Page 194 - Introduction to Business

168 PART 2 Managing Business Behavior

EXHIBIT 5.1
Strategic Analysis: Whirlpool Goes to China

Company vision Company strategic Strategy Strategy
or mission goal or goals formulation implementation

“Every Home…Everywhere” Expand and develop Concentrate on clothes Build Whirlpool washing
international business; washing machines; machine factory in Huainan
develop and expand concentrate on Chinese during the next two years—
business in world’s most heartland cities like tactical plan; improve
populous country which Huainan, with 2.1 million Whirlpool marketing display
has a growing middle people. at Hualian Commercial store,
class—China. Huainan, China, so that
within three months store
sales of Whirlpool clothes
washing machines will be
at least 36–37 per month—
operational plan.

reality If you were going to start a business selling magazine subscriptions to
CH ECK students at your college, what might an initial environmental analysis
for this business involve?

LEARNING OBJECTIVE 2
Discuss the special planning elements of succession planning, innovation planning,
and contingency and crisis planning.

Special Planning Elements. The strategic planning process contains three
parts, or elements, that deserve and receive special and separate attention. They are
succession planning, innovation planning, and contingency and crisis planning.

succession planning Planning related SUCCESSION PLANNING. Succession planning involves planning about choosing
to choosing successors for top successors for top company executives. Most companies have what the former Gen-
organization executives
eral Electric Company CEO Jack Welch called “hit by a truck” succession plans. 12
Such plans frequently involve depth charts, much like royal orders of succession in
countries with monarchies. These charts list in what order various top managers will
move into the company’s CEO and other top executive spots should an accident, like
a plane crash, occur, killing or incapacitating the company’s CEO or other top offi-
cial. Some companies require that certain top executives never travel together, just
as the president and vice president of the United States never fly on the same air-
plane together. Many companies also carry, for the benefit of the company, large life
insurance policies on the lives of their CEO and other top executives.
Another, more controversial type of succession planning involves comprehen-
sive planning regarding which individual is going to succeed the firm’s top execu-
tive. Some CEOs strongly resist naming and grooming a successor and setting a
specific date for their own retirement. Moreover, some boards of directors are reluc-
tant to set up an explicit horse race for the top slot, lest it attract unnecessary pub-
licity and promote unnecessary rivalries within the firm.
In contrast, other CEOs and corporate boards embrace a strong and explicit
CEO succession planning process. Jack Welch, for example, started a comprehen-
sive CEO succession plan at GE in 1994, seven years in advance of his planned 2001
retirement. The so-called NG (for New Guy) process became the biggest job of GE’s
senior vice president for human resources and initially involved 23 (all internal)
candidates. Ultimately, the CEO horse race came down to three candidates: Jeff

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