1 STRATEGIC PLANNING. 2 A Definition of Strategy Strategy is the direction and scope of an...

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STRATEGIC PLANNING

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A Definition of Strategy

‘Strategy is the direction and scope of an organisation over the long term which achieves advantages for the

organisation through its configuration of its resources within a

changing environment and to fulfil stakeholder expectations’

Johnson and Scholes (2002)

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“What is strategy anyway?”

• "Strategy is the direction and scope of an organisation over the long term: ideally, which matches its resources to its changing environment, and in particular its markets, customers or clients so as to meet stakeholder expectations.”Johnson & Scholes 'Exploring Corporate Strategy: Text and Cases'

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Strategic planning is a process which takes into account an organization’s external and internal environments while helping it define its purposes,

what it intends to become, and how it will attain its goals.

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Why Some Firms Do No Strategic Planning

1. Poor Reward 2. Fire-fighting3. Waste of Time4. Too Expensive 5. Laziness6. Content with Success7. Fear of Failure8. Prior Bad Experience9. Self-Interest10. Fear of the Unknown11. Honest Difference of Opinion12. Suspicion

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What if we don’t plan?

1. Decision-making by crisis2. Plans driven by budget3. Wasted/inefficient use of resources4. Unnecessary conflict – mostly over

resource allocations5. No clear direction/vision6. Unable to quickly respond to

opportunities and threats

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What makes planning strategic?

• Considers the environment – external and internal in relation to the organization

• Involves issues of significance having an impact on the organization's future

• Involves both analysis and insight

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Strategic planning is a processStrategic planning is a process..

Purpose is not to produce a document but to result in strategic thinking and acting by the people doing the work in the organization.

Documents are used to record both intentions and accomplishments – but they are not the goal of strategic planning.

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SP should answer the following questions:

• Where should the organization be going?

• Why and how has a particular direction/vision been chosen?

• What strategies and actions will be necessary to reach our vision?

• How will resources be marshaled?

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In other words ---

Strategic planning should help us envision our desired future and then put us on course to realize

that vision.

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Strategic planning is not a substitute for:

1. Leadership

2. Strategic thinking and acting

3. Competence

• They will work together for the benefit of the members of the organization and stakeholders.

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Overall process often includes:

• Initiation– Awareness of need– Training– Commitment by key people– Establishment of key committee(s)– Identification of resources needed– Discussion of what is to be accomplished

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• Formation of planning groups– Coordinating committee– Working group– Other groups as needed

• Environmental scan– Internal and external contexts – Planning assumptions– Mandates

• Vision/vision of success– Values/guiding principles

• Mission

Overall process often includes:

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• Identification of strategic issues/initiatives and selection of issues for action

• Outcome criteria/expectations for each action item

• Strategies and action plans

• Plan for monitoring progress and revising

• Write the document

• Implement the process

Overall process often includes:

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A strategic issue is:

• A significant challenge or situation the organization can do something about.

• Involves factors (e.g., mission, mandates, SWOT’s) that make the issue strategic.

• Entails consequences of not addressing the issue

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Identifying strategic issues is useful because:

• Focuses attention on what is really important.• Emphasizes issues rather than answers.• Can create “useful tension” necessary for true

change.• Helps in identifying solutions.• Process becomes real for some at this point

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Strategic Planning

• The Vision– Communicating to all staff where the

organisation is going and where it intends to be in the future

– Allows the firm to set goals

• Aims and Objectives:– Aims – long term target– Objectives – the way in which you are

going to achieve the aim

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Strategic Planning

• Example:• Aim may be for a chocolate manufacturer to

break into a new overseas market• Objectives:

– Develop relationships with overseas suppliers– Identify network of retail outlets– Conduct market research to identify consumer

needs– Find location for overseas sales team HQ

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Strategic Planning

• Once the direction is identified:Analyse positionDevelop and introduce strategyEvaluate:

– Evaluation is constant and the results of the evaluation feeds back into the vision

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Political/Legal

Political/Legal

EconomicEconomic

TechnologicalTechnological

GlobalGlobal

DemographicDemographicSocioculturalSociocultural

CompetitiveCompetitiveEnvironmentEnvironment

Industry Environment

Industry Environment

Components of the General EnvironmentComponents of the General Environment

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The SWOT The SWOT AnalysisAnalysis

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SWOT Analysis

• Strengths

• Weaknesses

• Opportunities

• Threats

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Basic Assumption of a SWOT Analysis

• Align internal activities with external realities

• The SWOT analysis provides a framework for analyzing: – strengths and weaknesses (internal);

and – opportunities and threats (external)

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The SWOT diagram may summarise the results of analyses

Strengths Weaknesses

OpportunitiesThreats

InternalAnalyses

InternalAnalyses

ExternalAnalyses

ExternalAnalyses

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The GAP / SWOT AnalysisThe GAP / SWOT AnalysisThe GAP / SWOT AnalysisThe GAP / SWOT Analysis

Vision3-5 years

Situation Audit

The

“GAP”

Where you Where you want to go.want to go.

Where you Where you are today.are today. What you have What you have

to do to get thereto do to get there.

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The purpose of SWOT Analysis

• It is an easy-to-use tool for developing an overview of a company’s strategic situation– It forms a basis for matching your

company’s strategy to its situation

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SWOT is the starting point

• It provides an overview of the strategic situation.

• It provides the “raw material” to do more extensive internal and external analysis.

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The External The External Environment: Environment:

SWOT SWOT AnalysisAnalysis

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The External Environment:Opportunities, Threats,

e.g.: Industry Competition, and Competitor Analysis

The External Environment:Opportunities, Threats,

e.g.: Industry Competition, and Competitor Analysis

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Opportunities

• An OPPORTUNITY is a chance for firm growth or progress due to a favorable juncture of circumstances in the business environment.

• Possible Opportunities:– Emerging customer needs– Quality Improvements– Expanding global markets– Vertical Integration

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Threats

• A THREAT is a factor in your company’s external environment that poses a danger to its well-being.

• Possible Threats:– New entry by competitors– Changing demographics/shifting demand– Emergence of cheaper technologies– Regulatory requirements

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Opportunities and Threats form a basis for EXTERNAL analysis

• By examining opportunities, you can discover untapped markets, and new products or technologies, or identify potential avenues for diversification.

• By examining threats, you can identify unfavorable market shifts or changes in technology, and create a defensive posture aimed at preserving your competitive position.

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Opportunities and Threats• Primarily external in nature• Represent characteristics of:

– the research environment– growth in potential markets– changes in the competitive, economic, political/legal,

technological, or socio-cultural environments

• A threat to some is an opportunity to another.

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• Questions on opportunities:– Is there a product/service area that others

have not yet covered?– Are there emerging trends that fit with your

company's strengths?

• Questions on threats:– Are your competitors becoming stronger?– Are there emerging trends that amplify one of

your weaknesses?

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The Internal The Internal Environment: Environment:

SWOT SWOT AnalysisAnalysis

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The Internal Environment: The Internal Environment: StrengthsStrengths, , WeaknessesWeaknesses,,

e.g.: Resources, Capabilities e.g.: Resources, Capabilities and and

Core CompetenciesCore Competencies

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Strengths

• A STRENGTH is something a company is good at doing or a characteristic that gives it an important capability.

• Possible Strengths:– Name recognition– Proprietary technology– Cost advantages– Skilled employees– Loyal Customers

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Weaknesses

• A WEAKNESS is something a company lacks or does poorly (in comparison to others) or a condition that places it at a disadvantage

• Possible Weaknesses:– Poor market image– Obsolete facilities– Internal operating problems– Poor marketing skills

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Strengths and Weakness form a basis for INTERNAL analysis• By examining strengths, you can

discover untapped potential or identify distinct competencies that helped you succeed in the past.

• By examining weaknesses, you can identify gaps in performance, vulnerabilities, and erroneous assumptions about existing strategies.

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Strengths• Consider from both the view of the firm (product)

as well as from customers and competitors• Realistic and not modest• One’s strength is another’s weakness• Questions:

– What are the firm’s advantages over others?– What does the firm do well?– What makes you stand out from your competitors?

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Weaknesses• Consider from internal and external viewpoint• Be truthful so that weaknesses may be

overcome as quickly as possible• One’s strength is another’s weakness• Questions.

– What is done poorly?– What can be improved?

– What should be avoided?

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SWOT Analysis Framework

S tre n g thsW e a kne sses

In te rna l A na lys is

O p po rtu n it iesT h re a ts

E x te rna l A na lys is

E nv iron m en ta l S can

SWOT Matrix

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SWOT Matrix

Internal External

+ Strengths Opportunities

- Weaknesses Threats

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Getting Started

• Be realistic about the strengths and weaknesses

• Analysis should distinguish between where you are today and where you could be in the future

• Be specific. Avoid grey areas. • Keep the SWOT short and simple. Avoid

complexity and over analysis • SWOT is subjective.

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Suggestions for conducting SWOT Analysis:• Be realistic; no need to inflate strengths or be in

denial about shortcomings.• Distinguish between where your technology is

today, and where it could be in the future.• Be specific. Avoid grey areas.• Always analyze in the context of your

competitive environment.• Keep your SWOT short and simple.

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Using the SWOT Analysis• Weaknesses should be looked at in order

to convert them into strengths.• Try to match your strengths with external

opportunities.• Threats should be converted into

opportunities.• Strengths and opportunities should be

matched.

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Expanding Your SWOT Analysis

• Delve deeper into the details of the technology.

• Include more detailed competitor information in the analysis.

• Take a closer look at the business environment.

• Expand the reach of a SWOT analysis through surveys.

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Simple rules for a successful SWOT analysis

• Establish the objectives• Establish the team • Allocate research and information

gathering tasks• Evaluate listed ideas against Objectives• Evaluate the List• Action Plan• Build the Strategies• Review the SWOT

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Drawbacks of SWOT

1. Usually reflects an existing position and viewpoint

2. Can look for 'fit' rather than to 'stretch'

3. Snapshot

4. SWOT analysis can very subjective

5. May be too close or far away from the actual activities of the organization

6. Focusing on the internal state vs. The external

7. Align internal efforts with external opportunities• Caution:

– Do not rely on it too much– Two people rarely come-up with the same final

version of SWOT

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Conclusion

• A SWOT analysis when correctly applied, is one tool that could provide an overall picture of the current situation and the outstanding requirements for business organizations.

• Used creatively, SWOT can form a foundation upon which to construct strategic plans for implementation

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PEST

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PEST

• Political: Local, national and international political developments – how will they affect the organisation and in what way/s?

• Economic: what are the main economic issues – both nationally and internationally – that might affect the organisation?

• Social: what are the developing social trends that may impact on how the organisation operates and what will they mean for future planning?

• Technological: changing technology can impact on competitive advantage very quickly!

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PEST• Examples:1. Growth of China and India as manufacturing centres2. Concern over treatment of workers and the

environment in less developed countries who may be suppliers

3. The future direction of the interest rate, consumer spending, etc.

4. The changing age structure of the population5. The popularity of ‘fads’ like the Atkins Diet6. The move towards greater political regulation of

business7. The effect of more bureaucracy in the labour market

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Five-Forces

• Developed by Michael Porter: forces that shape and influence the industry or market the organisation operates in.

– Strength of Barriers to Entry - how easy is it for new rivals to enter the industry?

– Extent of rivalry between firms – how competitive is the existing market?

– Supplier power – the greater the power, the less control the organisation has on the supply of its inputs.

– Buyer power – how much power do customers in the industry have?

– Threat from substitutes – what alternative products and services are there and what is the extent of the threat they pose?

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Strategy Requires Good Analyses & Choices

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RESPONSIBILITIES RESPONSIBILITIES FOR MANAGERSFOR MANAGERS

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RESPONSIBILITIES FOR RESPONSIBILITIES FOR MANAGERSMANAGERS

1. Establishing the mission

2. Formulating an organizational philosophy

3. Establishing policies

4. Setting Objectives

5. Developing a strategy

6. Planning the organizational structure

7. Providing personnel

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RESPONSIBILITIES FOR MANAGERS

8. Establishing procedures

9. Providing facilities

10. Providing capital

11. Setting standards

12. Establishing management programmes and operational plans

13. Providing control information

14. Activating people

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HOW CAN WE APPLY STRATEGIC PLANNING

IN THE JUDICIARY

(THE CASE OF LESOTHO)

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THANK YOU