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  1. 1. Introduction What exactly is strategic planning?
  2. 2. Historical Progression of Business Planning <ul><li>1900s, budgeting and controls; focus was on deviation from the budget. It assumed that the past would repeat itself. </li></ul><ul><li>1950s, long-range planning; it also assumed that the past would repea itself but the future could be forecasted based on an analysis of trends </li></ul><ul><li>1960s, strategic planning, assumed that simple trend analyses based on past occurances were inadequate. It considered forecasts of future changes in the marketing environment (customers and competitors). Its foundation is continuous scanning of the environment and internal abilities to develop quick responses to sudden changes. </li></ul>
  3. 3. What exactly is strategic planning? <ul><li>Strategic planning involves decisions that are made by the management of an organization as it pursue its mission and objectives. These decisions include the types of products to offer and in what markets to sell them, the allocation of resources to that end, the establishment of policies and procedures, and the appropriate distribution of employee responsibilities. This decision-making process is influenced by events occurring in the internal and external environments of the firm. </li></ul>
  4. 4. <ul><li>A strategic marketing plan is the joint preparation of a strategic (long-term) plan with supportive functional plans, to assure a compatible and continuous fit bewteen the organization’s goals and capabilities and its competitive environment. </li></ul><ul><li>It is a long-term plan to enchance the firm’s competitive position or a plan that encloses the firm’s primary strategies, especially those related to its product or services and market. </li></ul>
  5. 5. <ul><li>Important parts of the definition: </li></ul><ul><li>j oint preparation of a strategic marketing plan with supportive functional plans ; the annual functional plans must flow directly from strategic plans. Strategic decisions provide general guidelines for the planning needs of the functional departments (marketing, management - operations, finance) </li></ul><ul><li>assurance of a compatible and continuous fit ; long-term profit is determined by a series of short-term profits </li></ul>
  6. 6. <ul><li>compatible and continuous fit between the organization’s goals and capabilities and its competitive environment ; strengths and weaknesses of the business, and the opportunities and threats in the environment should be analyzed. Strategic controls must go on about (1) changes in the capabilities of the business, (2) critical events taking place in the environment – primarily the customers and competitors. Controls consist of determining whether the firm is achieving its objectives: if not, why? </li></ul>
  7. 7. Strategic Management <ul><li>The goal in strategic management is to match the resources of the firm to the threats and opportunities that exist in the environment in order to achieve long-term survival of the firm. </li></ul>
  8. 8. Strategic Marketing Concept <ul><li>Marketing concept ; determining the needs of customers and then satisfying those needs better than competitors </li></ul><ul><li>Strategic marketing concept ; focusing all planning and implementational activities on the primary goal of long-term customer satisfaction at a profit. Satisfaction of the customer over the long term requires continuous monitoring of the environment, incorporating findings into long- and short-term plans, achieving a sustainable competitive advantage, and enlisting the cooperation of employees to support the firm’s mission. </li></ul>
  9. 9. <ul><li>Central questions to be answered; </li></ul><ul><li>What is the firm’s current strategy and position in the market? How does the firm’s current abilities match up to future strategic requirements? Are there minor or major problems? </li></ul><ul><li>What is happening in the environment now and how might that be expected to change in the future (primarily customers and competitors)? </li></ul><ul><li>What should the firm’s short- and long-term strategy be in light of the analysis? Are radical or moderate changes in existing strategies required to meet current and future customer needs? </li></ul>
  10. 10. Strategic Marketing Model <ul><li>Mission statement ; basically the firm’s overall purpose </li></ul><ul><li>Internal analysis ; in-depth analysis of the performance of each key functional area of the company to expose the company’s strengths and weaknesses </li></ul><ul><li>Environmental analysis ; covers the analysis of (1) the remote environment – PEST and (2) the operating environment – PECCS. Together they are referred to as the situational analysis </li></ul><ul><li>PEST: political regulations, the economy, societal trends, and technology </li></ul><ul><li>PECCS: personnel, ecology, customers, competitors and suppliers </li></ul>
  11. 11. <ul><li>Strategic Marketing ; concerns the long-term or broad focus of the firm related to grand strategies, the chosen product and market segments (portfolio analysis, expansion strategies etc.) </li></ul><ul><li>Long-term Objectives ; objectives for multiyear period – three to five years. </li></ul><ul><li>Annual Objectives ; objectives of the firm for the first year. They flow from the long-term objectives but they are more specific (daily, weekly, monthly, quarterly) </li></ul>
  12. 12. <ul><li>Functional Strategies ; express how the marketing mix variables will be used to achieve the firm’s grand strategies. Other strategies for the operations, human resources and finance departments should also be addressed. (what?) </li></ul><ul><li>Action Plans and Policies ; they are temporary actions (referred to as tactics) necessary to carry out strategies. (how, when, by who, how much?) </li></ul><ul><li>Controls ; consist of ongoing monitoring and measuring of the actual performance of the firm compared with its proposed objectives. General abilities of the firm and the environment must also be monitored. </li></ul>
  13. 13. Key Terms <ul><li>Strategy ; refers to the plan for achieving a goal or objective. “It reflects a pattern in a sream of conscious managerial decisions, aimed at ensuring organizational adaptation”. </li></ul><ul><li>Tactic ; a term closely related to strategy – a specific action or means for accomplishing a strategy. The most common usage is for short-term actions of a firm. (Depending on the context, actions on the five-year plans may be referred as strategy, actions on yearly plans may be referred as tactics.) </li></ul>
  14. 14. <ul><li>Strategic ; in business, the term strategic generally refers “something important” and is utilized in many different contexts such as strategic marketing plan, strategic assets and resources, strategic issues or concerns, strategic thinking (seeing the big picture). </li></ul>
  15. 15. Levels of Strategy Decisions <ul><li>There are three levels of organizational strategies (decisions) – (1) corporate, (2) business, and (3) functional levels. Decisions made at each level vary in importance, specificity and degree of centralization. </li></ul><ul><li>Corporate-level strategies ; are made by the top management of a company (by CEO, CFO). Such decisions are normally associated with multi-business corporations. </li></ul>
  16. 16. <ul><li>These decisions generally concern; the corporation’s public and internal image, the degree of social responsibility desired, major resource allocations (invest, hold or milk, harvest, divest), with what businesses the corporation should be involved, financing of possible expansion internally through existing businesses or through dept or equity funding. </li></ul><ul><li>Business-level strategies ; are concerned with how the business will compete in its particular industry. They focus on the firm’s product mix, customer and geographic markets served, exploitation of the firm’s specific competencies, and achievement of one or more sustainable competitive advantages. Business and corporate-level strategies are the long-term portion of the strategic marketing plan. </li></ul>
  17. 17. <ul><li>Functional-level strategies ; made by the managers and the employees of various functional departments. They are primarily concerned with the preparation and implementation of policies and action plans that support the objectives and strategies set by the corporate- and business-level managers. (botto m -up) </li></ul>
  18. 18. <ul><li>Strategy level Focus Those Time Frame Specificity </li></ul><ul><li> responsible </li></ul><ul><li>Level 1: What set of busi- Top 5-10 years Broad </li></ul><ul><li>Corporate nesses should management </li></ul><ul><li>Strategy we be in? </li></ul><ul><li>Level 2: How do we com- President of 1-5 years Somewhat </li></ul><ul><li>Business pete within this SBUs specific </li></ul><ul><li>Strategy particular </li></ul><ul><li> industry? </li></ul><ul><li>Level 3: Details the cour- VP of Marketing Less than 1 year Detailed plan </li></ul><ul><li>Functional ses of action in VP of Operations </li></ul><ul><li>Strategy the functional </li></ul><ul><li> areas of mana- </li></ul><ul><li> gement </li></ul>
  19. 19. Strategic Aggression <ul><li>There are five basic divisions of organizational characteristic or strategic aggression: </li></ul><ul><li>Proactive ; being a leader rather than the follower, constantly assess the environment - opportunities and threats </li></ul><ul><li>Reactive ; having risk to be known as a “copy-cat” rather than “innovative”, mostly followed </li></ul><ul><li>Passive ; focusing simply on what have been done, focused on standardization and cost minimization, does not monitor the environment </li></ul>
  20. 20. <ul><li>Adaptive ; being flexible to adopt to the relatively stable environment, the company wants to continue with its current highly or reasonable successful strategies, but remain open to changes if the right opportunity presents itself. </li></ul><ul><li>Discordant ; poorly positioned firms, unsure about how to deal with its current position and the best opportunities. This strategy is not selected but acquired through poor performance. </li></ul>
  21. 21. Time Horizon <ul><li>The strategic marketing plan has two time horizons: one is the long-term or strategic portion, normally about three to five years for the hospitality industry; the other is the short-term (one year or less) or functional portion. Although the strategic portion is for longer than one year, it is generally updated each year. The reason for the annual update is that internal and environmental factors change. </li></ul>