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corporate strategic planning
Definition
Systematicprocessof determining goalsto be achieved in the foreseeable future. It
consists of: (1) Management'sfundamentalassumptionsabout the future economic,
technological, and competitiveenvironments. () Setting of goals to be achieved !ithin
a specified timeframe. (") #erformanceof S$%& analysis. () Selecting main and
alternative strategiestoachievethe goals. () ormulating, implementing,
and monitoringthe operationalor tactical plansto achieve interim ob*ectives.
+ead more: http:!!!.businessdictionary.comdefinitioncorporate-strategic-planning.htmli/002poI32e
Mission and Vision Statements in StrategicPlanning
There are various issues to consider in making an organizational strategic plan. Strategic plans oftenmean a change in organizational structure or a move toward change. Change can be a difficult processand sometimes requires time. It is important to get employees on board with the decision making process.
This can be articulated through the mission and vision statement of the organization. Articulating andrepeating the positives of the move toward change in the organization will help employees stay engagedand motivated in the process.
Strategic Planning
Change is an essential component of strategic planning. This involves moving the organization or
program forward to create or change something. Some plans are created out of the need for the
organization to move in a certain direction and other plans develop organically. !ission and vision
statements will be important to help communicate the goals of the plan to employees and the public.
Mission Statement
"eaders should emphasize the current mission statement to employees which clarifies the purpose and
primary measurable ob#ectives of the organization. A mission statement is meant for employees and
leaders of the organization. Strategic plans may involve changing the mission statement to reflect a new
direction of the organization. $ighlighting the benefits of the change and minimizing the deficits will help
employees and the public buy into the change.
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Vision Statement
Like mission statements, vision statements help to describe the organization's purpose.
Vision statements also include the organization values. Vision statements give direction for
employee behavior and helps provide inspiration. Strategic plans may reuire a marketing
strategy, !hich could include the vision statement to also help inspire consumers to !ork!ith the organization.
Purpose and "ene#ts
Strategic planning !ill likely have its successes and failures. Leaders should celebrate the
little successes to!ard meeting ob$ectives, !hich are part of the mission and vision
statement. %he mission statement !ill help measure !hether the strategic plan aligns !ith
the overall goals of the agency. %he vision statement helps to provide inspiration to
employees. &mployees !ho feel invested in the organizational change are more likely to
stay motivated and have higher levels of productivity.
onsiderations
( successful change !ill involve communicating and repeating mission and vision
statements, !hich helps prevent people from becoming discouraged in the event of small
failures along the !ay. Leaders should continue to highlight the strengths of the strategic
plans and involve important stakeholders in the process. &ngaging employees and
volunteers !ill help them to recognize and take o!nership of the change. )nvolving
employees also helps to provide more minds to prevent possible problems.
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First, mission and vision provide a vehicle for communicating an organizations purpose and values
to all key stakeholders. Stakeholders are those key parties who have some influence over the
organization or stake in its future. You will learn more about stakeholders and stakeholder analysis
later in this chapter; however, for now, suffice i
*hat )s the +ole of Leadership in Strategic)mplementation
Implementing corporate strategy requires a team effort headed by your organization%s leadership team.&ach person involved in change management has their responsibilities and it is important for the entireorganization to understand the role of leadership in strategic implementation to make delegatingresponsibility more effective.
)nvolvement
Strategic implementation of any kind of new company policy or program requires participation from all of
the departments that will be affected. Company leadership needs to identify what those departments are
and create an implementation team that consists of representatives from each affected group.
!anagement needs to create a structure that identifies various group leaders the responsibilities of those
group leaders and an accountability system that insures that the implementation team meets its timetablefor getting the new program or policy in place.
)nterest
Implementing change or any new strategy within a company requires a feeling of urgency on the part of
the entire company. It is the #ob of management to create that urgency by e'plaining to the staff why the
implementation is necessary. "eadership needs to help the employees understand how the company
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benefits from the new implementation but it also needs to get the organization to see the setbacks of not
making a change.
Monitoring
Strategic implementation within a company is not an e'act process. It is a dynamic procedure that needsto be monitored by management and altered to meet implementation goals. It is the responsibility of
leadership to put a monitoring system in place analyze the data that is being generated during the
implementation and make any necessary changes to make the implementation more efficient.
-et Step
Implementing a corporate strategy or change is often done in phases. The company leadership needs to
be able to identify when each phase of a strategic implementation is complete and be ready to transition
the company to the ne't phase. (or e'ample if the company is bringing in a new software program for
customer management then the first phase of the program may be to implement it in the sales
department. !anagement needs to identify when the proper alterations to the software have been made
that will allow it to be implemented in other parts of the company.
Author of the Smart ) (ast mini*course " trategic Management"
View more slides
Smart Executive
Results-based Leadership
Articulate Your Vision
Set Stretch Goals
Leadership vs !anagement
!a"or Leadership St#les
Leadership Attributes
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QuickMBA/ Strategy/ Levels of Strategy
$ierarchical "evels of Strategy
Strategy can be formulated on three different levels+
corporate level
business unit level
functional or departmental level.
,hile strategy may be about competing and surviving as a firm one can argue thatproducts not corporations compete and products are developed by business units. Therole of the corporation then is to manage its business units and products so that each iscompetitive and so that each contributes to corporate purposes.
Consider Te'tron Inc. a successful conglomerate corporation that pursues profitsthrough a range of businesses in unrelated industries. Te'tron has four core businesssegments+
Aircraft * -/ of revenues
Automotive * 0/ of revenues
Industrial * -1/ of revenues
(inance * 2/ of revenues.
,hile the corporation must manage its portfolio of businesses to grow and survive thesuccess of a diversified firm depends upon its ability to manage each of its product
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lines. ,hile there is no single competitor to Te'tron we can talk about the competitorsand strategy of each of its business units. In the finance business segment fore'ample the chief rivals are ma#or banks providing commercial financing. !anymanagers consider the business level to be the proper focus for strategic planning.
Corporate Level Strategy
Corporate level strategy fundamentally is concerned with the selection of businesses inwhich the company should compete and with the development and coordination of thatportfolio of businesses.
Corporate level strategy is concerned with+
3each * defining the issues that are corporate responsibilities4 these might
include identifying the overall goals of the corporation the types of businesses inwhich the corporation should be involved and the way in which businesses willbe integrated and managed.
Competitive Contact * defining where in the corporation competition is to belocalized. Take the case of insurance+ In the mid*5116%s Aetna as a corporationwas clearly identified with its commercial and property casualty insuranceproducts. The conglomerate Te'tron was not. (or Te'tron competition in theinsurance markets took place specifically at the business unit level through itssubsidiary 7aul 3evere. 8Te'tron divested itself of The 7aul 3evere Corporationin 5119.:
!anaging Activities and ;usiness Interrelationships * Corporate strategy seeksto develop synergies by sharing and coordinating staff and other resourcesacross business units investing financial resources across business units andusing business units to complement other corporate business activities. Igor
Ansoff introduced the concept of synergy to corporate strategy.
!anagement 7ractices * Corporations decide how business units are to begoverned+ through direct corporate intervention 8centralization: or through moreor less autonomous government 8decentralization: that relies on persuasion andrewards.
Corporations are responsible for creating value through their businesses. They do so bymanaging their portfolio of businesses ensuring that the businesses are successfulover the long*term developing business units and sometimes ensuring that eachbusiness is compatible with others in the portfolio.
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Business Unit Level Strategy
A strategic business unit may be a division product line or other profit center that canbe planned independently from the other business units of the firm.
At the business unit level the strategic issues are less about the coordination ofoperating units and more about developing and sustaining a competitive advantage forthe goods and services that are produced. At the business level the strategyformulation phase deals with+
positioning the business against rivals
anticipating changes in demand and technologies and ad#usting the strategy toaccommodate them
influencing the nature of competition through strategic actions such as vertical
integration and through political actions such as lobbying.
!ichael 7orter identified three generic strategies8cost leadership differentiationand focus: that can be implemented at the business unit level to create a competitiveadvantage and defend against the adverse effects of the five forces.
Functional Level Strategy
The functional level of the organization is the level of the operating divisions and
departments. The strategic issues at the functional level are related to businessprocesses and the value chain. (unctional level strategies in marketing financeoperations human resources and 3)< involve the development and coordination ofresources through which business unit level strategies can be e'ecuted efficiently andeffectively.
(unctional units of an organization are involved in higher level strategies by providinginput into the business unit level and corporate level strategy such as providinginformation on resources and capabilities on which the higher level strategies can bebased. =nce the higher*level strategy is developed the functional units translate it intodiscrete action*plans that each department or division must accomplish for the strategy
to succeed.
Recommended Reading
!intzberg $enry "ampel >. Ahlstrand ;. Strategy Safari:A Guided Tour through the Wilds of StrategicManagement
http://www.quickmba.com/strategy/generic.shtmlhttp://www.quickmba.com/strategy/porter.shtmlhttp://www.amazon.com/exec/obidos/ASIN/0684847434/quickmbahttp://www.quickmba.com/strategy/generic.shtmlhttp://www.quickmba.com/strategy/porter.shtmlhttp://www.amazon.com/exec/obidos/ASIN/0684847434/quickmba7/25/2019 Corporate Strategic Planning - Corporate Strategic PlanningCorporate Strategic PlanningCorporate Strategic Planni
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Strategy Safariorganizes the seemingly disconnected aspects of strategic management into 56 differentschools of thought. (or e'ample the basic strategic planning model that was popular in the 5196%s is partof The 7lanning School and !ichael 7orter%s theories are part of The 7ositioning School. StrategySafariprovides an overview of each school and presents a balanced view of each including advantagesand disadvantages. ;ecause of its comprehensive and insightful approachStrategy Safaripresents ane'cellent overview of the field of strategic management.
QuickMBA/ Strategy/ Strategic lanning
The Strategic 7lanning 7rocess
In today%s highly competitive business environment budget*oriented planning or
forecast*based planning methods are insufficient for a large corporation to survive and
prosper. The firm must engage in strategic planningthat clearly defines ob#ectives andassesses both the internal and e'ternal situation to formulate strategy implement the
strategy evaluate the progress and make ad#ustments as necessary to stay on track.
A simplified view of the strategic planning process is shown by the following diagram+
!"e Strategic lanning rocess
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Mission &
Objectives
Environmental
Scanning
Strategy
Formulation
Strategy
Implementation
Evaluation
& Control
Mission and Objectives
The mission statement describes the company%s business vision including theunchanging values and purpose of the firm and forward*looking visionary goals that
guide the pursuit of future opportunities.
?uided by the business vision the firm%s leaders can define measurable financial and
strategic ob#ectives. (inancial ob#ectives involve measures such as sales targets and
earnings growth. Strategic ob#ectives are related to the firm%s business position and
may include measures such as market shareand reputation.
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Environmental Scan
The environmental scan includes the following components+
Internal analysis of the firm
Analysis of the firm%s industry 8task environment:
&'ternal macroenvironment 87&ST analysis:
The internal analysis can identify the firm%s strengths and weaknesses and the e'ternal
analysis reveals opportunities and threats. A profile of the strengths weaknesses
opportunities and threats is generated by means of a S,=T analysis
An industry analysis can be performed using a framework developed by !ichael 7orter
known as 7orter%s five forces. This framework evaluates entry barriers suppliers
customers substitute products and industry rivalry.
Strategy ormulation
?iven the information from the environmental scan the firm should match its strengths
to the opportunities that it has identified while addressing its weaknesses and e'ternalthreats.
To attain superior profitability the firm seeks to develop a competitive advantageover its
rivals. A competitive advantage can be based on cost or differentiation. !ichael 7orter
identified three industry*independent generic strategiesfrom which the firm can choose.
Strategy !mplementation
The selected strategy is implemented by means of programs budgets and procedures.
Implementation involves organization of the firm%s resources and motivation of the staff
to achieve ob#ectives.
The way in which the strategy is implemented can have a significant impact on whetherit will be successful. In a large company those who implement the strategy likely will be
different people from those who formulated it. (or this reason care must be taken to
communicate the strategy and the reasoning behind it. =therwise the implementation
might not succeed if the strategy is misunderstood or if lower*level managers resist its
implementation because they do not understand why the particular strategy wasselected.
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Evaluation " #ontrol
The implementation of the strategy must be monitored and ad#ustments made as
needed.
&valuation and control consists of the following steps+
5.
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national prosperity is created, not inherited. )t does not gro! out of acountry3s natural endo!ments, its labor pool, its interest rates, or its
currency3s value, as classical economics insists.
( nation3s competitiveness depends on the capacity of its industry to
innovate and upgrade. ompanies gain advantage against the !orld3s bestcompetitors because of pressure and challenge. %hey bene#t from havingstrong domestic rivals, aggressive home4based suppliers, and demandinglocal customers.
)n a !orld of increasingly global competition, nations have become more, notless, important. (s the basis of competition has shifted more and more to thecreation and assimilation of kno!ledge, the role of the nation has gro!n.ompetitive advantage is created and sustained through a highly localized
process. 0i5erences in national values, culture, economic structures,
institutions, and histories all contribute to competitive success. %here arestriking di5erences in the patterns of competitiveness in every country6 no
nation can or !ill be competitive in every or even most industries.7ltimately, nations succeed in particular industries because their homeenvironment is the most for!ard4looking, dynamic, and challenging.
%hese conclusions, the product of a four4year study of the patterns ofcompetitive success in ten leading trading nations, contradict theconventional !isdom that guides the thinking of many companies andnational governments8and that is pervasive today in the 7nited States. 92or
more about the study, see the insert :Patterns of -ational ompetitiveSuccess.;< (ccording to prevailing thinking, labor costs, interest rates,echange rates, and economies of scale are the most potent determinants ofcompetitiveness. )n companies, the !ords of the day are merger, alliance,
strategic partnerships, collaboration, and supranational globalization.Managers are pressing for more government support for particular industries.(mong governments, there is a gro!ing tendency to eperiment !ith various
policies intended to promote national competitiveness8from e5orts tomanage echange rates to ne! measures to manage trade to policies torela antitrust8!hich usually end up only under mining it. 9See the insert:*hat )s -ational ompetitiveness;
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ash=o! )mplications
for 1ro!ing "usinesses
The growth of your business should have a positive impact as it implies that you may be
increasing profits increasing market share employing more staff buying or leasing
larger premises e'panding your product range or even gaining a better reputation.
These are great outcomes and if managed correctly your business will thrive. !anaged
poorly you run the risk of insolvency and your business could fail.
(ny gro!th should be planned and re=ected in budgets including your
cash=o! forecast. >our pro#t and loss budget is used to manage the
revenue and ependiture !hereas the cash=o! is used to forecast the timing
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of the payments and receipts. %herefore, !hen planning your gro!th you
should be clear !hat it is you are going to be doing, ho! you are going to do
it and !hen you are going to do it.
@ou need to be very clear about the costs that will be incurred and when they will be
paid as well as when you e'pect income to be received. Some important factors youneed to be mindful of when planning for growth are+
Are there seasonal factors that will affect my cashflow
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know your business. As a result the lending organisation is more likely to lend you thefunds and you may be able to negotiate a better deal with reduced costs. This washighlighted in our case study on $erb ;oothwhere the (ounder ) C&= Chris ;oothdiscussed how the Cal'a software helped when applying for a bank loan. In relation tothe presentation and accuracy of the cashflow forecast Chris stated DThe fact that they
married up with the 7rofit ) "oss and ;alance Sheet reports from !@=; certainlyimpressed themE..F Chris also discussed the importance of being able to foresee inadvance when cashflow will be short and how he can take action and stated D>ust thisweek I saved G0666 by reviewing my e'penses and changing one of my suppliers. IwouldnHt have been prompted to do that if I hadnHt been using Cal'aHs cashflowforecast.F
@our budget and cashflow forecast should clearly incorporate the elements of thegrowth and when they are likely to occur so you can monitor and avoid surprises. Thisallows you to actively manage your business and make considered and informeddecisions as they are needed. This will give you greater control and confidence with the
growth of your business without it adversely impacting on the viability of your business.
A#$#Littles Life%cycle approac" to strategic planning
assessing suitability
life cycle analysis
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positioning
66.5 Introducing ;usiness 7ortfolio
!anagement Many people are familiar !ith the term 4portfolio management4 in the financial sense. &he
term implies that you manage your money in a !ay that ma/imi0es your return and minimi0es
your ris5. &his includes understanding the different investment alternatives available and
pic5ing the ones that best achieve your overall financial goals and strategy. %ne si0e does not
fit all. &he investment decisions you ma5e !hen you are "6 are different from the ones you
ma5e !hen you are . 7ou don't loo5 at each investment in isolation, but in the conte/t of
the entire portfolio.
Example: 7ou may have a bond fund that is not doing as !ell as your stoc5 funds. 8o!ever,
you may decide to 5eep it because it provides balance to your entire portfolio and helps reduce
your overall ris5. 2epending on mar5et conditions, you may find that your stoc5 funds are
suddenly do!n, but your bond fund is no! providing the counterbalancing strength. 9i5e!ise,
you may turn do!n buying a 4hot tip4 stoc5 because the ris5 is too high and the purchase
!ould not fit !ithin your portfolio strategy.
Example: 7ou may prefer stoc5s and shares for their greater potential,
but you still !ish to diversify in such a !ay as to reduce ris5. 7ou have
shares in an airline but the problem is that as the price of oil goes up the
airline profits go do!n and so do their share values. In this case it !ould not ma5e sense to
buy shares in a second airline it !ould ma5e more sense to buy shares in an oil company.
&his !ay !hen oil is in short supply, the price goes up and so do the value of oil company
shares ; offsetting the fall in value of the airline shares. &he point is that you need to identify
the underlying drivers affecting your goals, in this case, the price of oil.
In more recent times, this same 4portfolio management4 concept has become popular as a
!ay to manage business investments.
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completed, !or5 in-progress and !or5 that has been approved for the future. urther, it helps
you come up !ith the baseline that you can subse=uently use to measure ho! !ell you are
managing the portfolio to meet the department's needs.
inancial portfolio management does not focus on costs, since the assumption is that
e/penditures !ill result in the purchase of an asset (stoc5s, bonds, etc.) or a service (trading
fee, investment advice, etc.). 9i5e!ise, !hen you manage your !or5 as a portfolio, you
change the emphasis from the costs of each portfolio component to the value provided. If the
value (and alignment) is right, the !or5 !ill get authori0ed. If the value is not there, the !or5
should be eliminated, cut or bac5logged.
%n some !ebsites, you !ill find lin5s to order boo5s. %n others, you find a professor's notes
from a college class. Many others !ill offer consulting help. %n this #ortfolioStep !ebsite, you
!ill find most of !hat you need to successfully establish and manage portfolios of !or5.
%rgani0ations of all si0es can use #ortfolioStep. Smaller business units and departments !ill
not use all of the processes and features offered. 9arger organi0ations !ill be able to use much
more. &he larger and more sophisticated your unit or department is, the more material from
#ortfolioStep you can leverage.
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Matching Structure With Strategy
Introduction&ach organization that eists has a distinctive organization structure. (n organization
structure can be vie!ed as the re=ection of the institutions past history, internal politics as!ell as reporting relationships. )t is the responsibility of the top management to makecertain that the organization structure supports the company3s strategy. )n situations !herethe organization structure does match the strategy, then it ought to be customized to #t thestrategy. Prior to matching organization structure !ith strategy, it is essential for themanagement to comprehend the di5erent eisting organization structure. %his is consideredto be crucial as it aids in determining !hich organization structure ought to be adopted forthe company3s strategies. (nderson 9?@AA
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$uontAnalysis 8also known as the dupontidentity$uontequation $uont Modelorthe $uontmethod: is an e'pression which breaks 3=& 8return on equity: into three parts. Thename comes from the$uontCorporation that started using this formula in the 516s.
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2uture of Strategic Management.
Strategic management is !hen a company !orks to strategize or
really, really !ork hard and make sure that they3re doing the best in
every area as it relates toC
Marketing
accounts payable
accounts receivable
production
sales
human resources
and other departments
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)f you !ant to increase your clients, and other areas that they may
be focused on in yourbusiness, then that means you need to
supervise every area and aspect and focus on !hat they are doing.
&nvironmental Scanning Industry Analysis CompetitiveIntelligence and &T=7 Study
ENVIRO
INTRODUCTION
Strategic analysis is basically concerned with the structuring of the relationship
between a business and its environment. The environment in which business opera
has a greater influence on their successes or failures. There is a strong linkage
between the changing environment the strategic response of the business to such
changes and the performance. It is therefore important to understand the forces of
e'ternal environment the way they influence this linkage. The e'ternal environment
which is dynamic and changing holds both opportunities and threats for the
organisations. The organisations while attempting at strategic realignments try to
capture these opportunities and avoid the emerging threats. At the same time the
changes in the environment affect the attractiveness or risk levels of various
investments of the organizations or the investors.
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A"J& C$AIK
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Scenario planning also called scenariothinking or scenarioanalysis is astrategicplanningmethod that some organizations use to make fle'ible long*term plans. It is inlarge part an adaptation and generalization of classic methods used by military intelligence.
Strategic Management> Scenario Planning
Scenario #lanning
&raditional forecasting techni=ues often fail to predict significant changes in the firm's
e/ternal environment, especially !hen the change is rapid and turbulent or !hen
information is limited. onse=uently, important opportunities and serious threats may beoverloo5ed and the very survival of the firm may be at sta5e. Scenario planning is a tool
specifically designed to deal !ith ma*or, uncertain shifts in the firm's environment.
Scenario planning has its roots in military strategy studies. 8erman >ahn !as an early
founder of scenario-based planning in his !or5 related to the possible scenarios associated
!ith thermonuclear !ar (4thin5ing the unthin5able4). Scenario planning !as transformed
into a business tool in the late 1?@6's and early 1?A6's, most notably by #ierre $ac5 !ho
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developed the scenario planning system used by +oyal 2utchShell.
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factor. or e/ample, consider the e/treme case in !hich a variable had a very large
range such that it might be rated a 16 on a scale of 1 to 16 for variation, but in
!hich the variable had very little impact on the firm so that the strength of impact
rating !ould be a 1. Multiplying the t!o together !ould yield 16 out of a possible
166, revealing that the variable is not highly critical.
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starting from the present. &he story should be internally consistent for the selected
scenario so that it describes that particular future as realistically as possible. B/perts
in specific fields may be called upon to devlop each story, possibly !ith the use of
computer simulation models. 3ame theory may be used to gain an understanding of
ho! each actor pursuing its o!n self interest might respond in the scenario. &he goal
of the stories is to transform the analysis from a simple matri/ of the obvious range
of environmental factors into decision scenarios useful for strategic planning.
?. Duantify the impact of each scenario on the firm, and formulate appropriate
strategies.
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