Functions of Planning and Organization: American Express

Introduction

Planning and organization form the foundation of any successful company. For American Express, prior planning and strong management have made it possible for the organization to enjoy its current state of affairs. This article strives to explain how planning and organization functions have enabled the organization to cope with both internal and external environments.

Planning

Planning is an organizational activity that allows management to allocate resources (Labor, capital, machinery, materials, and technology) in line with company goals and objectives. The organization executive committee sets organization goals and objectives. The committee uses SMART (Specific, Measurable, Achievable, Realistic, and Time-bound) criteria to set goals and objectives. While planning, American Empress’ management has precisely shifted their attention to meeting the organization’s goals continuously. These goals and objectives outline immediate targets, medium-term targets, and long-term targets. The company revises its targets periodically to deal with changing internal and external environments as shown below. On the other hand, planning helps the company to develop its strategy and map out plans to implement them.

Internal Environment

To understand the American Express internal environment, the article carries out a SWOT analysis. SWOT stands for Strength, Weakness, Opportunity, and Threats. American express strength is founded on its rich history and strong brand name that is known globally. The ability of the company to focus on one product line (Production of Credit Cards) has enhanced its reputation through adopting the up-to-date state-of-the-art. The organization’s research and development managers (R&D) earnestly search for new opportunities for future company expansion. The expansion of international trade, especially in the developing world, presents the new potential to the company. Adoption of new technologies has also enabled the company to fight off competition by producing superior products (Luca, 2010). On the other hand, emerging firms such as Visa, MasterCard, and Discover that offers substitute products threaten the company’s dominance. American Express is vested in its inability to tap into a foreign market with ease.

External Environment

American express enjoys a viable external environment characterized by the prevalence of a stable political atmosphere in the US, a strong economic foundation; America has become an economic hub for the international market. The economy also enjoys a stable exchange rate and a stable currency that promotes foreign trade. America being a cosmopolitan country helps people from across the globe to trade with it. In addition, the freedom of worship exercised in the US is an additional impetus for the international market. Finally, the strong financial supports help the American economy to invest in the latest technological breakthrough. Considering that America is one of the most industrialized countries furnishes the company with the best know-how. Kotler (1990) invites all firms to adapt to the external environment rather than try to mold it to fit their operations.

American Express uses strategic planning as the means to an end, the end being becoming the world-leading to quality production, customer satisfaction, and profit earner. Ample planning enables the company to remain focused on its performance, productions, and its commitment to satisfy customers profitably. Moreover, proper planning is an incentive to promote staff and eradicate redundancy by stipulating targets to meet the outlined goals.

Organization

The organization is yet another momentous management component that directs how the organization runs. American Express uses a multilevel organization structure to suit its international scope. The organization adopts hierarchical and matrix structures to fit in some specific management areas. The structure adopted helps the company to meet its strategic plan effectively. Furnham and Gunter (1993) highlight that organization structure streamlines the firm’s communication and fosters accountability. Regardless of the structure employed the company controls the entire operations within the instituted communication line.

American Express uses straight-line communication and accountability where orders flow from top to bottom while accountability assumes a reverse trend. Rainey (2009) contends that organizational structure imposes the political order within the organization. The political order eventually forms part of the organization’s culture. The straight-line command has been effective in enhancing accountability since each subordinate is answerable to his/her immediate senior.

Departmentalization

The American Express company is further subdivided into departments such as Finance, Logistics, international sales, human resources, marketing among others. Departmentalization helps the company to reduce the scope of operation as well as reduce overlapping of staff duties. Each department has a specific mandate and a target to meet. Asopa (1997) asserts that departmentalization paves room for the specialization of duties, enhances cohesion, and fosters integration in the entire organization.

Span of Control

American Express has managed to divide duties for each department as well as for each staff. The CEO overlooks the operation of the entire, below is an executive board that designs company strategies. The managing directors have

mandates and limited scope of operation. Similar mandates apply to other line managers who have specialized duties and limited scope of operation. Meier and Bohte (2003) outline that the span of operation demonstrates the relationship between leaders and subordinates. He further argues that a narrow span of leadership increases efficiency because the leader concentrates on a few subordinates.

Conclusion

Planning and management functions form the helm of any organization. American Express has precisely used the two to develop its competitive strategy. The two management function needs proper planning to ensure the organization remains focused on its core competencies. As outlined above, planning should be accompanied by realistic and attainable goals. On the other hand, the organization should assume a design that illustrates the command line, span of control, and departmentalization. Without proper planning, no organization can withstand stiff competition.

References List

Asopa V.N. (1997). Management of Agricultural Research: A Training Manual. Module 3: Organizational Principles and Design. Rome: Fao.

Furnham, A and Gunter, B. (1993). Corporate Assessment: Auditing A Company’s Personality. New Jersey: Routledge publishers.

Kotler, N. G. (1990). Sharing Innovation: Global Perspective on Food, Agriculture, and Rural Development: London: Smithsonian Institution Press.

Luca A.M. (2010). Swot Analysis. Web.

Meier, K. J and Bohte, J. (2003). Span of Control And Public Organization: Implementing Luther Gulick’s Design. Public Administration Review: (63), 1.

Rainey, H.G. (2009). Understanding and Managing Public Organization. New York, NY: John Wiley and Sons Publishers.