Planning _ Strategic Management.ppt

8/14/2019 Planning _ Strategic Management.ppt

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Planning & Strategic Management


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What is Strategy?

A Strategy is a comprehensive plan for accomplishing an organizations goals.

A Strategy is a plan or a course of action which is of vital, pervasive or continuing importance to theorganization as a whole.

A procedure to identify success from failure.

A strategy is the starting point for developing a detailed action plan, but it transcends the specifics ofany particular plan.


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Example

Concept Definition Example: British Airways

Mission Over-riding purpose in

line with the values or

expectations of stake

holders

British Airways is aiming to set new industry

standards in customer service and innovation,

deliver the best financial performance and evolvefrom being an airline to a world travel business with

the flexibility to stretch its brand into new business

areas

Vision Desired future state: the

aspiration of the

organization

To become the undisputed leader in world travel by

ensuring that BA is the customers first choice

through the delivery of an unbeatable travel

experience

Corporate

Objectives &

Goals

(precise) statement of

aims and purpose

To be a good neighbour, concerned for the

community and the environment, to provide overall

superior service and good value for money in every

market segment in which we compete, to excel in

anticipating and quickly responding to customer

needs and competitor activity.

Strategies The way or means in

which the corporate

objectives are to be

achieved and put into

effect

Continuing emphasis on consistent quality of

customer service and the delivery to the market

place of value for money through customer- oriented

initiatives (on line booking service, strategic

alliances) and to arrange all the elements of our

service so that they collectively generate a particular

experience..building trust with our shareholders,

employees, customers through commitment to goodpractice and societal reporting.


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Initial Strategy Assessment

Do you and your organizations leadership team truly understand your business strategy and howit relates to your industry?

Do you and your organizations leadership team truly know your market niche and its marketpotential so effective growth strategies can be put in place?

Does your mission statement clearly describe the purpose of your organization?

Have you developed a compelling vision which pictures your desired future?

Have you put in place the strategies that will ensure both the mission and vision can beachieved?

Do you know your organizations strategic strengths?

Do you know your organizations weaknesses?

Have you set measurable, specific and time bound tactics and objectives to help ensure theorganizations strategies can be attained?

In addition to your primary strategies, have you determined alternative plans and selected theappropriate alternative strategies?

Have you translated these strategies into action plans?

Do you and organizational members know what major strategic achievement/s your organizationwill cite as a significant accomplishment in its annual report?

Are organizational strategies clearly communicated to all members of the organization so allstakeholders can align their work activities accordingly?


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Activity

Coke

Our Mission

Our Roadmap starts with our mission, which is enduring. It declares our purpose as a company

and serves as the standard against which we weigh our actions and decisions.To refresh the world...

To inspire moments of optimism and happiness...

To create value and make a difference.

Our VisionOur vision serves as the framework for our Roadmap and guides every aspect of our business bydescribing what we need to accomplish in order to continue achieving sustainable, quality growth.

People:Be a great place to work where people are inspired to be the best they can be.Portfolio:Bring to the world a portfolio of quality beverage brands that anticipate and satisfypeople's desires and needs.

Partners:Nurture a winning network of customers and suppliers, together we create mutual,enduring value.

Planet: Be a responsible citizen that makes a difference by helping build and support sustainablecommunities.

Profit: Maximize long-term return to shareowners while being mindful of our overall

responsibilities.Productivity: Be a highly effective, lean and fast-moving organization.


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Objectives

Focus on the Market

Focus on needs of our consumers, customers and franchise partnersGet out into the market and listen, observe and learn

Possess a world view

Focus on execution in the marketplace every day

Be insatiably curious

Work Smart

Act with urgencyRemain responsive to change

Have the courage to change course when needed

Remain constructively discontent

Work efficiently

Act Like Owners

Be accountable for our actions and inactions

Steward system assets and focus on building valueReward our people for taking risks and finding better ways to solve problems

Learn from our outcomes -- what worked and what didnt

Be the Brand

Inspire creativity, passion, optimism and fun

activity contd;


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Planning and Organizational Goals

Organizational Goals

Purposes

Kinds of GoalsMission, Strategic, Tactical and Operational

Kinds of Organizational Plans

i) Strategic, Tactical and Operationalii) Contingency Planning


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Contingency Planning & Crisis Management (Y2K)

Monitor contingency event indicatorsand

implement contingency plan if necessary

Action point 1

Develop plan,

considering

contingency

events

Action point 2

Implement plan and

formally identify

contingency events

Action point 3

Specify indicators for

the contingency

events & develop

contingency plans

for each possible

event

Action point 4

Successfully complete

plan or contingency

plan

Ongoing Planning Process


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The Planning Process

The Environmental Context

The Organizations Mission

* Purpose * Premises * Value * Directions

Strategic Goals Strategic Plans

Tactical Goals Tactical Plans

Operational Goals Operational Plans


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Missionour mission is to operate a chain of restaurants that will prepare and serve highquality foodon a timely basis and at reasonable prices

Strategic Goals

President and CEO

Provide 14 % return to investors for at least 10 years

Start or purchase new restaurant chain within five years

Negotiate new labour contract in the current year.

Tactical Goals

VicePresidentOperations

Open 150 new restaurants in

next 10 years

Decrease food container costs

by 15 % in the next 5 years

Decrease average customer wait

by 30 secs this year

Vice PresidentFinance

Keep corporate debt to no more

than 200 % of liquid assets for next

10 years

Revise computerized accounting

system

Earn 9% of excess cash this year

Vice PresidentMarketing

Increase per store sales 5% per

year for next 10 years

Target and attract two new market

segments during next 5 years

Develop new promotional strategy

for next year

Operational Goals

Restaurant Manager

Implement employee incentive

system within one year

Decrease waste by 5 % this year

Hire and train new assistantmanager

Accounting Manager

Regularise all accounting

functions

Organise a proper and applicable

payroll systemPay all invoices within 30 days

Advertising Director

Develop regional advertising

campaigns within 1 year

Negotiate 5% lower advertising

rates next yearImplement this years promotional

strategy


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Tactical Planning

Developing Tactical Plans

Recognize and understand overarching

strategic plans and tactical goals

Specify relevant resource and time

issues

Recognize and identify human resource

commitments

Executing Tactical Plans

Evaluate each course of action in light

of its goal

Obtain and distribute information and

resources

Monitor horizontal and vertical

communication and integration ofactivities

Monitor ongoing activities for goal

achievement


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Operational Planning

Two Basic Types of Operational Plans and specific type of each :-

Plan Description

Single Use Plan Developed to carry out a course of action notlikely to be repeated in the future

Program - Single Use Plan for a large set of activities

eg:- a takeover

Project - Single use plan of less scope and complexity than aprogram

Standing Plan Developed for activities that recur regularlyover a period of time to enhance efficiencyby making decision making a routine

Policy - Standing plan specifying the organizations generalresponse to a designated problem or situation

Standard Operating Procedure - Standing plan outlining steps to be followed inparticular circumstances

Rules & Regulations - Standing plans describing exactly how specificactivities are to be carried out


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The Nature of Strategic Management

Components of Strategy

Distinctive Competencesomething that the organization does exceptionally well

Scopespecifies the range of markets (products) in which an organization will compete Resource Deployment is how the organization will distribute its resources across the areas

where it competes

Types of Strategic Alternatives

Corporate level Strategywhat business are we in? - the set of strategic alternatives from

which an organization chooses as it manages its operations simultaneously across several

industries

Business level Strategy- how do we compete? - the set of strategic alternatives from which an

organization chooses as it conducts business in a particular industry or market

Functional Strategyhow do we support the business level competitive strategy?

Strategy Formulation ( lines of content)is the set of processes involved in creating ordetermining the strategies of the organization. This determines what the strategy is.

Strategy Implementation (process mainly overcoming resistance) are the methods by which

strategies are operationalized or executed within the organization. This focuses on how the

strategy is achieved.


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Establish the Grand Strategy

In the case of a startup after the mission, vision or else, even during revisiting the strategy in a running

organization or product.

The first process is to make a rigorous analysis of the organizations present situation to determine

WHERE it is presently headed.

The second part is to determine where it SHOULD be headed in the future

i) The Growth Strategygrand strategy that involves expansionas in sales revenues,market share, number of customers

ii) The Stability Strategy(pause strategy)grand strategy that involves little or nosignificant change

iii) The Defensive Strategyor a retrenchment strategy that involves reduction in theorganizations efforts

iv) A mixture of the above


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Formulating Corporate Level Strategies

The most important strategic issue at the corporate level is the extent and nature of

diversification.

Single Product strategy for single geographic market

Related Diversification

Unrelated Diversification


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Implementing CorporateLevel Strategies

I. Becoming a Diversified Firm

1. Development of new products

Diversifying by developing their own new products or services within the boundaries

of their traditional business operations

Use their strengths and resources into new business

2. Replacement of Suppliers and Customers

Backward vertical integration

Forward vertical integration

3. Mergers and Acquisitions

To diversify through vertical integration by acquiring former suppliers or former

customers To acquire complementary products or complementary services

Main objective is the creation or exploitation of synergies

Synergy reduces the cost of doing business, increase revenues and also make way

for an entirely new business


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II. Managing Diversification

1. Organizational Structure

2. Portfolio Management Techniques

a) BCG Matrixfocuses on market growth and market share

High

Market

Growth rate

Low

High Low

Relative Market share


STARS Question Mark

Cash Cows Dogs


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b) GE Business ScreenThis focuses on industry attractiveness and competitive

position.

HighIndustry

Attractiveness Medium

Low

Good Medium Poor

Competitive Position

Winner Winner Question

Mark

Winner Average

Business

Loser

Profit

Producer

Loser Loser


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Using SWOT Analysis to Formulate Business Level Strategy

Mission -

An organizations fundamental purpose

SWOT Analysis

To formulate strategies that support the mission

Internal Analysis External Analysis

for competitive advantage

Strengths Opportunities

(distinctive Competencies)

Weaknesses Threats

Good Strategies

Those that support the mission and

Exploit opportunities

Neutralize threats

Avoid weaknesses


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Porters Five Forces of Competitive Position

(Opportunities and Threats)

Threats of New Market

Entrants, eg:

entry ease/barriers

geographical factors

incumbents resistance

new entrant strategy

routes to market

Bargaining Power of

Suppliers;eg:

brand reputation

geographical coverage

product/service level quality

relationships with customers

bidding processes/capabilities

Bargaining Power of

Customers; eg: buyer choice

buyers size/number

change cost/frequency

product/service

importance

volumes, JIT scheduling

Threat of substitute

products or services, eg:

alternatives price/quality

market distribution

changes

fashion and trends

legislative effects

Competitive Rivalry/; eg: number and size of firms

industry size and trends

fixed variable cost bases

product/service ranges

differentiation, strategy


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Formulating BusinessLevel Strategies

Three important classification schemes :-

a) Porters competitive / Generic Strategies:-

Wide marketsapplicable strategy types :-

i. Differentiation distinguish products Roles watches

or services Nikon Camera

ii. Overall cost reduce manufacturing Timex watches

leadership and other costs Toyota cars

Narrow marketsstrategy type:-

iii. Focus strategy concentrate on specific Tag Heuerregional market, product watches

market, or group of buyers


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b) Miles and Snow Typology :- identifies four strategic types of organizations. Three of

these, the prospector, the defender, and the analyzercan all be effective in certain

circumstances. The fourth typethe reactor- represents an ineffective approach tostrategy.

Strategy Type Definition Examples

Prospector Is innovative and growth oriented, 3M

searches for new markets and new J&J

growth opportunities, encourages

risk taking

Defender Protects current markets, maintains BIC

stable growth, serves current customers Mrs Fields

Analyzer Maintains current markets and current IBM;

customer satisfaction with moderate P&G

emphasis on innovation

Reactor No clear strategy, reacts to changes in

the environment, drifts with events


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c) Strategies based on Product Life Cycle

High

Introduction Growth Maturity Decline

Sales

Volume

Low

Time


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Implementing Business Level Strategies

a) Implementing Porters Generic Strategies

1. Differentiation Strategy :- to support this strategy

Marketing and sales must emphasize the high quality, high value image of theorganizations products or services

Accounts and finance departments should encourage the creativity needed to

constantly develop new products and services to meet customer needs by allowing

the flow of funds. If they keep track of and control the flow of money then

differentiation strategy cannot be implemented effectively.

Manufacturing department must emphasize quality and meeting specific customerneeds rather than simply reducing costs

The culture of the organization must also emphasize creativity, innovation and

response to customer needs.

2. Overall Cost Leadership Strategy :-

Marketing and sales focus on single product attributes and how these productattributes meet customer needs in a low cost and effective manner.

These organizations bank on advertising to a large extent.

They emphasize on the value for money instead on the special features of the

product or service

Cost reduction is the primary focus

Culture is about improvising marketing and sales of the products; bringing in profits


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Implementing Business Level Strategies

a) Implementing Porters Generic Strategies

3. Focus Strategy:-

Depending upon what the focus is on, the strategy is worked likewise.

Marketing and sales should understand the region of sales or group of buyers

perfectly. As in their habits, preferences, way of conducting etc.

If the focus is on product line, creativity and innovation should be encouraged

strategy should identify a unique selling proposition target market should be clearly defined and understood

Broad Market Cost Leadership Differentiation

Narrow Market Focus ( Low Cost) Focus

( Differentiation)

Target

Scope

Advantage

Low

Cost

Product

Differentiation

Documents

Planning _ Strategic Management.ppt