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Strategic planning is a management tool for organizing the present on the basis of the projections of the desired future. That is, a strategic plan is a road map to lead an organization from where it is now to where it would like to be in five or ten years.
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S.R.P* 6TH TERM- BUSINESS STRATEGIES & CORPORATE PLANNING. Page 1
Strategic Planning - Definition
Strategic planning is a management tool for organizing the present on the basis of the projections
of the desired future. That is, a strategic plan is a road map to lead an organization from where it
is now to where it would like to be in five or ten years.
It is necessary to have a strategic plan for your company and/or department. In order to develop a
comprehensive plan for your company and/or department which would include both long-range
and strategic elements, we suggest the methods and mechanisms outlined on the following
pages.
The plan must be:
simple
written
clear
based on the real current situation
have enough time allowed to give it a time to settle. It should not be rushed. Rushing the
plan will cause problems
BENEFITS AND PITFALLS IN STRATEGIC PLANNING
Since the beginning of Special Libraries Association in 1909, it has experienced phenomenal growth
in membership and influence. In the past ten years, growth has been particularly significant.
Changes in the fields of special librarianship and information science have been dramatic and
fundamental to the very way of doing business. The advent of on line systems and the computer age
rapidly changed the way librarians/information managers operate.
The Association recognizes that it can no longer merely react to issues as they emerge. If it is to
continue as a leader in improving the profession, it must begin to anticipate future change rather than
merely react to change. The Association as well as each chapter and division needs to consider this
long-term future. Drawing on the
resources it has, both human and financial, it needs to continue to grow. These resources are
limited, and careful thought must be given to the allocation of these resources. To meet obligations
to the profession, the public, and the membership, it is essential that the Association and its units use
these resources in the most efficient manner by determining priority areas on which to concentrate.
This means the identification of goals, pursuing those goals, and achieving them. Strategic planning
will help build continuity in the Association's programs, particularly in the areas of continuing
education and publications. The Association has the gift of a great deal of diversity among the
membership. The Association draws its strength from this diversity but at
the same time, that diversity lessens the Association's impact in key areas because of a lack of
cohesive focus by the organization. Therefore, it is necessary for each chapter and division to have
a plan that is compatible with the overall strategic plan of SLA thus concentrating its efforts and
greatly increasing its impact.
There are several pitfalls associated with strategic planning. First, the plan may not turn out as well
as expected because of changes in the environment in which the plan is supposed to operate. Also,
strategic planning is worthless in getting an organization out of a major crisis. A crisis is a current
problem not solved by a strategic plan. And, if the planning process itself is weak, the resulting plan
may be weak and not satisfactory to the organization. George Steiner in his Strategic Planning (see
Sources of Information) lists 50 major common pitfalls in starting, doing, and using strategic planning.
S.R.P* 6TH TERM- BUSINESS STRATEGIES & CORPORATE PLANNING. Page 2
STRATEGIC PLANNING MODEL
In choosing the strategic planning model, two main things need to be considered.
The first is whether you want the Association unit to plan as a not-for-profit, or as a profit
organization. Association planning is not the same as the planning for universities or businesses or
government agencies. Associations need to be consistently receptive to the needs of the
membership-at-large. The main purpose is to serve the members more than to make a profit or to
increase the size of the organization.
The strategic plan needs to include a Mission Statement, Objectives, Goals, and an Action (or
Implementation) Plan.
Mission Statement
This is the agreed-upon statement by the organization and explains the reason for its existence. It is
necessarily broad to encompass the diversity within the Association.
The statement is not precise in its measurements nor does it need to be, but it does need to be
periodically reviewed by the Association to see whether it still encompasses all of the relevant
activities of the Association.
Objectives
The objectives are the areas of emphasis within the Association. Rather than specific statements
with a specific goal, objectives state that the Association plans to continue to do quality work in the
following areas. These objectives or areas of emphasis need to be attained by discussion and
review of the organization's current activities as well as activities in which it would like to participate.
Goals
These need to be both long-term and short-term goals; six months, one-year, three-years, and ten-
year goals need to be set so that the strategy for reaching these goals can be outlined in the plan.
Most organizations recommend setting the long-term goals first and then setting short-term goals:
those goals which can be reached as steps to attaining the long-term goal.
Action Plan
The Action Plan should be designed after the main goals and objectives have been set in order to
attain the mission in a straightforward and measurable way. With an Action Plan, the goals
themselves can be obtained. Without the Action Plan, and the measures it entails, it would be
impossible to implement the plan and measure its success. Being able to measure success would
certainly be important both for maintaining our tax status as a not-for-profit organization as well as to
explain the use of it to the membership-at-large.
S.R.P* 6TH TERM- BUSINESS STRATEGIES & CORPORATE PLANNING. Page 3
STRATEGIC PLANNING PROCESSES AND MECHANISMS
The publications "A Guide to Nominal Group and Delphi Processes" by Andre L. Blebecq, et al, and
"Guide for Leaders Using Nominal Group Technique" by James G. Cope and Carl Moore, describe
the combination of nominal group and Delphi processes. Using these techniques, an organization
that is geographically separate can communicate and develop the working document in fairly rapid
fashion.
1. Gathering of Background Information
Background information is used by your Strategic Planning Committee for its review.
By shifting through that information, the Committee would be able to develop a sound basis to
continue their work. After existing information has been gathered, another information gathering
activity should take place. Develop a survey questionnaire to poll all members for their viewpoints on
the directions your chapter or division should take.
After the information has been synthesized from the questionnaires as well as from information
already gathered, move to the second step.
2. A Planning Workshop
We recommend the suggestions put forth in an article by John N. Bailey in Leadership magazine,
Spring 1981, pp. 26-29. The title of the article is "Strategic Planning: Lead Your Association With a
Plan for Tomorrow". Based on this article, your chapter or division needs to gather information on
five basic questions:
(1) Where are we now? (The Situation)
(2) How did we get there? (Our Momentum)
(3) Where are we going? (The Direction)
(4) Where should we be going? (Desired Direction)
(5) How will we get there? (The Strategic Plan)
Bailey recommends that after gathering the background information, the planning workshop should
take place.
The first session would assess the current situation and how you arrived at that present situation.
The second activity of this first workshop is to try to figure out where you are going and where you
want to be. This is a very hard-hitting and difficult time for any association or business given the
economic conditions and the change within our profession itself.
(Divisions would be able to conduct this session during the Annual Conference.)
3. Designing a Planning Workbook
The planning Workbook will bring together all of the information gathered during the Planning
Workshop, sift through the ideas put forward, and organize them into a meaningful body for review by
the Planning Workshop attendees and other interested parties in the organization.
4. Second Planning Workshop
After the Planning Workshop information has been gathered into a workbook, another workshop
should be planned. At this workshop (which should not be held too long after the first one), several
things need to be accomplished. In the first half-day a Mission Statement should be adopted for the
S.R.P* 6TH TERM- BUSINESS STRATEGIES & CORPORATE PLANNING. Page 4
Association. The Mission Statement will include what the Association intends to stand for; what it
hopes to contribute to the world-at-large. It should set goals for the Association and then, having set
the goals, fulfill the Mission Statement by translating each goal into a specific objective. This means
that the Mission Statement will be carried forth into a strategic plan.
(Divisions could replace this session with a conference call or by
correspondence.)
5. The Committee Structure
The Strategic Planning Committee should be composed of people who understand the organization
of Special Libraries Association, but also who have a constant feel for the Association and your
chapter and division in general, and where it is moving. The Strategic Planning Committee should be
made a permanent standing committee within the chapters and divisions with a rotating membership.
This will encourage constant review and updating by the membership.
When Should Strategic Planning Be Done?
The scheduling for the strategic planning process depends on the nature and needs of the
organization and the its immediate external environment. For example, planning should be carried
out frequently in an organization whose products and services are in an industry that is changing
rapidly . In this situation, planning might be carried out once or even twice a year and done in a very
comprehensive and detailed fashion (that is, with attention to mission, vision, values, environmental
scan, issues, goals, strategies, objectives, responsibilities, time lines, budgets, etc). On the other
hand, if the organization has been around for many years and is in a fairly stable marketplace, then
planning might be carried out once a year and only certain parts of the planning process, for
example, action planning (objectives, responsibilities, time lines, budgets, etc) are updated each
year.
Consider the following guidelines:
1. Strategic planning should be done when an organization is just getting started. (The strategic plan
is usually part of an overall business plan, along with a marketing plan, financial plan and
operational/management plan.)
2. Strategic planning should also be done in preparation for a new major venture, for example,
developing a new department, division, major new product or line of products, etc.
3. Strategic planning should also be conducted at least once a year in order to be ready for the
coming fiscal year (the financial management of an organization is usually based on a year-to-
year, or fiscal year, basis). In this case, strategic planning should be conducted in time to identify
the organizational goals to be achieved at least over the coming fiscal year, resources needed to
achieve those goals, and funded needed to obtain the resources. These funds are included in
budget planning for the coming fiscal year. However, not all phases of strategic planning need be
fully completed each year. The full strategic planning process should be conducted at least once
every three years. As noted above, these activities should be conducted every year if the
organization is experiencing tremendous change.
4. Each year, action plans should be updated.
5. Note that, during implementation of the plan, the progress of the implementation should be
reviewed at least on a quarterly basis by the board. Again, the frequency of review depends
on the extent of the rate of change in and around the organization.
S.R.P* 6TH TERM- BUSINESS STRATEGIES & CORPORATE PLANNING. Page 5
For-Profit Versus Nonprofit Strategic Planning
Major differences in how organizations carry out the various steps and associated activities in the
strategic planning process are more of a matter of the size of the organization -- than its for-
profit/nonprofit status. Small nonprofits and small for-profits tend to conduct somewhat similar
planning activities that are different from those conducted in large organizations. On the other hand,
large nonprofits and large for-profits tend to conduct somewhat similar planning activities that are
different from those conducted in small organizations. (The focus of the planning activities is often
different between for-profits and nonprofits. Nonprofits tend to focus more on matters of board
development, fundraising and volunteer management. For-profits tend to focus more on activities to
maximize profit.)
Benefits of Strategic Planning
Strategic planning serves a variety of purposes in organizations, including to:
1. Clearly define the purpose of the organization and to establish realistic goals and objectives
consistent with that mission in a defined time frame within the organization‟s capacity for
implementation.
2. Communicate those goals and objectives to the organization‟s constituents.
3. Develop a sense of ownership of the plan.
4. Ensure the most effective use is made of the organization‟s resources by focusing the
resources on the key priorities.
5. Provide a base from which progress can be measured and establish a mechanism for
informed change when needed.
6. Listen to everyone‟s opinions in order to build consensus about where the organization is
going
Other reasons include that strategic planning:
7. Provides clearer focus for the organization, thereby producing more efficiency and
effectiveness.
8. Bridges staff/employees and the board of directors (in the case of corporations).
9. Builds strong teams in the board and in the staff/employees (in the case of corporations).
10. Provides the glue that keeps the board members together (in the case of corporations).
11. Produces great satisfaction and meaning among planners, especially around a common
vision.
12. Increases productivity from increased efficiency and effectiveness.
13. Solves major problems in the organization.
S.R.P* 6TH TERM- BUSINESS STRATEGIES & CORPORATE PLANNING. Page 6
Strategic Planning in Smaller Nonprofit Organizations
The workload for nonprofit organizations has increased, and all the while resources have grown
scarcer. No longer-as if they ever could-can nonprofit organizations assume their funds will arrive
automatically from generous donors, nor can they assume they will have dozens of capable
volunteers available to work. Increasingly, funding organizations and even individual donors want to
see evidence that their gifts will be put to good use. One piece of evidence they often demand is a
strategic plan. So, what is a strategic plan, and how can an organization prepare one?
This short guide is designed to help board members and staff of smaller nonprofit
organizations develop strategic plans that can help them strengthen and sustain their
organizations' achievements.
This guide contains some suggested steps and methods organizations can use to complete these
steps. You will need a comfortable room with tables and chairs and space to move around. It also
helps if the room is one that has plenty of wall space that can be used to tape sheets of paper that
will come out of the strategic planning process. Supplies needed include at least one 27 x 33 inch
easel pad, markers for writing on the large sheets of paper, masking tape, 4 x 6 inch pads of Post-it
notes (one per person), and felt-tip pens (one per person).
What is Strategic Planning?
Most of us know that planning is a way of looking toward the future and deciding what the
organization will do in the future. Strategic planning is a disciplined effort to produce decisions and
actions that guide and shape what the organization is, what it does, and why it does it (Bryson,
1995). Both strategic planning and long range planning cover several years. However, strategic
planning requires the organization to examine what it is and the environment in which it is working.
Strategic planning also helps the organization to focus its attention on the crucial issues and
challenges. It, therefore, helps the organization's leaders decide what to do about those issues and
challenges.
In short, as a result of a strategic planning process, an organization will have a clearer idea of what it
is, what it does, and what challenges it faces. If it follows the plan, it will also enjoy enhanced
performance and responsiveness to its environment.
S.R.P* 6TH TERM- BUSINESS STRATEGIES & CORPORATE PLANNING. Page 7
Who Should be Involved?
Each organization must carefully decide who should be involved in strategic planning. There are
several key roles to be played in a strategic planning process including
1. Planning Process Champion. This is usually a key member of the board of directors or the
executive director. The person must be someone who believes in strategic planning and will help
keep the process on track. This person does not have to be an expert in strategic planning, but
s/he should be someone respected by board and staff members.
2. Plan Writer. Someone must assemble the planning group's decisions into a cohesive document.
This person takes notes during planning meetings and uses them to prepare a plan, often in the
form of several drafts for review by the entire planning group. Writing the plan, however, is more
than simply compiling a record of planning meetings. The plan writer must also insert options and
next logical steps into the drafts at each stage of the planning process.
3. Planning Process Facilitator. This person may be from outside the organization, though this
role also can be played by a member of the board. The facilitator's main responsibility is to plan
each meeting's agenda and to ensure the group stays on track.
4. Planning Team. The planning team's members are those who are most directly involved in laying
out the issues and options for the future of the organization. This might be the entire board of
directors plus the executive director. It might also be a committee of the board plus the executive
director. Key staff beyond the executive director may also be involved. It might also include one
(or more) representatives of people served by the organization. What is important to remember is
to ensure that the people who are fairly representative of and respected by the organization's
leadership are included on the planning team
5. Board of Directors. The board of directors will ultimately adopt the plan and will use it to guide its
decisions and actions. If the entire board is not involved directly in the planning process, it must at
least approve a planning process and be kept informed of its progress. The process of developing
a strategic plan is a special opportunity to engage the board of directors in an active role in
shaping the organization's future.
6. Staff. Staff members, particularly the executive director, have expertise and information that
should be tapped during the planning process. Since they will be the ones who will carry out the
plan on a day-to-day basis, they should be informed and, to whatever extent is appropriate for the
organization, involved. Larger organizations often rely on representation from staff, while smaller
organizations may include only the executive director on the planning team.
7. Clients. Those who benefit from the organization's services are sometimes involved in the
planning process. Each organization makes its own choices about whether to include clients on
the planning team or whether to consult them in some other way.
S.R.P* 6TH TERM- BUSINESS STRATEGIES & CORPORATE PLANNING. Page 8
Getting Started
Each organization needs to decide for itself when the time is right for a strategic plan. It is sometimes
easier to describe when the time is not right than when it is. For example, when the roof has blown
off the building, an organization should replace it, not start strategic planning. The organization
should get its crisis resolved, preferably by acting strategically, and then begin planning. Something
less than a "roof-blown-off" crisis, however, usually prompts organizations to begin strategic
planning. Some organizations find the loss of a significant funding source or, conversely, the
opportunity to obtain a new source of funds, an impetus to plan. Other organizations recognize that
their clients are changing and, therefore, they ought to prepare for these changes. And so on. There
are as many reasons for starting a strategic planning process as there are nonprofit organizations.
After deciding to engage in strategic planning, the organization should take the following initial steps:
List some of the main issues that face the organization. This need not be a complete list,
nor does it have to be fully organized. However, knowing some of the concerns of the
organization will help those who will be asked to be involved in planning to prepare.
Decide when the plan should be adopted by the board. Developing and drafting a plan will
take a few weeks to a few months. The board should set a future board meeting to be the
target date for adopting the plan.
Set aside some time for the planning process. Members of the board and staff who will be
involved in planning should agree to take time for the planning process. This could involve a
few hours a week for three to four weeks or it could involve a single day or weekend. The plan
writer, of course, will spend more time than others as s/he will be preparing a document that
represents decisions made at planning meetings. I recommend that the total time frame from
starting the planning process to adopting the plan not stretch out for more than three months
for a small organization.
Decide if a facilitator would be helpful. Some organizations find that an individual who is not
directly involved with the organization's regular work can help them with their planning
process.
Decide who should be involved and how they should be involved in planning. See the
list on pp. 1-2 for suggestions about the major roles.
Find a place for the planning meetings to occur. It is often helpful to meet someplace other
than the standard meeting location for the organization because a different setting can help
members of the group step out of their usual patterns. The planning location should be
comfortable, include tables or other surfaces for participants to write, and have room to move
around. Having the ability to provide refreshments for planning participants is also needed.
Some organizations use large sheets of paper to record ideas, so having a planning location
that permits hanging paper (using masking tape or other nondestructive adhesive) on the walls
is ideal.
S.R.P* 6TH TERM- BUSINESS STRATEGIES & CORPORATE PLANNING. Page 9
Steps in the Strategic Planning Process
The following outline of steps is a suggestion only. Each organization will need to decide what
works and what doesn't. Suggested methods for completing each step and an approximate time
frame for each are included as well.
Step 1: Mission Review
Nearly every organization these days has a mission statement. It is helpful to periodically review
the mission and to change it if necessary. An organization's mission is its reason for being, its
purpose, or its social justification for existing. Just stating the organization's mission isn't enough.
Clarifying the organization's purpose helps eliminate a great deal of unnecessary conflict and helps
channel the organization's discussions and activity.
The classic planning process begins by writing a mission statement. I recommend instead that the
planning team members simply start by reviewing the mission statement, including asking the
following questions to help them understand the mission better:
Who are we? If the organization were walking down the street and someone asked who it was,
what would the answer be? Distinguish what it is and what it does.
In general, what are the basic social or political issues the organization exists to meet or what are
the basic social or political problems the organization exists to address? This is the basic social
justification for the organization's existence.
What, in general, does the organization do to recognize, anticipate, and respond to those needs
or problems? How does the organization find out about them and decide what to do?
Who are the key stakeholders1 for the organization, and how should we respond to them? How
do we find out what they want from the organization?
What are the organization's philosophy, its values, and its culture?
What makes the organization unique or distinctive; that is, what gives the organization its
competitive advantage?
Step 2: Organizational Mandates
Formal mandates are those required by a funding or authorizing group. If these mandates are not
met, the organization may face serious sanctions including (possibly) the inability to operate. Informal
mandates are those expectations that may remain unspoken. Often the expectations of clients or
staff are informal in nature. Mandates include both those things an organization is required to do as
well as those things it is required not to do. A simple way to state this is to ask the question-what are
we supposed to do, and who requires it of us? A similar question could be asked about informal
mandates-how can we find out what stakeholders expect of us?
S.R.P* 6TH TERM- BUSINESS STRATEGIES & CORPORATE PLANNING. Page 10
Step 3: "Back to the Future"
In planning we usually assume we are thinking only of the future. However, the organization's past is
a source of much information about what has been effective and what has not. It is highly useful for
the planning team to look backward for the same number of years it is expecting to plan into the
future. For example, if the planning horizon is five years into the future, then look back over the
previous five years.
Asking questions like the following can help clarify some of the issues:
1. What opportunities has the organization had? How has the organization responded to these
opportunities (taken advantage of them? unable to take advantage of them? ignored them?)
2. What threats has the organization had to deal with during this time period? Which were handled
successfully, which unsuccessfully, and which were ignored?
3. What strengths did the organization rely on to deal with threats or opportunities? Which strengths
did the organization ignore?
4. What weaknesses has the organization had in dealing with threats and opportunities? What has
the organization done about them?
Step 4: Envisioning the Future
At this stage, it is helpful to start looking briefly into the future of the organization. This is an exercise
requiring imagination, not necessarily "practical" ideas. However, this kind of exercise can often
result in some of the best ideas for an organization's future-along with some of the wackiest!
Step 5: SWOT
"SWOT" (pronounced swat) stands for Strengths, Weaknesses, Opportunities, and Threats. This is a
key part of strategic planning because it examines the organization itself and the external and future
environment of the organization. Strengths and weaknesses refer to the organization itself-they are
akin to assets and liabilities. They are current, that is, they exist now. Opportunities and threats
exist outside the organization and/or they refer to the future
Step 6: Planning Themes
One of the first steps the organization should have taken in deciding to plan was listing some of the
issues around which to plan (p. 3). At this point in the planning process, the planning team will
synthesize information from its earlier steps in planning and combine it with the issues or themes
identified at the outset. This will form the basis for developing specific steps and tasks to implement
the plan.
Some questions the group might ask itself include
Is each issue or theme consistent with the organization's mission? If not, then should the
mission be changed or should the theme(s) be restated?
Are the themes consistent with one another?
Are the themes or items distinct enough from one another that they can be easily categorized?
For example, issues related to the physical plant or space occupied by the organization may
S.R.P* 6TH TERM- BUSINESS STRATEGIES & CORPORATE PLANNING. Page 11
be separated from issues related to the personnel of the organization. There may be
interrelationships (more staff may require more space, for example), but the themes should be
listed separately. They will be linked later on in the process.
Step 7: Setting Out the Steps and Time Frame
At this point, the process may become somewhat messy, and members of the planning team should
feel free to move around, write on the large sheet, post more Post-its, move them around, and so on.
Have the discussion focus on whether the steps are in the right order (e.g., one shouldn't prepare to
move into a new building before signing the lease) and whether they can be accomplished in the time
available. Also, having members identify interim steps (these can be listed with smaller-sized Post-
its) is very useful at this point. Some groups may also use markers to draw lines between some of
the Post-its and to add information to them (be sure the markers don't bleed through to the wall).
Some of the items the group should consider include
Are the major steps in the "right" order?
Are the completion dates realistic?
Are there critical starting points and interim steps that should be listed?
What are some of the linkages between the themes and their major components? Draw lines
between these if necessary.
How will we know when we have accomplished this objective? What will determine whether
we have been successful?
What are some of the weaknesses and threats that will affect the organization's ability to
complete each step? How can they be dealt with, and are additional steps needed in order to
ensure the organization can accomplish its goals?
What resources (e.g., time, personnel, talent, and money) are needed to accomplish each
component or step? Are these resources currently available to the organization or must they
be acquired? If they must be acquired first, then they should be identified in the appropriate
place(s) on the large sheet of paper.
Step 8: Bringing It All Together-Writing the Plan
The plan writer will have been taking careful notes throughout the process, including preparing
interim reports between planning sessions. The plan writer now must assemble the information into a
coherent document that reflects the key decisions of the planning team and enables the organization
to move forward to implementation.
S.R.P* 6TH TERM- BUSINESS STRATEGIES & CORPORATE PLANNING. Page 12
The writer will need to insert some ideas and clarification into the plan. Following is a suggested
outline for the final plan:
The organization's mission. This section may also include any relevant comments
summarizing some of the ways the organization's mission makes it unique or provides it a
competitive advantage.
The organization's mandates and its stakeholders
A summary of the SWOT analysis
Vision of success. This section may include descriptions of key items the planning team
identified in its "envisioning the future" exercise. The plan writer may wish to modify the items
on the list somewhat so that it will be clear how the organization will know it is succeeding.
Strategic issues, goals, and objectives. This section will be the meat of the plan because
within it will be a listing of each planning theme (now identified as a strategic issue) and the
goals and objectives associated with it.
Financial implications of the plan
Time line for reviewing and updating the plan
Step 9: Reviewing and Revising the Mission
Early in the planning process, the organization's planning team reviewed the mission statement. At
this later stage in the planning process, it is important to review the mission once again and to modify
it to reflect the plans and ambitions of the organization. Sometimes a mission is too narrowly stated,
and a strategic planning process may identify areas needing broader focus; conversely, a mission
may be too vague, and it will need specifics.
Step 10: Adopting the Plan
The planning team and the plan writer may have considered several drafts of the plan before
presenting a final version to the board of directors. As a separate item at a regular board meeting, the
plan should be formally presented to the board for its consideration and adoption. Ideally, the board
members will have read the plan before the board meeting, but it is often helpful to provide a verbal
overview of the plan's contents.
Step 11: Checking Progress on the Plan (approximate time required: 15 - 30 minutes)
Once the board has adopted the plan, it should also plan to check the progress on accomplishing the
plan's goals and objectives. Such checkpoints should occur at regular board meetings, perhaps
every three months. The time for checking may vary with the nature of the objectives, but their review
should be an important part of the board's business on a regular basis.
Getting Finished :Just as it is important to get started with planning, it is important to finish a
planning process. In some ways, though, effective planning never ends because a plan must be
revised and updated on a regular basis. Nonetheless, the planning process champion must ensure
the planning process comes to a successful conclusion and that the organization can move to
implementing the plan.
S.R.P* 6TH TERM- BUSINESS STRATEGIES & CORPORATE PLANNING. Page 13
An Approach to Strategic Planning
This presentation is based on a couple of presentations which I put together for different clients. It
outlines an approach to strategic planning which we have used successfully in organisations.
The New Paradigm “Strategic Triangle” emphasises the essentially relational nature of our
approach.
There are three areas which must be considered in any strategic process:
The Organisation, Its Environment and The Future.
Yet what really matters is not these things on their own but the relationships between them. Actually,
even the strategic triangle over-simplifies this by breaking it down into three dyadic relationships. In
reality all three terms interrelate in complex webs of co-created meaning.
We see strategy as a process of inquiry. The crucial thing is to „increase the possibility space‟ for the
organisation so that more actions and responses can be considered and undertaken if appropriate.
For us, the process is more important than the output – strategic planning is crucial, the strategic plan
is not.
We use methods such as scenario planning and environmental scanning; helping
organisations to develop and test a range of strategic options so that they can respond to
their changing environment and also help to shape it (the adaptive organisation co-evolves
with others in its 'business ecosystem).
The "Strategic Triangle" below gives an indication of the way that we approach the different
aspects of planning:
There are three 'learning aspects' which characterise the planning process, which occur in the
relationships between the corners of the Strategic Triangle. All of these aspects interact with one
another so the order given below is purely arbitrary; any other order would do just as well.
S.R.P* 6TH TERM- BUSINESS STRATEGIES & CORPORATE PLANNING. Page 14
Between the organisation and its business ecosystem—that is those other organisations which
which it competes or collaborates (or sometimes both)—there should be a relationship of co-
evolution. The planning process helps to uncover the web of relationships and to delineate the
relative fitness of the different players. We use a variety of approaches to 'ecosystem mapping' to
help discover these.
Between the organisation and its future are a number of strategic options. Any organisation has a
number of possible paths it could take and a range of different ways in which it could develop. The
wider the range of possibilities, the more adaptive the organisation will be. Of course, it is necessary
to make a decision to take one particular path (dithering is not a strategic option) but the adaptive
organisation is always prepared to take a different path when it is appropriate. Organisations which
fail are usually those which continue down a path even when it becomes clear that it is leading
nowhere.
Between the business ecosystem and the future are a wide range of possible futures. Scenario
planning, originally developed at Shell, is an ideal way of trying to anticipate these possible futures.
The aim is not to try to predict the future but to come to a greater awareness of the possibilities.
A slide presentation can be viewed which gives an idea of a typical planning process, though all our
work is tailored to the needs of the organisation.
1.The Organisation
Culture
What are the patterns of thinking & behaviour which characterise the
organisation?
Is change needed?
Competencies
What is the organisation distinctively good at ?
Do these give competitive advantage ?
What needs to be developed ?
o It is conventional to start with a look at the organisation. The classical, and still useful, SWOT
(Strengths, Waeknesses, Opportuities & Threats) analysis usually starts with a look at the
organisation‟s strengths & weaknesses and only then moves on to look at the relationship with the
environment in considering opportunities & threats. This is OK but it does have some dangers. As
the next slide illustrates, many mature organisations are much too focused on themselves and
find it hard to look beyond the boundaries so this must always be guarded against.
There are many questions which can be asked about an organisation. Some people like to do lots
of number crunching to characterise the rational side of organisational life and to use
questionnaires to try to quantify the „softer‟ aspects of organisation. For them the answers are
more important than the questions. It seems to us that the reverse is true: it is in the process of
asking questions that change and development become possible. Answers close conversations;
questions (asked in the right way) can open them up
So we advocate asking questions about two key areas: what is our nature as an organisation
(culture) & what can we do as an organisation (competency)? These are questions which should
always be on the agenda. If they have not been asked seriously recently it may be necessary to
spend some time exploring them.
S.R.P* 6TH TERM- BUSINESS STRATEGIES & CORPORATE PLANNING. Page 15
\
This slide is useful in indicating the change of focus which often happens as companies become
more mature. I recently worked with a group of bright young managers, facilitating them through a
scenario planning exercise. The hardest thing was trying to help them look beyond the confines of
the own organisation, let alone their own industry. Intellectually, they accepted the need to look out
and up but it was as if there was a powerful magnetic force drawing them back and down. Changing
habits is not easy but awareness is often the first step.
2.Business Ecosystem
I put this diagram together some years
ago for a client. It isn‟t rigorous but it
doe indicate most of the areas which
need attention. Students of strategy will
recognise Michael Porter‟s five forces
amongst other influences.
Mapping the ecosystem =“Our current relationships”
STEEP (Society, Technology, Environment, Economics, Politics)
Customers
Markets
Competitors
Five forces
S.R.P* 6TH TERM- BUSINESS STRATEGIES & CORPORATE PLANNING. Page 16
STEEP used to be PEST but we now recognise the need to consider environmental factors as
well. Customers, markets and competitors can be analysed in great depth. The point is to do as
much as is necessary.
3. The Future
The future is inherently unpredictable
The purpose of planning is not to predict the future but to increase the possibility space
for the organisation
The future is co-created
We are neither passive victims of forces beyond our control nor masters of our destiny
We believe that it is important to get away from a „railway tracks‟ notion of the future as pre-
ordained and predictable (or pre-ordained and unpredictable). “Men make history but not in
circumstances of their own choosing” (Marx); “There‟s a divinity which shapes our ends, rough
hew them how we will” (Hamlet).
We make the future in combination with others and within the context of natural constraints. No-
one can do it or predict it on their own but we aren‟t helpless either. In this sense the future is
chaotic – patterned but unpredictable.
a) Strategic options -“Our future possibilities”
Key strategic issues
What are the real areas which affect our business?
(E.g. service, channel, market)
Formulate key decision areas
Where do decisions need to be made?
Create clusters of options
Discover coherent strategies
Check against distinctive competencies
Strategic options result when we look at the organisation and weave stories of how it might be
in the future. It is rare that there is only one possible way in which an organisation might
develop and flourish. Finding strategic options
is more art than science but there are
processes which can help.
This is one well-known approach to the development
of strategic options – Ansoff‟s product/market matrix
as developed by Johnson & Scholes. It is important
to test strategic options against existing
organisational competencies.
S.R.P* 6TH TERM- BUSINESS STRATEGIES & CORPORATE PLANNING. Page 17
„
b) Scenarios -“Imagining the future”
Identify key driving forces
Choose most uncertain/most significant
Develop alternatives
„Flesh out‟ with narrative
Scenario planning has become very popular since its early successes at Shell. The process can
be very elaborate but many organisations can develop some useful scenarios with only a few
days‟ work.
5. Typical process
Structured conversations
o Speak with as wide a range of people as possible
Ecosystem workshops
o Look out before looking in
o STEEP, customers, etc.
Organisation workshops
o Distinctive competencies & competitive advantage
o Explore culture
Develop strategic options
Develop scenarios
Cross-impact competencies against scenarios
Prepare change agenda
This is the sort of process that we would advocate. We would start with a set of conversations
with individuals or (better) groups of people in the organisation. Each of the workshops probably
needs two days, though this will depend on the amount of work the organisation has done on
these issues recently.
S.R.P* 6TH TERM- BUSINESS STRATEGIES & CORPORATE PLANNING. Page 18
STRATEGIC PLANNING MODEL
Overview
1. Clearly define the complete strategic planning process
2. Explain how to create and execute a strategic plan
3. Provide a common model that the entire organization can follow
What is Strategic Planning?
Process to establish priorities on what you will accomplish in the future
Forces you to make choices on what you will do and what you will not do
Pulls the entire organization together around a single game plan for execution
Broad outline on where resources will get allocated
Why do Strategic Planning?
If you fail to plan, then you plan to fail – be proactive about the future
Strategic planning improves performance
Counter excessive inward and short-term thinking
Solve major issues at a macro level
Communicate to everyone what is most important
Fundamental Questions to Ask
o Where are we now? (Assessment)
o Where do we need to be? (Gap / Future End State)
o How will we close the gap (Strategic Plan)
o How will we monitor our progress (Balanced Scorecard)
A Good Strategic Plan should . . .
Address critical performance issues
Create the right balance between what the organization is capable of doing vs. what the
organization would like to do
Cover a sufficient time period to close the performance gap
Visionary – convey a desired future end state
Flexible – allow and accommodate change
Guide decision making at lower levels – operational, tactical, individual
S.R.P* 6TH TERM- BUSINESS STRATEGIES & CORPORATE PLANNING. Page 19
Strategic Planning Model : A B C D E
Pre-Requisites to Planning
• Senior leadership commitment
• Who will do what?
• What will each group do?
• How will we do it?
• When is the best time?
1.Assessment Model:
S
S W O T
1. Strength’s
2. Weaknesses
3. Opportunities
4. Threats
S.R.P* 6TH TERM- BUSINESS STRATEGIES & CORPORATE PLANNING. Page 20
1. Strength’s
Strength‟s – Those things that you do well, the high value or performance points
Strengths can be tangible: Loyal customers, efficient distribution channels, very high
quality products, excellent financial condition
Strengths can be intangible: Good leadership, strategic insights, customer intelligence,
solid reputation, high skilled workforce
Often considered “Core Competencies” – Best leverage points for growth without
draining your resources /
2. Weaknesses
Weaknesses – Those things that prevent you from doing what you really need to do
Since weaknesses are internal, they are within your control
Weaknesses include: Bad leadership, unskilled workforce, insufficient resources, poor
product quality, slow distribution and delivery channels, outdated technologies, lack of
planning,
3. Opportunities
Opportunities – Potential areas for growth and higher performance
External in nature – marketplace, unhappy customers with competitor‟s, better economic
conditions, more open trading policies, . .
Internal opportunities should be classified as Strength‟s
Timing may be important for capitalizing on opportunities
4. Threats
Threats – Challenges confronting the organization, external in nature
Threats can take a wide range – bad press coverage, shifts in consumer behavior,
substitute products, new regulations,
May be useful to classify or assign probabilities to threats
The more accurate you are in identifying threats, the better position you are for dealing
with the “sudden ripples” of change
2.Baseline
Why create a baseline?
Puts everything about the organization into a single context for comparability and planning
Descriptive about the company as well as the overall environment
Include information about relationships – customers, suppliers, partners, . . .
Preferred format is the Organizational Profile
S.R.P* 6TH TERM- BUSINESS STRATEGIES & CORPORATE PLANNING. Page 21
Organizational Profile
1. Operating Environment
Products and Services – Suppliers, Delivery Channels, Contracts, Arrangements, . . .
Organizational Culture – Barriers, Leadership, Communication, Cohesiveness . . . .
Workforce Productivity – Skill levels, diversity, contractor‟s, aging workforce, . . .
Infrastructure – Systems, technology, facilities, . .
Regulatory – Product / Service Regulation, ISO, Quality Standards, Safety, Environmental, . .
2. Business Relationships
Organizational Structure – Business Units, Functions, Board, Management Layers, . . .
Customer Relationships – Requirements, Satisfaction, Loyalty, Expectations, . . .
Value Chain – Relationship between everyone in the value chain . . . .
Partner Relationships – Alliances, long-term suppliers, customer partnerships, . . .
3. Key Performance Categories
Customer
Products and Services
Financial
Human Capital
Operational
External (Regulatory Compliance, Social Responsibility, . . . )
3.Components
Major Components of the Strategic Plan / Down to Action
S.R.P* 6TH TERM- BUSINESS STRATEGIES & CORPORATE PLANNING. Page 22
Mission Statement
Captures the essence of why the organization exists – Who we are, what we do
Explains the basic needs that you fulfill
Expresses the core values of the organization
Should be brief and to the point
Easy to understand
If possible, try to convey the unique nature of your organization and the role it plays that
differentiates it from others
Vision
How the organization wants to be perceived in the future – what success looks like
An expression of the desired end state
Challenges everyone to reach for something significant – inspires a compelling future
Provides a long-term focus for the entire organization
Guiding Principles and Values
Every organization should be guided by a set of values and beliefs
Provides an underlying framework for making decisions – part of the organization‟s culture
Values are often rooted in ethical themes, such as honesty, trust, integrity, respect, fairness,
Values should be applicable across the entire organization
Values may be appropriate for certain best management practices – best in terms of quality,
exceptional customer service, etc.
Goals’
Describes a future end-state – desired outcome that is supportive of the mission and vision.
Shapes the way ahead in actionable terms.\
Best applied where there are clear choices about the future.
Puts strategic focus into the organization – specific ownership of the goal should be assigned
to someone within the organization.
May not work well where things are changing fast – goals tend to be long-term for
environments that have limited choices about the future.
Developing Goals
Cascade from the top of the Strategic Plan – Mission, Vision, Guiding Principles.
Look at your strategic analysis – SWOT, Environmental Scan, Past Performance, Gaps . .
Limit to a critical few – such as five to eight goals.
Broad participation in the development of goals:
Consensus from above – buy-in at the execution level.
Should drive higher levels of performance and close a critical performance gap.
Objectives
Relevant - directly supports the goal
Compels the organization into action
S.R.P* 6TH TERM- BUSINESS STRATEGIES & CORPORATE PLANNING. Page 23
Specific enough so we can quantify and measure the results
Simple and easy to understand
Realistic and attainable
Conveys responsibility and ownership
Acceptable to those who must execute
May need several objectives to meet a goal
Goals vs. Objectives\]
GOALS OBJECTIVES
Very short statement, few words Longer statement, more descriptive
Broad in scope Narrow in scope
Directly relates to the Mission Statement Indirectly relates to the Mission Statement
Covers long time period (such as 10 years) Covers short time period (such 1 year budget
cycle)
Examples of Objectives
1. Develop a customer intelligence database system to capture and analyze patterns in purchasing
behavior across our product line.
2. Centralize the procurement process for improvements in enterprise-wide purchasing power.
3. Consolidate payable processing through a P-Card System over the next two years.
Examples of Goals
1. Reorganize the entire organization for better responsiveness to customers
2. Manage our resources with fiscal responsibility and efficiency through a single comprehensive
process that is aligned to our strategic plan.
3. Establish a means by which our decision making process is market and customer focus.
4.Down to Specifics
What are Action Plans?
The Action Plan identifies the specific steps that will be taken to achieve the initiatives and
strategic objectives – where the rubber meets the road
Each Initiative has a supporting Action Plan(s) attached to it
Action Plans are geared toward operations, procedures, and processes
They describe who does what, when it will be completed, and how the organization knows
when steps are completed
Like Initiatives, Action Plans require the monitoring of progress on Objectives, for which
measures are needed
S.R.P* 6TH TERM- BUSINESS STRATEGIES & CORPORATE PLANNING. Page 24
Characteristics of Action Plans
1. Assign responsibility for the successful completion of the Action Plan. Who is responsible?
What are the roles and responsibilities?
2. Detail all required steps to achieve the Initiative that the Action Plan is supporting. Where will
the actions be taken?
3. Establish a time frame for the completion each steps. When will we need to take these
actions?
4. Establish the resources required to complete the steps. How much will it take to execute
these actions?
5. Define the specific actions (steps) that must be taken to implement the initiative. Determine
the deliverables (in measurable terms) that should result from completion of individual
steps. Identify in-process measures to ensure the processes used to carry out the action are
working as intended. Define the expected results and milestones of the action plan.
6. Provide a brief status report on each step, whether completed or not. What communication
process will we follow? How well are we doing in executing our action plan?
7. Based on the above criteria, you should be able to clearly define your action plan. If you have
several action plans, you may have to prioritize.
Action Plan Execution
• Requires that you have answered the Who, What, How, Where, and When questions related
to the project or initiative that drives strategic execution
• Coordinate with lower level sections, administrative and operating personnel since they will
execute the Action Plan in the form of specific work plans
• Assign action responsibility and set timelines – Develop working plans and schedules that
have specific action steps
• Resource the project or initiative and document in the form of detail budgets (may require
reallocation prior to execution)
• Monitor progress against milestones and measurements
• Correct and revise action plans per comparison of actual results against original action plan
Quantify from Action Level Up in terms of Measurements
Measure your milestones – short-term outcomes at the Action Item level.
Measure the outcomes of your objectives.
Try to keep your measures one per objective.
May want to include lead and lag measures to depict cause-effect relationships if you are
uncertain about driving (leading) the desired outcome.
Establish measures using a template to capture critical data elements
S.R.P* 6TH TERM- BUSINESS STRATEGIES & CORPORATE PLANNING. Page 25
Measurement Template
(Insert
organization
name)
(Insert
division
name)
(Insert
department
name)
Risk
Frame
area
objective
supports
(Insert
objective
owner)
(Insert
measurement
owner)
(Insert
reporting
contact
info)
Objective Description – description of objective purpose, in sufficient detail for
personnel not familiar with the objective to understand its intent. Objective
descriptions are typically two or three paragraphs long. This will appear in the pop-up
window when you mouse over the objective in the Balanced Scorecard System.
References – source
documentation for objective and
objective description
Comments – additional information about the objective not covered in above blocks, such as recommendations for
further revision, additional organizations objective impacts, recommendations for coordination / alignment with other
objectives, etc.
Measure Name - The
name exactly as you want
it to appear in the
Balanced Scorecard,
including the measure
number (i.e. Percent
Employees Satisfied, etc.)
Measure Description – description of the
measure, include its intent, data source, and
organization responsible for providing
measure data. This will appear in the pop-up
window when you mouse over the measure in
the Balanced Scorecard.
Measure Formula
– formula used to
calculate measure
value (if any)
Data Source - The
source of the data
– manual, data
spreadsheet, or
database name
and contact familiar
with the data
Measure Weight - the relative weight of the measure based on the impact it
has on the overall objective. The total weights for all measures for an
objective must add to 100
Measure Reporter – Person responsible
for providing measure data. Include the
name, organization and email.
Target Maximum – Maximum expected value for the
measure.
Effective Date
– Date the
target first
becomes
effective
Frequency – How often
target data will be reported
Units –
Units of
measure
Target – Point where the measure goes from green to
amber
Target Minimum – Point where the measure goes from
amber to red. The target minimum and target can not
be the same value.
Scorecard Perspective
Name
Criteria for Good Measures
Integrity – Complete; useful; inclusive of several types of measure; designed to measure the
most important activities of the organization
Reliable: Consistent
Accurate - Correct
Timely – Available when needed: designed to use and report data in a usable timeframe
Confidential and Secure: Free from inappropriate release or attack
Examples of Measurements Lead Indicators
Average time to initiate customer contact => shorter time should lead to better customer
service
S.R.P* 6TH TERM- BUSINESS STRATEGIES & CORPORATE PLANNING. Page 26
Average response time to incident => below average response times should lead to
increased effectiveness in dealing with incident
Facilities that meet facility quality A1 rating => should lead to improved operational
readiness for meeting customer needs
Examples of MeasurementsLag Indicators
Overall customer satisfaction rating => how well you are doing looking back
Business Units met budgeted service hour targets => after the fact reporting of service
delivery volume
Number of category C safety accidents at construction sites => historical report of what has
already taken place
Targets
For each measurement, you should have at least one target
Targets should stretch the organization to higher levels of performance
Incremental improvements over current performance can be used to establish your targets
Targets put focus on your strategy
When you reach your targets, you have successfully executed your strategy
5.Evaluate
Continuous Feedback through the Balanced Scorecard
Cascade and align from the top to create a Strategic Management System.
Use the Balanced Scorecard framework to organize and report actionable components.
Use the Scorecard for managing the execution of your strategy.
Scorecard “forces” you to look at different perspectives and take into account cause-effect
relationships (lead and lag indicators)
Improves how you communicate your strategy – critical to execution.
Performance Management
Establish a regular review cycle using your balanced scorecard.
Analyze and compare trends using graphs for rapid communication of performance.
Don‟t be afraid to change your metrics – life cycle (inputs to outputs to outcomes)
Work back upstream to revise your plans: Action Plans > Operating Plans > Strategic
Plans
Planning is very dynamic – must be flexible to change.
Recognize and reward good performance results
Brainstorm and change – take corrective action on poor performance results.
Link Budgets to Strategic Plan
The world‟s best Strategic Plan will fail if it is not adequately resourced through the budgeting
process
Strategic Plans cannot succeed without people, time, money, and other key resources
S.R.P* 6TH TERM- BUSINESS STRATEGIES & CORPORATE PLANNING. Page 27
Aligning resources validates that initiatives and action plans comprising the strategic plan
support the strategic objectives
What Resources? & How to Link?
Every Action Plan should identify the following:
The people resources needed to succeed
The time resources needed to succeed
The money resources needed to succeed
The physical resources (facilities, technology, etc.) needed to succeed
Resource information is gathered by Objective Owners which is provided to the Budget
Coordinators for each Business Unit.
Resources identified for each Action Plan are used to establish the total cost of the Initiative.
Cost-bundling of Initiatives at the Objective level is used by our Business Unit Budget
Coordinators to create the Operating Plan Budget
Some Final Thoughts
Integrate all components from the top to the bottom:
Vision > Mission > Goals > Objectives > Measures > Targets > Initiatives > Action Plans >
Budgets.
Get Early Wins (Quick Kills) to create some momentum
Seek external expertise (where possible and permissible)
Articulate your requirements to senior leadership if they are really serious about strategic
execution.
Techniques and Analytical Methods and Strategic Analysis Plans
1. Econometric model
2. Trend Analysis
3. Regression Analysis
4. The Delphi Technique
5. Bench Marking
6. Spying
7. Expert Opinion Method
8. Sales Force Composite Method
9. Extrapolation
10. Moving Averages
11. Exponential Smoothing
12. Simulation
13. Morphological Analysis
14. Game Theory
15. Monte Carlo Method
16. Fuzzy Logic
17. Genetic Algorithms
18. Quest
S.R.P* 6TH TERM- BUSINESS STRATEGIES & CORPORATE PLANNING. Page 28
I. Strategic marketing plans
1. Product related factors:
• Variety
• Differentiation
• Product positioning
• Packaging
2. Price related factors:
• Pricing policies
• Pricing methods
• Government policies
3. Place related factors:
• Logistics
• Distribution
• Market intermediaries
4. Promotion related factors:
• Promotion budget
• Advertising
• Public relations
• Sales promotion
5. System related factors:
• Market intelligence
• Market information system
• Customer relationship management
Typical strengths that build marketing capability
• Wide variety of goods
• Good quality products
• Focused positioning
• Price protection
• Low prices
• Differentiated products
• High profile advertisement
• Brand building efforts
• Effective distribution system
• Strong R&D for new product development
Techniques for analyzing the strength and weakness in marketing
• Market share analysis
• Marketing audit
• Brand monitoring surveys
• Dealer and consumer panels
• Analysis of profit volume relationships
S.R.P* 6TH TERM- BUSINESS STRATEGIES & CORPORATE PLANNING. Page 29
II. Strategic Advantage Analysis:
1. Marketing and Distribution
Competitive position and market share:
1. Product line
2. Product life-cycle
3. Pricing Strategy
4. Nature of the market
5. Channels of Distribution
6. Brand Image
7. Market Research
8. Packaging
9. Marketing Policy
Finance and Accounting:
• Financial resources and strength
• Capital structure and cost of capital
• Relations with owners
• Financial planning and budgeting
• Accounting System and audit procedure
• Tax planning and tax advantages
III. Strategic Financial Plans:
1. Factors related to sources of fund:
• Capital structure
• Reserves and surplus
• Relation ship with bankers
• Working capital availability
• Financing pattern
2. Factors relating to usage of funds:
• Fixed assets
• Currents asset
• Loans and advances
• Rapport with share holders
• Dividend distribution
3. Factors related to the management of funds:
1. Tax planning measures
2. Cost reduction measures
3. Financial accounting
4. Risk/return management
5. Budgeting system
Typical strengths that develop financial capability
• Access to financial resource
• High rate of credit worthiness
• Availability of low cost capital compared
to competitors
• Favorable tax provisions given by
government
• High level of shareholders confidence
• Cordial relationship with bankers
Techniques adopted for analyzing the strength and weakness in finance area
• Liquidity ratio
• Profitability ratio
• Leverage ratio
• Cash flow analysis
• Payback and IRR analysis
• Breakeven analysis
• Earning to sales and
• Earning per share
S.R.P* 6TH TERM- BUSINESS STRATEGIES & CORPORATE PLANNING. Page 30
Production and operations management
• Cost of operations
• Capacity utilization
• Production facilities
• Cost and availability of materials and components
• Plant location
• Purchasing and inventory control
IV. Strategic operations issues
1. Factors related to production system:
• Location
• Layout
• Work system
• Capacity
• Extent of automation
• Vertical integration
2. Factors related to operations and control
systems:
• Aggregated production planning
• Material supply
• Capacity utilization
• Quality control
• Maintenance systems
3. Factors related to R&D systems:
• Patents
• Technology collaboration
• Technology transfer
• Technology agreements
• Facilities
Techniques used for assessing strengths and weakness of operations management
• Capacity utilization analysis
• Inventory analysis
• Cost of production analysis
• Analysis of patents generated
• New products commercialization record
• Comparison of investments made in new product launch
Typical strengths that build operations capability
• High capacity utilization
• Suitable plant location
• Good inventory control system like JIT
• High profile scientist
• Technical collaboration with world-class R&D firms
S.R.P* 6TH TERM- BUSINESS STRATEGIES & CORPORATE PLANNING. Page 31
Human Resources and Organizational Factors:
• Organization Climate
• Employee performance record
• Personnel policies and practices
• Managerial (leadership) style
• Union-Management relations
• Corporate Image
V.Strategic human resource issues
1. Factors related to personnel systems:
• Manpower planning system
• Selection and development system
• Compensation and
• Appraisal system
2. Factors related to employee characteristics:
• Quality and skill of management
• Image of organization as employer
• Working conditions
• leadership
3. Factors related to industrial relations:
• Union-management relationship
• Health, welfare, safety, stress, discipline
• Collective bargaining
Typical strengths that support human resource and capabilities
• Efficient personnel systems
• Be a model employer
• High level of morale
• Satisfied workforce
• Statutory working conditions
• Need based training programs
• Absenteeism
• Cordial work environment
• Motivated workforce
S.R.P* 6TH TERM- BUSINESS STRATEGIES & CORPORATE PLANNING. Page 32
Hoshin Planning Process
The Hoshin Planning Process is a systematic planning methodology for:
1) defining the long-range key objectives of the organization or company; and
2) ensuring the implementation of 'business fundamentals' required to successfully run the
business on a daily basis.
Hoshin planning, therefore, is a two-prong planning approach that covers the organization's
strategy to achieve breakthrough results through its long-term objectives and ensure continual
improvement through its short-term business fundamentals.
Like many modern business concepts today, hoshin planning was developed in Japan.
The Japanese words 'hoshin kanri' can be translated into 'direction setting'.
And like many Japanese management concepts, hoshin planning also promotes the
involvement of all employees in the process, on the basic premise that desired results can
only be attained if everybody in the organization fully understands the goals of the company
and is somehow involved in the 'chain' of plans defined to achieve them.
The plan generated by the Hoshin process is hierarchical in nature, with the corporate
objectives determining the corporate strategies which, in turn, are supported by lower-level
strategies that cascade down the organization.
In effect, the goals of every individual should support the goals of the next person up in the
hierarchy.
Every strategy further consists of tactics or actions that need to be undertaken to accomplish
the strategy.
S.R.P* 6TH TERM- BUSINESS STRATEGIES & CORPORATE PLANNING. Page 33
The hoshin planning process basically consists of the following steps:
1) Identification of critical business issues that the organization faces;
2) Establishment of business objectives to address these issues;
3) Definition of the company's over-all goals;
4) Development of strategies that support the over-all goals;
5) Definition of sub-goals or tactics that support each strategy;
6) Establishment of metrics or indicators for measuring process performance; and
7) Establishment of business fundamental measures.
The first 3 steps of this process are handled by top management, with the defined over-all goals
supported by the rest of the organization through steps 4-7.
An important aspect of the Hoshin process is the regular review of the defined plans.
It is not enough to have a documented plan - it needs to be checked against actual
performance.
Hoshin plans must undergo a major review at least once a year.
During review, Hoshin plans are usually presented using Hoshin review tables, each of which
shows a single objective and its supporting strategies.
A group or individual responsible for several objectives therefore needs to generate several
review tables in order to cover all objectives.
The following details must be shown for each strategy in the review table:
1) the strategy owner(s);
2) the timeframe;
3) the performance metrics;
4) the target(s) for each strategy as defined during the Hoshin planning process; and
5) the actual results at the time of the review. Any discrepancy between the target and actual
results, whether positive or negative, must be noted along with the impact of the discrepancy on
next year's plans. As mentioned earlier, hoshin plans are hierarchical in nature, cascading from
the top levels to the lower ones, so review tables must likewise cascade upwards.
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STRATEGY - THE STRATEGIC AUDIT
In our introduction to business strategy, we emphasised the role of the "business environment" in
shaping strategic thinking and decision-making.
The external environment in which a business operates can create opportunities which a business
can exploit, as well as threats which could damage a business. However, to be in a position to
exploit opportunities or respond to threats, a business needs to have the right resources and
capabilities in place.
An important part of business strategy is concerned with ensuring that these resources and
competencies are understood and evaluated - a process that is often known as a "Strategic Audit".
The process of conducting a strategic audit can be summarised into the following stages:
(1) Resource Audit:
The resource audit identifies the resources available to a business. Some of these can be owned
(e.g. plant and machinery, trademarks, retail outlets) whereas other resources can be obtained
through partnerships, joint ventures or simply supplier arrangements with other businesses. You can
read more about resources here.
(2) Value Chain Analysis:
Value Chain Analysis describes the activities that take place in a business and relates them to an
analysis of the competitive strength of the business. Influential work by Michael Porter suggested that
the activities of a business could be grouped under two headings: (1) Primary Activities - those that
are directly concerned with creating and delivering a product (e.g. component assembly); and (2)
Support Activities, which whilst they are not directly involved in production, may increase
effectiveness or efficiency (e.g. human resource management). It is rare for a business to undertake
all primary and support activities. Value Chain Analysis is one way of identifying which activities are
best undertaken by a business and which are best provided by others ("outsourced").
(3) Core Competence Analysis:
Core competencies are those capabilities that are critical to a business achieving competitive
advantage. The starting point for analysing core competencies is recognising that competition
between businesses is as much a race for competence mastery as it is for market position and
market power. Senior management cannot focus on all activities of a business and the competencies
required to undertake them. So the goal is for management to focus attention on competencies that
really affect competitive advantage.
(4) Performance Analysis
The resource audit, value chain analysis and core competence analysis help to define the strategic
capabilities of a business. After completing such analysis, questions that can be asked that evaluate
the overall performance of the business. These questions include:
- How have the resources deployed in the business changed over time; this is "historical analysis"
- How do the resources and capabilities of the business compare with others in the industry -
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"industry norm analysis"
- How do the resources and capabilities of the business compare with "best-in-class" - wherever that
is to be found- "benchmarking"
- How has the financial performance of the business changed over time and how does it compare
with key competitors and the industry as a whole? - "ratio analysis"
(5) Portfolio Analysis:
Portfolio Analysis analyses the overall balance of the strategic business units of a business. Most
large businesses have operations in more than one market segment, and often in different
geographical markets. Larger, diversified groups often have several divisions (each containing many
business units) operating in quite distinct industries.
An important objective of a strategic audit is to ensure that the business portfolio is strong and that
business units requiring investment and management attention are highlighted. This is important - a
business should always consider which markets are most attractive and which business units have
the potential to achieve advantage in the most attractive markets.
Traditionally, two analytical models have been widely used to undertake portfolio analysis:
- The Boston Consulting Group Portfolio Matrix (the "Boston Box");
- The McKinsey/General Electric Growth Share Matrix
(6) SWOT Analysis:
SWOT is an abbreviation for Strengths, Weaknesses, Opportunities and Threats. SWOT analysis is
an important tool for auditing the overall strategic position of a business and its environment
Five Forces Model by Michael Porter
Five Forces model of Michael Porter is a very elaborate concept for evaluating company's
competitive position. Michael Porter provided a framework that models an industry and therefore
implicitly also businesses as being influenced by five forces. Michael Porter's Five Forces model is
often used in strategic planning.
Porter's competitive five forces model is probably one of the most commonly used business strategy
tools and has proven its usefulness in numerous situations. When exploring strategic management
models, you also might want to check out the BCG matrix, SWOT analysis, IFE matrix, and SPACE
matrix models.
Why would I need to use Porter's Five Forces model?
In general, any CEO or a strategic business manager is trying to steer his or her business in a
direction where the business will develop an edge over rival firms. Michael Porter's model of Five
Forces can be used to better understand the industry context in which the firm operates. Porter's
Five Forces model is a strategy tool that is used to analyze attractiveness of an industry structure
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What is good about Porter's Five Forces model?
Porter has the ability to represent complex concepts in relatively easily accessible formats. His book
about the Five Forces model is written in a very easy and understandable language. Even though his
model is backed up by some complex model, the model itself is simple and easily comprehensible at
all levels.
Porter's Five Forces model provides suggested points under each main heading, by which you can
develop a broad and sophisticated analysis of competitive position. This can be then used when
creating strategy, plans, or making investment decisions about your business or organization.
What is the basic idea behind Porter's Five Forces model?
Porter's Five Forces model is made up by identification of 5 fundamental competitive forces:
1. Barriers to entry
2. Threat of substitutes
3. Bargaining power of buyers
4. Bargaining power of suppliers
5. Rivalry among the existing players
Some later economists also consider government as the sixth force in this model.
When putting all these points together in a graphical representation, we get Porter's Five Forces
model which looks like this:
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Force 1: Barriers to entry
Barriers to entry measure how easy or difficult it is for new entrants to enter into the industry. This
can involve for example:
Cost advantages (economies of scale, economies of scope)
Access to production inputs and financing,
Government policies and taxation
Production cycle and learning curve
Capital requirements
Access to distribution channels
Patents, branding, and image also fall into this category.
Force 2: Threat of substitutes
Every top decision makes has to ask: How easy can our product or service be substituted? The
following needs to be analyzed:
How much does it cost the customer to switch to competing products or services?
How likely are customers to switch?
What is the price-performance trade-off of substitutes?
If a product can be easily substituted, then it is a threat to the company because it can compete with
price only.
Force 3: Bargaining power of buyers
Now the question is how strong the position of buyers is. For example, can your customers work
together to order large volumes to squeeze your profit margins? The following is a list of other
examples:
Buyer volume and concentration
What information buyers have
Can buyers corner you in negotiations about price
How loyal are customers to your brand
Price sensitivity
Threat of backward integration
How well differentiated your product is
Availability of substitutes
Having a customer that has the leverage to dictate your prices is not a good position.
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Force 4: Bargaining power of suppliers
This relates to what your suppliers can do in relationship with you.
How strong is the position of sellers?
Are there many or only few potential suppliers?
Is there a monopoly?
Do you take inputs from a single supplier or from a group? (concentration)
How much do you take from each of your suppliers?
Can you easily switch from one supplier to another one? (switching costs)
If you switch to another supplier, will it affect the cost and differentiation of your product?
Are there other suppliers with the same inputs available? (substitute inputs)
The threat of forward integration is also an important factor here.
Force 5: Rivalry among the existing players
Finally, we have to analyze the level of competition between existing players in the industry.
Is one player very dominant or all equal in strength/size?
Are there exit barriers?
How fast does the industry grow?
Does the industry operate at surplus or shortage?
How is the industry concentrated?
How do customers identify themselves with your brand?
Is the product differentiated?
How well are rivals diversified?
Rivalry is the fifth factor in the Five Forces model but probably the one with the most attention.
What are the assumptions behind the Five Forces model?
From the risk-return perspective, Five Forces model indirectly implies that risk-adjusted rates of
return should be constant across firms and industries.
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STRATEGY - PORTFOLIO ANALYSIS – GE-MATRIX
The business portfolio is the collection of businesses and products that make up the
company. The best business portfolio is one that fits the company's strengths and helps
exploit the most attractive opportunities.
The company must:
(1) Analyze its current business portfolio and decide which businesses should receive more or
less investment, and
(2) Develop growth strategies for adding new products and businesses to the portfolio, whilst at
the same time deciding when products and businesses should no longer be retained.
The two best-known portfolio planning methods are the Boston Consulting Group Portfolio Matrix and
the McKinsey / General Electric Matrix . In both methods, the first step is to identify the various
Strategic Business Units ("SBU's") in a company portfolio. An SBU is a unit of the company that has
a separate mission and objectives and that can be planned independently from the other businesses.
An SBU can be a company division, a product line or even individual brands - it all depends on how
the company is organised.
The McKinsey / General Electric Matrix
The McKinsey/GE Matrix overcomes a number of the disadvantages of the BCG Box. Firstly, market
attractiveness replaces market growth as the dimension of industry attractiveness, and includes a
broader range of factors other than just the market growth rate. Secondly, competitive strength
replaces market share as the dimension by which the competitive position of each SBU is assessed.
The diagram below illustrates some of the
possible elements that determine market
attractiveness and competitive strength by
applying the McKinsey/GE Matrix to the UK
retailing market:
Factors that Affect Market Attractiveness
Whilst any assessment of market
attractiveness is necessarily
subjective, there are several factors
which can help determine
attractiveness. These are listed below:
Market Size
Market growth
Market profitability
Pricing trends
Competitive intensity / rivalry
Overall risk of returns in the industry
Opportunity to differentiate products and
services
Segmentation
Distribution structure (e.g. retail, direct,
wholesale
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Factors that Affect Competitive Strength
Factors to consider include:
o Strength of assets and competencies
o Relative brand strength
o Market share
o Customer loyalty
o Relative cost position (cost structure compared with competitors)
o Distribution strength
o Record of technological or other innovation
o Access to financial and other investment resources
MCKINSEY’S 7S FRAMEWORK
MCKINSEY’S 7S FRAMEWORK
What is the 7-S Framework? Description
The 7-S Framework of McKinsey is a management model that describes 7factors to *organize a
company in an holistic and effective way*.Together these factors determine the way in which a
corporation operates. Managers should take into account all seven of these factors,to be sure of
successful implementation of a strategy. Large or small. They‟re all interdependent, so if you fail to
pay proper attention to one of them, this may effect all others as well. On top of that, the relative
importance of each factor may vary over time.
Origin of the 7-S Framework. History
The 7-S Framework was first mentioned in "The Art Of JapaneseManagement" by *Richard Pascale*
and *Anthony Athos* in 1981. They hadbeen investigating how Japanese industry had been so
successful. At around the same time that Tom Peters and Robert Waterman were exploring what
made a company excellent. The Seven S model was born at a meeting of these four authors in 1978.
It appeared also in "In Search of Excellence" by Peters and Waterman, and was taken up as a basic
tool by the global management consultancy company McKinsey. Since then it is known as their 7-S
model.
MCKINSEY’S 7S FRAMEWORK
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1. Strategy: the direction and scope of the company over the long term.
2. Structure: the basic organization of the company, its departments, reporting lines, areas of
expertise and responsibility (and how they inter-relate).
3. Systems: formal and informal procedures that govern everyday activity, covering everything from
management information systems, through to the systems at the point of contact with the
customer (retail systems, call center systems, online systems, etc).
4. Skills: the capabilities and competencies that exist within the company. What it does best.
5. Shared values: the values and beliefs of the company. Ultimately they guide employees towards
'valued' behavior.
6. Staff: the company's people resources and how the are developed, trained and motivated.
7. Style: the leadership approach of top management and the company's overall operating
approach.
Strengths of the 7-S Model. Benefits
Diagnostic tool for understanding organizations that are ineffective.
Guides organizational change.
Combines rational and hard elements with emotional and soft elements.
Managers must act on all Ss in parallel and all Ss are interrelated.\\\
PRODUCT PORTFOLIO STRATEGY –
INTRODUCTION TO THE BOSTON CONSULTING BOX
Introduction
The business portfolio is the collection of businesses and products that make up the company. The
best business portfolio is one that fits the company's strengths and helps exploit the most attractive
opportunities.
The company must:
(1) Analyse its current business portfolio and decide which businesses should receive more or less
investment, and
(2) Develop growth strategies for adding
new products and businesses to the
portfolio, whilst at the same time deciding
when products and businesses should no
longer be retained.
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Methods of Portfolio Planning
The two best-known portfolio planning methods are from the Boston Consulting Group (the subject of
this revision note) and by General Electric/Shell. In each method, the first step is to identify the
various Strategic Business Units ("SBU's") in a company portfolio. An SBU is a unit of the company
that has a separate mission and objectives and that can be planned independently from the other
businesses. An SBU can be a company division, a product line or even individual brands - it all
depends on how the company is organised.
The Boston Consulting Group Box ("BCG Box")
Using the BCG Box (an example is illustrated above) a company classifies all its SBU's according to
two dimensions:
On the horizontal axis: relative market share - this serves as a measure of SBU strength in the
market
On the vertical axis: market growth rate - this provides a measure of market attractiveness
By dividing the matrix into four areas, four types of SBU can be distinguished:
1. Stars - Stars are high growth businesses or products competing in markets where they are
relatively strong compared with the competition. Often they need heavy investment to sustain
their growth. Eventually their growth will slow and, assuming they maintain their relative
market share, will become cash cows.
2. Cash Cows - Cash cows are low-growth businesses or products with a relatively high market
share. These are mature, successful businesses with relatively little need for investment. They
need to be managed for continued profit - so that they continue to generate the strong cash
flows that the company needs for its Stars.
3. Question marks - Question marks are businesses or products with low market share but
which operate in higher growth markets. This suggests that they have potential, but may
require substantial investment in order to grow market share at the expense of more powerful
competitors. Management have to think hard about "question marks" - which ones should they
invest in? Which ones should they allow to fail or shrink?
4. Dogs - Unsurprisingly, the term "dogs" refers to businesses or products that have low relative
share in unattractive, low-growth markets. Dogs may generate enough cash to break-even,
but they are rarely, if ever, worth investing in.
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Using the BCG Box to determine strategy
Once a company has classified its SBU's, it must decide what to do with them. In the diagram above,
the company has one large cash cow (the size of the circle is proportional to the SBU's sales), a
large dog and two, smaller stars and question marks.
Conventional strategic thinking suggests there are four possible strategies for each SBU:
(1) Build Share: here the company can invest to increase market share (for example turning a
"question mark" into a star)
(2) Hold: here the company invests just enough to keep the SBU in its present position
(3) Harvest: here the company reduces the amount of investment in order to maximise the short-
term cash flows and profits from the SBU. This may have the effect of turning Stars into Cash Cows.
(4) Divest: the company can divest the SBU by phasing it out or selling it - in order to use the
resources elsewhere (e.g. investing in the more promising "question marks").
THE STRATEGIC POSITION AND ACTION EVALUATION (SPACE) MATRIX
Learning objective
After understanding this chapter you are able to understand SPACE matrix and also understand how
to prepare the space matrix of any organization and how it is helpful for strategic formulation
framework
The Strategic Position and Action Evaluation (SPACE) Matrix
The Strategic Position and Action Evaluation (SPACE) Matrix is another important Stage 2 matching
tool of formulation framework. It explains that what is our strategic position and what possible action
can be taken. It is not closed matrix. It is prepared on graph. It is closed matrix. This follow counter
clock wise direction. It contains four-quadrant named aggressive, conservative, defensive, or
competitive strategies.
The axes of the SPACE Matrix represent two internal dimensions: financial strength [FS] and
competitive advantage [CA]) and two external dimensions: (environmental stability [ES] and
industry strength [IS]). These four factors are the most important determinants of an organization's
overall strategic position.
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This is what a completed SPACE matrix looks like:
Aggressive
Conservative
Defensive
Competitive
It is divided into two internal and external dimensions which are as follow (Internal dimensions)
financial strength, competitive advantage, (External dimensions) environment stability and industry
strength.
This sequence is convention to be followed as graphed above. This frame work determines
appropriate set of strategies for each quadrant.
First quadrant is aggressive the firm fall in this quadrant that fellow the aggressive strategy.
Second quadrant is conservative all those firms that fall n this quadrant that must fallow conservative
strategy and in next the firm fellow the defensive strategy.
All the firms fall on competitive follow that strategy. After a rating is assigned ranging from +1 (worst)
to +6 (best) to each of the variables that make up the financial strength and industry strength
dimensions.
Assign a numerical value ranging from -1 (best) to -6 (worst) to each of the variables that make up
the environment stability and Competitive advantage dimensions.
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These dimensions are explained below:
Internal Strategic Position External Strategic Position
Financial Strength (FS)
1. Risk involved in business
2. Debt to equity ratio
3. Working capital condition
4. Leverage
5. Liquidity
6. Ease of exit from market
7. Cash flow statement
8. Return on investment
Environmental Stability (ES)
1. Impact of technology
2. Price elasticity of demand
3. Political situation
4. Demand variability
5. Price range of competing products
6. Rate of inflation
7. Competitive pressure.
Competitive Advantage (CA)
1. Access to the market
2. Market share
3. Quality of product and services
4. Product life cycle
5. Customer loyalty
6. Capacity, location and
7. Technological know-how
8. Backward and forward integration
Industry Strength (IS)
1. Demand and supply factors
2. Resource utilization
3. Growth potential
4. Profit potential
5. Financial stability
6. Technological know-how
7. Productivity, capacity utilization
8. Capital intensity
9. Ease of entry into market
After the selection of variables the rating is assigned to each. After the addition of these variables
taking the average.
For example financial strength is explain below “:
Financial Strength (FS) Rating
High Return on investment 3
Large amount of capital 2
Consistently increasing revenue 4
Working capital condition 1
Financial strength average is (3+2+4+1)/4 = 2.5
The industry strength is explained as follows :
Industry Strength (IS) Rating
Demand and supply factors 5
Resource utilization 3
Profit potential 3
Technological know-how 6
Ease of entry into market 2
Industry strength average is (5+3+3+6+2)/5 = 3.8.
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It is plotted on graph:
The graph indicates that firm adopts aggressive strategy
Steps for the preparation of SPACE Matrix
The steps required to develop a SPACE Matrix are as
follows:
2. Select a set of variables to relating to financial strength, competitive advantage, environmental
stability, and industry strength.
3. Assign a numerical value ranging from +1 (worst) to +6 (best) to each of the variables that make
up the financial strength and industry strength dimensions. Assign a numerical value ranging
from -1 (best) to -6 (worst) to each of the variables that make up the environmental stability and
competitive advantage dimensions.
4. Compute an average score and dividing by the number of variables
5. Plot the average scores in the SPACE Matrix.
6. Add the two scores on the x-axis and plot the resultant point on X. Add the two scores on the y-
axis and plot the resultant point on Y. Plot the intersection of the new xy point.
7. Draw a directional vector from the origin of the SPACE Matrix through the new intersection
point.
This vector reveals the type of strategies recommended for the organization: aggressive,
competitive, defensive, or conservative.
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NATURE OF STRATEGIC MANAGEMENT
Objectives: This Lecture provides an overview of strategic management. It introduces a practical,
integrative model of the strategic-management process and defines basic activities and terms in
strategic management and discusses the importance of business ethics.
What is strategic management?
Strategic Management can be defined as “the art and science of formulating, implementing and
evaluating cross-functional decisions that enable an organization to achieve its objective.”
Definition: “The on-going process of formulating, implementing and controlling broad plans guide
the organizational in achieving the strategic goods given its internal and external environment”.
Interpretation:
1. On-going process: Strategic management is a on-going process which is in existence through
out the life of organization.
2. Shaping broad plans: First, it is an on-going process in which broad plans are firstly formulated
than implementing and finally controlled.
3. Strategic goals: Strategic goals are those which are set by top management. The broad plans
are made in achieving the goals.
4. Internal and external environment: Internal and external environment generally set the goals.
Simply external environment forced internal environment to set the goals and guide them that how to
achieve the goals?
How the strategic management show:
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Importance of strategic Management
1. Globalization: The survival for business
First, global considerations impact virtually all strategic decisions! The boundaries of countries no
longer can define the limits of our imaginations. To see and appreciate the world from the
perspective of others has become a matter of survival for businesses. The underpinnings of
strategic management hinge upon managers' gaining an understanding of competitors, markets,
prices, suppliers, distributors, governments, creditors, shareholders, and customers worldwide.
The price and quality of a firm's products and services must be competitive on a worldwide basis,
not just a local basis.
The distance between the business sectors are becoming less due to the provisions of certain
facilities. Although political boundaries are there but in order to become successful in business it
is essential to laid stress on globalization.
2. E-Commerce: : A business tool
A second theme is that electric commerce (e-commerce) has become a vital strategic-
management tool. An increasing number of companies are gaining competitive advantage by
using the Internet for direct selling and for communication with suppliers, customers, creditors,
partners, shareholders, clients, and competitors who may be dispersed globally. E-commerce
allows firms to sell products, advertise, purchase supplies, bypass intermediaries, track inventory,
eliminate paperwork, and share information. In total, electronic commerce is minimizing the
expense and cumbersomeness of time, distance and space in doing business, which yields better
customer service, greater efficiency, improved products and higher profitability.
The Internet and personal computers are changing the way we organize our lives; inhabit our
homes; and relate to and interact with family, friends, neighbors, and even ourselves. The Internet
promotes endless comparison shopping which enables consumers worldwide to band together to
demand discounts. The Internet has transferred power from businesses to individuals so swiftly
that in another decade there may be "regulations" imposed on groups of consumers. Politicians
may one day debate the need for "regulation on consumers" rather than "regulation on big
business" because of the Internet's empowerment of individuals.
Buyers used to face big obstacles to getting the best price and service, such as limited time and
data to compare, but now consumers can quickly scan hundreds of vendors‟ offerings. Or they
can go to Web sites such as CompareNet.com that offers detailed information on more than
100,000 consumer products. The Internet has changed the very nature and core of buying and
selling in nearly all industries. It has fundamentally changed the economics of business in every
single industry worldwide
3. Earth environment has become a major strategic issue
A third theme is that the natural environment has become an important strategic issue. With the demise of communism and the end of the Cold War, perhaps there is now no greater threat to business and society than the continuous exploitation and decimation of our natural environment. The resources are scarce but the wants are unlimited. In order to meet the wants of the world, the resources should be efficiently utilized. For example, the use of oil resources or energy resources will make the people to use these resources for a long time.
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Strategic management – A route to success:
The study of strategic management integrates different topics. Different courses are integrated due
to the study of this course so that businesses become successful in every sector. It integrates the
following:
Marketing
Management
Finance
Research and development
The management and marketing are essential part of a business sectors. They should be
integrated. Just like other sections of the business are integrated under this study. This term is
mostly used by academia but this is also used in media.
Stages of Strategic management:
The strategic management process consists of three stages:
Strategy Formulation (strategy planning)
Strategy Implementations
Strategy Evaluation
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Strategic Formulation:
Strategic formulation means a strategy formulate to execute the business activities. Strategy
formulation includes developing:-
Vision and Mission (The target of the business)
Strength and weakness (Strong points of business and also weaknesses)
Opportunities and threats (These are related with external environment for the business
Strategy formulation is also concerned with setting long term goals and objectives, generating
alternative strategies to achieve that long term goals and choosing particular strategy to pursue.
The considerations for the best strategy formulation should be as follows:
Allocation of resources
Business to enter or retain
Business to divest or liquidate
Joint ventures or mergers
Whether to expand or not
Moving into foreign markets
Trying to avoid take over
Strategy Implementation :
Strategy implementation requires a firm to establish annual objectives, devise policies, motivating
employees and allocate resources so that formulated strategies can be executed. Strategy
implementation includes developing strategy supportive culture, creating an effective organizational
structure, redirecting marketing efforts, preparing budgets, developing and utilizing information
system and linking employee compensation to organizational performance.
Strategy implementation is often called the action stage of strategic management. Implementing
means mobilizing employees and managers in order to put formulated strategies into action. It is
often considered to be most difficult stage of strategic management. It requires personal discipline,
commitment and sacrifice. Strategy formulated but not implemented serve no useful purpose.
Strategy evaluation:
Strategy evaluation is the final stage in the strategic management process. Management
desperately needs to know when particular strategies are not working well; strategy evaluation is the
primary means for obtaining this information. All strategies are subject to future modification because
external and internal forces are constantly changing.