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1Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Strategic Planning
Spring 1385-86
Dr. Mehran SepehriDr. Ali KermanshahGraduate School of Management
Session 1 -2Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Session 1 – Saturday 14th Bahman 85• Strategic Planning Fundamentals• Definitions, Terms, and Terminology• Overview of Concepts and Importance
Strategic Management: Concepts & Cases11th Edition, Fred David, Prentice Hall, 2006
Chapter 1 The Nature of Strategic Management
What Is Strategy andWhy Is It Important?What goes into Strategy?
What Is Strategy andWhy Is It Important?What goes into Strategy?
Session 1 -3Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Fred R. David, Ph.D. is an internationally recognized strategic planning scholar, author, and consultantHe received a BS and MBA degree from Wake Forest University and a Ph.D. in strategic management from the University of South Carolina. He is the Tran-South Professor of Strategic Management at Francis Marion University in Florence, South Carolina.His Strategic Management textbook, is used in more than 400 colleges and universities to teach strategic planning. The textbook is very practitioner and skills-oriented. This book has been translated into Farsi, Spanish, German, Japanese and Chinese and is widely used worldwide.
About the Author:
Fred R. David, Ph.D..
Session 1 -4Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Themes in 11th ed. of the Text
• Global Considerations –impact virtually all strategic decisions• E-commerce –vital strategic management tool
•Natural environment –important strategic issue
• Why Strategic Management Is a Process?• Who Performs the Tasks of Strategy?• Benefits of “Managing Strategically”?• Terms to Remember!
Session 1 -5Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Power of Saying No!
Case of Start-up companyExcellent at OperationsTrying to please everyoneDoing a bit of everythingWorking harder, not smarter
Not growing, little profitNo focus, no directionLosing to specialty stores
Session 1 -6Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Prime Task of Strategic Management
Peter Drucker: -- Think through the overall mission of a business. Ask the key question: “What is our Business?”
Session 1 -7Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
سازماني هايچالش
كنشي رفتار جاي به رفتار واكنشي
فرهنگ تفكر در مورد آينده عدم وجود
و اطمينان کارکنان از آينده سازمان عدم آگاهي
داخلي هاي نيروي همسويي عدم
سازمان رهبران و کارکنان هاي دغدغه بين انفکاک
ها استراتژي با اهداف و سازماني ساختار همگوني نا
اهداف به دستيابي راستاي متوازن منابع در تخصيص عدم
کارکنان ارزيابي براي مناسب مبناي وجود عدم
Session 1 -8Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Thinking Strategically:The Three Big Strategic Questions1. Where are we now?2. Where do we want to go?
Business(es) to be in and market positions to stake outBuyer needs and groups to serveOutcomes to achieve
3. How will we get there?A company’s answer to “how will we get there?” is its strategy
Session 1 -9Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Strategic Management –Defined
Art & science of formulating, implementing, and evaluating, cross-functional decisions that enable an organization to achieve its objectives
Session 1 -10Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
ريزي استراتژيكبرنامه تعاريف
، يك سازمان اعضاء كه با راهنمايي دائمي و نظام مندي فرآيند
و ها رويه همچنين و نمايد اتخاذ مي آينده در مورد را تصميماتي
و دهد توسعه مي را مورد نظر آينده نيل به نياز جهت عمليات مورد
.نمايد تعيين مي موفقيت را گيري اندازه نحوه
اي مختلف، وظيفه تصميمات ارزيابي تدوين، اجراء و هنر و علم استراتژيك نيل به اهداف راستاي در سازمان كمك به جهت
سازمان مدت بلند نيل به اهداف ابزار
Session 1 -11Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Strategic Management
In essence, the strategic plan is a company’s game plan
It is fundamental planning, away from daily operations to bring focus & direction
Session 1 -12Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Strategic Management achieves a firm’s success through integration ––
Management
MIS
Production/OperationsFinance/Accounting
Marketing
Research & Development
Session 1 -13Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
What Is Strategy?
Consists of the combination of competitive moves and business approaches used by managers to run the companyManagement’s “game plan” to
Attract and please customersStake out a market positionCompete successfullyGrow the business
Achieve targeted objectives
Session 1 -14Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
The Hows ThatDefine a Firm's StrategyThe Hows ThatDefine a Firm's Strategy
How to please customersHow to respond to changing market conditionsHow to outcompete rivalsHow to grow the businessHow to manage each functional piece of the business and develop needed organizational capabilitiesHow to achieve strategic and financial objectives
Strategyis HOWto . . .
Session 1 -15Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
The What of a Company’s StrategyThe What of a Company’s Strategy
Session 1 -16Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
استراتژيك مديريت فرايندهاي زير
است است سه مرحله سه مرحله شامل شامل استراتژيك استراتژيك مديريت مديريت فرآيند فرآيند رحط
يتژراستي ايزر
و ها
ي يابرزا
آن
ي رااج
ي تژراستا
ي يابرزا
ق حق ت
ي تژراستا
Session 1 -17Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Vision & Mission
Strategy Formulation
External Opportunities & Threats
Internal Strengths & Weaknesses
Long-Term Objectives
Alternative Strategies
Strategy Selection
Session 1 -18Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Issues in Strategy Formulation
New business opportunities
Businesses to abandonAllocation of resourcesExpansion or
diversificationInternational marketsMergers or joint venturesAvoidance of hostile
takeover
New business opportunities
Businesses to abandonAllocation of resourcesExpansion or
diversificationInternational marketsMergers or joint venturesAvoidance of hostile
takeover
Session 1 -19Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Strategy Implementation
Annual Objectives
Policies
Employee Motivation
Resource Allocation
Session 1 -20Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Strategy Implementation
Action Stage of Strategic Management –
Most difficult stageMobilization of employees
& managersInterpersonal skills
criticalConsensus on goal
pursuit
Action Stage of Strategic Management –
Most difficult stageMobilization of employees
& managersInterpersonal skills
criticalConsensus on goal
pursuit
Session 1 -21Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Strategy Evaluation
Internal Review
External Review
Performance Metrics
Corrective Actions
Session 1 -22Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Strategy Evaluation
Final Stage of Strategic Management
Subject to future modification
Today’s success no guarantee of future success
New & different problemsComplacency leads to
demise
Final Stage of Strategic Management
Subject to future modification
Today’s success no guarantee of future success
New & different problemsComplacency leads to
demise
Session 1 -23Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Tasks of Strategic Management
Develop aStrategic
Vision& Mission
Improve/Change
Revise asNeeded
Revise asNeeded
Improve/Change
Recycleas Needed
Task 1 Task 2 Task 3 Task 4 Task 5
Evaluate & Make
Corrections
Implement& ExecuteStrategy
Craft aStrategy
to AchieveObjectives
SetObjectives
Session 1 -24Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Developing a Vision and Mission
Begins with thinking strategically aboutThe firm’s future business makeup Where to take the firm
The task is toCreate a roadmap of a company’s futureDecide what future business position to stake outProvide long-term directionGive the firm a strong identity
The First Task of Strategic Management
Session 1 -25Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Missions vs. Strategic Visions
A missionstatement focuses on currentbusiness activities
Business(es) company is in nowCustomer needs currently being served
A strategic vision concerns a firm’sfuture business path
The kind of company it is trying to becomeCustomer needs to be satisfied in the future
Session 1 -26Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Competitive Advantage
“Strategic Management is Gaining & Maintaining Competitive Advantage”
“Anything that a firm does especially well compared to rival firms”
Session 1 -27Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Achieving Sustained Competitive Advantage
1. Adapting to change in external trends, internal capabilities and resources
2. Effectively formulating, implementing & evaluating strategies
Session 1 -28Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Integrating Intuition and Analysis
The strategic management process attempts to organize quantitative and qualitative information under conditions of uncertainty
Session 1 -29Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Integrating Intuition and Analysis
Intuition is based on:Past experiencesJudgmentFeelings
Intuition is useful for decision making in:Conditions of great uncertaintyConditions with little precedent
Session 1 -30Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Integrating Intuition & Analysis
Involve Management at all levels
Intuition & Judgment
Influence all Analyses
Analytical Thinking
Intuitive Thinking
Session 1 -31Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Adapting to Change
Organizations must monitor eventsOn-going processInternal and external eventsTimely changes
Effective Adaptation
Requires long-term focus
Session 1 -32Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Adapting to Change
Rate & magnitude of change increasing dramatically
E-commerce
Demographics
Technology
Session 1 -33Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Adapting to Change – Key Strategic Management Questions
What kind of business should we become?Are we in the right fieldsAre there new competitors?What strategies should we pursue?How are our customers changing?
Session 1 -34Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Key Terms
Various Job Titles:
•Chief Executive Officer (CEO)•Chief Strategy Officer (CSO)•President•Owner•Board Chair•Executive Director
Strategists – Firm’s success/failure
Session 1 -35Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Key Terms
Vision Statement –What do we want to become?
Mission Statement –What is our business?
Session 1 -36Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Key Terms
Opportunities and Threats (External)
Largely beyond the control of a single organization
Session 1 -37Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Opportunities & Threats (External)Analysis of Trends:
• Economic
• Social
• Cultural
• Demographic/Environmental
• Political, Legal, Governmental
• Technological
• Competitors
Key Terms
Session 1 -38Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Key Terms Opportunities & Threats
Environmental Scanning (Industry Analysis)
Process of conducting research and gathering and assimilating external information
Session 1 -39Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Key Terms Opportunities & Threats
Basic Tenet of Strategic Management
Strategy Formulation
Take advantage of External Opportunities
Take advantage of External Opportunities
Avoid/minimize impact ofExternal Threats
Avoid/minimize impact ofExternal Threats
Session 1 -40Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Key Terms
Strengths & Weaknesses (Internal)
Controllable activities performed especially well or poorly
Session 1 -41Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Key Terms
Strengths & Weaknesses (Internal)
Typically located in functional areas of the firm
• Management
• Marketing
• Finance/Accounting
• Production/Operations
• Research & Development
• Computer Information Systems
Session 1 -42Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Key Terms Strengths & WeaknessesAssessing the Internal Environment
Internal FactorsPerformance Metrics
Financial Ratios
Industry Averages
Survey Data
Session 1 -43Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Key Terms
Long-term Objectives
Mission-driven pursuit of specified results more than one year out
Session 1 -44Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Key Terms
Long-term Objectives
Essential for ensuring the firm’s success
• Provide direction
• Aid in evaluation
• Create synergy
• Focus coordination
• Basis for planning, motivating, and controlling
Session 1 -45Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Key Terms
Strategies
Means by which long-term objectives are achieved
Session 1 -46Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Key Terms
Strategies
Some Examples
• Geographic expansion
• Diversification
• Acquisition
• Market penetration
• Retrenchment
• Liquidation
• Joint venture
Session 1 -47Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Key Terms
Annual Objectives
Short-term milestones that firms must achieve to attain long-term objectives
Session 1 -48Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Key Terms
Policies
Means by which annual objectives will be achieved
Session 1 -49Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Example Strategies in Action in 2005
Session 1 -50Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Example Strategies in Action in 2005
Session 1 -51Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Comprehensive strategic management model
ExternalAudit
Chapter 3
InternalAudit
Chapter 4
Long-TermObjectives
Chapter 5
Generate,Evaluate,
SelectStrategies
Chapter 6
ImplementStrategies:
Mgmt Issues
Chapter 7
ImplementStrategies:Marketing,Fin/Acct,R&D, CISChapter 8
Measure &Evaluate
Performance
Chapter 9
Vision&
Mission
Chapter 2
Session 1 -52Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Strategic Management Model
Strategic Management Process
Dynamic & ContinuousMore formal in larger organizations
Session 1 -53Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Strategic Management Model
1. Identify Existing --
• Vision
• Mission
• Objectives
• Strategies
Session 1 -54Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Strategic Management Model
2. Audit external environment3. Audit internal environment4. Establish long-term objectives5. Generate, evaluate & select
strategies6. Implement selected strategies7. Measure & evaluate performance
Session 1 -55Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Benefits of Strategic Management
• Proactive in shaping firm’s future
• Initiate and influence firm’s activities
• Formulate better strategies•Systematic, logical, rational
Session 1 -56Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Benefits of Strategic Management
Financial Benefits
• Improvement in sales
• Improvement in profitability
• Productivity improvement
Session 1 -57Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Benefits of Strategic Management
Non-Financial Benefits
• Improved understanding of competitors strategies
• Enhanced awareness of threats
• Reduced resistance to change
• Enhanced problem-prevention capabilities
Session 1 -58Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Benefits of Strategic Management (Greenley)
1. Identification of Opportunities
2. Objective view of management problems
3. Improved coordination & control
4. Minimizes adverse conditions & changes
5. Decisions that better support objectives
Session 1 -59Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Benefits of Strategic Management (Greenley – cont’d)
6. Effective allocation of time & resources
7. Internal communication among personnel
8. Integration of individual behaviors
9. Clarify individual responsibilities
10. Encourage forward thinking
Session 1 -60Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Benefits of Strategic Management (Greenley – cont’d)
11. Encourages favorable attitude toward change
12. Provides discipline and formality to the management of the business
Session 1 -61Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Why Some Firms Do NoStrategic Planning
Poor reward structures
Fire-fighting
Waste of time
Too expensive
Laziness
Content with success
Session 1 -62Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Why Some Firms Do NoStrategic Planning
Fear of failure
Overconfidence
Prior bad experience
Self-interest
Fear of the unknown
Suspicion
Session 1 -63Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Business Ethics & Strategic Management
Business Ethics defined –
Principles of conduct within organizations that guide decision making and behavior
Session 1 -64Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Business Ethics & Strategic Management
Good business ethics –
Prerequisite for good strategic management
Session 1 -65Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Business Ethics & Strategic Management
Code of business ethics –
Provides basis on which policies can be devised to guide daily behavior and decisions in the workplace
Session 1 -66Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Business Ethics & Strategic Management
Business practices always considered unethical –
Misleading advertisingMisleading labelingHarm to the environmentInsider tradingDumping flawed products on foreign marketsPoor product or service safetyPadding expense accounts
Session 1 -67Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Natural Environment Perspective
ISO used to gain strategic advantage
ISO 9000 focuses on quality control> 1.5 million companies incorporate ISO
Session 1 -68Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Natural Environment Perspective
Voluntary standards ISO 14001 standard for Environmental Management SystemFirms minimize harmful effects on environment
ISO 14000 standards
Session 1 -69Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
The Nature of Global Competition
International/multinational corporations
Parent companyHost country
Session 1 -70Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
The Nature of Global Competition
Strategy implementation may be difficult
Cultural differencesNormsValuesWork ethic
Session 1 -71Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Advantages of International OperationsAbsorb excess capacity
Reduce unit costs
Spread risk over wider markets
Low-cost production facilitiesLess intense competition
Lower taxes
Economies of scale
Session 1 -72Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385
Disadvantages of International Operations
Difficult communications
Underestimate foreign competition
Cultural barriers to effective management
Complications arising from currency differences
