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Strategic Planning

Strategic Planning. Strategic management is the new term that has emerged for the strategic planning process Strategic Management is a process that involves managers from all parts of the organization in the formulation and implementation of strategic goals and strategies.

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Strategic Planning

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  1. Strategic Planning • Strategic management is the new term that has emerged for the strategic planning process • Strategic Management is a process that involves managers from all parts of the organization in the formulation and implementation of strategic goals and strategies

  2. Strategic Management Process

  3. Strategic Management: Step 1 • Establishment of mission, vision, and goals • Mission is an organization’s basic purpose and scope of operations • Strategic vision is the long-term direction and strategic intent of a company • Strategic goals evolve from the mission and vision of the organization

  4. Microsoft • Vision 1 • Vision 2

  5. Strategic Management: Step 2 • Analysis of External Opportunities and Threats • Successful strategic management depends on an accurate and thorough evaluation of the environment • Begins with an examination of the industry • Managers should also examine other forces in the environment, such as macroeconomic conditions (laws, demographics, economy)and technological factors • One critical task is forecasting future trends

  6. Analysis of External Opportunities and Threats

  7. Strategic Management: Step 3 • Analysis of Internal Strengths and Weaknesses • This kind of internal analysis provides strategic decision makers with an inventory of the organization’s existing functions, skills, and resources as well as its overall performance level • This step will also include looking at the firms resources and core competencies • A final area may include benchmarking with other firms

  8. Resources and Core Competencies • Resources are inputs to a system that can enhance performance • Tangible assets such as real estate, production facilities, raw materials and so on • Intangible assets such as company reputation, culture, technical knowledge, patents, and accumulated learning and experience • Resources can create a competitive advantage if: • They are instrumental for creating customer value • They are rare and not equally available to all competitors • They are difficult to imitate • Finally they must be well organized Return

  9. SWA • “They can imitate the airplanes. They can imitate the ticket counters and all the other hardware…..But they can’t duplicate the people of Southwest and their attitudes.”Kelleher

  10. Core Competencies • Core competencies are the unique skills and/or knowledge an organization possesses that give it an edge over competitors. • Generally it refers to a set of skills or expertise in some activity, rather than physical or financial assets. Return

  11. Analysis of Strengths and Weaknesses

  12. Strategic Management: Step 3

  13. Strategic Management: Step 4 • SWOT Analysis and Strategy Formulation • By completing steps 2 and 3 managers will be able to analyze the companies strengths, weaknesses, opportunities and threats (SWOT) • Once the SWOT has been completed management will be able to begin to formulate a strategy

  14. Business Strategy • Business Strategy is the major actions by which a business competes in a particular industry or market (On what basis do we compete?). • Low-Cost Strategy is a strategy that an organization uses to build competitive advantage by being efficient and offering a standard, no frills product. • Differentiation Strategy is a strategy that an organization uses to build competitive advantage by being unique in its industry or market segment along one or more dimensions.

  15. Strategic Management: Step 5 Implementation • There are two major trends related to implementation • Organizations are adopting a more comprehensive view of implementation • Managers at all levels of the organization are being involved with the implementation process • Implementation generally involves four related steps • Define strategic tasks • Assess organization capabilities • Develop an implementation agenda • Create an implementation plan

  16. Barriers to Implementation

  17. Strategic Management: Step 6 • Strategic Control • A system designed to support managers in evaluating the organization’s progress regarding its strategy and, when discrepancies exist, taking corrective action • The organization must develop performance indicators, an information system, and specific mechanisms to monitor progress • Normally includes a budget

  18. Corporate Strategy • Corporate Strategy The set of businesses, markets, or industries in which an organization competes and the distribution of resources among those entities • Concentration A strategy employed for an organization that operates a single business and competes in a single industry • Concentric Diversification A strategy used to add new businesses that produce related products or are involved in related markets and activities • Vertical Integration The acquisition or development of new businesses that produce parts or components of the organization’s product

  19. Summary of Corporate Strategies

  20. Boston Consulting Group

  21. TiVo’s Analyst Ratings • Taken together, may be a question mark • RTE: Cash Cow

  22. Situational Analysis • Aprocess planners use, within time and resource constraints, to gather, interpret, and summarize all information relevant to the planning issue under consideration Return

  23. Alternative Goals and Plans • Based on the situational analysis, the planning process should generate alternative goals that may be pursued in the future and the alternative plans that may be used to achieve those goals • Goals are a target or end that management desires to reach • Plans are the actions or means managers intend to use to achieve organizational goals Return

  24. Goal and Plan Evaluation • This step is made up of two activities • Managers will evaluate the advantages, disadvantages, and potential effects of each alternative goal and plan. • They will prioritize those goals and even eliminate some of them from consideration. Return

  25. Goal and Plan Selection • Managers will select the goal and plan that is most appropriate and feasible once they have assessed all of the various goals and plans • Some organizations will generate planning scenarios to aid in the evaluation and selection process • Scenario – a narrative that describes a particular set of future conditions • This approach helps the firm avoid crises and allows greater flexibility and responsiveness Return

  26. Implementation • Managers and employees must: • Understand the plan • Have the resources necessary to implement the plan • Be motivated to implement the plan • The implementation phase probably will be more effective and efficient If both managers and employees have participated in the planning process Return

  27. Monitor and Control • This step is essential in a formal planning process • Managers will need to develop control systems that measure thee plan’s performance • Managers should take corrective action when the plans implemented improperly or when the situation changes Return

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