2. Formal Planning- Strategic studying of an
issue and the preparation of a written
document to deal with the problem.
3 RANGES
• Short term- 1 year plan
• Long-range- 3 to 5 years plus
• Intermediate- 1-3 year (the gap between short term and
long range plans)
3. Strategy- an outline of basic
management steps to achieve a goal
• I. Grand or corporate strategies- Overall (Big
Picture) direction for company.
• A) Growth Strategies- steps to increase sales
or products
– Concentration- extend the sale of current
products
– Vertical Integration- extend into new markets
(locations)
– Diversification- introduce new or better products
4. Strategies (continued)
• B) Stability Strategy- keeping the company
operating on the same level- no new
development.
• C) Defensive Retrenchment Strategy-
Developing a plan for a company that is losing
sales or profit.
– Turnaround- plan to regain success
– Diverstiture- to sell a portion of the business (non-profit
part of business)
– Liquidation- entire company is sold or dissolved
D) Combination Strategy- using several of these
strategies at once to maximize profit.
5. II. Business Strategy- Plans that only
affect 1 or 2 departments of business
• Overall cost leadership- plan to produce and
deliver current product at a lower cost.
• Differentiation- making product(s) more
unique/different.
6. III. Functions Strategies- Short range
operation plan
• 5 most common function plans
• 1. Sales & Marketing- new products and
selling techniques
• 2. Production- making more products faster
• 3. Finance- controlling expenses
• 4. Research & Development- Making new or
better products
• 5. Personnel- Managing employees
7. Section 10.2
• Strategic Management- Application of the
basic planning process by management.
• Strategic Management Approach
(list and define 3 phrases)
Formation- developing the plan
Implementation- activating the plan
Evaluation- analyzing/adjusting the plan
Formulating Strategy- Total vision and business level
strategy planning.
8. Mission Statement
• Mission Statement- a company’s written
statement of purpose- the vision for the
company
*objectives of the MS
– Common vision and purpose
– Motivating resource
– Standard of values
– Business Culture of company
9. • Goals- Companies direction, what do we want
to accomplish
• Policies- Rules of a company
• Procedures- Detailed steps of operating within
those rules.
• Rules- limits and guidelines
11. • Implementing Strategy- How to activate plan
• Evaluating Strategy- How to analyze and adjust the plan
Managers should ask
• Does the plan need revising
• What are the possible problem areas
List the 3 basic strategy evaluation activities
• Review all factors (internal and external)
• Measure performance (increase sales, decrease costs)
• Taking corrective action
