compromised by arranging an alternative? • Which group is the best customer in terms of amount of repeat business? • Who should tell the group about the change, how should it be handled, and what product, service, or financial adjustment should be made to compensate the group that has to be moved? • How will the alternative plan affect the catering department in terms of set-up, serving, and meal preparation? 2. Some approaches: • Make sure that a room is automatically reserved as a back-up for every outside event and that this is checked regularly by the hotel sales manager or general manager. • Set up a computerized system for room reservations so that overbooking will not occur. The computerized system could also automatically factor in enough set-up and clean-up time for each event, based on type of event and room size. • Schedule regular meetings with the sales and catering staff at the start of each week to review the schedule and prepare for any potential problems in advance. 3. Some problems Bill might encounter: • The sales staff may dislike the fact that they cannot sell the outside area without closing off an inside room. They could lose business by leaving a room empty that could have generated revenue. • All of the departments may protest the additional time it takes to implement the suggested plan, especially at first, when everyone is pretty low on the learning curve for the new system. • The plan may include some accountability for either individual employees or managers. They may not care for such direct accountability. BONUS ASSIGNMENT - COOPERATIVE LEARNING TOOL Making a Move (This can be a group or individual assignment) Graduation is only two months away, and you’ve already received a job offer. It’s a great opportunity, and it pays $5,000 a year more than you expected. There’s only one problem—they want you to start work the Monday after graduation. Although they will pay for your move, you are responsible for finding a place to live and getting settled. The job is an intense one, with lots of travel and long hours. There will be no time to arrange your living situation once you get there. With a little research, you’ve gathered the following information: • It takes six weeks from the order date for Internet to be installed. • Intrastate movers require reservations at least four weeks in advance. • Apartments are available in this city, but tenants often spend from three to six weeks on a waiting list before they can move in. • You have never searched for an apartment on the Internet. • The company will pay you up to $1,000 for costs of visiting to find a place to live. This is equal to four nights in a hotel as well as two economy airfares or one full price. To get the economy fare, you have to schedule two weeks in advance. • Between classes, labs, and your job, you have only three afternoons free during the week. • Your current work schedule requires you to work on Monday, Tuesday, and Thursday nights every week and every other weekend (starting with the next one). There is no rescheduling, and you need this job to make ends meet. • Based on previous experience, you know it will take you either six evenings or one full weekend to pack. • The post office recommends providing change-of-address information at least four to six weeks before a move for out-of-town address changes. • Aunt Gertrude has informed you that your cousin Larry is getting married and she wants you to be in the wedding, using up one of your free weekends. It will take three weeks from the day you select an outfit to have the alterations completed. (You can’t stand Larry, but Aunt Gertie is your mother’s favorite sister, who has occasionally slipped a spare $100 your way. You suspect you may currently be mentioned in her will.) • You know that you require either two evenings or one weekend day to study for each of your five exams in order to get a satisfactory grade. • You have three papers due, and you know that each paper that’s due will require either four evenings or two full days to complete. This is clearly not a time to be disorganized. Using a calendar for the last two months of this school year and the project management tools presented in this chapter, create a plan to establish your priorities and manage the last two months of school and your move. Chapter 7 Strategic Management: Planning for Long-Term Success END OF CHAPTER FEATURES • Terms to Understand – encourage students to make use of the flashcards available on the student website. Also, suggest they visit the Manager’s Toolkit section on the website for tips and suggestions for aspiring managers. • Action Learning Exercise – Thinking Strategically: A SWOT Analysis. Encourage students (in groups or individually) to develop a SWOT analysis for an organization or company they know relatively well. You may want to show the end of chapter video about Preserve by Recycline and have them complete a SWOT analysis for Preserve. Have students respond to the questions for discussion that follow. • Ethics Exercise – Do the Right Thing, Where is the Fine Line Between Free Internet Content and Pirating? Ask your students if they have ever illegally downloaded a song, video or other content for free. This issue will only grow as newspapers hang on for dear life and students think that Wikipedia is a credible source. Have them contemplate the ethical questions - a few possible responses they are likely to offer are included. What are the ethical implications of the following interpretations? 1. Any information you can access for free on the Internet is fair game. That’s what the Web is all about, greater and greater access to information for more and more people around the world. In your circle of acquaintances, how common is pirating music and plagiarizing? Answer: In my conversations, I don't have specific information about the behaviors of individuals, so I can't provide details about how common pirating music or plagiarizing is in any particular circle of acquaintances. However, both practices are generally discouraged and can have legal and ethical implications. It's important to respect intellectual property rights and to create original work or properly attribute sources when using others' work. 2. Those who create original intellectual property deserve to fairly compensated for their creativity and effort and not have it stolen via the Internet. What are the practical business implications for entrepreneurs and companies attempting to make money with an Internet strategy? Answer: To make money, artists need to protect their works. Apple’s i-tunes is an excellent model. They offer product sampling but you may not simply download to your own device without paying (unless there is a free promotion available). They transformed the music industry. We e-readers, we are seeing a similar transformation taking place with published books. What’s next? 3. The Internet is an evolving technology still in its infancy, and the dividing line between free and paid content needs to be sorted out by lawmakers and the competitive marketplace. Any suggestions? Answer: Based on your students experience with e-commerce this discussion could be quite interesting. Remind students to ponder all types of transactions. Should transactions be taxed? If yes, who gets the tax revenue? How should transactions such as prescription drug purchases be handled -who is responsible for validating the doctor’s actually written the prescription? What about the ordering of alcohol online – how do you know the recipient is really old enough to drink? The list of potential risks goes on for e-commerce. Now add the additional variable of free vs paid content and who owns the rights to intellectual property and it becomes more complicated. Just for fun, insert the global variable. Many countries do not respect, recognize or enforce U.S. Intellectual property laws – basically pirating is part of the culture. With just about everyone in the world having access to the Internet how should Internet content providers proceed? 4. Your own ethical interpretations? Answer: When framing my own ethical interpretations regarding management's social and ethical responsibilities, I believe that ethical management involves a commitment to transparency, fairness, and accountability. Managers must prioritize the well-being of employees, customers, and the community while making decisions that balance profit with social good. Ethical responsibilities also include respecting environmental sustainability, promoting diversity and inclusion, and upholding integrity in all business practices. Ultimately, ethical management requires a proactive approach to identifying and addressing ethical dilemmas, fostering a culture of ethical behavior, and ensuring that the organization contributes positively to society. • Managers-In-Action Video Case Study – Preserve by Recycline CHAPTER 7 MANAGERS-IN-ACTION VIDEO: PRESERVE® BY RECYCLINE - STRATEGIC PARTNERSHIPS Length: 7 minutes Topics: Strategic Thinking, Partnerships, Competitive Advantage, Green Marketplace, Family of Products, Goal Setting, Strategic Planning, Prioritize, Relationships, Sustainable, supply Chain, Brand, and Synergy. Company Background From the Preserve® Products website December 30, 2010. http://www.preserveproducts.com/ Preserve® makes stylish, high performance, eco-friendly products for your home. As a company, we strive to combine socially and environmentally responsible business practices with groundbreaking design to create products that people feel good about having in their homes. We believe that choosing eco-friendly products doesn't mean having to sacrifice quality, price, or performance. In 1996, founder and president Eric Hudson was committed to the need to use our earth's resources more efficiently and responsibly. The developing plastic recycling market represented a great new opportunity to reuse our earth's resources (plastics are made from oil and natural gas—making up roughly 9% of the world's petroleum usage). However, at the time that Preserve was formed, there was a lot of concern that recyclables were not necessarily turning into new products. Seeing an opportunity, Eric started Preserve to reuse Earth's precious resources and turn them back into products that people wanted. He worked with dentists, scientists and engineers to create Preserve's first high-quality product from recycled plastics—the Preserve Toothbrush. Since then, Preserve has grown into a dynamic, green lifestyle company offering a range of everyday products for almost every room in your home. Using innovative methods, we turn used materials into razors, colanders, cutting boards, tableware and more! As we grow, our core principles remain the same • Preserve products are made from 100% recycled plastics and 100% post-consumer paper. By using recycled materials, we save energy, preserve natural resources and create an incentive for communities to recycle. • All of our plastic products are recyclable, either through our postage-paid labels and mailers (toothbrushes and razor handles) or at the curb in communities that recycle #5 plastic. • We make our products in the USA, so that we can ship them shorter distances, using less fuel and limiting our environmental footprint. • We don't test on animals. Period. • Preserve products are made to last—and to look good doing it. The Preserve team is made up of 17 people and a host of talented interns who bike, walk, train, and drive (some in bio-diesel fueled cars) to our office outside of Boston intent on bringing Preserve and our mission into more homes every day. To learn more about the partnership with Stoneyfield Farm select this link: http://www.preserveproducts.com/aboutus/partnerships.html Synopsis of Video Preserve® by Recycline Strategic Partnerships Recycline company executives Eric Hudson, C.A. Webb, and Ben Anderson discuss how strategic partnerships impact their Preserve® brand’s marketing and product development. Hudson, President of Recycline considers partnerships with companies such as Stoneyfield Farm to be a core advantage as the company is able to provide service beyond their size. From college campuses to yogurt manufacturers, learn how strategic partnerships are giving Preserve a competitive advantage. For more information about Preserve® visit their website: http://www.preserveproducts.com Previewing Questions 1. What is meant by the concept, “strategic thinking”? Answer: Every employee should be encouraged to participate and embrace this concept as strategic thinking is taking a holistic view from a longer-term perspective yet it is also personal and immediate. In other words, everyone should look at the overall goals of their job, team and organization on a daily basis. Strategically thinking about these and looking for innovative ways to achieve success. It is constantly asking why we do things the way we do them. Is there a faster, better, cheaper way to achieve our strategic goals.? Should we be considering other opportunities? 2. Describe what is involved in a SWOT analysis? Answer: SWOT is also referred to as a situational analysis technique. It involves analyzing a company’s Strengths, Weaknesses, Opportunities and Threats. 3. When and why should a company conduct a SWOT analysis? Answer: Organizations should conduct a SWOT analysis during the first phase of the strategic management process when they are formulating the grand strategy. This is the ideal time because organizations or determining how they are going to fulfill their mission. Understanding the organization’s strengths, weaknesses, opportunities and threats will help managers identify the right market niche as they prepare their grand strategy and strategic plans. Postviewing Questions 4. Explain the process and approach the executives for Preserve® follow to determine who they will partner with? Answer: Preserve has a core management team that meets once every two weeks to determine their top five strategic goals for the next six months. Each department head then develops a strategy, often using unconventional approaches. They have now reached a phase in their maturity where they are receiving calls from prospective partners which has forced them to develop a systematic approach to decide who to partner with. They prioritize which relationships make the most sense based on their strategic goals. 5. Describe the impact partnerships have on synergy and a sustainable supply chain. Answer: Preserve’s partnerships and their sustainable supply chain have helped them achieve their ultimate goal of, “providing service beyond our size.” They are unique in getting back materials from consumers that are then repurposed and converted into new products. For example the yogurt cups that get sent to them are then converted into toothbrush handles. Their synergistic relationship with their partners makes this sustainable supply chain possible. Because of this synergy they are able to provide lines of green products that provide the same level of quality and functionality consumers are accustomed to while also being environmentally friendly. Sustainable products reach the marketplace without any sacrifice to the consumer as it relates to everything from price to reliability. 6. What are potential risks and rewards of using partners as part of the Preserve® brand’s overall strategy? Answer: The rewards are evident in the previous answers. Preserve grows their product lines through their partnerships. They leverage college students to assess market demand and their sustainable supply chain allows them to produce and deliver products that serve the green marketplace without sacrifice. The risks are two-fold; first as larger companies realize the demand for green goods they have the resources to enter this space increasing competition. Second, they are relying on volunteers and people who buy-in to the sustainable movement to complete their supply chain. If the external environment changes in any way they run the risk of losing a necessary component in the supply chain. These risks would certainly be an element to include in the “threats” category of their SWOT. 7. Based on what you learned from the video and from visiting the Preserve website, complete a SWOT analysis. Answer: This is intended to be a class activity. Encourage students to research on the web and perhaps visit retailers that sell green products. This is an opportunity to encourage creative and critical thinking as they apply what they have learned about situational analysis to complete a SWOT analysis. CLOSING CASE: SOLUTION HOWARD SCHULTZ GETS STARBUCKS PERKING AGAIN 1. Initially, the turnaround required a traditional command strategy where Schultz took control and made some difficult decisions. However, after further reading you realize he was primarily committed to a transactive strategy where he refocused the company on their core mission and values, learned from their mistakes and moved on. By empowering his employees to maintain the intimate, small café feel even though it is a huge company. The risk is that the internal processes miss the mark. If the road map is not on target they could lose the battle. 2. Starbuck’s continues to use a differentiation strategy focused on an intimate customer experience where quality is not compromised. The pros and cons both center on the market. If customers continue to want that quality, intimate coffee house experience than Starbuck’s will be successful and McDonald’s will not put a dent in their market share. However, they are wrong and either people decide to go local or cheaper than the competition may win. 3. Starbuck’s business ecosystem includes all stakeholders including customers and suppliers. To continue to be healthy they need to understand the needs, wants, and habits of their customers. They also need to maintain a leadership role in leveraging the rapidly changing world around them. Introducing the smart phone app that allows customers to place their order from their device and simply walk in and grab it from the barista counter is one example. From a supplier perspective they need to maintain their commitment to high quality beans sourced from growers that embrace sustainable practices and fair trade policies. As evidenced by the erroneous dipper well story, part of their strategy needs to be a focused commitment on feeding the social media accurate and positive information about their business ecosystem. 4. As Figure 7.2 illustrates, the final two stages implementation and strategic control are essential to the strategic management process. As Schultz realized when it was almost too late, they had not done a good job of evaluating results and taking corrective action based on monitoring and feedback. The case illustrates how Schultz started over in the planning process. They didn’t change the core mission or values but they did update the strategic plan. Now, time will tell how they do with implementation and control. 5. This is another great opportunity for a group activity or assignment. Consider breaking the class into groups. Have one SWOT Starbuck’s, another take a local coffee shoproaster, another group can take Dunkin Donuts and another SWOT McDonald’s (particularly their coffee business). Each group can report back. It will be interesting to see the similarities and differences. 6. Schultz clearly learned that he needed to include social media in his overall communication plan and have a proactive strategy for leveraging this user driven space for Starbuck’s benefit. His lack of awareness allowed one story to turn into a firestorm overnight. Although negative PR cannot be eliminated it can be minimized with an aggressive social media strategy that can help bolster a brand’s image while putting out the fires quickly. INSTRUCTIONAL TIPS 1. To bring the concept of synergy home, have students consider how the four types of synergy work at a grocery store. From basic examples such as market synergy (supermarkets with in-store banks and dry cleaners) and cost synergy (having one check-out process for all parts of the store, bar codes), students can begin to recognize synergistic business behavior. Another approach would be to discuss synergy in terms of class group projects. Technological synergy could come from students with different backgrounds, majors, or skills. For example, one student may have strong writing skills, and another may be good at handling the numerical portion of the project. 2. An interesting way to generate discussion of strategic management is to have your students perform a situational (SWOT) analysis on your own college or university. You can have the students brainstorm ideas while you write the four lists on the board. Following the SWOT analysis, the lists can be matched and reviewed to determine the best niche and strategic direction for the school. 3. A variation of the exercise above is to have your students select a hardcopy or online article from Business Week, Fast Company (http://www.fastcompany.com/backissues), or Fortune that profiles a company in depth and list its environmental opportunities and threats and organizational strengths and weaknesses. The strategic health of the organization can then be assessed in class. You can also ask your students which of Porter’s generic competitive strategies each company uses and whether that strategy is the best option. 4. Using the four forecasting techniques—informed judgment, scenario analysis, surveys, and trend analysis—you can create a four-way debate with teams of students. By arguing for and against the four forecasting techniques, students can increase their depth of understanding about forecasting and gain an appreciation for its subjective variations. 5. Using a major current political or business issue, such as a civil war in another country, an upcoming election, or a decision on major legislation, have students create differing scenarios based on the various possible outcomes. Vote on the probability of each occurring. Save these scenarios from semester to semester so that if solutions develop later, you can compare the reality to the scenarios developed by the students in either the current class or classes from past semesters. ADDITIONAL DISCUSSION/ESSAY QUESTIONS 1. Why is strategic management especially important today? Answer: Strategic management is particularly crucial in today's dynamic business environment for several reasons. Firstly, globalization has significantly increased competition, making it essential for organizations to carefully plan and execute strategies to remain competitive in global markets. Secondly, rapid technological advancements have shortened product life cycles and increased the pace of change, requiring organizations to be agile and adaptable to stay relevant. Thirdly, the rise of digital technologies has transformed how businesses operate and interact with customers, necessitating strategic management to leverage these technologies effectively. Finally, environmental and social concerns have become more prominent, requiring organizations to align their strategies with sustainability and corporate social responsibility goals. Overall, strategic management is crucial today to navigate these complex challenges and seize opportunities for long-term success. 2. What does the term synergy mean, and what kinds of synergy should strategic planners seek to achieve? What are Porter’s generic competitive strategies and how do they differ? Answer: Synergy refers to the combined effect of two or more elements that is greater than the sum of their individual effects. In strategic management, synergy is about creating value that is greater than what could be achieved by individual efforts or components of a strategy. Strategic planners should seek to achieve different types of synergy, such as operational synergy (efficiencies in operations), financial synergy (cost savings or revenue enhancement), and managerial synergy (benefits from better management practices). Michael Porter's generic competitive strategies are a framework for understanding how companies can gain a competitive advantage in their industry. The strategies are cost leadership, differentiation, and focus. Cost leadership involves becoming the lowest-cost producer in the industry. This strategy aims to achieve a competitive advantage by offering products or services at a lower cost than competitors. Differentiation involves offering unique products or services that are perceived as valuable by customers. This strategy aims to achieve a competitive advantage by offering something that is distinct and valued by customers. Focus involves concentrating on a specific market segment or niche. This strategy aims to achieve a competitive advantage by tailoring products or services to meet the specific needs of a particular group of customers. These strategies differ in their approach to competitive advantage. Cost leadership focuses on achieving a competitive advantage through lower costs, differentiation focuses on achieving a competitive advantage through uniqueness, and focus focuses on achieving a competitive advantage through specialization in a specific market segment. 3. Is it impractical to ask highly competitive managers in the United States to cooperate with their competitors as suggested by the business ecosystems model? Explain. Answer: It can be challenging to ask highly competitive managers in the United States to cooperate with their competitors as suggested by the business ecosystems model. This is primarily because competition is deeply ingrained in the American business culture, where companies often strive to outperform rivals and gain market share. Cooperation with competitors may be perceived as counterintuitive or against traditional business practices. Managers may be concerned that sharing information or resources with competitors could lead to a loss of competitive advantage or even collusion, which is illegal under antitrust laws. Additionally, there may be a lack of trust among competitors, making cooperation difficult to achieve. Companies may fear that competitors will not uphold their end of the bargain or may use shared information to their advantage. However, despite these challenges, there are instances where cooperation among competitors can be beneficial. In industries where innovation is key, such as technology or pharmaceuticals, companies may collaborate on research and development to achieve breakthroughs that benefit the entire industry. Overall, while it may be impractical to expect widespread cooperation among highly competitive managers in the United States, there are situations where cooperation can lead to mutual benefits and advancements in the industry. 4. What are the four basic steps in the strategic management process? What can strategic planners do to keep their strategies internally consistent and up-to-date? Answer: The four basic steps in the strategic management process are: 1. Environmental Analysis: This involves scanning the external environment to identify opportunities and threats that may affect the organization. It also involves analyzing the internal environment to identify strengths and weaknesses. 2. Strategy Formulation: Based on the environmental analysis, organizations develop strategies to achieve their goals. This step involves setting objectives, evaluating alternative strategies, and selecting the best course of action. 3. Strategy Implementation: Once a strategy is chosen, it needs to be implemented. This involves allocating resources, designing the organization's structure, and developing policies and procedures to support the strategy. 4. Evaluation and Control: The final step is to evaluate the effectiveness of the strategy and make any necessary adjustments. This may involve monitoring performance, comparing actual results to desired results, and taking corrective action as needed. To keep their strategies internally consistent and up-to-date, strategic planners can: 1. Regularly Review and Update Strategies: Environmental factors and organizational capabilities change over time, so it's important to regularly review and update strategies to ensure they remain relevant and effective. 2. Communicate Strategies Clearly: Ensure that all employees understand the organization's strategies and how their individual roles contribute to achieving strategic objectives. This helps maintain consistency in implementation. 3. Align Goals and Incentives: Aligning individual and team goals with the organization's strategic objectives helps ensure that everyone is working towards the same goals. 4. Monitor and Measure Performance: Regularly monitor and measure performance against strategic objectives to identify any deviations or areas for improvement. 5. Encourage Innovation: Encourage employees to come up with new ideas and approaches to achieving strategic objectives. This can help keep strategies fresh and innovative. By following these steps, strategic planners can help ensure that their strategies remain internally consistent and up-to-date, ultimately increasing the likelihood of long-term success. 5. Discuss the relative advantages and disadvantages of the following four forecasting techniques: informed judgment, scenario analysis, surveys, and trend analysis. Answer: The relative advantages and disadvantages of the four forecasting techniques are as follows: 1. Informed Judgment: • Advantages: Informed judgment relies on the expertise and experience of individuals, making it flexible and able to incorporate qualitative factors that may not be captured by quantitative methods. It can also be quickly applied in situations where data is limited. • Disadvantages: It can be subjective and prone to bias. The accuracy of the forecast depends heavily on the expertise of the individuals involved, and there is a risk of overlooking important factors or being influenced by personal biases. 2. Scenario Analysis: • Advantages: Scenario analysis considers multiple possible future scenarios, helping to identify risks and opportunities that may not be apparent in a single forecast. It can also facilitate strategic planning by providing a framework for decision-making under different conditions. • Disadvantages: It can be time-consuming and resource-intensive to develop multiple scenarios. There is also a risk of focusing on extreme or unlikely scenarios at the expense of more probable outcomes. 3. Surveys: • Advantages: Surveys can provide direct input from stakeholders or experts, helping to capture a range of opinions and perspectives. They can also be relatively cost-effective and quick to administer. • Disadvantages: Surveys may suffer from response bias, where respondents provide answers they think are expected rather than their true opinions. They can also be limited by the quality of the questions and the representativeness of the sample. 4. Trend Analysis: • Advantages: Trend analysis uses historical data to identify patterns and trends, providing a basis for forecasting future trends. It can be relatively straightforward to apply and can provide a quantitative basis for decision-making. • Disadvantages: It assumes that past trends will continue into the future, which may not always be the case. It can also be sensitive to outliers or changes in underlying conditions that may not be captured by historical data. In conclusion, each forecasting technique has its own strengths and weaknesses, and the most appropriate technique will depend on the specific context and requirements of the forecasting task. Combining multiple techniques or using a hybrid approach can help mitigate some of the limitations of individual techniques and provide a more robust forecast. 6. How does social media impact strategic planning? and what should managers do to effectively leverage social media? Answer: Social media has a significant impact on strategic planning by changing the way organizations interact with customers, competitors, and other stakeholders. It has created new opportunities for organizations to engage with their target audience, gather feedback, and promote their brand. However, it also presents challenges in terms of managing online reputation, dealing with negative feedback, and keeping up with the rapidly evolving social media landscape. To effectively leverage social media in strategic planning, managers should: 1. Listen to Customers: Use social media monitoring tools to listen to what customers are saying about the brand, competitors, and industry trends. This information can provide valuable insights for strategic decision-making. 2. Engage with Customers: Actively engage with customers on social media by responding to comments, addressing complaints, and soliciting feedback. This helps build relationships and improve customer loyalty. 3. Promote the Brand: Use social media platforms to promote the brand, share content, and interact with followers. This can help increase brand awareness and reach a wider audience. 4. Monitor Competitors: Keep an eye on competitors' social media activities to stay informed about their strategies and identify opportunities or threats. 5. Adapt to Trends: Social media trends evolve rapidly, so managers should be flexible and willing to adapt their strategies to take advantage of new opportunities or mitigate risks. 6. Integrate with Overall Strategy: Social media should be integrated into the organization's overall strategic planning process, aligning with business objectives and complementing other marketing and communication efforts. 7. Measure and Analyze Results: Use social media analytics tools to measure the effectiveness of social media activities and track key performance indicators (KPIs). This data can help refine strategies and optimize future campaigns. By effectively leveraging social media in strategic planning, managers can improve customer engagement, enhance brand reputation, and drive business growth in today's digital age. Discussion Starter: Forecasting Imagine for a moment you own a local sports bar in a large college town such as Columbus, Ohio. Consider for a moment the four forecasting techniques discussed in the book. As a manager tasked with planning for everything from staffing to food & beverage orders how would you go about forecasting customer volume from July 1st – December 31st? For Discussion • Is one of the four techniques more accurate for this type of forecasting? (Remind students that each forecasting technique has limitations, so strategists are wise to use two or more methods to help validate the projections). Answer: Forecasting customer volume for a sports bar in a college town like Columbus, Ohio, from July 1st to December 31st requires a combination of forecasting techniques to account for the seasonal variations in customer traffic. Here's how each technique could be applied: 1. Informed Judgment: Start by consulting with experienced staff members who have worked at the sports bar during previous years. They can provide insights into historical patterns, events that may impact customer traffic (like home games or holidays), and any changes in the local college scene that could affect business. 2. Scenario Analysis: Develop multiple scenarios based on different assumptions, such as a scenario where there are more home games or events in the area, and another where there are fewer. This approach helps to prepare for different possibilities and plan accordingly. 3. Surveys: Conduct surveys among college students, local residents, and regular customers to gauge their anticipated visitation patterns for the upcoming months. This can provide valuable insights into potential customer volume. 4. Trend Analysis: Analyze historical data from previous years, looking at trends in customer traffic during the same period. This can help identify any recurring patterns or factors that may influence customer volume. Combining these techniques can help validate the projections and provide a more comprehensive forecast. While no single technique may be perfectly accurate, using multiple methods can help account for the uncertainties inherent in forecasting and improve the overall accuracy of the predictions. • Strategic thinking should involve every employee at every level of the organization. Is this also true of forecasting? Explain. Answer: To forecast customer volume for a sports bar in a large college town like Columbus, Ohio, from July 1st to December 31st, the following steps could be taken: 1. Informed Judgment: Utilize the experience and insights of the sports bar's management team and staff who have worked during previous summers and college terms. They can provide valuable insights into past trends, events that could impact customer traffic (like sports events or holidays), and any changes in the local college scene. 2. Scenario Analysis: Develop several scenarios based on different assumptions, such as variations in the number of home games, concerts, or other events that could attract customers. This approach helps in preparing for different possibilities and planning accordingly. 3. Surveys: Conduct surveys among college students, local residents, and regular customers to understand their anticipated visitation patterns for the upcoming months. This can provide valuable insights into potential customer volume. 4. Trend Analysis: Analyze historical data from previous years, looking at trends in customer traffic during the same period. This can help identify any recurring patterns or factors that may influence customer volume. Combining these forecasting techniques can help validate the projections and provide a more comprehensive forecast. While no single technique may be perfectly accurate, using multiple methods can help account for uncertainties and improve the overall accuracy of the predictions. As for the role of forecasting in strategic thinking, it should involve every employee at every level of the organization to some extent. While not everyone may be directly involved in the technical aspects of forecasting, such as data analysis, it is important for all employees to understand the forecasted outcomes and how they contribute to the organization's overall goals. This understanding can help align individual and team efforts with the forecasted plans, ensuring that everyone is working towards the same objectives. Additionally, input from employees at various levels can provide valuable insights and perspectives that may improve the accuracy and relevance of the forecasts. BONUS VIDEOS BIZFLIX VIDEO CASES FROM THE TEXTBOOK WEBSITE Discussion Questions and Guide Video Case: Played (I) VIDEO CASE SYNOPSIS Ray Burns (Mick Rossi) does prison time for a crime he did not commit. After his release, he focuses on getting even with his enemies. This fast-moving film peers deeply into London’s criminal world, which includes some crooked London police, especially Detective Brice (Vinnie Jones). The film’s unusual ending reviews all major parts of the plot. This BizFlix video case starts with a nighttime shot of a house on Edenville Street. Ray says, "OK, what we got guys? Nathan. One, two, three, four moves, okay?" They begin after Ray tells Terry (Trevor Nugent) and Nikki (Meredith Ostrom) that they have the robbery job. These scenes end as Ray and Terry leave with the sound of the alarm. VIDEO CASE DISCUSSION QUESTIONS AND SUGGESTED ANSWERS 1. How is this film clip an example of strategic planning? Answer: In the scene, the thieves are discussing how they are going to achieve their long-term goals. They discuss not only the resources they have, but also others they’ll need and how they’re going to get them. They also discuss what they know about the environment in which they’ll be working. 2. This chapter discusses situational analysis and defines a SWOT analysis as “a search for strengths, weaknesses, opportunities, and threats that affect organizational performance.” Did Ray and the others do such an analysis? If not, what was missing from their analysis? Answer: Ray had already done a SWOT analysis and describes it to the others in the early part of these scenes. It included the number of moves (four), cut both CCTVs, the number of guards, no dogs, messing up the place to make it look like a random robbery, and their car’s location. Their plan included little analysis of threats or other contingencies that could occur. 3. Synergy results from combining organizational resources in a way that gets more than the sum of individual resources. Assess the synergy that occurred in these scenes. Did Ray and the others combine in a way to have the most positive effect? Why or why not? Answer: Ray and Terry had worked together on other operations. They knew each other well enough to predict what each could do. Nathan was the weak link in their strategic chain. His inattention to where he placed his gun led to both his death and the operation’s partial failure. BONUS DECISION CASE THE HENDERSON HARDWARE CHALLENGE At Janine’s graduation party, her Uncle Harry walked over and shook her hand. “I understand you’re in the job market now that you’ve gotten that fresh, new M.B.A.” “Well,” Janine replied, “I realize my real-world experience is limited, but I hope to find a place where I can learn and work my way up.” “I know it’s not as glamorous as some big corporate job, but how would you like to come work for me in the hardware business? I’d like you to consider coming into the head office; we could use some new ideas over there.” “Let me think about it and call you tomorrow,” Janine replied. Janine considered the offer. Since her childhood, the Henderson Hardware stores had been part of her life. The family owned twelve stores in eight counties in the state. The privately held company had been started by her great-grandfather in the 1800s, and as it expanded over the years, children, aunts, uncles, cousins, and in-laws had grown up and joined the business. The income from the stock Janine received automatically at birth paid for her college education. Janine’s Uncle Harry had taken over the company six months ago. Janine knew from her mother’s letters that Harry was trying to bring the company into the new millennium, but it was quite a task. Janine decided to ask her mother what she thought. As a family member who was not actively involved with the company, her mother would be more objective than some. “I’m not sure that it’s the place for you, Janine,” her mother answered. “The company isn’t doing as well as it once was. The stores are going downhill, and there is a lot of blaming going on among family members in the company. Your Uncle Harry is the third company president in four years. I do know that they could use a new perspective over there. Your grandfather and the great-uncles think they can run the business the way they always have, and everything will be fine, but the market’s changed. The baby boomers are buying, but from ‘big box’ competitors such as Home Depot and Lowe’s.” After considering the situation, Janine called her uncle. “What sort of job did you have in mind?” “Well,” Harry replied, “to start, I would like you to work in human resources and help them develop a customer-service program. I don’t think we pay enough attention to our customers anymore. But I’d also like your opinion in general. You’ve got a fresh viewpoint and a newly minted business degree. We can use your knowledge of new management trends and ideas.” Janine’s first week on the job was a real eye opener. She started by visiting all the stores with her Uncle Tom, the operations director. While Tom chatted with the managers, Janine wandered up and down the aisles and looked through the stockrooms in the back of each store. She soon realized that the types and levels of inventory, attention to service, cleanliness, the knowledge and competency of the sales staff, and even the prices varied dramatically from store to store. The only consistency was the name. Even sales promotions could vary, since each store had a small, individual advertising budget. The customers were also a concern. Most of them were older and tended to make small purchases. Janine asked her Uncle Tom about this. “Well, a lot of the young kids just look at price, and then they shop at these big warehouse and discount stores like Home Depot and Wal-Mart. We’ve already got three different stores entering this market. It’s also tough for us to compete against the national chains because they can get much better price discounts.” Janine’s concern grew deeper when she looked at the company’s financial reports. Several stores had lost money regularly for over three years. When she asked Uncle Harry about them, Harry replied, “I know, but the last three great-uncles in the family are running those, and they’re on the board of directors. I can’t do much about them. Besides, it isn’t really their fault; those neighborhoods have really gone downhill in the last five to ten years.” The next thing Janine asked to see was the company’s strategic plan. “There isn’t one,” Harry explained. “We’re all so busy getting the day-to-day things done that we just don’t have time.” Altogether, it had been a discouraging week for Janine. Discussion Questions 1. Based on the information in the case, do a mini-SWOT analysis. What are the biggest problems facing Henderson Hardware? Answer: Mini-SWOT Analysis: • Strengths: Family-owned business with a long history, strong brand recognition in local markets, loyal customer base. • Weaknesses: Inconsistent store operations and customer service, varying levels of inventory and pricing, lack of strategic direction and planning, financial losses in some stores. • Opportunities: Developing a customer-service program, leveraging Janine's fresh perspective and business degree, adapting to changing market trends. • Threats: Competition from big-box retailers like Home Depot and Lowe's, entry of new competitors into the market, changing customer demographics and preferences. 2. Consider Porter’s generic competitive strategies. Which approach would work best for Henderson, given the nature of the competition? Answer: Porter's Generic Competitive Strategies: • Cost Leadership: Given the competition from big-box retailers and the emphasis on price by younger customers, a cost leadership strategy could work well for Henderson Hardware. This would involve streamlining operations, negotiating better price discounts with suppliers, and focusing on efficient inventory management to offer competitive prices. • Differentiation: Another approach could be to differentiate Henderson Hardware from its competitors by offering superior customer service and a unique in-store experience. Janine could help develop a customer-service program that emphasizes personalized service and product knowledge to attract and retain customers. 3. What steps can Janine take to help convince her Uncle Harry that the company needs a strategic plan? Do you think Janine will succeed? Answer: Steps to Convince Uncle Harry and Likelihood of Success: • Janine can present a compelling case for the need for a strategic plan by highlighting the current challenges facing the company, such as inconsistent store operations, financial losses, and increasing competition. • She can emphasize the benefits of having a strategic plan, such as providing a clear direction for the company, aligning efforts across the organization, and improving decision-making. • Janine can also suggest that a strategic plan would help address the specific issues identified in the SWOT analysis and capitalize on opportunities in the market. • Success in convincing Uncle Harry will depend on his openness to change and willingness to listen to Janine's insights. If Janine can demonstrate the potential benefits of a strategic plan and show how it aligns with the company's long-term goals, she may succeed in convincing Uncle Harry to develop a strategic plan for Henderson Hardware. DECISION CASE: ANSWERS TO DISCUSSION QUESTIONS THE HENDERSON HARDWARE CHALLENGE 1. 1. STRENGTHS: A solid group of people who know the basics of the hardware business at all levels of the company. The company is privately held, so stock market fluctuations and pressure for short-term results are not a problem. Henderson Hardware has a “hometown advantage.” Through its years in business, the company is well established in the communities it serves. A fundamental loyalty to the company on the part of many employees, due to strong family ties. WEAKNESSES: Decisions are being made on a family basis, not on a business basis. Less successful areas of the business are draining cash from successful areas. There is a total lack of standards or controls from the top. This has led to inconsistency on major issues from store to store, which can create a confusing market image. No strategic planning or strategic management techniques are implemented. The company’s customer base is older, and its competition is getting the newer customers. High turnover at the top. With a board of directors that is easily dissatisfied and that doesn’t give the top person enough time to implement decisions and see results, it is impossible to succeed with long-term planning. OPPORTUNITIES: The potential for Janine and others like her to join the company and contribute. As a local company, it may be able to position itself in a different way than the national chains moving into the area. The increased need for hardware products, as aging baby boomers seek bigger homes. THREATS: The competition: more variety, consistency, and lower prices. Potential financial problems if negative cash flow continues and competition undercuts other, more successful stores. PROBLEMS: This is an opinion question. Some possible issues are the family/business conflict, an absence of a plan or direction for the company, the competition, and an unwillingness to change. 2. Henderson Hardware would probably do best with a focused differentiation strategy. Due to the price breaks possible with the larger national chains, Henderson is simply incapable of adopting a cost leadership strategy. Henderson’s potential success comes from its ability to serve customers better, thanks to its years of experience. 3. This is an opinion question. Janine may want to have some information gathered to support her concerns. This could include articles on strategic planning, surveys and interviews of Henderson customers, and some information on the industry and the competition. Janine may also want to get some support from family members. The younger members of the family should be concerned about where the business is going because they stand to inherit it someday. BONUS COOPERATIVE LEARNING ACTIVITY: INSTRUCTOR NOTES Building a New Opportunity for Lego The following exercise allows your students to spend time on the ground floor of strategic planning. One of the different aspects of this exercise is that students will work with actual Legos in the planning process. A large tub of Legos—plenty for the exercise—can be purchased at any toy store for about $20. If you try this exercise, you will be amazed at the energy the actual Legos will generate. In grade school math, this type of tool is called a “manipulative,” but you don’t have to be eight to enjoy the chance to work with blocks or to inspire learning with physical tools. This exercise gives a brief history of Lego, focusing on its culture, its approach to the toy industry, and some of the challenges it has faced recently. Then it gives your student teams a challenge—find a new Lego product. Students have to do a brief SWOT analysis for Lego, define and design the new product, define the market, consider the competition, recommend a promotion for introducing the product, suggest various distribution methods, and address any other areas they think should be part of the strategic plan for the new product. For a more detailed background on Lego, go to http://www.lego.com/ or to http://www.fastcompany.com/ and do a company search for Lego. There is an article that gives an extensive history, along with the description and examples of the amazing response to the article on its Web site. You may want to capture some of the opinions to share with your class or to incorporate a visit to the site and a review of the article and the responses as part of the exercise. Building a New Opportunity for Lego For over 70 years, a little town in Denmark has produced one of the world’s best-known and longest-lasting toys, Legos. Most adults today played with the distinctive Lego bricks as children. But many people don’t realize that the little Legos are part of the heritage of a company started by a far-seeing carpenter, Ole Kirk Christiansen, who founded Lego in 1932 with his purchase of a plastics injection-molding machine. One of his early plastic toys was a set of small blocks that snapped together, initially called “automatic binding bricks.” The magic of these bricks was that when you pushed them together, they stayed snapped together. This is something Lego calls “clutch power.” There is another factor beyond clutch power that holds Lego together—Lego values. These include inspiring and nurturing play and creativity and a belief that if they do things right, the profit will be there. Some of Lego’s innovations over the years: • Themed sets—such as town and farm kits, and (later) space, castle, and pirate sets. • Developing Lego kits that are more like models, including construction instructions. • Legoland—a theme park built around Legos. • The introduction of Mindstorms—programmable Lego bricks that make your Lego creations behave in certain ways. • A partnership with Lucasfilm Ltd. in 1999 to produce Star Wars–themed kits. Other licensed kits have followed. • Bionicle action figures, introduced in 2001, are built around a story—the legend of Mata Nui. In spite of the success of these introductions, Lego has been losing money steadily since the mid-1990s. In addition, many Lego employees have been concerned, with each addition to the product mix, that the primary values Lego was built around are in jeopardy. It’s a constant challenge to Lego to come up with toys that today’s entertainment-rich children will want, while maintaining their belief in the importance of creative, self-guided play. As Poul Plougmann, the CEO’s chief deputy at Lego, explained, “The important thing is that we not grow beyond our values. We are here only to develop kids. And we should be smart enough to make a business of it.” Your Assignment: Create a new Lego product. It can be anything, for any purpose or any market. When developing it, include the following: • How your product fits into the company with a brief SWOT analysis of Lego • How your product fits in with Lego values • A prototype of the product • The demographic group your product will appeal to • Lego’s competition for your new product with that demographic group • What makes this product unique—its competitive advantage • How the product would be introduced and promoted • How the product would be distributed • Anything else you think is relevant to the product plan Solution Manual for Management Robert Kreitner, Charlene Cassidy 9781111221362