Strategic planning is the process by which an organization envisions its future and develops plans to achieve it. It involves evaluating the organization's current mission, objectives, strategies and policies, as well as its internal strengths and weaknesses and external opportunities and threats. The strategic planning process scans the internal and external environment, formulates strategies, implements plans, and evaluates performance to meet the organization's goals. Effective strategic planning provides direction, aligns resources, and allows an organization to adapt to changes in its environment.
3. Agenda:
A- What is strategic planning?
B- Evaluating current strategic posture
• What is Strategic Planning?
• Benefits & pitfalls of Strategic Planning
• Strategic Planning Process & Strategic Decision Making Process
• Evaluating the current strategic posture
• Mission
• Vision
• Objectives
• Environmental Variables
• Strategy
• Policy
5. What is Strategic Planning?
Planning
Is setting the direction for
something.
Strategy
is the long term direction of
an organization
Is the PROCESS by which the GUIDING
MEMBERS of an organization ENVISION its
future and develop the necessary
PROCEDURES AND OPERATIONS to achieve
that future.
Strategic Management
That set of managerial
decisions and actions that
determines the long-run
performance of a corporation
Strategic Planning
Making fundamental
decisions that guide
organizations to a developed
vision of the future.
7. Pitfalls in Strategic Planning
Top management support
Standard for measuring performance.
Communicate plan
Involve key employees, delegate a “Planner”.
Collaborative climate & change.
8. Strategic Management Process
Environmental
Scanning
Strategy
Formulation
Strategy
Implementation
Evaluation &
Control
9. Strategic Planning Process -
Three Basic Questions
Long-
Term
View
Situation
Analysis
Strategy
1: Where Do We Want To Go?
2: Where Are We Now?
3: What Must We Do To Close The Gap?
10. 5(b) 6(a) 6(b) 7 8
10
Strategic Decision-Making Process
Review and
Revise as
Necessary:
Mission
Objectives
Generate
and
Evaluate
Strategic
Alterna-tives
Select
and
Recommend
Best
Alternative
Implement
Strategies:
Programs
Budgets
Procedures
Evaluate
and
Control
Strategy
Implementation
Step 7
Analyze
External
Factors:
Opportun-ities
Threats
Scan and
Assess
Internal
Environment:
Structure
Culture
Resources
Select
Strategic
Factors
(SWOT)
in Light of
Current
Situation
Analyze
Internal
Factors:
Strengths
Weak-nesses
Scan and
Assess
External
Environment:
Societal
Task
Evaluate
Current
Performance
Results
Examine and
Evaluate the
Current:
Mission
Objectives
Strategies
Policies
Review
Corporate
Governance:
Board of
Directors
Top Man-agement
Environmental Scanning &
Strategy Formulation:
Steps 1 – 6
3(a)
1(a) 1(b) 2 5(a)
4(a)
3(b)
4(b)
Evaluation
and
Control:
Step 8
12. Mission Statement:
• The purpose or reason for the corporation’s
existence. It may be narrow or broad in scope.
Vision Statement:
• Is the desired future state of the organization.
13. Objective
The end results of planned activity.
They state WHAT is to be accomplished by WHEN.
They should be quantified, if possible.
It should be SMART.
WHICH Objectives?
21. Functional Strategies
Core
Competencies
Customer
values
Competitor
Unique
Extendibility
Financial Marketing
Market
Development
Product
Development
Diversification
Market
Penetration
R & D Value Chain
22. Policies
• The BROAD GUIDELINES for implementation, decision-making
& actions
• Part of corporate culture & can last more than strategies.
• Restrict top management strategic options
• Ex: “The Customer is always right”
• A change in strategy must be followed by a change in policies
• Managing policies is one way to manage the corporate culture
23. Conclusion
5(b) 6(a) 6(b) 7 8
Review and
Revise as
Necessary:
Mission
Objectives
Generate
and
Evaluate
Strategic
Alterna-tives
Select
and
Recommend
Best
Alternative
Implement
Strategies:
Programs
Budgets
Procedures
Evaluate
and
Control
Strategy
Implementation
Step 7
Analyze
External
Factors:
Opportun-ities
Threats
Scan and
Assess
Internal
Environment:
Structure
Culture
Resources
Select
Strategic
Factors
(SWOT)
in Light of
Current
Situation
Analyze
Internal
Factors:
Strengths
Weak-nesses
Scan and
Assess
External
Environment:
Societal
Task
Evaluate
Current
Performance
Results
Examine and
Evaluate the
Current:
Mission
Objectives
Strategies
Policies
Review
Corporate
Governance:
Board of
Directors
Top Man-agement
Environmental Scanning &
Strategy Formulation:
Steps 1 – 6
3(a)
1(a) 1(b) 2 5(a)
4(a)
3(b)
4(b)
Evaluation
and
Control:
Step 8
“Without a strategy the organization is like a ship without a rudder, going around in circles”.
“ All men can see the tactics whereby I conquer, but what none can see is the strategy out of which great victory is evolved”
Planning
Is setting the direction for something.
STRATEGY is the direction of an organization over the long term, which achieves advantage of the organization through its configuration of resources within a changing environment and to fulfill stakeholder expectations
STRATEGY is the long term direction of an organization
Strategic Management
That set of managerial decisions and actions that determines the long-run performance of a corporation
Strategic Planning
Making fundamental decisions that guide organizations to a developed vision of the future.
Strategic planning is the PROCESS by which the GUIDING MEMBERS of an organization ENVISION its future and develop the necessary PROCEDURES AND OPERATIONS to achieve that future.
The strategic plan sets the stage for creating the marketing plan and the financial plan. The risk analysis section of the strategic plan includes the development of a succession plan.
Benefits of Strategic Planning:
Properly allocating resources to the most beneficial Activities.
Analyze internal environment & its impact.
Analyze external environment & its impact.
Setting the appropriate direction & roadmap of the organization
Setting more realistic business objectives.
Growth can be accelerated and improved
Building cross functional activities across the organization.
Gain control over operational problems and poor performing areas.
Develop a frame of reference for budgets & short-range operating plans.
Pitfalls in Strategic Planning
Using SP to gain control over decisions and resources
Doing SP only to satisfy accreditation or requirements
Quick move from mission development to strategy formulation
Failing to communicate the plan to employees
Making intuitive decisions conflicting with the formal plan
Top management not supporting the strategic planning process
Failing to use plans as a standard for measuring performance
Delegating planning to a ”planner” rather than involving all managers
Failing to involve key employees in all phases of planning
Failure to create a collaborative climate supportive of change
Viewing planning to be unnecessary or unimportant
Becoming so involved with current problems that no planning is done
Being so formal in planning that flexibility and creativity are stifled
Strategy Formulation:
The process of developing long-range plans to deal effectively with environmental opportunities and threats in light of corporate strengths and weaknesses
Composed of:
Mission
Objectives
Strategies
Policies
Strategy Implementation
The process of putting strategies and policies into action through the development of
Programs: A statement of activities or steps needed to accomplish a single-use plan
Budgets: A statement of a corporation’s program in dollar terms
Procedures: A system of sequential steps or techniques that describe in detail how to perform a particular task or job
Evaluation & Control: The process of monitoring corporate activities and performance results so that actual performance can be compared with desired performance
Strategic Planning Process - Three Basic Questions
Where is the organization now?
If no changes are made, where will the organization be in one, two, five or ten years? Are the answers acceptable?
If the answers are not acceptable, what specific actions should management undertake? What are the risks and payoffs involved?
Triggering Events for Strategic Change:
New CEO
External intervention
Threat of a change in ownership
Performance gap
Strategic Inflection Point
Mission Elements:
Customers, Products & Services, Markets, Technology, Survival growth profit, Philosophy, Self-concept, Public Image & Employees.
Vision Elements:
Defining what business the company is presently in.
Deciding on a long-term strategic courses for the company to pursue
Communicating the vision in ways that are clear, existing & inspiring
Objectives: the end results of planned activity. They state what is to be accomplished by when.
They should be quantified, if possible.
SMART Objectives:
Specific
Measurable
Achievable/Attainable
Rational
Time Bound
Areas of setting objectives:
Profitability (Net Profits)
Efficiency (low costs)
Growth (increase in total assets)
Shareholder wealth (dividends plus stock price appreciation)
Utilization of resources (return on investment or equity)
Reputation (being considered a top firm)
Contribution to employees
Contribution to society
Market leadership
Technological leadership
Survival
Personal needs of top management
Task Environment: Composed of
Groups in environment that directly affect or are affected by the organization’s operations
(Often called industry)
Structure: The way a corporation is organized in terms of communication, authority, and workflow
Corporate Culture: Collection of beliefs, expectations, and values learned and shared by members and transmitted from one generation of employees to another
Resource: An asset, competency, process, skill, or knowledge controlled by the corporation
Corporate Strategy: Corporation’s overall direction and the management of its businesses
Business Strategy: Emphasizes improving the competitive position of a corporation’s products or units
Policies:
The broad guidelines for implementation
Policies provide guidance for decision-making & actions
Part of corporate culture & can last more than strategies.
Restrict top management strategic options
Ex: “The Customer is always right”
A change in strategy must be followed by a change in policies
Managing policies is one way to manage the corporate culture