btecbs part b strategic planning_final [compatibility mode]

8/12/2019 BtecBS Part B Strategic Planning_Final [Compatibility Mode]

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STRATEGIC PLANNING

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PART B


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THE NATURE OF PLANNING Planning is the process of deciding what should be done, how

and when it should be done and who should do it.

Why planning is important.

It focuses attention on objectives by uniting the organisation

and its activities. It removes uncertainty by providing a framework of activities

that can be placed in a context.

It facilitates control by supplying targets for performance.

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ea s o econom ca opera ons y emp as s ng e c encyand consistency.

Planning Gap

Management activities - PLOC


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A HIERARCHY OF PLANS

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PLANNING CYCLEEstablish

Objectives

Plan the StrategyReview Progress

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DecideTactics

Implementthe Strategy


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PLANNING HORIZONS.

Planning - long term and short term. Example

An organisation with only limited funds, might be tempted in

the short term to spend all of this on maintaining current profitlevels. However, if spending on capital investment orresearch and development is ignored in the long term, this willeventually affect profitability.

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A planning horizon is the length of time betweenmaking a planning decision and implementing thatdecision. Example

Decision to move to new premises might take many years

Production or sale schedule might be implemented within afew days or weeks.


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Planning Time Horizon

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Profitability is the prospect of a particular courseof action generating profits for the organisation


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STRATEGIC PLANNING

Strategic planning is the managerial process of developing andmaintaining a strategic fit between the organisations objectives andresources and its changing market opportunities

Corporate means relating to the whole organisation Strategic plans are used to define the direction of all other plans and so they

must be: Where the organization wants to be in the future (Long term)

Pertain to the organization as a whole. (Comprehensive)

Action ste s develo ed and controlled b to mana ement .

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Blueprint that defines the organizational activities and resourceallocations.

Strategy: (3 levels) Corporate strategy

concerned with what types of business the organisation is in. It denotes the most

general level of strategy in an organisation (Johnson, arid Scholes). Business strategy

explains how an organisation approaches a particular product market area

Functional / operational strategies deal with specialised areas of activity.


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STRATEGIC PLANNING - Goals and Plans

Tactical Goals/Tactical Plans Goals that define the outcomes that major

divisions and departments must achieve.

Plans designed to help execute major strategicplans.

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pera ona oa s pera ona ans Specific, measurable results expected from

departments, work groups, and individuals.

Organizations lower levels that specify actionsteps toward achieving operational goals.

Include day to day and task to task activities


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STRATEGIC PLANNING - LEVELS OF

GOALS/PLANS

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STRATEGIC PLANNING - The strategic planning

process

Looks at:

Strategic analysis Strategic options

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three distinct stages:

Strategic analysis trategic choice strategicimplementation.


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The exploring strategy model

Figure 1.4 The Exploring Strategy Model


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STRATEGIC PLANNING - The strategic planning process (example)

Mission

Why does the organisation exist?

ObjectivesHow can the mission be achieved?What are the organisationsobjectives?

Internal Environment

What are our resources, standing,success and ca abilities?

External Environment

What are the possible external

influences, likely current

Reconsiderand adjustas necessary

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an uture compet t on

Corporate Analysis

SWOT, improve to achieve

Strategic Choice

Options available, compared most suitable

Strategic Implementation

Best strategies for design, mkt., prod., etc.

Review and Control

Access actual performancesagainst plan


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STRATEGIC PLANNING Strategic Analysis

Step I Mission and/or vision Mission statement

Step 2 Goals Stakeholder analysis

Step 3 Objectives Measures such as; profitability, deadlines, time scale, etc.

Step 4 Environmental analysis PEST anal sis Porters 5 force anal sis and com etitive

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advantage of nations, scenario building, etc. Step 5 Position audit or situation analysis

Resource audit, distinctive competence, value chain, PLC, BCG,directional policy matrix, marketing audit, market share (PIMS)

Step 6 Corporate appraisal(Combines steps 4 and 5) SWOT analysis charts

Step 7 Gap analysis(Compares outcomes of step 6 withstep 3)

Gap analysis


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STRATEGIC PLANNING Strategic Choices

Strategic options generation Come up with new ideas; How to compete

(competitive advantage), where to compete,

method of growth, etc. Value chain analysis; Scenario building; Porters

generic strategic choices; Ansoffs growth vector;

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Acquisition v organic growth Strategic options evaluation

Normally, each strategy has to be evaluated on

the basis of acceptability, suitability, feasibility andenvironmental fit.

Key models; Stakeholder analysis, Risk analysis,Financial measures


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STRATEGIC PLANNING Strategic Implementation

Resource planning Deploying the resources to achieve the strategy Critical success factors, outsourcing

Operations plans

Operational activities Activity schedules, budgets, project management

Organisation structure and culture Designing the organisation to implement the strategy

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Implement changes

Change Functional strategies HRM

Personnel planning, appraisal schemes, etc.

Production Quality management, scheduling, etc.

Marketing MktIS, marketing mix, segmentation, PLC, etc.


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STRATEGIC PLANNING Models

Four common models;

BCG Matrix (chapter 3) Boston Consultant Group growth share matrix

SPACE Diagram

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Strategic Positioning and Action Evaluation model GE Matrix

General Electric Business Screen

Shell Directional Policy Matrix PIMS

Profit Impact of Market Share


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Strategy Analysis & Choice

Strategic Position & Action EvaluationMatrix (SPACE)

Four quadrant framework

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Determines appropriate strategies Aggressive

Conservative

Defensive Competitive


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Two Internal Dimensions

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Financial Strength [FS] Competitive Advantage [CA]

Two External Dimensions

Environmental Stability [ES] Industry Strength [IS]


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Overall Strategic position determined by:

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Financial Strength [FS] Competitive Advantage [CA]

Environmental Stability [ES]

Industry Strength [IS]


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SPACE Matrix

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SPACE Matrix

FS

+6

+1

+5

+4

+3

+2

Conservative Aggressive

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-6

-5

-4

-3

-2

-1-6 -5 -4 -3 -2 -1 +1 +2 +3 +4 +5 +6

ES

CA IS

Defensive Competitive


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General Electrics Business Screen

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The strength of attraction that the product has in general for customers (forwhatever reasons).

The competitive position of products compared with rival products in themarket.Harvest means that the firm should invest no more, but earn what profits it canbefore quitting.


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PIMS (Profit Impact of Market Share)

This indicates a positive relationship between

market share and profitability. Companies with

high market share have high profits, so highmarket share is often an objective laid down at

the lannin sta e.

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BCG Growth-Share Matrix

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BCG Growth-Share Matrix

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btecbs part b strategic planning_final [compatibility mode]

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