- An overview of Planning Fundamentals
- How strategic planning differs from
tactical and operational planning
- Strategic Planning: Yesterday and
- Step 1: Establishment of
Mission, Vision, and goals
- Step 2: Analysis of External
Opportunities and Threats
- Step 3: Analysis of Internal
Strengths and Weaknesses
- Step 4: SWOT Analysis and
- Step 5: Strategy
- Step 6: Strategy Control
An Overview of Planning Fundamentals
Planning : Systematic process of making decisions about goals and activities that a group or organization or individual will pursue in the future
The basics planning process are:
- Situational analysis
Planning should gather, interpret and summarize information which is relevant to the planning issues
- Alternative goals and plans
Evaluate the advantages, disadvantages and potential effects of each alternative goal and plan.
- Goal and evaluation
When performing evaluation, priority should be set in order to achieve goals and plans.
- Goal and plan selection
After priority has been set, and evaluation has been conducted, the most feasible goals and plans must be selected accordingly. In some organization, this steps is called planning scenarios which describes a particular set of future conditions
- Monitor and control
This is an essential step because planning is ongoing and the process is repetitive. Thus manager should monitor and control the actual performance according to the unitís goal and plans.
Level of Planning
The level of planning in consist of :
- Strategic planning
Involves making decisions for the organization long term goals and strategies
It has a strong external orientation.
Strategic goal major targets relating to the organizationís long term survival, value and growth.
Strategy is a pattern of actions and resource allocations designated to obtained the goal of the organization.
- Tactical and operational planning
This translates broad strategic goals and plans into specific goals and plans that are relevant to the organizations.
Tactical plans focus on the major actions to fulfill the strategic plan.
Operation planning identifies the specific procedures and processes required at lower levels of the organization.
Adidas bought out Salomon sports equipment, and with this purchase it makes adidas a second largest sports equipment to Nike.
Strategic Planning: Yesterday and Today
From 1960ís to 1980ís strategic planning generally emphasized a top-down approach to goal setting and planning. During this period individual companies and consulting firms innovated a variety analytical method and planning approaches.
Strategic management involves managers from all sections of organization in the formulation and implementation of strategic goal and strategies.
The six major components of the strategic management process are:
- Establishment of mission, vision and goals
The first step is to establish mission.
Mission is the basic purpose, scope and value of the organization.
Second step is to establish Strategic vision
It moves beyond the mission statement to provide a perspective to the organization goal.
- Analysis of external opportunities and threats
Successful strategic management depends on an accurate evaluation of the environment. After environment has been analyzed, the industry is examined. The next is organizational stakeholder.
Stakeholder is groups or individual who affect and are affected by the achievement of the mission, goal and strategy of the organization.
Compaq has to segment its product to different kind of products according to customersí need; Therefore, Compaqís revenues are up about 50 percent.
- Analysis of internal strengths and weakness
The major or internal resource analysis are:
- Financial analysis
- Human resources assessment
- Marketing audit
- Operations analysis
Resources are inputs to a system that can enhance performance.
Resources can take many forms but tend to fall into two broad classifications:
For instance: Real estate, Production facilities and raw materials
For instance: Company reputation, culture, technical knowledge, and patents
- Core competencies is the unique skills or knowledge that an organization possess to give an
edge over competitors.
- Benchmarking is the process of estimating how well the companyís basic functions and skills
compare to other companies.
- SWOT analysis and strategy
SWOT analysis is a comparison of weakness, strengths, threats and opportunities that helps executives to formulate strategy.
Strategy formulation moves from simple analysis to devising a coherent course of action.
Corporate strategy identifies the set of businesses, marketing or industries in which the organization competes among other businesses.
An organization has 4 basic corporate strategy alternatives ranging from very specialized to highly diverse.
A concentration is a strategy employed for an organization that operates a single business and competes in a single industry.
Vertical integration involves expanding the business to supply channels and distributors.
Concentric diversification used to add new business that produce related products, markets and activities
The opposite of concentric diversification is conglomerate diversification, defined as a corporate strategy that involves expansion into unrelated businesses.
The BCGís matrix helps identify businesses that should be sold but it does not help managers of individual businesses to develop strategies to improve its competitiveness.
Trends in Corporate Strategy
Organization usually performs better if they implement a more concentric diversification strategy in which businesses are related or similar to one another. For instance, Disney spend $19 Million to merge with ABC/Cap cities.
Defines the major actions that an organization builds and strengthens its competitive position in the marketplace.
Two generic business strategies are:
- Low Ė Cost Strategy
Wal-Mart and Southwest Airlines peruse competitive advantages through low-cost strategies which is a strategy used by businesses by building competitive advantages by being efficient and offering a standard, no trills product.
- Differentiation strategy
Company attempts to be unique in its industry or market segment by using this strategy.
This is the final step in strategy formulation. In this strategy, each functional area of the organization is implemented to support the business strategy.
Starbucks: Inside the coffee cult
Starbucks employed and trained the "tattooed kids" and paid them above the industryís standard salary. They also gave their employees the opportunity to express their ideas to the company. In return, the company expects their employees to adhere to a fairly rigid dress code. The payoff of this human resources strategy is impressive because Starbucks generate revenues about $35 Million, and the company now is expanding their business to overseas.
- Strategy implementation
Strategic managers must ensure that the new strategies are implemented effectively and efficiently.
Strategy implementation reflected in two major trends:
- Adopting a more comprehensive view of implementation
- Extending the more participative strategic management
- Strategic control
Strategic control system is designed to support managers in evaluating the organizationís progress regarding its strategy and when
discrepancies exit, taking corrective action.
Most strategic control systems include budgets to monitor and control major financial expenditures.
The dual responsibilities of the control system are efficiency and flexibility.
DuPont has changed from a slow moving giant into a faster growing machine thanks to John A. Krol. He has done this by involving more people in the planning process, by listening to them and asking for input which has improved the quality of decisions made. To improve DuPonts position Krolís plan to diversify its operations into life sciences such as biotech agriculture and pharmaceuticals. When these operations such as the their low margin medical products donít go well, they sell them off. The overall plan of DuPont is the concentrate on faster growing markets that build on their core competencies.
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