Strategic Planning For Managers

Slide 1: Strategic Planning for Managers 1 www.studyMarketing.org

Slide 2: Contents 1. Five Tasks of Strategic Planning 2. Factors Shaping the Choice of Strategy 3. Three Tests of Best Strategy 4. Analyzing Industry Environment and Crafting Competitive Strategy 5. Strategy Implementation and Execution If you find this presentation useful, please consider telling others about our site (www.studyMarketing.org) 2 www.studyMarketing.org

Slide 3: You can download this presentation at: www.studyMarketing.org Please visit www.studyMarketing.org for more presentations on strategy, marketing, branding, and innovation 3 www.studyMarketing.org

Slide 4: Five Tasks of Strategic Planning 4 www.studyMarketing.org

Slide 5: Five Tasks of Strategic Planning Crafting a Forming a Setting strategy to strategic objectives achieve the vision desired outcomes Evaluating performance, Implementing monitoring new and executing developments, the chosen and initiating strategy corrective adjustments 5 www.studyMarketing.org

Slide 6: Forming a Strategic Vision • Very early in the strategy-making Forming a process, company managers need to strategic pose a set of questions: vision • \"What is our vision for the company — where should the company be headed, what should its future technology-product-customer focus be, what kind of enterprise do we want to become, what industry standing do we want to achieve in five years?\" 6 www.studyMarketing.org

Slide 7: Setting Objectives • The purpose of setting objectives is to Setting convert managerial statements of objectives strategic vision and business mission into specific performance targets — results and outcomes the organization wants to achieve. • Setting objectives and then measuring whether they are achieved or not help managers track an organization's progress. 7 www.studyMarketing.org

Slide 8: Strategic Objectives in Four Perspectives Enhance Long-term Shareholder Value Improve Increase Revenue Growth Cost Efficiency Financial Build High Expand Enhance Performance Products Market Share Brand Image Customer Achieve Drive Demand Implement Good Manage Dramatic Operational through Customer Environmental Growth through Excellence Relation Management Policy Innovation Internal Process Learning & Growth Develop Strategic Build Learning Expand Capabilities with Competencies Culture Technology 8 www.studyMarketing.org

Slide 9: Crafting Strategy • A company's strategy represents Crafting a management's answers to such fundamental strategy to achieve the business questions as : desired • whether to concentrate on a single business or build outcomes a diversified group of businesses • whether to cater to a broad range of customers or focus on a particular market niche • whether to develop a wide or narrow product line • how to respond to changing buyer preferences • how big a geographic market to try to cover • how to react to newly emerging market and competitive conditions • how to grow the enterprise over the long term. 9 www.studyMarketing.org

Slide 10: What Does a Company's Strategy Consist Of? • Company strategies concern how: Crafting a • how to grow the business strategy to achieve the • how to satisfy customers desired • how to outcompete rivals outcomes • how to respond to changing market conditions • how to manage each functional piece of the business and develop needed organizational capabilities • how to achieve strategic and financial objectives 10 www.studyMarketing.org

Slide 11: Strategy Implementation and Execution • Strategy implementation concerns the Implementing managerial exercise of putting a freshly and executing chosen strategy into place the chosen • Strategy execution deals with the managerial strategy exercise of supervising the ongoing pursuit of strategy, making it work, and showing measurable progress in achieving the targeted results. 11 www.studyMarketing.org

Slide 12: Strategy Evaluation and Monitoring • It is management's duty to stay on top of Evaluating the company's situation, deciding whether performance, monitoring new things are going well internally, and developments, monitoring outside developments closely. and initiating • Marginal performance or too little corrective adjustments progress, as well as important new external circumstances, will require corrective actions and adjustments. 12 www.studyMarketing.org

Slide 13: Strategy Hierarchy Corporate Strategy Business Strategy Strategies hierarchy for a diversified Functional Strategies (R&D, company Marketing, Manufacturing, HR, Finance, etc. Operating Strategies (regions, plants, departments within functional areas) 13 www.studyMarketing.org

Slide 14: Strategy Hierarchy Business Strategies Strategy hierarchy Functional Strategies (R&D, for Marketing, Manufacturing, HR, a single-business Finance, etc. company Operating Strategies (regions, plants, departments within functional areas) 14 www.studyMarketing.org

Slide 15: Strategy Hierarchy Corporate Corporate Corporate Strategic Vision Strategic Objectives Strategic Strategy Business-Level Business-Level Business-Level Strategic Vision Strategic Objectives Strategy Functional Functional Functional Areas Visions Areas Objectives Areas Strategies Operating Unit Operating Unit Visions Operating Unit Objectives Strategies 15 www.studyMarketing.org

Slide 16: Factors Shaping the Choice of Strategy 16 www.studyMarketing.org

Slide 17: Factors Shaping the Choice of Strategy External Factors Competitive Company Economic, conditions and opportunity and societal, political, industry threat and government attractiveness regulations The mix of considerations that determines a company’s strategic situation Personal ambitions Company strengths Shared values and and business and weaknesses, company culture philosophies of key competencies and executives capabilities Internal Factors 17 www.studyMarketing.org

Slide 18: Strategic Analysis and Strategic Choices Analyzing strategically about industry and competitive What strategic conditions options does the What is the best company strategy? Analyzing realistically strategically have? about a company’s own situation 18 www.studyMarketing.org

Slide 19: Three Tests of Best Strategy The Goodness of Fit Test The The Best Competitive Advantage Strategy Test The Performance Test 19 www.studyMarketing.org

Slide 20: Three Tests of Best Strategy The Goodness of • A good strategy has to be well matched Fit Test to industry and competitive conditions, market opportunities and threats, and other aspects of the enterprise's external environment. • At the same time, it has to be tailored to the company's resource strengths and weaknesses, competencies, and competitive capabilities. 20 www.studyMarketing.org

Slide 21: Three Tests of Best Strategy The Competitive Advantage • A good strategy leads to sustainable Test competitive advantage. • The bigger the competitive edge that a strategy helps build, the more powerful and effective it is. 21 www.studyMarketing.org

Slide 22: Three Tests of Best Strategy The Performance • A good strategy boosts company Test performance. • Two kinds of performance improvements are the most telling of a strategy's caliber: gains in profitability and gains in the company's competitive strength and long-term mar-ket position. 22 www.studyMarketing.org

Slide 23: Analyzing Industry Environment and Designing Competitive Strategy 23 www.studyMarketing.org

Slide 24: Porter’s Five Forces Buyer Barriers to Power Entry Rivalry Threats of Supplier Substitutes Power 24 www.studyMarketing.org

Slide 25: The Intensity of Rivalry 1. A larger number of firms The intensity of 2. Slow market growth rivalry is influenced 3. High fixed cost by the following 4. High storages costs or highly industry perishable products characteristics: 5. Low switching cost 6. Low level of product differentiation 7. Strategic stakes are high 8. High exit barriers 9. A diversity of rivals 10. Industry shakeout 25 www.studyMarketing.org

Slide 26: Barriers to Entry 1. Absolute cost advantages 2. Proprietary learning curve Entry barriers 3. Access to inputs are influenced by the following 4. Government policy factors : 5. Economies of scale 6. Capital requirements 7. Brand identity 8. Switching costs 9. Access to distribution 10. Expected retaliation 11. Proprietary products 26 www.studyMarketing.org

Slide 27: Threats of Substitutes 1. Switching costs Threats of 2. Buyer inclination to substitute substitutes are influenced by 3. Price-performance trade-off the following of substitutes factors : 27 www.studyMarketing.org

Slide 28: Buyer Power 1. Bargaining leverage 2. Buyer volume Buyer power is influenced by 3. Buyer information the following 4. Brand identity factors : 5. Price sensitivity 6. Threat of backward integration 7. Product differentiation 8. Buyer concentration vs. industry 9. Substitutes available 10. Buyers' incentives 28 www.studyMarketing.org

Slide 29: Supplier Power 1. Supplier concentration 2. Importance of volume to supplier Supplier power is influenced by 3. Differentiation of inputs the following 4. Impact of inputs on cost or factors : differentiation 5. Switching costs of firms in the industry 6. Presence of substitute inputs 7. Threat of forward integration 8. Cost relative to total purchases in industry 29 www.studyMarketing.org

Slide 30: Sample Form for an Industry and Competitive Analysis Summary Dominant Economic Characteristics of the Industry Environment (market size and growth rate, geographic scope, number and sizes of buyers and sellers, pace of technological change and innovation, scale economies, experience curve effects, capital requirements, and so on) Competitive Analysis  Rivalry among competing sellers  Threat of potential entry  Competition from substitutes Power of suppliers  Power of consumers Competitive Position of Major Companies/ Strategic Groups.  Those that are favorably positioned, and why  Those that are unfavorably positioned, and why Competitor Analysis  Strategic approaches/predicated moves of key competitors  Whom to watch, and why Industry Key Success Factors Industry Prospects and Overall Attractiveness  Factors making the industry attractive  Factors making the industry unattractive  Special industry issues/problems  Profit outlook (favorable/unfavorable) 30 www.studyMarketing.org

Slide 31: Five Generic Competitive Strategies Low Cost Differentiation Overall Low Cost Differentiation Broad Market Leadership Strategy Strategy Segment Best Cost Strategy Focused Low Cost Focused Narrow Market Strategy Differentiation Segment Strategy 31 www.studyMarketing.org

Slide 32: Generic Strategies and Industry Forces Generic Strategies Industry Force Cost Leadership Differentiation Focus Ability to cut price in Focusing develops core Customer loyalty can Entry retaliation deters potential competencies that can act as Barriers discourage potential entrants. entrants. an entry barrier. Large buyers have less power Large buyers have less power Ability to offer lower price to Buyer to negotiate because of few to negotiate because of few Power powerful buyers. close alternatives. alternatives. Suppliers have power because of low volumes, but a Better insulated from Better able to pass on supplier Supplier differentiation-focused firm is Power powerful suppliers. price increases to customers. better able to pass on supplier price increases. Customer's become attached Specialized products & core Can use low price to defend Threat of to differentiating attributes, competency protect against Substitutes against substitutes. reducing threat of substitutes. substitutes. Rivals cannot meet Better able to compete on Brand loyalty to keep differentiation-focused Rivalry price. customers from rivals. customer needs. 32 www.studyMarketing.org

Slide 33: Strategy Implementation and Execution 33 www.studyMarketing.org

Slide 34: Strategy Implementation Building a capable Linking budget to strategy organization Designing strategy- Establishing strategy- supportive reward system supportive policies and Effective procedures Strategy Instituting best practices and Creating a strategy- commitment to continuous supportive corporate Execution improvement culture Installing information system Exerting strategic to support strategy execution leadership HR & Organization System Factor Development Factor 34 www.studyMarketing.org

Slide 35: Building a Capable Organization Staffing the organization • Putting together a strong management team • Recruiting and retaining talented employees Building a Building Core Competencies and Capabilities capable • Developing competence/capability portfolio suited to current strategy organization • Updating and reshaping the portfolio as external conditions and strategy change Structuring the Organization and Work Effort • Organizing business function and processes, value chain activities, and decision making 35 www.studyMarketing.org

Slide 36: Strategy-supportive Reward System • Strategy-supportive motivational practices Designing and reward systems are powerful strategy- management tools for gaining employee supportive buy-in and commitment. reward • The key to creating a reward system that system promotes good strategy execution is to make strategically relevant measures of performance the dominating basis for designing incentives, evaluating individual and group efforts, and handing out rewards. 36 www.studyMarketing.org

Slide 37: Strategy-supportive Corporate Culture • Building a strategy-supportive culture is Creating a important to successful strategy execution strategy- because it produces a work climate and supportive organizational esprit de corps that thrive corporate on meeting performance targets and culture being part of a winning effort. 37 www.studyMarketing.org

Slide 38: Strategic Leadership • Strategic leaders encourage people to be Exerting innovative in order to keep the strategic organization responsive to changing leadership conditions, alert to new opportunities, and anxious to pursue fresh initiatives. • Strategic leaders also actively push corrective actions to improve strategy execution and overall strategic performance. 38 www.studyMarketing.org

Slide 39: Linking Budget to Strategy • Reworking the budget to make it more Linking strategy-supportive is a crucial part of the budget to implementation process because every strategy organization unit needs to have the people, equipment, facilities, and other resources to carry out its part of the strategic plan. 39 www.studyMarketing.org

Slide 40: Strategy-supportive Policy • Prescribing new or freshly revised policies Establishing and operating procedures aids the task of strategy- implementation (1) by promoting supportive consistency in how particular strategy- policies and critical activities are performed in procedures geographically scattered operating units and (2) by helping to create a strategy- supportive work climate and corporate culture. 40 www.studyMarketing.org

Slide 41: Continuous Improvement • Competent strategy execution entails Instituting visible, unyielding managerial commitment best practices to best practices and continuous and improvement. commitment to • Benchmarking, the discovery and continuous adoption of best practices, and six sigma improvement initiatives all aim at improved efficiency, better product, and greater customer satisfaction. 41 www.studyMarketing.org

Slide 42: Information Support System • Company strategies can’t be implemented Installing well without a number of support system information to carry on business operations. system to • Well-conceived, state-of-the-art support support system not only facilitate better strategy strategy execution but can also strengthen execution organizational capabilities enough to provide a competitive edge over rivals. 42 www.studyMarketing.org

Slide 43: Recommended Further Readings 1. Arthur Thompson and A.J. Strickland III, Strategic Management : Concept and Cases, McGraw-Hill 2. Michael Porter, Competitive Strategy : Techniques for Analyzing Industries and Competitors, Free Press 43 www.studyMarketing.org

Slide 44: End of Material 44 www.studyMarketing.org