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CHAPTER 5. PLANNING
NỘI DUNG KIẾN THỨC
- What is planning
- Definition
- Outcomes: 3
- Importance of planning: 4 reasons
- Outcome 1: GOAL
- Definition
- Types: According to Time / Aim / Function / Level
- Characteristics of a good goal SMART + WC
- Two ways to set up goals: Traditional + MBO
- Outcome 2: PLAN
- Types: According to Time / Breadth of use / Specificity / Frequency of use
- Business plan
- Outcome 3: STRATEGY
- Definition
- Strategic management process: 6 steps
- Strategic management analysis tool: SWOT matrix
- Value chain model
- Level of strategies (BCG matrix is used in the Corporate level)
CHI TIẾT BÀI GIẢNG VÀ BÀI TẬP TRÊN LỚP
1. WHAT IS PLANNING a. Definition - Planning is often called the the primary management function because it establishes the basis for all the other things managers do. - It’s concerned with ends (what is to be done) as well as with means (how it is to be done) E1. FILL IN THE BLANK 1. Planning is a (1) ________ process of (2) ________ up the goals, (3) ________ strategies and (4) ________ plans to achieve the goals. 2. Planning includes the answer for (5) ________.
b. Outcomes of planning:
- Goals (most important)
- Plans
- Strategies c. Importance of planning
E2. WHY IS PLANNING IMPORTANT?
2. GOALS
a. Definitions
E3. FILL IN THE BLANK
- Goal is the ______ (1) outcomes of ______ (2), _____ (3), and _______ (4).
- Goal is the ______ (5) for other items of planning.
b. Types of goals
- According to TIMEFRAME: Short-term goal (< 1 year) >> Mid-term goal (1 - 3 years) >> Long-term goal (> 3 years)
- According to AIMS:
- Stated goals: Official statements of what an organization says, and wants its stakeholders to believe, its goals are.
- Real goals: Those goals an organization actually pursues as shown by what the organization’s members are doing E 4. ANSWER THE QUESTIONS
- What is the real goal of all enterprises?
- Why do firms need stated goals?
- According to FUNCTION: Marketing goal / HR goal / Financial goal /…
- According to LEVEL: Organizational goals >> Departmental goals >> Group goals >> Individual goals
c. Characteristics of a good goal
S M A R T W C Specific Measurable Achievable Relevant Timebound Written down Challenging
Know exactly what you want to achieve
Progress made towards the set goals must be measureable
Be sure the goal is something you have the ability to accomplish
Be sure the goal is something you can do and within the desired time
Set time limits
E 5. APPLY SMART AND WC TO FIX THE FOLLOWING GOALS
- I will study better.
- Our company will be the best.
- Answer the customers as soon as possible.
4. STRATEGY
a. Definitions
E7. FILL IN THE BLANKS
- Strategy is a set of _____ (1) in a particular ______ (2) to achieve the goals in _____ (3).
- Strategic Management is a ______ ( 4 ) of planning, ______ ( 5 ), ______ ( 6 ), and ______ ( 7 ) the strategies to achieve the goals.
- The aims of Strategic Management are to_____ ( 8 ) with rivals and ______ ( 9 ) the customers.
b. Strategic management process
- STEP 1: Identifying the organization’s current mission, goals and strategies
- STEP 2: Doing an external analysis
- STEP 3: Doing an internal analysis
- STEP 4: Formulating the strategies
- STEP 5: Implementing strategies
- STEP 6: Evaluating results
E8. WHICH STEP IS THE MOST IMPORTANT? WHY?
c. Strategic management analysis tool 1 – SWOT MATRIX
- SWOT Matrix can be used in Step 2 and 3 for analyzing the environment, and in Step 4 for formulating the strategies.
- SWOT matrix suggests that there are 4 strategies that can be applied: (1) S-O (2) S-T (3) W-O (4) W-T
d. Strategic management analysis tool 2 – Value Chain model
- A contribution of Michael Porter
- The Model divides business activities into 2 categories:
- Main activities: (1) Inbound logistics; (2) Operation; (3) Outbound logistics; (4) Marketing & Sales; (5) Service
- Supporting actitivies - Necessary for success implementation of main activities: (1) Firm infrastructure; (2) HR management; (3) Technology development; (4) Procurement
- Application of Value Chain Model:
- Can be used in Step 3 for internal analysis to understand strengths and weaknesses as well as competitive advantages of firms
- Looking at this model will help find which stages the firm is good at to focus on, and which stages the firm is not good at to outsource for more effective implementation.
e. Level of strategies: 3 levels of organizational strategies (1) LEVEL 1: CORPORATE STRATEGIES * Growth strategies:
- Strategies relating to the expansion of markets served / products offered either through current business or though new business.
- Including:
- Concentration growth: Firms concentrate on current market and main business (1 SBU only)
- Diversification growth: (>= 2 SBUs) Classified into Related and Unrelated diversification (conglomerate) Including Opening new businesses in new fields / industries and M&A
- Integration growth: Vertical integration: towards managing and controling the whole supply chain Horizontal integration: cooperate with another firms in the supply chain _Stability strategies_*
- It is implemented when:
- The environment is stable; and
- The company does not have many strengths and weaknesses; or
- [W-O] There are some opportunities, but the company is very weak; or
- [S-T] The company has some strengths, but there are many threats.
- It is implemented when the company does not have much changes in size / product diversification. _ Renewal (Retrenchment) strategy_*
- It is implemented when there are many threats and the company is weak.
- When implementing this strategy, the company will close some branches or subsidiaries, or reduce product diversification.
CORPORATE STRATEGY ANALYSIS TOOL: BCG MATRIX
Classify products into 4 categories based on the market growth rate and the relative market share.
STAR
High earnings Stategy applied: Invest
QUESTION MARK
Low, unstable earnings Strategy: (?)
CASH COW
High & stable earnings Strategy applied: Milk
DOG
Low, unstable earnings Strategy applied: Divest
STRATEGIC CHOICE FOR EACH CATEGORIES:
(1) STAR – High growth High share
- Companies have lots of advantages in the industry
- Should invest more for growth
- Strategies that can be applied:
- Vertical & Horizontal integration
- Market penetration and development (2) CASH COW – Low growth High share
- Cash cows are the most profitable products and should be “MILKED” to provide as much cash as possible. Cash gained grom Cows should be invested into STARS to support further growth.
- Should NOT invest for new growth, except for supporting current market share
- Strategies that can be applied:
- Product development
- Diversification
- Divestiture & Retrenchment (3) DOG – Low growth Low share
- In general: not worth investing in because generating low or negative cash returns
- Two situations:
- If the DOG is completely useless and incurs losses DIVESTITURE / LIQUIDATION
- If the DOG is still profitable in the long run / useful in providing synergies for another SBUs or acting as a defense for counter competitor moves RETRENCHMENT (4) QUESTION MARK – High growth Low share
- Hold low market share in fast growing markets with high costs and losses
- Has high potential to gain market share and become STAR But also has high risk to fail and become a DOG
- Requires very close consideration to decide if they are worth investing in or not
MARKET GROWTH RATE
RELATIVE MARKET SHARE
*Market growth rate of the industry implies the potential to growth in the industry.
- High growth rate = Growing industry
- Low growth rate = Declining industry *Relative market share
- Implies the company’s position in the industry: Strong >> Moderate >> Weak
- Can be calculated as the company market share divided by its biggest competitor’s market share.
(2) LEVEL 2 – COMPETITIVE STRATEGIES
Business-level strategies are also called competitive strategies
- Cost leadership: Competing on the basis of having the lowest costs in the industry.
- Differentiation: Competing on the basis of having unique products that are widely valued by customers.
- Focus strategy: Competing in a narrow segment or niche with either a cost focus or a differentiation focus.
E13. OPENING QUESTIONS ON COMPETITIVE STRATEGIES.
- Competitive strategies are also called __________ strategies.
- For Michael Porter, there are 2 sources of competitive advantages. What are they?
- Which tool that you have learnt can help firms find their competitive advantages?
- For the case of Apple, what are their competitive advantages?
E 14. FILL IN THE BLANKS
COST LEADERSHIP
- Business level strategies are also called ______(1) strategies.
- Companies try to have the ______(2) cost compared to other competitors in the ______(3) with features which are accepted by _______ (4).
- Companies will try to _____(5) costs of inputs or increase the ______(6) in management.
- In retail industry in the US, the famous case of Cost Leadership Strategy is ________ (7).
E 15. FILL IN THE BLANKS
DIFFERENTIATION
- Companies try to create _____ (1) or _______ (2) characteristics for their product or services.
- Companies do not care much about _____ (3) and invest in _______ (4) and marketing mainly to attract _______ (5).
- An example of this strategy in laptop industry in the world is the case of ______(7).
E16. FILL IN THE BLANKS
FOCUS STRATEGY
- Firms can choose to focus on ______(1) or _______(2).
- However, firms do not compete in the whole market, they choose a specific ______(3).
- A example of focus strategy in fashion ready to wear industry in Vietnam is ______(4). It is not like the case of _____(5), Zara, UniQlo, or Canifa when they aim at _____(6).
Đáp án bài tập: E1. (1) Continuous (2) Setting (3) Establishing (4) Making (5) 5W1H E2.
- Planning sets up the goals as direction and outcomes for other activities
- Planning establishes coordinated effort
- Planning reduces uncertainty
- Planning reduces overlapping and wasteful activities
- Planning establishes the goals or standards that facilitate control E3. (1) Desired (2) Individuals (3) Groups (4) Organization (5) Direction / Orientation E4.
- Real goal of every company is the LONGTERM PROFIT MAXIMIZATION
- Because:
- Stated goals convince and persuade stakeholders (both internal and external).
- Stated goals increase brand loyalty. E5.
- I will get grade A of 8.5 in Principles of Management in the end of this semester 19-20.
- Our company will have the biggest market share of 51% in Vietnam market by 2022.
- Answer FAQs of customes within 3 minutes. E6. None of them is better because each one fits in different situations: Traditional goal setting MBO goal setting Downwards decision making: Top managers set up the goals Employees follow General goals Appropriate when: X people Make quick decisions Important goals
Combine downwards & upwards decision making Top managers set up the goals Employees involve in setting goals Specific goals Appropriate when: Y people Have time for employees to involve Operational goals E7. (1) Actions (3) Future (5) Organizing (7) Controlling (9) Attract (2) Ways (4) Process (6) Leading (8) Compete E8. The first step is the most important because it provides the platform and direction for the following step. E9.
- Related diversification: 2, 3, 4, 7, 8
- Unrelated diversification: 5
- Vertical integration: 6
- Horizontal integration: 9, 1 E10. (1) Stable (3) Weaknesses (5) Weak (7) Threats (9) Diversification (2) Strengths (4) Opportunities (6) Strengths (8) Size E11. (1) Threats (3) Downsize (5) Reduce (2) Weak (4) Branches E12.
- This company is the biggest one (market share)
- This company and the biggest rival share the biggest market share
- This company is not the biggest one in the market. The smaller to 1, the smaller market share the company has.
- You can see the figure:
E13.
- Business level
- Cost and Differentiation
- Value chain model: 10đ
- Design; R&D or technology development (IOS); Cost: outsource assembly in China to save cost E14. (1) Competitive (3) Industry (5) Reduce (7) Walmart (2) Lowest (4) Customers (6) Efficiency E15. (1) Unique (3) Cost (5) Customers (2) Special/ Differentiative (4) R&D (6) Apple E16. (1) Cost-leadership (2) Differentiation (3) Segment (4) Ivy Moda/ 7 AM/ Elise/ Viettien/ May 10/Owen,… (5) H&M (6) Everyone/all E17. Corporate level: 2, 5, 8, 9, 10 Business level (competitive): 1, 4, 7 Functional level: 3, 6
CHAPTER 7. ORGANIZING
NỘI DUNG KIẾN THỨC
- Definitions
- Organizing
- Organizing structure (O.S)
- Designing the O.S.
- Division of labor
- Departmentalization
- Chain of command
- Span of control
- Centralization or Decentralization
- Formalization
- Contemporary O.S
CHI TIẾT BÀI GIẢNG VÀ BÀI TẬP TRÊN LỚP
3. DEFINITIONS d. Organizing e. Organization structure (O.S)
E1. FILL IN THE BLANK
- Organizing is a ______(1) of _____ (2) and _____ (3) resources and designing organizational ______ (4) to achieve the goals.
- Organizational Structure (O.S) is an ______ (5) framework in which ______ (6) within the organization are divided and ______ (7). 4. DESIGNING THE ORGANIZATION STRUCTURE (O.S) e. Division of labor / Work specialization
- First defined by Adam Smith (1776) in “The Wealth of Nations”
- Dividing work activities into separate jobs / tasks
- Main advantages: Economies of specialization o Increased productivity o Staffs are more skilled and capable due to repeatly doing one task
- Disadvantages: Human diseconomies in the long run o Boredom, fatigue, stress, low productivity, poor quality, increased absenteeism, high turnover o Staffs cannot develop their abilities or explore their potential f. Departmentalization
- Definition: Departmentalization is how JOBS are GROUPED TOGETHER
- Five types of deparmentalization
- Functional Departmentalization: Grouping activities by functions performed
- Product Departmentalization: Grouping activities by major product areas
- Customer Departmentalization: Grouping activities by customer
- Geographic Departmentalization: Grouping activities on the basis of geography or territory.
- Process Departmentalization: Grouping activities on the basis of work or customer flow.
- Cross-functional Teams: Teams made up of individuals from various departments and that cross traditional departmental lines.
- Matrix structure: A structure in which specialists from different functional departments are assigned to work on projects led by a project manager. E 2. FIND THE NAME OF THE FOLLOWING STRUCTURES
Figure 1. _______________________
Figure 2. _______________________
Figure 3. _______________________
Figure 4. _______________________
Figure 5. _______________________
Figure 6. _______________________
h. Span of control
- Is the number of employees that a manager can efficiently and effectively supervise
- A manager with a large S.O.C has a lot of people under him. The smaller a manager’s S.O.C, the less subordinates he can lead.
- The span of control always involves two dimensions: o Horizontal dimension: the number of direct subordinates a manager actually supervises o Vertical dimension: the number of levels that are (in)directly managed.
- A large Span of Control leads to a flatter organisational structure, which results in lower costs.
- A small span of control creates a steeper organisational structure, which requires more managers and which will consequently be more expensive for the organisation.
E 5. ANALYZE TWO OPTIONS BELOW AND GIVE RECOMMENDATION
- A company has 4096 non managerial employees. The CEO is thinking of 2 options: Option 1: Span of control is 4 Option 2: Span of control is 8 •The jobs are simple and familiar.
E6. FILL IN THE BLANK AND ANSWER THE QUESTIONS
- This concept refers to the ____ (1) of employees that a manager can control ______ (2) and ______ (3).
- Span of control can be large or small depending on many factors. What are those factors?
- If the jobs are new and complicated, span of control should be large or small? Why?
- If the employees are Y people, span of control should be large or small? Why?
- If jobs are easy and familiar, span of control should be large or small? Why?
i. Centralization or Decentralization
- Centralization o Top managers hold the power in their hands o Centralization is the degree to which decision making takes place at upper levels of the organization.
- Decentralization o Lower level managers have or involve in decision making o Decentralization is the degree to which lower-level managers provide input or actually make decisions.
- The two concepts is linked to traditional and MBO goal setting o None of them is better o However, many firms today want to develop the flexibility and apply decentralization j. Formalization
- Formalization refers to how standardized an organization’s jobs are and the extent to which employee behavior is guided by rules and procedures.
- Example: In Japanese firm, there are many rules such as choosing clothes, not taking phone to work, etc.
- It depends whether high or low formalization is better.
Đáp án bài tập: E1. (1) process (3) coordinating (5) official (7) grouped (2) allocating (4) structure (6) jobs E2. Fig.1. Functional Fig.3. Geographic Fig.5. Customer Fig.2. Product Fig.4. Process Fig.6. Cross-functional E3.
- Vietnamese SMEs suit the Functional departmentalization structure because:
- SMEs have limited capital and number of employees
- They do not have wide product ranges or branches
- They can have efficiency from putting together similar specialties and people
- They can coordinate well within functional areas
- They can have in-depth specialization
- Big corporation suit the Product, Geographic, Customers and Cross functional structures. Because they have wide product ranges or branches or customers and many projects or SBUs. E4. (1) Line (4) Authority (7) Support/assistant/cooperation (2) Top/highest (5) Responsibility (8) Unity of command (3) Bottom/lowest (6) Direction (9) Acceptance of authority E5.
Option 1: 1 manager controls 4 employees 6 levels of management 1365 managers Option 2: 1 manager controls 8 employees 4 levels of management 585 managers
ANALYSIS Option 1: Because there are more levels of management and more managers, so: The organizational structure is more complicated and power distance is further. Higher costs for payment to the managers But also higher level of control Option 2: Because there are fewer levels of management and managers, so The organization structure is simpler and power distance is nearer Lower costs for payment to the managers RECOMMENDATION Since it is stated that the jobs are simple and familiar Employees can do it themselves So option 2 is more beneficial Should choose option 2 E6.
1. (1) number (2) efficiently (3) effectively
2. S.O.C can be large or small, depending on 6 main factors: (1) Abilities of managers (2) Abilities of employees (3) Nature of the jobs: similarity – complexity – standardization (4) Technology (5) Organization culture (6) Leadership 3. If the jobs are new and complicated: Small S.O.C Managers can instruct and control closely to ensure the jobs are well done 4. If the employees are Y people: Large S.O.C Because according to Theory Y, employees are highly capable, need litle supervision and can be left on their own The employees have the ability and responsibility to do the jobs. 5. If the jobs are easy and similar: Large S.O.C Because employees can do the jobs themselves. E7.
- Matrix Organizational Structure as there is it is a mix of the functional organizational structure and the projectized organizational structure.
- The principle of unity of command
