The Manager as a Planner and Strategist

Describe the three steps of the planning process. • Explain the relationship between planning and strategy. • Explain the role of planning in predicting the future and in mobilizing organizational resources to meet future contingencies. • Outline the main steps in SWOT analysis.
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The Manager as a Planner and StrategistChapter 8The Manager as a Plannerand StrategistLearning ObjectivesAfter studying this chapter, youshould be able to: • Describe the three steps of the • Differentiate among corporate-, planning process. business-, and functional-level strategies. • Explain the relationship between planning and strategy. • Describe the vital role played by strategy implementation in • Explain the role of planning in determining managers’ ability to predicting the future and in achieve an organization’s mission mobilizing organizational resources and goals. to meet future contingencies. • Outline the main steps in SWOT analysis.A Manager’s Challenge UPS Battles FedExWhat is the best way to compete in anindustry?In 1971, Federal Express (FedEx) turned thepackage delivery world upside down when itbegan to offer overnight package delivery byair. Its founder, Fred Smith, had seen theopportunity for next-day delivery becauseboth the U.S. Postal Service and United Par-cel Service (UPS) were, at that time, takingseveral days to deliver packages. Smith wasconvinced there was pent up demand forsuch a unique new service, overnight deliv-ery, and he was also convinced that cus-tomers would be willing to pay a high pre-mium price to get it, at least $15 a package atthat time.1 Smith was right, customers werewilling to pay high prices for fast reliable The “bricks and mortar” store and “virtual” storefront of bookseller Barnes and Noble. As of 2001, Barnes and Noble had still not yetdelivery; when he discovered and tapped into made a profit from its on-line activities and the company as a whole was experiencing losses.an unmet customer need, he redefined thepackage delivery industry. Several companies imitated FedEx’s new ness. A few, like Airborne Express, managedstrategy and introduced their own air over- to survive by focusing or specializing onnight service. None, however, could match serving the needs of one particular group ofFedEx’s efficiency and its state-of-the-art customers—corporate customers—and byinformation systems which allowed continu- offering lower prices than FedEx. Its strategyous tracking of all packages while in transit. earned FedEx huge returns through theSeveral of its competitors went out of busi- 1980s, even though the costs of operating its252 Chapter Eightvast air delivery system were, and still are, integrated its overnight air service into thisvery high. nationwide delivery service and now has a Previously only a road delivery package seamless interface between these two differ-service, in 1988 UPS initiated an overnight air ent aspects of its business. This has given it adelivery service of its own.2 UPS managers competitive advantage over FedEx becauserealized that the future of package delivery lay UPS can more efficiently deliver short-rangeboth on the road and in the air because differ- and mid-distance packages, those around 500ent customer groups, with different needs miles, than FedEx, as well as match FedEx’swere emerging. It began to aggressively imi- long-range operations. Moreover, UPS cantate FedEx’s operating and information sys- also offer customers lower prices because ittems, especially its tracking systems. Slowly has lower costs than FedEx.and surely UPS increased the number of In 2000 FedEx delivered 3 million overnightovernight packages that it was delivering but packages and had a 39 percent market shareit was still way behind FedEx. Even its well- compared to UPS’s 2.2 million packages; butdeveloped, highly efficient road delivery sys- while UPS’s overnight business was growingtem that could reach every customer in the at 8 percent FedEx’s was growing at 3.6 per-United States—its major strength—was not cent.3 Some analysts believe that the effi-really helping it to catch up. ciency and flexibility of UPS’s delivery sys- Then, in 1999, UPS announced two major tems will make it the market leader in eveninnovations: First, it introduced a new tracking overnight delivery (it already is in surfaceand shipping information system which package delivery) and that it is the companymatched, and even exceeded, the sophistica- poised to become the global leader this cen-tion of that used by FedEx because it could tury. No ...