vantage associates, inc. management consultants

VANTAGEASSOCIATES, INC.MANAGEMENT CONSULTANTS

STRATEGIC PLANNING

Transforming Vision Into Action

VisionVision

StrategyStrategy StructureStructure

SystemsSystems CultureCulture

© Vantage Associates, Inc.

An Introductionto Strategic Planning

VANTAGEASSOCIATES, INC.

MANAGEMENT CONSULTANTS


Top Management Defined

The task of thinking through the mission of the

business, that is, of asking the question "What is

our business and what should it be?" This leads

to the setting of objectives, the development of

strategies and plans, and the making of today's

decisions for tomorrow's results.

Peter Drucker


Strategy = A coherent set of time-sequenced actions aimed at gaining a sustainable advantage over competition and improving position with customers.

Planning = The process of making decisionsconcerning the systematic allocationof resources.

Strategy Vs. Planning


If you do what you have always doneyou will get what you have always got

-- or less.

Strategic Planning


Definition of Insanity

Insanity is doing the same thing over and over again ...

each time expecting different results


Strategic Planning

Planning is a tool for managing the change every organization must undergo

Your planning process should recognize the key ingredients to successfully manage change


MANAGEMENTCOMMITMENT

SPECIFICACTION STEPS

SUCCESSFULCHANGE

+

+

Requirements for Successful Change

COMMONVISION

1. You must have a commonVision of what you are changing toand why

2. Employees must see thatManagement is committed to achievingthe Vision

3. You must define the specific stepsyou will take to reach the Vision

Only then can you manage changesuccessfully


Manage change proactively Improved trust and

communications Effective allocation of

limited resources

Improved organizational performance

Increase focus

Provide a catalyst for action

The Planning Process Should:


The only purpose of planning is to improve performance.

Planning is an evolutionary process that can be improved with each planning cycle.

Planning is a continuous process, not an activity to be completed in a month or two.

The real value in planning is in the process, not the document.

Uncertainty about the future is the reason for planning, not an excuse for not planning.

Our Planning Philosophy


Characteristics of High-Performing Organizations

Leadership

Common understanding of mission/purpose

Enthusiastic about mission/purpose

Open communications -up, down, and laterally

High level of trust

Teamwork

High morale

Commitment - sense of urgency

Failure and success are viewed as learning experiences


Strategic Planning

The strategic planning process can be effectively used to:

– Generate information

– Identify issues

– Improve communications

– Reinforce culture; i.e., teamwork

– Identify possible crisis points

– Enhance decision making


Board/Top Mgmt

Input Direction

Mgr/Employees

PLANNING

Planning is a Part of a Cycle


Strategic Planning is a Function and Responsibility of All Managers at All Levels of an Organization

MID- MANAGEMENT/SUPERVISION

PRODUCTION/ENTRY LEVEL

STRATEGIC

TOP MANAGEMENT

TACTICAL


Three Basic Questions

A Strategic Plan answersthree basic questions about

the organization


PHASE I: Where Do We Want To Go?

PHASE II: Where We Are Now?

Long-TermView

SituationAnalysis

StrategyPHASE III: What We Must Do To Close The Gap?

Strategic Planning ProcessThree Basic Questions


Components of a Strategic Plan

The “Three Questions” are too difficult to answer all at once

Planners break these questions down into small components

These individual components add up to answer the “Three Questions”


PHASE I: Where We Want To Go?

Assumptions WeaknessesStrengths Opportunities Threats

PHASE II: Where We Are Now?

Critical IssuesKey Decisionsand Strategies

Long-TermView

SituationAnalysis

StrategicPlan

PHASE III: What We Must Do To Close The Gap?

VisionConstituentGroups

Mission Values GoalsObjectives(Short & LongTerm)

ActionPlans

Overview of TheStrategic Planning Process


The Planning Pyramid

VISION

MISSION

VALUES

CONSTITUENTS

GOALS

OBJECTIVES (SHORT & LONG TERM)/STRATEGIES

CRITICAL ISSUES/KEY DECISIONS

ASSUMPTIONSENVIRONMENTAL SCAN

STRENGTHS, WEAKNESSES, THREATS, & OPPORTUNITIES

SITUATION ANALYSIS


PHASE 1

FINANCIAL PLANNING

PHASE 2

FORECAST-BASED

PHASE 3

EXTERNALLY ORIENTED

PHASE 4

STRATEGIC MANAGEMENT

PLANNINGPLANNING

VALUE SYSTEM MEET BUDGET PREDICT THE FUTURE THINK STRATEGICALLY CREATE THE FUTURE

EFFECTIVENESS OF STRATEGIC DECISION MAKING

ANNUAL BUDGETS

FUNCTIONAL FOCUS

MULTIYEAR BUDGETS

GAP ANALYSIS

"STATIC" ALLOCATIONOF RESOURCES

THOROUGH SITUATIONANALYSIS AND COMPETITIVEASSESSMENTS

EVALUATION OFSTRATEGICALTERNATIVES

"DYNAMIC"ALLOCATION OFRESOURCES

WELL-DEFINED STRATEGICFRAMEWORK

STRATEGICALLY FOCUSEDORGANIZATION

WIDESPREAD STRATEGICTHINKING CAPABILITY

COHERENT REINFORCINGMANAGEMENT PROCESSES

NEGOTIATIONS OF OBJECTIVES

REVIEW OF PROGRESS

INCENTIVES

SUPPORTIVE VALUE SYSTEMAND CLIMATE

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-

-

Evolution of Strategic Management

Strategic Analysis




Characteristics of Strategic Decisions

Multiple objectives

Difficulty of identifying good alternatives

Intangibles

Long-time horizons

Many interested factions

Risk and uncertainty

Interdisciplinary problems

Several decision makers

Value trade-offs

Risk attitude

Sequential nature of decisions


STRATEGIC ADVANTAGE

ST

RA

TE

GIC

TA

RG

ET

INDUSTRYWIDE

PARTICULARSEGMENT ONLY

UNIQUENESS PERCEIVEDBY THE CUSTOMER LOW COST POSITION

DIFFERENTIATIONOVERALL

COST LEADERSHIP

F O C U S

Three Generic Strategies


EMBRYONIC GROWTH MATURITY DECLINE

SA

LE

S V

OL

UM

EBusiness Life Cycle


THREAT OF NEW ENTRANTS

THREAT OF SUBSTITUTE PRODUCTS OR SERVICES

COMPETITORSJOCKEYING FOR

POSITIONBARGAINING POWER OF SUPPLIERS

BARGAINING POWER OF

CUSTOMERS

Industry Structure Analysis


Threat of New Entrants

Economies of scale

Product differentiation

Capital requirements

Switching cost

Access to distribution

Non-scale cost advantages


Power of Suppliers

Relative number of suppliers

Existence of potential substitutes

Importance of the industry to the supplier

Importance of the input to the industry

Differentiation or switching costs

Threat of forward integration


Power of Customers

Relative size of customer purchases

Importance of the input to the customer

Differentiation or switching costs

Customer profitability or price sensitivity

Importance of quality

Customer information


Threat of Substitutes

Price performance of alternatives

Technology innovations

Total product concept

Customer perceptions


Competitive Rivalry

Numerous or equally balanced competitors

Slow industry growth

High fixed or storage costs

Lack of differentiation or switching costs

Capacity added in large increments

Diverse competitors

High strategic stakes

High exit barriers

Componentsof a Plan




The Planning Pyramid

VISION

MISSION

VALUES

CONSTITUENTS

GOALS

OBJECTIVES (SHORT & LONG TERM)/STRATEGIES

CRITICAL ISSUES/KEY DECISIONS

ASSUMPTIONSENVIRONMENTAL SCAN

STRENGTHS, WEAKNESSES, THREATS, & OPPORTUNITIES

SITUATION ANALYSIS


A Vision Statement is a statement of what the

organization would like to be in the future. A

vision is not a statement of who we are or

what we do, but of what we would like to

become.

Vision Statement


A Vision Statement Should:

Inspire the management team

Motivate employees Focus the organization Communicate the direction

of the organization Challenge everyone to

perform at higher levels Look beyond the

organizations current limitations


Vision (Examples)

We will be one of the leading producers and marketers of product X in the Southeast.

We will be recognized by our customers as a company that provides superior customer service.

We will exploit our advantage of vertical integration to achieve the lowest cost position and become the dominant supplier in our industry.


A Mission or Purpose Statement is a statement of

why the organization exist. What need is it

designed to satisfy?

Mission and Purpose are the same thing. They

are used interchangeably.

Mission or Purpose Statement


A Mission Statement Should:

Focus on the “now” Define the product or

service provided Recognize the target

market or customer base

Begin to distinguish your organization from others

Recognize current limitations


Purpose (Examples)

To research, develop, and bring to market products which enhance the leisure time of our customers.

To develop economic alternatives to waste disposal and recycling.

To provide to our customers the full range of hardware and software products and services in a way that maximizes long-term profitability


An organization’s Values are the core beliefs

that drive the behaviors of everyone in the

organization?

Values describe the culture of the

organization. Values tell employees what it is

like to be a part of the organization.

Values


A List of Values Should:

Contain a list of five or six core beliefs

Include the values you already share as well as other values you are working to develop

Identify principals that guide your personal and professional life


Values (Examples)

Excellence in customer service

Financial stability

Personal and business integrity

Professionalism

Teamwork

Trust

Mutual Respect


An organization’s Constituents are those

individuals or groups that can have a positive

or negative impact on your organization?

Constituents usually cannot dictate what you

do, but they can create problems when they

disagree with what you want to do.

Constituents


Constituents Should Include:

Groups internal or external to the organization

Groups that are directly or indirectly involved

Groups that want you to success or

Groups that want you to fail


Constituent Groups (Examples)

Stockholders

Employees

Competitors

Media

Professional/trade associations


Goals are the things the organization is trying

to achieve over the long term.

Goals are developed to address specific

constituent groups and are enduring and

timeless.

Goals


Goals Should:

Address each of the constituent groups already identified

Be unique for each group or the groups can be combined

Define what we are willing to strive for with that Constituent


Goals (Examples)

We will make sound investment decisions such that we maximize the long-term return to our stockholders.

We will create an environment which challenges our employees and encourages their development.

We will monitor and develop aggressive responses to competitors’ moves.


Goals (Examples)

We will develop a proactive approach to the media such that it helps us communicate with our customers.

We will participate in trade and professional associations in an effort to shape the structure of the industry.


Assumptions are things that you think will

happen but over which you have no direct

control.

Assumptions are the collective view of the

future you are anticipating for your

organization.

Assumptions


Assumptions Should:

Reveal your expectations for the economy, the industry, the market or the need for your product or service

Address important areas of uncertainty even if they must change later

Form a foundation for decisions about organization’s future


Assumptions (Examples)

The national economy will continue to grow at 2% per year.

The local economy will grow faster than the national economy.

Raw materials will be available at today’s prices.

New and different types of competitors will enter the market.


Assumptions (Examples)

The technical skills required in the business will be more difficult to find.

New technologies will create new production methods.

The demand for quality will continue to increase.


Strengths and Weaknesses are things that are

internal to the organization over which the

organization has some control or influence.

Strengths are things that are positive.

Weaknesses are things that are negative.

Strengths and Weaknesses


Strengths and Weaknesses Should:

Be significant enough to make a real difference in the long-term success of the organization

Be measured relative to other similar or competitive organizations

Be limited to those things you would be willing to invest in or try to improve over time


Strengths (Examples)

Customer service

Focus on specific markets

Financial stability

Quality employees

Strong market share

Wide range of products

Technical leadership


Weaknesses (Examples)

Inexperience in sales

Depth of the management team

Systems and structures not keeping up with growth

Poor internal communications

High employee turnover

High cost structure


Opportunities and Threats are things that are

external to the organization over which the

organization has little or no control or influence.

Opportunities are things that are positive.

Threats are things that are negative.

Opportunities and Threats


Opportunities and Threats Should:

Address the economy, the industry, the marketplace, or the social environment

Include things you might want to take advantage of or things you will want to avoid or manage around

Focus on those things that matter


Opportunities (Examples)

Rapid change of technology

Deregulation

New product applications

Changing customer tastes

Growing customer base

International markets


Threats (Examples)

Increasing competition

Modifications to tort reform

Adverse federal initiatives

Increasing environmental concerns

Growing price sensitivity

Aging customer base


Objectives are things that are measurable

and achievable in a specific time frame.

Short-Term is usually one year or less.

Long-Term is usually three to five years.

Short and Long-Term Objectives


Objectives Should:

Always include a number and a date by which it will be achieved

Usually include both a long-term and a short-term component

Focus on those areas of the organization that are truly measures of success


Objectives (Examples)

Revenues

Profits

Number of employees

Volume of business

Return on equity

Gross margin

Error rate


Critical Issues are things that stand in the

way of you achieving your objectives. They

are the barriers to achieving the success you

defined by your Objectives

If you have no Critical Issues, your

Objectives are set too low.

Critical Issues


Critical Issues Should:

Help the organization focus its energy and resources on the most important areas

Be limited to the vital few items that must be addressed to achieve your objectives

Be identified by referring back to other components of the plan


Critical Issues (Examples)

Internal communication

Employee morale

Sales capabilities

Research and development

New markets


Action Plans are the steps you will take to

resolve or eliminate the Critical Issues.

Action Plans


Action Plans Should:

Identify the specific actions to be taken

Identify the individual responsible for seeing that the actions are accomplished

Include the time frame or milestones for completing the actions


Action Plans (Examples)

Implement regular staff meetings beginning first quarter, next year. Responsibility: President

Develop task force to identify employee morale issues and implement programs to improve morale. Responsibility: VP, Human Resources

Identify potential sales seminars and select one for implementation this year. Responsibility: Director of Marketing


Action Plans (Examples)

Establish a Research & Development Department reporting directly to the President. Hire a Director from outside by second quarter, next year. Responsibility: VP, Engineering

Conduct a market opportunity analysis to be completed by first quarter, next year. Responsibility: Director of Marketing


Sample

Format

VISION WEAKNESSES

THREATS

MISSION

STRENGTHS

VALUES

OPPORTUNITIES

CONSTITUENTGROUPS

GOALS

• ____________________________• ____________________________• ____________________________• ____________________________

• ____________________________• ____________________________• ____________________________• ____________________________

• ____________________________• ____________________________• ____________________________• ____________________________

• ____________________________• ____________________________• ____________________________• ____________________________

• ____________________________• ____________________________• ____________________________• ____________________________

• ____________________________• ____________________________• ____________________________• ____________________________

• ____________________________• ____________________________• ____________________________• ____________________________

Strategic Plan


Sample

Format

CRITICAL ISSUES/ACTION PLANS (Con’t)ASSUMPTIONS

OBJECTIVESShort & Long Term

CRITICAL ISSUES/ACTION PLANS

•ISSUE: _______________________

•ACTIONS:• _____________________________• _____________________________• _____________________________

•RESPON: _____________________•TIMING: ______________________

•ISSUE: _______________________

•ACTIONS:• _____________________________• _____________________________• _____________________________

•RESPON: _____________________•TIMING: ______________________

•ISSUE: _______________________

•ACTIONS:• _____________________________• _____________________________• _____________________________

•RESPON: _____________________•TIMING: ______________________

•ISSUE: _______________________

•ACTIONS:• _____________________________• _____________________________• _____________________________

•RESPON: _____________________•TIMING: ______________________

1 YR 5 YR

• ____________________________• ____________________________• ____________________________• ____________________________

•Obj1

•Obj2

•Obj3

•Obj4

Strategic Plan

Implementation




EXTERNAL ANALYSIS

Opportunities

Threats

Identify Responsibility & Allocate Resources

INTERNAL ANALYSIS

StrengthsWeaknesses

MISSION/PURPOSE

Define the BusinessIdentify the Market

DefineAction Programs

Identify Critical Issues and Key Decisions

FORMULATE STRATEGY

Set Goals

Set Objectives

Strategic Planning Process


CONDUCTRESEARCH

ANALYZERESEARCH

DOCUMENTPLAN

COMMUNICATEPLAN

#1 #2 #3

STRATEGIC PLANNING SESSIONS

WHERE WE WANT TO GO

WHERE WE ARE NOW

WHAT WE MUSTDO TO CLOSE

THE GAP

ACTIONPLANS

STATEMENTOF

STRATEGY

CRITICALISSUES

STRENGTHS

WEAKNESSES

OPPORTUNITIES

THREATS

ASSUMPTIONS

DISTINCTIVECOMPETENCE

VISION

MISSION

VALUES

LONG-TERM

SHORT-TERM

GOALS

OBJECTIVES

OBJECTIVES

MONITORPLAN

FEEDBACK LOOP

Strategic Planning Process

ANNOUNCE TO ORGANIZATION


Common Blunders in Business Strategy

Making moves inappropriate to the position Building productivity in the wrong way

Underdeveloping strong positions

Underdeveloping weak positions

Going down with the flagship

"Zigzagging"

Joining the other lemmings

Inappropriate turnaround efforts


Factors Affecting Implementation

Perceived need

Quick results

Endorsement of line managers

Commitment of resources

Clear benefits

Understood concept

Manageable tasks

Past experience

Identified sponsor


Some Obstacles to Corporate Planning

Difficult to predict future - i.e., competitive moves; new technology

Internal resistance

Requires significant resources

Difficult exercise/hard work

Difficult to achieve common understanding

Requires management and supervisory education


STRATEGY IS:

IMP

LE

ME

NT

AT

ION

IS:

APPROPRIATE INAPPROPRIATE

PO

OR

GO

OD

SUCCESS: ROULETTE:

TROUBLE: FAILURE:

ALL THAT CAN BE DONE TO ASSURE SUCCESS HAS BEEN DONE..

POOR EXECUTION HAMPERS GOOD STRATEGY. MANAGEMENT MAY NEVER BECOME AWARE OF STRATEGIC SOUNDNESS BECAUSE OF EXECUTION INADEQUACIES.

GOOD EXECUTION CAN MITIGATE POOR STRATEGY, FORCING MANAGEMENT TO SUCCESS.

THE SAME GOOD EXECUTION CAN HASTEN FAILURE.

VERY HARD TO DIAGNOSE, BECAUSE BAD STRATEGY IS MASKED BY POOR EXECUTION.

EVEN HARDER TO FIX, BECAUSE TWO THINGS ARE WRONG.

OR

-

- -

-

-

-

SOURCE: "THE MARKETING EDGE" BY THOMAS BONOMA

Strategy/Implementation Matrix


Critical Issues, Action Plans

Year Three

Vision, Mission, Values, Goals

Year One

Emphasis Changes Over Time


Typical Planning Schedule(January 1 Fiscal Year)

JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY

• Collect information and conduct preliminary analysis

• Identify Strategic Issues

• Conduct Strategic Planning Session

• Document Output

• Communicate the Plan

• Develop Company Budgets

• Conduct Quarterly Reviews


FUNDAMENTALS OF

SALESMANSHIP




THE MYTHOLOGY OF SELLING

Salespeople are born, not made.

Good salespeople are good talkers.

The good salesperson can sell anything.

A good salesperson can sell to any prospect.

The good salesperson never takes no for an answer.

Selling is a bag of tricks.

People don't want to buy.

The get-rich-quick illusion.


A GOOD SALESPERSON MUST HAVE AT LEAST TWO BASIC QUALITIES

Empathy

Ego Drive


SALES PERFORMANCE

ATTITUDE Winner Confidence Action

SKILL Planning Presenting Closing

KNOWLEDGE Customer/Industry Product/Service Competition/Market


WHAT IS SELLING?

A PROFESSIONAL SALESPERSON:

– Knowledgeable

– Motivated to Serve

– Personal Code of Ethics


WHAT IS SELLING?

KNOWLEDGE REQUIRED:

– Product

– Competition

– Human Behavior

– Customers

– Buyer - Business, Company, Needs, Plans, Problems, and Buying Motivation


JOB OF A SALESPERSON

Self-Management

Administration

Prospecting/Client Development

Selling


CAN SELLING BE PRACTICED PROFESSIONALLY?

CHARACTERISTICS OF PROFESSIONAL SALESPEOPLE

Capacity for hard work

Empathy

Competitive

Ability to live with rejection

Organized

Enthusiastic

Integrity


EFFECTIVE SELLING

Define the product

Define the market

Identify and evaluate the competition

Set objectives/develop a plan

Implement the plan

Evaluate results

Measure results/refine as required


HELPFUL PERSONALITY TRAITSIN SELLING

Intelligence

Social intelligence and

tact

Dependability

Timing

Assertiveness

Self-confidence

Vocabulary

Imagination

Determination

Self-management -

Discipline

Responsibility


NON-TRADITIONAL APPROACHES THAT WILL WORK IN THE 90s

Salespeople must be in front of qualified buyers when the

buyer wants to buy.

More selling will occur in the “needs analysis” phase of the

sales cycle.

All products and services must be differentiated in the mind

of the buyer

Be customer driven

Remember the Four Fs: Be fast, friendly, flexible, and

customer focused.


EVALUATE AND TAKE ACTION!

TO BE A SUCCESSFUL SALESPERSON, YOU NEED TO KNOW:

Your customer and his/her business

Your competitors and their products, services,

programs, strengths, and weaknesses

Your trade allies and their products, services,

programs, strengths, and weaknesses

Your company and its policies

Your products, services, and programs

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