Ch 6 Strategic Planning

8/8/2019 Ch 6 Strategic Planning

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Prentice Hall, 2005 1 - 1

Ch

apter 6

Strategic Planning


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ObjectivesObjectives

ObjectivesObjectives

1. Definitionsofbothstrategicplanningandstrategy

2. Anunderstandingofthestrategymanagementprocess

3. A knowledgeoftheimpactofenvironmentalanalysison

strategyformulation

4. Insightsintohowtousecriticalquestionanalysisand

SWOTanalysistoformulatestrategy

5.Insightsintowhattacticalplanningisandhowstrategicand

tacticalplanningshouldbecoordinated


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Barnes & Nobles New strategyBarnes & Nobles New strategy

Barnes & Nobles New strategyBarnes & Nobles New strategy

owns & operates about 900 retail bookstores,

& being of th

e largest book retailers in th

e worldProcess: purchase the books from the publishers & then sell

to individual customers

New competitors: - Internet retailers as Amazon.com; 10%/on

line- Discount retailers as Wal-Mart

New strategy: publish & sell in its store copies of classic

books as the scarlet letter & great expectations

Such strategy could improve the companys competitive

position; could also prove difficult to implement!!!

WHY?


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Strategic PlanningStrategic Planning


Fundamentals of Strategic Planning

Strategic Planning is a long-term planning that focuses on the

org as a whole

Long-term is a period of time extending about 3-5 years

Org is considered as total unit

Strategy: the end product of ST process: general plan

developed to reach

long-term objectives; focu

s on differentorganizational areas

Org objectives should be linked to strategy


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Strategy Management: process of ensuring that an

org possesses & benefits from the use ofan

appropriate organizational strategy

SMSteps:

1. Environmental Analysis

2. Establishment of organizational direction (mission &

objectives)

3. Strategy formulation

4. Strategy implementation

5. Strategy control


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StrategyStrategy MManagement Processanagement ProcessStrategyStrategy MManagement Processanagement Process


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SM StepsSM Steps11-- Environmental AnalysisEnvironmental Analysis

SM StepsSM Steps11-- Environmental AnalysisEnvironmental Analysis

The General Environment

Economic, Social Component,

Political, Legal & TechnologyComponents

The Operating Environment

Customer , Competition , Labor ,

Supplier, International

The Internal Environment


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The Operating Environment: external environment that

have relatively specific & immediate implications formanaging the org

Customer who buy goods/services provided by the org

Competitors with whom the org is competing with

Labor who are performing organizational tasksSupplier that provide org with resources they need

International as other countries laws, culture, politics,

economic

The Internal Environment: the entire org factors that

affect the managing of the org as finance, HRs,

marketing,

Environmental AnalysisEnvironmental Analysis--Environmental AnalysisEnvironmental Analysis--


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Strategic PlanningStrategic PlanningStrategic PlanningStrategic Planning


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Group Work: DiscussionGroup Work: DiscussionAnalyzing the Environment at EI NuevoAnalyzing the Environment at EI Nuevo DiaDia

Group Work: DiscussionGroup Work: DiscussionAnalyzing the Environment at EI NuevoAnalyzing the Environment at EI Nuevo DiaDia

Pages no 183-184 at your Text book

Divide yourself into groups, each of 5-7

membersDiscuss the case

Identify a notes writer and presenter

Duration: 5 Minutes


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Strategy Management (continued)Strategy Management (continued)Strategy Management (continued)Strategy Management (continued)

2- Establishing Organizational Direction: based on the

environment analysis, managers can determine the directionin which an org should move: Mission & Objectives

Organizational Mission is broad statement that defines the

present purpose of the organization: why org exist? what

business we are in? Reflect info as types of product/service,customers, values..

Developing a Mission Statement usually done by managers &

non-managers, it is expressed in writing and should beunderstood by all org members

Organizational Mission is very important because it focus

human effort in a common direction; serves as rationale for

allocating resources; define broad & important areas


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SomeSome examplesexamplesSomeSome examplesexamples

College ofBusiness Mission

http://www.q

u.ed

u.qa/b

usiness/abo

ut_u

s/m

ission.ph

p

FedEx

http://about.fedex.designcdt.com/our_company/company

_inform

ation/m

ission_statem

ent


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McDonald's Mission Statement

McDonalds mission is to be the worldsMcDonalds mission is to be the worldsbest quick service restaurant experience.best quick service restaurant experience.

Being the best means providingBeing the best means providing

outstanding quality, service, cleanlinessoutstanding quality, service, cleanlinessand value, so that we make everyand value, so that we make every

restaurant smile.restaurant smile.


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3- Strategy Formulation: is the process of determining

appropriate courses of actions for achieving org objectives

& purpose. It can be done though specific tools:

Critical Question Analysis

SWOT AnalysisCritical Question Analysis

What are the purposes and objectives of the organization?

Where is the organization presently going?

In what kind of environment does the organization now

exist?

What can be done to better achieve organizational

objectives in the future?


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SWOTSWOT AnalysisAnalysis

Strengths (strategic) Internal resources that are available or things that an

organization does well.

Weaknesses

Resources that an organization lacks or activities that it does

not do well.

The Internal Environment

Opportunities (strategic) Positive external environmental factors.

Threats

Negative external environmental factors.

Operating & General Environment


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McDonalds SWOT analysis

StrengthStrength: well established brand name, goodvalue meal, the best entertaining experience for

kids

WeaknessesWeaknesses: product image associated tounhealthy and junk food

OpportunitiesOpportunities: an anticipated increase in

demand for fast food restaurants ThreatsThreats: increasingly health oriented

consumers, the increasing number of

competitors


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Strategy Formulation: Types (Porters strategies)

Differentiation

Cost Leadership

Focus

Differentiation: developing a product(s) perceived different

from other competitors. It emphasize highquality, innovativedesign, extraordinary services as after-sale service as Nikes

Air Jordan shoe (high technology air construction)

Cost Leadership: becoming the lowest-cost producer,

cheaper, in an industry which is achieved by efficiency inoperations, technological innovation, low-cost labor.

Focus: targeting particular customers as Magazines

targeting women, body builders, special needs, engineers,

Strategy Management (continuedStrategy Management (continuedStrategy Management (continuedStrategy Management (continued


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Sample Organizational Strategies

Growth

Stability

Retrenchment

1- Growth strategy increase the amount of business in terms of the level of its

operations.

Growth can be in sales revenues,more market share, more

employees

It can be achieved through direct expansion, new product

development, quality improvement, diversifying (merging

with other firms)



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2- Stability Strategy

Maintain or slightly improve the amount of current

business

characterized by an absence of significant

change.

Org continue to serve its same market &

customers while maintaining market share

It is best with some conditions as stable

environment, satisfactory performance, and non-

significant opportunities & threats



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3- Retrenchm

ent Strategy A strategy in whichmanagement attempts to

strengthen or protect the amount of business

Usu

ally by redu

cing its size,u

su

ally in anenvironment of decline, which is due to

technological advancement, global competition,

and oth

er environm

ental ch

anges.44-- CombinationCombination strategystrategyThe simultaneous pursuit by an organization of two

ormore of growth, stability, and retrenchment

strategies.



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4- Strategy Implementation is to put the formulated strategies

into action. The successful implementation requires 4 basic

skills:

1. Interacting skill: ability to manage people during implementation

2. Allocating skill: ability to provide the org resources necessary to

implement strategy

3. Monitoring skill: ability to use information to determine whether a

problemhas arisen that is blocking implementation

4. Organizing skill: ability to create throughout the org a network of

people who can help solve implementation problems as they

occur

Strategic Control

Monitor and evaluate the whole strategy management process

It focuses on the activities involved in the environmental analysis,

org direction, strategy formulation & implementation


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Tactical PlanningTactical PlanningTactical PlanningTactical Planning

Tactical Planning is short-term, less than a year, planning that

emphasizes the current operations of various part of the org

Usually developed in the areas of production, marketing, HR, finance,

& facilities

Basic differences between strategic and tactical planning:

1. Strategic plans are usually developed by upper-level management

and tactical plans by lower-level management

2. Facts to base strategic plans are more difficult to gather

3. Strategic plans are generally less detailed than tactical plans

4. Strategic plans cover a relatively long period of time

whereas tactical plans cover a relatively short period of time


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Tactical PlanningTactical PlanningTactical PlanningTactical Planning


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QuestionsQuestions

Ch 6 Strategic Planning

Documents

Transcript of Ch 6 Strategic Planning