This document discusses strategic and operational planning. Strategic planning involves setting long-term objectives at the corporate level, while operational planning focuses on short-term objectives at lower management levels. Strategic planning includes analyzing the environment, setting objectives, and developing strategies. Operational planning involves creating functional strategies and standing, single-use, and contingency plans. The key aspects of strategic planning are developing a mission, analyzing competitors and the company's strengths/weaknesses, and selecting grand and growth strategies.

1. CHAPTER 5:
STRATEGIC AND OPERATIONAL PLANNING
CH 5
© 2015 SAGE Publications

2. Strategic and Operational Planning
• Long range objectives (more
than 1 year)
• Upper level management
• Corporate and business
planning level
• Short-range objectives (less
than 1 year)
• Middle and lower level
managers
• Functional planning level
Strategic Planning: Operational Planning:

3. Strategy
• A plan for pursuing a mission and achieving objectives
• Three levels
• Corporate
• Business
• Functional
Part of Strategic Planning
Part of Operational Planning

4. Three Levels of Strategy
• A corporate strategy: strategic plan for managing multiple lines
of business
• A business strategy: strategic plan for managing one line of
business
• A functional strategy: operational plan for managing one area
of a business.

5. Strategic Planning Process
• Develop the mission:
• A mission is often based on a vision that defines where the company is
headed, and explains why
• Analyze the environment:
• An analysis focuses on those features in a company’s environment that
most directly affect its options and opportunities
• Set objectives:
• What is to be accomplished in specific and measurable terms with a
target date of completion

6. • Develop strategies:
• Overall corporate strategy for growth, stability, turnaround and/or
retrenchment
• Implement and control strategies:
• Constantly ongoing, especially at operational level
Strategic Planning Process

7. Analyzing the Environment
• Industry and Competitive Situation Analysis
• Company Situation Analysis
• At the business level to determine the strategic issues and problems
that need to be addressed

8. Company Situation Analysis
1. Assessment of the present strategy based on performance
2. SWOT analysis
3. Assessment of competitive strength and identification of
competitive advantage
4. Conclusions concerning competitive position
5. Determination of the issues and problems that need to be
addressed through the strategic planning process

9. Competitive Analysis
• Competitive Analysis
• How large is the market?
• What is the growth rate?
• How many competitors are there?

10. Competitive Advantage
• Competitive Advantage
• Specifies how an organization offers unique customer value
• Benchmarking is the process of comparing an organization’s products
or services and processes with those of other companies

12. Setting and Writing Objectives
• Goals
• State general, broad targets to be accomplished
• Objectives
• State what is to be accomplished in specific and measurable terms with
a target date
• Writing Effective Objectives
• (1) To + (2) action verb + (3) specific and measurable result + (4) target
date

13. Criteria For Objectives
• Must:
• express a specific and measurable result
• set a date for achieving that result
• have a single result
• Want:
• difficult but achievable
• participatively set
• acceptance and commitment

14. Management by Objectives (MBO)
• A process in which managers and their employees work
together towards objectives
• Managers and employees jointly set individual objectives
• Give feedback
• Evaluate performance
• Reward according to performance

15. Developing Strategies
• Four Types of Corporate and Business Strategy
• Grand
• Growth
• Adaptive
• Competitive

17. Grand Strategies
• Growth: a firm pursues increasing its size
• Stability: a firm maintains the same size or grows slowly
• Turnaround and retrenchment: a firm attempts a comeback, and
retrenchment decreases its size
• Combination of these strategies: two or more of the three
strategies are used for different lines of business

18. Growth Strategies
• Concentration: a firm grows in its exiting line(s) of business
• Backward and Forward Integration: a firm grows by entering
forward or backward lines of business
• Related and Unrelated Diversification: a firm grows by adding
related or unrelated products

19. Merger and Acquisition
• A merger occurs when two companies form one corporation
• An acquisition occurs when one business buys all or part of
another business

20. Corporate Portfolio Management (CPM)
• The primary objective of corporate portfolio management
(CPM) is to make strategic decisions about the allocation of
resources among business units.
• Cash cows:
• Large market share but little industry growth
• Question marks:
• Little market share but in a growing industry
• Stars:
• Large market share in a growing industry
• Dogs:
• Small market share with little industry growth

21. Adaptive Strategies
• Prospecting:
• A firm offers new products and enters to new markets
• Defending:
• A firm stays in product line and markets
• Analyzing:
• A firm moves into new markets and seeks new opportunities

22. Competitive Strategies
• Differentiation Strategy
• Cost Leadership Strategy
• Focus Strategy

23. Operational Planning
• Functional Strategies are a major part of Operational Planning
• Marketing Strategy
• Operations Strategy
• Finance Strategy
• Human Resources Strategy
• Other Functional Strategies

24. Standing Plans
• Purpose: to guide employee’s actions in decision making
• Policies, rules and procedures for handling repetitive situations
• Policies provide general guidelines to be followed when making
decisions
• A procedure is a sequence of actions to be followed in order to achieve
an objective
• Rules state exactly what should or should not be done

25. Single-Use Plans
• For specific purposes
• Programs and budgets for handling non-repetitive situations
• Used as a model for future version of the program or budget
• Growth Strategy is an example of single-use plans

26. Contingency Plans
• Alternative plans
• Implemented if uncontrollable events occurs
• Construction work is an example of contingency plans
• Should answer three questions:
1. What might go wrong?
2. How can I prevent it from happening?
3. If it does occur, what can I do to minimize its effect?