IMPACT OF PLANNING SYSTEMS ON MANAGERIAL BEHAVIOUR

What do the "star", "cash cow", "problem child" and "dog" categories, or for

that matter, above average, average and below average rankings have to

do with unethical managerial behaviour? They are determinants, given the

objectives of the strategic planning models.

a. Think for a minute of the possibility of a business unit being ranked below

average on either industry attractiveness or company strength; what will

happen to that unit? Lack of investment and a "wait and see" attitude on

the part of corporate management are the best we can expect;

disinvestments and eventual sale or dissolution, are the most likely

outcomes.

b. What will happen if a business unit is positioned in the "dog" category? It

will be "harvested" generally through sale or dissolution of assets. The sale

and subsequent merger of a business unit brings a degree of personal

trauma, and the very real chance of dismissal in cost-cutting efforts by the

new owner.

Is it possible to avoid the below average ranking or the cash cow and dog

categories? Yes, simply by increasing quarterly profits as a return on sales or as a

return on the capital employed. In the GE planning matrix:

a. Profitability has a direct influence on the measurement of industry

attractiveness through the input factors of historical margins and

competitive intensity, accounting for 30 percent of the weightings.

b. Profitability has an indirect influence on the measurement of company

strengths through input factors of product quality, brand reput ation,

promotional effectiveness and product efficiency, accounting for 35 percent

of the weightings.

In the BCG planning matrix, high profits are assumed to be the result of high

market share and high market growth. Consequently, the markets served by a

given SBU are segmented and redefined until profit, growth and share figures

are consistent.