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CHAPTER EIGHT THE MANAGER AS A PLANNER AND A STRATEGIST OVERVIEW OF THE CHAPTER In an uncertain competitive environment, managers must engage in thorough planning to find strategies that will help their organization to compete effectively. This chapter explores the manager’s role as both planner and as strategist. It discusses various elements of the planning process, different kinds of plans, strategy formulation, and the challenge of strategy implementation. This chapter also contains a detailed explanation of SWOT analysis and Michael Porter’s business level strategies. LEARNING OBJECTIVES 1. Describe the three steps of the planning process and the relationship between planning and strategy. 2. Explain the role of planning in predicting the future and in mobilizing organizational resources to meet future contingencies. 3. Outline the main steps in SWOT analysis . 4. Differentiate among corporate-level, business-level, and functional-level strategies . 5. Describe the vital role played by strategy implementation in determining a manager’s ability to achieve an organization’s mission and goals. A MANAGER’S CHALLENGE: HOW TO COMPETE IN THE SOFTDRINK INDUSTRY This case compares the strategies used by Pepsi and Coke to those used by Gerald Pencer, a Canadian entrepreneur, to compete in the soft drink industry. Both Pepsi and Coke decided to build global brands by manufacturing soft-drink concentrate and selling it in a syrup form to bottlers throughout the world. Pepsi and Coke charge a premium price for the syrup and invest part of the proceeds into advertising to build and maintain brand awareness. The bottlers, who are responsible for producing and distributing the cola, must sign an exclusive agreement that prohibits them from distributing competing brands. On the other hand, Pencer’s strategy was to produce a low-price cola that was manufactured and bottled by his own company, the Cott Corporation, and sell directly to major retail establishments as a private-label “house-brand.” He implemented his plan in Canada and quickly expanded to the U.S. Retailers are attracted to Cott’s brand because it allows them to make 15 percent more profit than they receive from selling Coke or Pepsi. Pencer spends no money on advertising and takes advantage of the efficient distribution systems of national retailers such as Wal-Mart. So successful has Cott been in capturing the low price end of the market that it has squeezed the profit margins of its giant rivals. Pepsi and Coke find it difficult to raise prices and often offer their products at sale prices, for fear that customers will switch to lower cost private label colas. LECTURE OUTLINE Jones, Contemporary Management, Fourth Edition 171
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CHAPTER EIGHT THE MANAGER AS A PLANNER AND STRATEGIST I. THE PLANNING PROCESS The Planning Process Planning is a process that managers use to identify and select appropriate goals and courses of action for an organization. The organizational plan that results from the planning process details how managers
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