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The strategic planning process by Ruby Sharma


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Published in: Business, Technology

The strategic planning process by Ruby Sharma

  1. 1. The Strategic Planning Process1 Ruby Sharma
  2. 2.  In todays highly competitive businessenvironment, budget-oriented planning orforecast-based planning methods areinsufficient for a large corporation tosurvive and prosper. The firm must engagein strategic planning that clearly definesobjectives and assesses both the internaland external situation to formulatestrategy, implement the strategy, evaluatethe progress, and make adjustments asnecessary to stay on track.2 Ruby Sharma
  3. 3. The Strategic Planning ProcessMission &ObjectivesEnvironmentalScanningStrategyFormulationStrategyImplementationEvaluation& Control3 Ruby Sharma
  4. 4. Mission and Objectives The mission statement describes the companysbusiness vision, including the unchanging valuesand purpose of the firm and forward-lookingvisionary goals that guide the pursuit of futureopportunities. Guided by the business vision, the firms leaderscan define measurable financial and strategicobjectives. Financial objectives involve measuressuch as sales targets and earnings growth.Strategic objectives are related to the firmsbusiness position, and may include measuressuch as market share and reputation4 Ruby Sharma
  5. 5. Environmental Scan The environmental scan includes the followingcomponents: Internal analysis of the firm Analysis of the firms industry (task environment) External macro environment The internal analysis can identify the firms strengthsand weaknesses and the external analysis revealsopportunities and threats. A profile of thestrengths, weaknesses, opportunities, and threats isgenerated by means of a SWOT analysis An industry analysis can be performed using aframework developed by Michael Porter known asPorter’s five forces. This framework evaluates entrybarriers, suppliers, customers, substituteproducts, and industry rivalry.5 Ruby Sharma
  6. 6. Strategy Formulation Given the information from the environmentalscan, the firm should match its strengths to theopportunities that it has identified, whileaddressing its weaknesses and external threats. To attain superior profitability, the firm seeks todevelop a competitive advantage over its rivals. Acompetitive advantage can be based on cost ordifferentiation. Michael Porter identified threeindustry-independent generic strategies fromwhich the firm can choose.6 Ruby Sharma
  7. 7. Strategy Implementation The selected strategy is implemented by means ofprograms, budgets, and procedures. Implementationinvolves organization of the firms resources andmotivation of the staff to achieve objectives. The way in which the strategy is implemented canhave a significant impact on whether it will besuccessful. In a large company, those who implementthe strategy likely will be different people from thosewho formulated it. For this reason, care must be takento communicate the strategy and the reasoningbehind it. Otherwise, the implementation might notsucceed if the strategy is misunderstood or if lower-level managers resist its implementation becausethey do not understand why the particular strategywas selected.7 Ruby Sharma
  8. 8. Evaluation & Control The implementation of the strategy must bemonitored and adjustments made as needed. Evaluation and control consists of the followingsteps: Define parameters to be measured Define target values for those parameters Perform measurements Compare measured results to the pre-definedstandard Make necessary changes8 Ruby Sharma
  9. 9. Ruby Sharma9Thank You