Chapter 4: Planning

Topic 1: Planning

You may think “planning” is relevant to large companies, but not something that’s
relevant to you right now. But when you figure out your class schedule for the next term
or when you decide what you need to do to finish a class project on time, you’re
planning. Planning is something that all managers need to do. Although what they plan
and how they plan may differ, it’s still important that they do plan. In this chapter, we
present the basics: what planning is, why managers plan, and how they plan. In a fast-
changing competitive environment, managers must continually evaluate how well their
products are meeting customer needs, and they must engage, in systematic planning to
find new strategies to tailor their products to better meet those needs.

This chapter explores the manager’s role both as a planner and as a strategist. After you
study this chapter, you will be able to use English to:

 Explain the planning process.

 Identify the types of strategies in an organization.

So we have 2 topics for this chapter which are titled planning and strategy.

For topic 4.1 - planning we will know three main steps of the planning process: Firstly,
determining an organization’s mission and major goals, secondly, choosing or
formulating strategies to realize the mission and goals, and thirdly, selecting the most
effective ways to implement and put these strategies into action.

We also examine several techniques, such as scenario planning and SWOT analysis, that
can help managers improve the quality of their planning; and we discuss a range of
strategies managers can use to give their companies a competitive advantage over their
rivals. By the end of this chapter, you will understand the vital role managers carry out
when they plan, develop, and implement strategies to create a high-performing
organization.
For the topic 4.2 - strategies, firstly we define what strategy is and its roles. Then, we
discuss the four ways to create a competitive advantage. And final the types of strategies
are distinguished in the topic.

Now we are starting to learn topic 4.1 – planning.

First – What is planning?

Planning involves defining the organization’s goals, establishing strategies for achieving
those goals, and developing plans to integrate and coordinate work activities. It’s
concerned with both ends (what) and means (how). When we use the term planning, we
mean formal planning. In formal planning, specific goals covering a specific time period
are defined. These goals are written and shared with organizational members to reduce
ambiguity and create a common understanding about what needs to be done. Finally,
specific plans exist for achieving these goals.

Second – Why do managers plan?

Almost all managers participate in some kind of planning because they must try to predict
future opportunities and threats and develop a plan and strategies that will result in a high
performing organization. Planning seems to take a lot of effort. So why should managers
plan? I can give you at least four reasons:

1. Planning provides direction to managers and nonmanagers alike. When employees

know what their organization or work unit is trying to accomplish and what they must
contribute to reach goals, they can coordinate their activities, cooperate with each other,
and do what it takes to accomplish those goals. Without planning, departments and
individuals might work at cross- purposes and prevent the organization from efficiently
achieving its goals.

2. Planning reduces uncertainty by forcing managers to look ahead, anticipate change,

consider the impact of change, and develop appropriate responses. Although planning
won’t eliminate uncertainty, managers plan so they can respond effectively.
3. Planning minimizes waste and redundancy. When work activities are coordinated
around plans, inefficiencies become obvious and can be corrected or eliminated.

4. Planning establishes the goals or standards used in controlling. When managers plan,
they develop goals and plans. When they control, they see whether the plans have been
carried out and the goals met. Without planning, there would be no goals against which to
measure work effort.

For example, the FLC Group’s Bamboo Airways have plan to conduct its first flight to
Ibaraki, Japan, on April 29, creating a driving force for the development of cooperation
between the locality and Vietnam in areas where Ibaraki holds strengths.

In opening flights to Ibaraki, Bamboo Airways expects to create new impetus to promote
cooperation between Vietnam and Ibaraki in a range of fields, especially strong areas for
the prefecture such as agriculture, tourism and trade, while strengthening cooperation
between Vietnam and Japan in general.

With the goal of serving increasing travel needs and promoting tourism, trade, and
cultural exchange between the two countries, Bamboo Airways will coordinate with
travel companies to operate charter flights to Ibaraki. This is a modern form of air
transport, bringing benefits to all parties, ensuring operating capacity for airlines, and
providing standard services at the best price. After the first flight to Ibaraki on April 29,
Bamboo Airways is expected to continue to expand coverage to many other Japanese
destinations such as Okinawa, Fukushima, Wakayama, and Komatsu.

In large organizations planning usually takes place at three levels of management:

corporate, business or division, and department or functional. The corporate-level plan
contains top management’s decisions concerning the organization’s mission and goals,
overall (corporate-level) strategy, and structure. Corporate-level strategy specifies in
which industries and national markets an organization intends to compete and why. In
general, corporate-level planning and strategy are the primary responsibility of top or
corporate managers.
The corporate-level plan provides the framework within which divisional managers
create their business-level plans. At the business level, the managers of each division
create a business-level plan that details (1) the long-term divisional goals that will allow
the division to meet corporate goals and (2) the division’s business-level strategy and
structure necessary to achieve divisional goals. Business-level strategy outlines the
specific methods a division, business unit, or organiza- tion will use to compete
effectively against its rivals in an industry.

At the functional level, the business-level plan provides the framework within which
func- tional managers devise their plans. A functional-level plan states the goals that the
managers of each function will pursue to help their division attain its business-level
goals, which, in turn, will allow the entire company to achieve its corporate goals.
Functional-level strategy is a plan of action that managers of individual functions (such
as manufacturing or market- ing) can follow to improve the ability of each function to
perform its task-specific activities in ways that add value to an organization’s goods and
services and thereby increase the value customers receive.

In the planning process, it is important to ensure that planning across the three different
levels is consistent—functional goals and strategies should be consistent with divisional
goals and strategies, which, in turn, should be consistent with corporate goals and
strategies, and vice versa. When consistency is achieved, the whole company operates in
harmony; activities at one level reinforce and strengthen those at the other levels,
increasing efficiency and effectiveness. To help accomplish this, each function’s plan is
linked to its division’s business- level plan, which, in turn, is linked to the corporate plan.

One of the most widely used planning methods or techniques that can help managers
create plans that have these qualities is scenario planning. Scenario planning (also known
as contingency planning) is the generation of multiple forecasts of future conditions
followed by an analysis of how to respond effectively to each of those conditions.
For example, Farmers use scenarios to predict whether the harvest will be good or bad,
depending on the weather. It helps them forecast their sales but also their future
investments.

Military institutions use scenario planning in their operations to cope with any unlikely
situations, anticipating the consequences of every event. In this case, scenario planning
can mean the difference between life and death.

Scenario planning might not have such dire consequences in your organization, but if not
done, you risk opening the door to increased costs, increased risks, and missed
opportunities.

After the company has plan to do, the manager should bring structure and trackability
into your goals and objectives. In stead of vague resolutions, SMART goal setting creates
verifiable trajectories towards a certain objective, with clear milestones and an estimation
of the goal's attainabililty. Every goal or objective, from intermediary step to overarching
objective, can be made S.M.A.R.T. and as such, brought closer to reality. To make your
goal S.M.A.R.T., it needs to conform to the following criteria: Specific, Measurable,
Attainable, Relevant and Timely.

The S stands for specific. It helps to remind you to write down what you want to do,
using action words. For example, instead of saying, “I want more clients,” you might say,
I’m going to sign up four new clients. Being specific and using action verbs focuses you
on what exactly you need to do.

The M in a SMART goal helps you clarify and quantify your efforts. In the example
above, you could have said that you want to sign up new clients. By adding the number
four, you now have a measurement you can use to focus your effort and track your
progress toward your goal.

The A stands for achievable, which some refer to as attainable. In either case, the A
reminds you to check to make sure the goal is within reach. Research shows that people
are motivated by goals that stretch them as long as they’re not unrealistic. Let’s assume,
for example, four new clients is an achievable goal.

The R stands for relevant and may spur you to challenge your thinking. If your overall
business plan calls for increasing profitability, perhaps new customers aren’t what you
need. You may need to focus on retention of existing customers, price increases, or
expense reductions instead. Make sure the goal you set makes sense for you.

The T references the time aspect of your goal. Some refer to is as timely. What it reminds
you to do is set an end date or time frame for achieving your goal. Four new customers
are fine, but if you don’t set a time frame, will you be satisfied with four customers a year
when you meant to sign up four customers a month?

For example:

• Specific: Win six projects per month

• Measurable: The number of projects is obvious, but we know to get to six, we

need to have 12 proposals, 24 pitches, and 48 warm prospects

• Attainable: Last year we averaged 5.2 projects per month, and we have been
growing at 20%, so a growth rate of 15% felt very attainable

• Relevant: The number and size of the projects we win each month ties directly to
our top and bottom line

• Time-bound: We measure our performance monthly―incredibly important for

staffing and contingency planning

This broader definition will help you to be successful in both your business and personal
life.

Next part, I will introduce to you the SWOT analysis. A SWOT analysis is designed to
facilitate a realistic, fact-based, data-driven look at the strengths and weaknesses of an
organization, its initiatives, or an industry. The organization needs to keep the analysis
accurate by avoiding pre-conceived beliefs or gray areas and instead focusing on real-life
contexts. Companies should use it as a guide and not necessarily as a prescription.

SWOT analysis is a planning exercise in which managers identify internal organiza-

tional strengths (S) and weaknesses (W) and external environmental opportunities (O)
and threats (T). Based on a SWOT analysis, managers at the different levels of the
organization select the corporate, business, and functional strategies to best position the
organization to achieve its mission and goals (see Figure 8.5). In Chapter 6 we discussed
forces in the task and general environments that have the potential to affect an
organization. We noted that changes in these forces can produce opportunities that an
organization might take advantage of and threats that may harm its current situation. The
first step in SWOT analysis is to identify an organization’s strengths and weaknesses. The
task facing managers is to identify the strengths and weaknesses that char- acterize the
present state of their organization.

The second step in SWOT analysis begins when managers embark on a full-scale SWOT
planning exercise to identify potential opportunities and threats in the environment that
affect the organization now or may affect it in the future.

This is the end of the part 4.1 about concept of planning, three main steps of planning,
SMART, SWOT analysis. I hope you have a good time.