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thereby adding variety to its own online offerings. Recent acquisitions include
YouTube, a leader in online video sharing, Postini, a leader in communications-
security products, and Double Click, a leader in online advertising services.
Strategic alliances include those with foreign online service providers that offer
Google searches on their sites.
For the immediate future, at least, Google plans on following its basic proven
recipe for success, competing head to head with financial-service providers for
stock information and with iTunes for music and videos. Also committed to the
in-house development of new features and services, Google spent $2 8 billion on
R&D in 2012 (up from $1 2 billion in 2006) and another $1 billion to acquire new IT
assets. Innovations in the works include an automated universal language
translator for translating documents in any language into any other language
and personalized home pages that will allow users to design automatic searches
and display the results in personal “newspapers.”
Nobody knows for sure what else is on the drawing board. In fact, outsiders—
notably potential investors—often criticize Google for being a “black box” when
they want a few more details on Google’s long-range strategy. “We don’t talk
about our strategy,” explains Page, “… because it’s strategic. I would rather
have people think we’re confused than let our competitors know what we’re
going to do.”
1
Strategic thinking is at the heart of effective management in any business, including old-
line industrial giants like Ford and General Electric to newer web-based businesses such
as Google and Yahoo!. This chapter discusses how organizations manage strategy and
how managers engage in strategic planning. As we note in Chapter 1, planning and deci-
sion making comprise the first managerial functions that organizations must address.
This chapter is the first of three that explore planning and decision making.
PLANNING AND ORGANIZATIONAL GOALS
The planning process itself can best be thought of as a generic activity. All organizations
engage in planning activities, but no two organizations plan in exactly the same fashion.
Figure 3.1 is a general representation of the planning process that many organizations
attempt to follow. But although most firms follow this general framework, each also has
its own nuances and variations.
2
As Figure 3.1 shows, all planning occurs within an environmental context. If
managers do not understand this context, they are unable to develop effective plans.
Thus, understanding the environment is essentially the first step in planning. Chapter 2
covered many of the basic environmental issues that affect organizations and how they
plan. With this understanding as a foundation, managers must then establish the organi-
zation’s mission. The mission outlines the organization’s purpose, premises, values, and
directions. Flowing from the mission are parallel streams of goals and plans. Directly
following the mission are strategic goals. These goals and the mission help determine
strategic plans. Strategic goals and plans are primary inputs for developing tactical
goals. Tactical goals and the original strategic plans help shape tactical plans. Tactical
plans, in turn, combine with the tactical goals to shape operational goals. These goals
and the appropriate tactical plans determine operational plans. Finally, goals and plans
at each level can also be used as inputs for future activities at all levels.
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