3-Planning & Strategic Mananement

PLANNING & STRATEGIC

MANAGEMENT LECTURE 3

LECTURER: SARA ASLAM

FALL 2011

KINNAIRD COLLEGE FOR WOMEN

LECTURE OUTLINE

Planning and Organizational Goals

Purposes of Goals

Kinds of Goals

The Nature of Strategic Management

The Components of Strategy

Types of Strategic Alternatives

Using SWOT Analysis to Formulate Strategy

Evaluating an Organization’s Strengths

Evaluating an Organization’s Weaknesses

Evaluating an Organization’s Opportunities and Threats

Human Resource Management

Instructor: Sara Aslam

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LECTURE OUTLINE (CONT’D)

Formulating Business-Level Strategies

Porter’s Generic Strategies

Strategies Based on the Product Life Cycle

Formulating Corporate-Level Strategies

Single-Product Strategy

Related Diversification

Unrelated Diversification

Managing Diversification

Tactical Planning

Developing Tactical Plans

Executing Tactical Plans



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LECTURE OUTLINE (CONT’D)

Operational Planning

Single-Use Plans

Standing Plans

Contingency Plans



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LEARNING OBJECTIVES

Summarise the planning process and describe

organisational goals.

Discuss the components of strategy and the types

of strategic alternatives.

Describe how to use SWOT analysis in formulating

strategy.



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PLANNING AND ORGANISATIONAL GOALS

The planning process:

“the planning process takes place within an

environmental context. Managers must develop a

complete and thorough understanding of this

context to determine the organisation’s mission and

to develop its strategic, tactical and operational

plans and goals”



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THE PLANNING PROCESS

Strategic goals Strategic plans

Tactical goals

Operational goals Operational plans

The organization’s mission

The Environmental Context

• Purpose • Premises • Values • Directions

Tactical plans



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ORGANISATIONAL GOALS

Goals are critical to organisational effectiveness and

they serve a number of purposes. A number of

different managers must be involved in setting goals.

Purposes of Goals:

Goals serve four important purposes:

The provide guidance and a unified direction for

people in the organisation.

Goal setting practices strongly affect other aspects of

planning. Effective goal setting promotes good

planning and good planning facilitates future goal

setting.



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Goals can serve as a source of motivation for

employees of the organisation.

Provide an effective mechanism for evaluation and

control of the organization



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mission: a statement of an organisation’s

fundamentals purpose.

Kinds of Goals:

Strategic Goals: a goal set by and for top

management of the organisation.

Tactical Goals: a goal set by and for middle

managers of the organisation.

Operational Goals: a goal set by and for lower

managers of the organisation.



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KINDS OF PLANS

Strategic Plans

A general plan outlining resource allocation, priorities,

and action steps to achieve strategic goals. The plans

are set by and for top management.

Tactical Plans

A plan aimed at achieving the

tactical goals set by and for

middle management.

Operational Plans

Plans that have a short-term focus.

These plans are set by and for lower-level managers.



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THE NATURE OF STRATEGIC MANAGEMENT

Strategy

A comprehensive plan for accomplishing an organization’s

goals.

Strategic Management

A way of approaching business opportunities and

challenges–a comprehensive and ongoing management

process aimed at formulating and implementing effective

strategies.

Effective Strategies

Strategies that promote a superior alignment between the

organization and its environment and the achievement of

its goals.



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THE COMPONENTS OF STRATEGY

Distinctive Competence

Something an organization does exceptionally well.

Scope

Range of markets in which an organization will compete.

Resource Deployment

How an organization will

distribute its resources

across the areas in

which it competes.



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TYPES OF STRATEGIC ALTERNATIVES

Business-level Strategy

The set of strategic alternatives that an organization

chooses from as it conducts business in a particular

industry or a particular market.

Corporate-level Strategy

The set of strategic alternatives that an organization

chooses from as it manages its operations

simultaneously across several industries and several

markets.



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TYPES OF STRATEGIC ALTERNATIVES

(CONT’D)

Strategy Formulation

The set of processes involved in creating or determining

the organization’s strategies; it focuses on the content of

strategies.

Strategy Implementation

The methods by which strategies are operationalized or

executed within the organization; it focuses on the

processes through which strategies

are achieved.



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SWOT

ANALYSIS

Strengths

Weaknesses

Opportunities

Threats

Mission

An organization’s fundamental purpose

Best Strategies

SWOT Analysis To formulate strategies that support the mission

Those that support the mission and • exploit opportunities and strengths • neutralize threats • avoid (or correct) weaknesses

Internal Analysis Strengths (distinctive competencies)

Weaknesses Threats

External Analysis Opportunities



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USING SWOT ANALYSIS TO FORMULATE

STRATEGY

Evaluating Organizational Strengths

Organizational strengths

- Skills and abilities enabling an organization to conceive of and

implement strategies.

Distinctive competencies

- Useful for competitive advantage and superior performance.

Sustained competitive advantage

- Occurs when a distinctive competence cannot be easily

duplicated and is what remains after all attempts at strategic

imitations have ceased.



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STRATEGY (CONT’D)

Evaluating Organizational Weaknesses

Organizational weaknesses are skills and capabilities that do

not enable an organization to choose and implement

strategies that support its mission.

Weaknesses can be overcome by:

investments to obtain the strengths needed.

modification of the organization’s mission

so it can be accomplished with the current

workforce.

Competitive disadvantage is a situation in which an organization fails

to implement strategies being implemented by competitors.



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STRATEGY (CONT’D)

Evaluating an Organization’s Opportunities and

Threats

Organizational opportunities are areas in the

organization’s environment that may generate high

performance.

Organizational threats are areas

in the organization’s environment that make it difficult

for the organization

to achieve high performance.



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FORMULATING BUSINESS LEVEL STRATEGIES

Porter’s Generic Strategies:

Differentiation strategy

- An organization seeks to distinguish itself from

competitors through the quality of its products or

services.

Overall cost leadership strategy

- An organization attempts to gain competitive advantage

by reducing its costs below the costs of competing

firms.

Focus strategy

- An organization concentrates on a specific regional

market, product line, or group of buyers.



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STRATEGIES BASED ON THE PRODUCT LIFE

CYCLE

A product life cycle is a model that portrays how sales

volumes for products changes over the life of products.

Introduction

Time

Stages

Growth Maturity Decline

High

Low

Sa

les V

olu

me



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FORMULATING CORPORATE LEVEL STRATEGIES

Strategic Business Units

Each business or group of businesses within an

organization engaged in serving the same markets,

customers, or products.

Diversification

The number of businesses an organization is engaged

in and the extent to which these businesses are related

to one another.

Single Product Strategy

A strategy in which an organization manufactures one

product or service and sells it in a single geographic

market.



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FORMULATING CORPORATE LEVEL STRATEGIES

(CONT’D)


A strategy in which an organization operates in several different

businesses, industries, or markets that are somehow linked.

Bases of Relatedness in Implementing


Basis of Relatedness Examples

Similar technology Phillips, Boeing, Westinghouse, Compaq

Common distribution and marketing skills RJR Nabisco, Phillip Morris, Procter & Gamble

Common name brand and reputation Disney, Universal

Common customers Merck, IBM, AMF-Head



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MANAGING DIVERSIFICATION

Major Tools for Managing Diversification

Portfolio management techniques

- Methods that diversified organizations use to make decisions about

what businesses to engage in and how to manage these multiple

businesses to maximize corporate performance.

Two important portfolio management techniques

The BCG Matrix

The GE Business Screen



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MANAGING DIVERSIFICATION (CONT’D)

BCG Matrix

A method of evaluating businesses relative to the growth

rate of their market and the organization’s share of the

market.

The matrix classifies the types of businesses that a

diversified organization can engage as:

“Dogs” have small market shares and no growth prospects.

“Cash cows” have large shares of mature markets.

“Question marks” have small market shares in quickly growing

markets.

“Stars” have large shares of rapidly growing markets.



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THE BCG MATRIX

Relative market share

Cash cows Dogs

High

Low

High Low

Question

marks Stars

Ma

rke

t g

row

th r

ate

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TACTICAL PLANNING

Developing and Executing Tactical Plans

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

of activities

• Monitor ongoing activities for

goal achievement



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OPERATIONAL PLANNING



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CONTINGENCY PLANNING

Contingency is the determination of alternative courses of

action to be taken if an intended plan is unexpectedly

disrupted or rendered inappropriate. These plans help

managers to cope with uncertainty and change.

Ongoing planning process

Action point 1 Action point 2 Action point 3 Action point 4

Develop plan,

considering

contingency events

Implement plan and

formally identify

contingency events

Specify indicators

for the contingency

events and develop

contingency plans for

each possible event

Successfully complete

plan or contingency

plan

Monitor contingency event indicators and

implement contingency plan if necessary



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THANK YOU!



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