Management Chapter 4 The Following Are Barriers For The Implementation

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communication and the purpose of the meeting, and the notes that are relevant for the previous or cur-

rent meeting being offered.1

LECTURETTE 4.2: Preparing Your Business Plan

Most people plan more extensively for a vacation than they do for a new business. An entrepreneur

should not quit his job until he researches the type of business enterprise he or she wants to start and cre-

ates a solid business plan for success. Unless the entrepreneur is pretty sure that over time he or she can

earn a better salary by owning a business, the best advice may be to stay at the current job. Why take

such a big risk? However, the proverbial saying is true – “no risk, no reward.” However, a business

owner stands a good chance of generating considerable revenues and creating a very good income if they

take the time to create a strong business plan and have a mentor and/or support system to guide them in

starting and running the new business.

A business plan is a document of approximately 40-50 pages that outlines the goals and plans for running

Why Prepare a Business Plan?

Although entrepreneurs might have heard that you only need a business plan if you are trying to get fi-

nancing to start a company, this is not true. There are several other reasons to write a business plan:

1. Putting goals and ideas down on paper helps to organize one’s thinking.

2. Writing down plans and goals demonstrates commitment to business success, which makes a strong

impression on potential investors, suppliers, and employees.

Before beginning to write a business plan, one must learn as much as possible about the business: the

market in which a company operates, the types of products or services offered, and customer needs. Or-

1 Kirkland, Ellzabeth, “It’s all in the Planning” Mississippi Business Journal, 12/11/2000, Vol.22, Issue 50, p4

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➢ Marketing Strategy

Automation is wonderful for performing routine tasks such as extensive number of crunching and the cre-

ation of standard section. Almost all business plans contain the same basic information, and the overall

structure is fairly well defined. For this reason, one may find that business planning software will help

you start writing your business plan. A number of business planning software packages on the market are

designed to ask question to fill in the blanks. The entrepreneur’s responses are then entered into the ap-

propriate plan sections and the plan contents are automatically created.

2 Paulson, Ed: Layton, Marcia, “Preparing Your Business Plan”, Complete Idiot’s Guide to Starting Your Own Business, 1998, p 51

Chapter 04 – Planning and Strategic Management

1. The chapter opened with a quote by GE’s Jack Welch: “Manage your destiny, or somebody else

will.” What does this mean for strategic management? What does it mean when Welch adds,

“…or somebody else will”?

The first part of Jack Welch’s quote means it is up to the management team of a company to have a

2. List the six steps in the formal planning process. Suppose you are a top executive of a home-

improvement chain and you want to launch a new company Web site. Provide examples of ac-

tivities you would carry out during each step to create this site.

The six steps in the formal planning process are:

1) Situational analysis;

As the executive of a home-improvement store wanting to launch a Web site, you would first need to

analyze the business situation using the SWOT approach (what are the company’s strengths, weak-

nesses, opportunities, and threats?). Then you would review alternative goals and plans (create your

3. Your friend is frustrated because he is having trouble selecting a career. He says, “I can’t plan

because the future is too complicated. Anything can happen, and there are too many choices.”

What would you say to him to change his mind?

Your friend needs to think about the consequences of not planning. By planning now, many of the

DISCUSSION QUESTIONS

Chapter 04 – Planning and Strategic Management

4. How do strategic, operational, and tactical planning differ? How might the three levels com-

plement one another in an organization?

Strategic planning involves making decisions about the long-term goals and strategies for the organi-

zation. Strategic plans typically involve an in-depth evaluation of the external environment, normally

involve heavy participation on the part of top management, and cover a relatively long time frame

(from three to five years, although some Japanese companies develop 20-year plans).

Tactical planning translates the strategic plans into detailed goals and plans that are relevant to a spe-

5. How might an organization such as Urban Outfitters use a strategic map? With your class-

mates and using Exhibit 4.5 as a guide, develop a possible strategic map for the company.

Urban Outfitters is a trendy store that caters to young people. Selling everything from magnets to

6. What accounts for the shift from strategic planning to strategic management? In which indus-

tries would you be most likely to observe these trends?

Strategic planning often emphasizes a top-down approach. Senior management and specialized stra-

tegic planning units develop goals and objectives that are then given to the next level of management

for implementation. The problem with this approach is that it ignores the ideas and perspectives of

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7. Review Exhibit 4.7, which lists the components of an environmental analysis. Why would this

analysis be important to a company’s strategic planning process?

By analyzing the components of the external environment, a company can see changes in advance,

8. In your opinion, what are the core competencies of Harley-Davidson Motor Company motorcy-

cles? How do these core competencies help Harley Davidson compete against foreign competi-

tors such as Yamaha and Suzuki?

A “core competency” is defined as something that a company does especially well relative to its

competitors. Examples of core competencies might be a firm’s technological innovations, its engi-

9. How could SWOT analysis help newspaper companies remain competitive in the new media

environment?

Newspaper companies which use a SWOT analysis would be able to more clearly see niche opportu-

nities that cannot be fulfilled by other types of media.

• Strengths: Newspapers are truly portable – they require no wires, batteries, or electricity to oper-

ate. In addition, newspapers offer the kind of in-depth analysis and reporting that simply isn’t

10. What are the key challenges in strategy implementation? What barriers might prevent strategy

implementation?

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The two key trends in strategy implementation are the:

1) Adoption of a comprehensive view—ensuring that the organizational structure, technology,

are responsible for implementation are also involved in the planning and formulation stages.

The following are barriers for the implementation of strategic management:

➢ Top-down or laissez-faire senior management style

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EXERCISE 4.1 – BUSINESS STRATEGIES NEED ADJUSTING

Objective

To study why and how a company adjusts its business strategy to adapt to changing external environ-

ments.

Instructions

Using an Internet browser or a college’s library research portal, identify a recent article from such busi-

How would you describe the company’s former business strategy?

_____________________________________________________________________________________

Why is the company changing its strategy? What external forces are encouraging it to change?

_____________________________________________________________________________________

How would you describe the new business strategy?

_____________________________________________________________________________________

What strategic goals or major targets does the company hope to achieve?

_____________________________________________________________________________________

How does the company intend to translate its new strategic goals into tactical or operational plans?

Which levels of management will carry out these plans?

_____________________________________________________________________________________

EXPERIENTIAL EXERCISES

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To what extent do you think the new strategy will be successful in addressing or adapting to the ex-

ternal forces? Explain.

_____________________________________________________________________________________

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EXERCISE 4.2 – FORMULATING BUSINESS STRATEGY

A. Objectives

1. To illustrate the complex interrelationships central to business strategy formulation.

B. Suggested Responses

1. The rationale for organizations not to establish strategies is due to a world of uncertainty. There is

tremendous change occurring in the market place, and as quickly as a SWOT analysis is developed

2. The rationale for most organizations not to develop opportunities and weaknesses is for the fact that

3. Most organizations want to deal from strength because of the internal analysis. Firms are more likely

to know what is going on inside the organization than knowing about information coming from an ex-

Teaching Tips:

1. Select a company and provide the students with a set of references, which they can use to address the

2. Divide the class into two sections with one group focusing on a selected for-profit organization and

the other on a non-profit organization to see whether or not students feel that the SWOT analysis ap-

plies equally to both types of organizations.

3. Ask students whether they found it easier to identify the strengths of the organization or the weak-

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Wish You Wood Toy Store

Case Summary:

Jim and Pam Klein operate a toy store in a resort town and expanded by offering the same products

Chapter Topics Related to the Case:

• Identify how to analyze external opportunities and threats to a company like Wish You Wood

Case Discussion Questions:

1. Prepare a SWOT analysis for Wish You Wood, based on the information given.

Suggested Response:

2. Using the SWOT analysis, what general corporate strategy would you recommend for Wish You

Wood? Should the store continue or change its current approach?

Suggested Response:

Student responses to this question will vary contingent upon their responses provided to the first question.

Given the store’s strengths and weaknesses, it seems that it will need to continue serving a niche market.

CONCLUDING CASE

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Example 4.1 – Tactical planning: Gary Boomer, CPA, is the president of Boomer Consulting in

Manhattan, Kansas. Gary states that other than costs there are tactical as well as strategic issues

involved when making decisions. Gary also reflected that knowing the right questions to ask is

Example 4.2 – Evaluation of the environment: Jason Black, Vice President of the Planning In-

stitute of Australia and senior spatial planning consultant at MacroPlan, feels some of the key is-

sues city planners are facing are movement to coastal areas, higher density inner-city living, the

Example 4.3 – Benchmarking: Every year, J.D. Power and Associates publish numerous rank-

ings for the auto industry. Two of these, the Initial Quality Study, and the Vehicle Dependability

Survey, (quality ratings after three years of ownership) illustrate both the internal and external

factors that come into play when a company is developing strategy. For example, Lexus has been

Example 4.4 Vertical integration: Vertical integration, so far, seems to have worked for the

RDF Meat Shop, Inc. of Pampanga. Starting out as a chicken contract farmer for three food

stores, the company later became an independent grower of swine and chicken. Dr. Lo, the com-

4 Boomer, L. Gary. “IT strategies and tactics.” Accounting Today, August 20, 2007, Vol. 21, No. 15, p 22.

5 Norris, Paul. “Map out the big picture.” The Australian, October 22, 2005. p 9.

6 White, Joseph B. “Ranking the most–reliable cars.” Wall Street Journal, June 29, 2005, pg. D1.

EXAMPLES

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Example 4.5 – Business strategy: Most people know that Southwest Airlines is the low-cost

flight leader in the United States, but fewer people will have heard of Spring, the first private

Example 4.6 – Barriers to strategy implementation: Netflix recently made the decision to pur-

sue original production, with the series, “House of Cards,” recognizing the potential risk of their

content owners increasing fees or deciding not to allow their content to be available on the Netflix

viewing platform. However, some have criticized this move as risky, noting the high rate of fail-

7 Villanueva, Frankie. “The view from Taft: Vertical integration or outsourcing?”, August 31, 2006, p S 1/5.

Chapter 04 – Planning and Strategic Management

Please see the following additional materials in Connect.

• Ball

Ball is by far the market leader in aluminum can manufacturing. The Ball corporation was

founded by the 5 Ball brothers. Manufacturing has always been a keystone of their success

What tactical planning steps did Ball take to innovate and remain competitive in the packag-

ing industry?

Ball has had to focus on marketing, including social media campaigns, to remind customers

that they’re more than just the glass jars customers might be most familiar with. Ball has also

Where do canning jars fit into the BCG matrix?

• There is no Hot Seat segment that applies to this chapter

• There are no self-assessments for this chapter

SELF-ASSESSMENTS

SUPPLEMENTAL FEATURES

MANAGER’S HOT SEAT (MHS)

CHAPTER VIDEO