Strategic Planning Cycle & Tactics ( A to Z ).ppsx

Strategic Planning Cycle & Tactics ( A to Z )
Tactics Strategy Vision
1

2
Strategy
"If you can't measure it, you can't improve it "
Having a structured and robust Strategic Performance Management system is critical to
the sustainable success of any organization; and affects all areas of our organization.

1 Strategic Planning Overview
2 Strategic Planning Process
3 Strategic Intent
4 Stakeholder Analysis
5 Internal Analysis
6 Environmental Analysis
7 Industry Analysis
8 Market Analysis
9 Competitor Analysis
10 Strategic Synthesis
11 Strategy Formulation
12 Strategy Implementation
Contents
Table of Contents
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Strategic Planning
100 mph 100 mph
40% 70%
1 2 3 4 5
Process, Key Frameworks and Tools
4

Identifying Key Issues within the Organization
Key Strategies to Address Issues
Checklist for Issue based Planning
Action Plan for Issue Based Planning
Action Plan for issue Based Planning (Roadmap)

Poor Turnover Low Sales Low productivity
High employee
attrition rate
01 02 03 04
 Poor turnover in the
year FY
 Turnover
 Continues decline in
sales in each Quarter
 Units sold,
 Low employee
productivity in
comparison to previous
years
 High employee
attrition rate
6

JAN
FEB
MAR
APR
MAY
JUN
JUL
START
END
Action Plan for issue Based Planning (Roadmap)
7

Strategic Planning
100 mph 100 mph
1 2 3 4 5
1. Strategic Planning Overview
8

Strategic Planning
1. Strategic Planning Overview
When Strategic Planning Should Occur?
There is no single time that is right for all businesses, but, rather, it depends on the company’s
unique situation and its industry. But there are certain times when it’s worth to think about it:
 IF the industry is evolving quickly and competition is becoming brisk.
 AT the time of product launch, if the products/services are fully developed.
 At the beginning of a new fiscal year.
 IF government regulations are causing a change in process, production, etc.
 IF the company itself is contemplating a new initiative.
 IF a previous strategic plan is old and in need of re-evaluation.

Strategic Planning
There are different steps and models for strategic planning, but some common questions and associated stages are:
Where are we now?
This stage involves assessing the current situation of the organization, its strengths, weaknesses, opportunities and threats (SWOT analysis),
as well as its external environment and competitors.
This stage helps to identify the gaps between where the organization is and where it wants to be.
Where do we want to be?
This stage involves defining the vision, mission, values and goals of the organization.
The vision is a clear and inspiring statement of what the organization wants to achieve in the long term. The mission is a concise statement of
why the organization exists and what it does. The values are the guiding principles that shape the culture and behavior of the organization.
The goals are specific, measurable, achievable, relevant and time-bound (SMART) outcomes that support the vision and mission.
How will we get there?
This stage involves developing strategies and action plans to achieve the goals. Strategies are broad approaches or methods that will help the
organization reach its desired state. Action plans are detailed steps or tasks that outline who will do what, when, how and with what resources.
This stage also involves identifying key performance indicators (KPIs) and targets to measure progress and success.
How will we know if we are successful?
This stage involves monitoring, evaluating and reviewing the implementation of the strategies and action plans. This stage helps to track
performance, identify challenges, risks and opportunities, and make adjustments as needed. This stage also involves communicating the
results and celebrating achievements with stakeholders.
Key questions and associated stages
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Strategic Planning
When properly tackled, answering these three primary questions enables a company to formulate a strategic direction, key
strategies and implementation plans
Key questions and associated stages
Alternatives Analysis Recommendations
Where are we
today?
Situation Analysis
Where do we
want to go?
How can we get
there?
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Strategic Planning
Breaking down the three primary questions into strategy analysis and formulation elements provides a road map for the
strategic planning process
Key stages and associated elements
Alternatives Analysis Recommendations
Situation Analysis
Internal
Review
External
Review
Where are we today? Where do we want to go? How can we get there?
Strengths and
Weaknesses
Opportunities
and Threats
Business Definition
Strategic Issues
Strategic Alternatives
Preferred Strategy
Long-Term Plans
 Strategic direction
 SMART objectives
 Programs and resources
 Contingencies
 Interdependencies
 Monitoring and evaluation
Short-Term Plans
 Strategic direction
 SMART objectives
 Programs and resources
 Contingencies
 Interdependencies
 Monitoring and evaluation
Market Attractiveness
Competitive Position
Competitive Advantage
12

Strategic Planning
In an unpredictable environment, ongoing monitoring of the environment and periodic adaption of the strategy may be necessary
Clarity on what activities not to do/be can be more important that determining exactly what to do
Adaptation in an unpredictable environment
A
B
Vision
Where you are today
A
B
Vision
Where you are today
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Strategic Planning
While a traditional strategic planning and classic strategies fit a predictable environment, a more agile approach to strategy may
be needed in an unpredictable environment
Strategy approaches - factoring in the company’s circumstances
Environment Predictable Unpredictable Harsh
Key Element Classic Visionary Adaptive Shaping Renewal
Core Focus Be big Be first Be fast Be the orchestrator Be viable
Predictability vs
Malleability
Can predict it, but cannot
change it
Can predict it, and can
change it
Cannot predict it, and
cannot change it
Cannot predict it, but can
change it
Resources severely
constrained
Approach
Analyze
Plan
Execute
Envisage
Build
Persist
Vary (the options)
Select
Scale up
Engage
Orchestrate
Evolve
React, or anticipate
Economize
Grow
Approach triggers
Low growth
High concentration
Mature industry
Stable Regulation
High growth potential
White space, no direct
competition
Limited regulation
Volatile growth
Limited concentration
Young industry
High technological
change
Fragmentation
No dominant
player/platform
Shapable regulation
Low growth, decline, crisis
Restricted financing
Negative cash flows
Related models
and frameworks
BCG Matrix
Five Forces
Capabilities
Blue ocean strategy
Innovator’s
Dilemma
Time-based competition
Temporary advantage
Adaptive advantage
Networks
Ecosystems
Platforms
Transformation
Turnaround
Source: Reeves, Martin, et al. Your Strategy Needs a Strategy, Harvard Business Review Press, 2015
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2. Strategic Planning Process
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1 2 3 4 5
Overall process, phases and key activities
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Strategic Planning Process
A high-level view of the strategic planning phases summarizes the key phases involved
In practice, however, the process can be iterative, especially in an unpredictable environment
Main planning phases
Strategic
Intent
Strategy Formulation/
Goal
Setting
Strategy Implementation/
Operational
Planning
Monitoring, Review and Control
Situation
Analysis
Internal
External
1 2 3 4
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Breakdown of main phases
Vision,
Mission,
And
Values
Evaluation
Corporate Performance Management
Departmental Performance Management
Individual Performance Management
Strategy Implementation/
Operational Planning
Action
Plans
Financial Plan
Manpower Plan
Technology Plan
Communication Plan
Review and Control
Strategic
Intent
1 2 3 4
Strategy Formulation/
Goal Setting
Long-Term Goals
Overarching Strategies
Strategies and Tactics
to Achieve Objectives
Strategic Objectives
Situation
Analysis
Internal
Analysis
Environment
Analysis
Industry
Analysis
Market
Analysis
Competitor
Analysis
Stakeholder
Analysis
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Key planning activities and methods
Phase Key Activities Methods to Consider
1 Strategic
Intent
 Securing commitment to the strategic planning process
 Evaluation, and if needed the updating, of the vision, mission and values by
the management
 Formulation of a plan to communicate the vision, mission and values
throughout the organization
 Review of existing plans and relevant
material
 One-on-one meetings
 Internal surveys
 Visioning workshop
2 Situation
Analysis
 Collecting input on internal environment from the management
 Conducting research required for the external environment analysis
 Formulating a synthesis of the analysis utilizing tools such as SWOT, as
appropriate
 Internal surveys
 Targeted research on external
environment
 Strategy workshop
3 Strategy Formulation/
Goal Setting
 Development of corporate strategies and objectives
 Formulation of strategies and objectives for strategic business units (SBUs) in
alignment with the corporate strategies and objectives
 Strategy workshop
 Planning templates
4 Strategy Implementation/
Operational Planning
 Development of strategy-aligned operational plans for the core units,
including action plans, timelines, responsibilities, and resource requirements
 Along with the strategic plans developed in the prior phase, using the core
units’ operational plans by the other departments as a reference for
developing their own plans
 Factoring in the requirements of the strategic and operational plans,
formulation of overall financial, manpower, technology and communication
plans
 Planning workshops
 Planning templates
1 3 4
2
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Actual timeframe will depends on the organizational readiness, availability of the management and complexity of the
organization
Typical timeline for traditional strategic planning
Sample
Situation Analysis
Vision, Mission and Values Evaluation
Strategy Review (Corporate and SBUs)
Departmental Operational Planning
Corporate Strategy Plan Consolidation
Corporate Manpower Plan
Corporate Technology Plan
Corporate Communication Plan
Financial Plan/Budgets
November
October
September
August
Finalization and
Presentation to
Board for
Approval
Management Review • Situation Analysis review
• Assessment of company
SWOT
• Presentation of
departmental
strategies
• Review of
departmental
operational plans
• Budget presentations
• Presentation of consolidated corporate
level plans (Strategy, Manpower,
Technology, and Communication)
• Corporate budget presentation
Starting in June
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3. Strategic Intent
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1 2 3 4 5
Setting or reaffirming strategic direction
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Strategic Intent
Concise and easy to understand strategic statement can serve as a powerful common reference throughout the strategic planning
process
Key elements of the Strategic Direction Statement
Vision
 a concise word picture of the company at some future time, which sets the overall direction of the organization
 It is what a company strives to be
Mission
 defines a company’s purpose or “reason for being”
 it is the primary objective toward which the plans and programs should be aimed
Values
 the core beliefs and principles of the company that guide decision making
 define the character of an organization and describe what it stands
Business
Definition
 defines the boundaries of the business, including what it will NOT do
 covers areas such as markets, customers, products, services, geography and distribution
 clearly explains where a company is headed
Competitive
Advantages
 describes the key customer needs a company will fulfill better than its competitors
Core
Competencies
 specifies the key assets, intellectual knowhow, systems, processes or skills that allow a company to maintain and
improve its competitive advantage
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Strategic Intent
Strategy and culture must align for an effective strategy to succeed
Strategy and culture
Mission: What is our purpose?
Vision: What we aim to become?
Strategy: How to get there?
Goals: What we would look like
when we achieve our vision?
Objectives: What are our interim
aims?
Activities: What do we need to
do to achieve or objectives?
Culture: What Are our basic
assumptions and beliefs?
Values: What are the underlying
principles that guide us?
Beliefs: What are our
organizational beliefs ?
Behaviors: How do we operate
day-to-day?
Are goals and values aligned?
Are objectives and beliefs aligned?
Are activities and behaviors aligned?
Outcome: What we aim to achieve?
Are strategy and culture aligned?
22

Strategic Intent
At this stage in the process broad long-term goals are formulated
While the Goals/Objectives terminology is sometimes reversed, the differentiation remains
Goals versus objectives
Goal Objective
Short statement, high-level Longer statement, more descriptive
Broad in scope (e.g. BHAG) Narrow in scope (SMART)
Directly relates to the mission statement Indirectly relates to the mission statement
Covers a long time period
(e.g. 5+ years)
Covers short time period
(e.g. 1 year budget cycle, up to 2 years)
23

Strategic Intent
A Big Hairy Audacious Goal (BHAG) can be audacious and may not be fully achieved but they drive a company towards its
maximum potential
Big Hairy Audacious Goal (BHAG)
Purpose
Drivers
Competencies
What are we passionate about?
What drives our economic engine?
What can we be the best at?
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Strategic Intent
Big Hairy Audacious Goal (BHAG) can be audacious and may not be fully achieved but they drive a company towards its
maximum potential
Big Hairy Audacious Goal (BHAG) - examples
Company
Google
Facebook
Evernote
SpaceX
BHAG
“Organize the world’s information”
“Connect the world”
“Remember everything”
“Enable human exploration and
settlement of Mars”
 May not be fully achievable
 Clear and compelling
 Expands a company’s current
capabilities
 Measurable
 Connected to the company’s
mission
 Long-term (10+ years)
Characteristics
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4. Stakeholder Analysis
100 mph 100 mph
1 2 3 4 5
Identifying key stakeholders and their alignment level
26

Stakeholder Analysis
Stakeholder analysis is the process of identifying and understanding the needs, interests, influence and impact of the various groups or individuals
who have a stake in the organization or its activities. Stakeholder analysis is an important part of strategic planning because it helps to:
 Align the organization’s vision, mission, values and goals with the expectations and preferences of its stakeholders.
 Identify the potential risks, opportunities, challenges and conflicts that may arise from stakeholder interactions.
 Develop strategies and action plans to engage, communicate, collaborate and manage relationships with stakeholders effectively.
 Measure and evaluate the value creation and satisfaction for each stakeholder group.
 Enhance the organization’s reputation, trust, legitimacy and accountability among its stakeholders.
There are different methods and tools for conducting stakeholder analysis, but some common steps are:
 Identify stakeholders.
 Assess stakeholders.
 Prioritize stakeholders.
 Engage stakeholders.
27

A high-level mapping of stakeholders, in terms of expectations/objectives and power/influence, can help gauge the level of
alignment on key priorities
Mapping the key stakeholders
Stakeholder Group
Expectations/
Objectives
Power/
Influence
Alignment
of Priorities
Shareholders Share price increase, dividends Appoint board May not align with staff priorities
Lenders
Principle repayment, interest, risk
management
Impact funding
May align with shareholders’ priorities except
during a financial crunch
Management Compensation, recognition, success
Decision making, information
control
Depending on reward structure, may align with
shareholders’ priorities
Staff Salary, job security, development Service quality, turnover May not align with shareholders’ priorities
Customers Reliable products, quality service Revenue, satisfaction feedback May seek low prices
Suppliers
Retention, repeat business, timely
payments
Input cost, quality, reliability May seek high prices
Government Taxes, compliance Regulations, taxation Varied
Community Community impact, key issues Opinion leaders May align with staff priorities
Sample
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5. Internal Analysis
100 mph 100 mph
1 2 3 4 5
Analyzing the company
29

Internal Analysis
Identify the assets and capabilities necessary to succeed in the industry
Assess the current position relative to the capabilities necessary to succeed in the industry
Consider how to leverage existing strengths and overcome current weaknesses
Sources of competitive advantage
Strong Weak
 Privileged
assets
 Distinctive
competencies
Necessary
capabilities in
order to
succeed in the
industry
 Location
 Distribution network
 Physical assets
 Brand/reputation
 Intellectual Property Rights
 Partnerships and alliances
2
1 Overall
3
Segment
 Market positioning
 Innovation
 Cross-functional coordination
 Cost efficiency
 Talent development
30

Internal Analysis
The VRIO analysis take a resource-based approach to identify potential sustainable advantages based on valuable and rare
resources that are difficult to imitate
VRIO analysis
Strategic Implication
Advantage Impact SWOT
Competitive
disadvantage
Low Weakness
Competitive
parity
Neutral
Weakness or
strength
Temporary
competitive
advantage
Medium
Strength/
core competency
Sustainable
competitive
advantage
High
Strength/
Long-term
core competency
Resource Characteristics
Valuable? Rare?
Difficult to
Imitate?
Used by
Organization?
No - -
Yes No -
Yes Yes No
Yes Yes Yes
No
Yes
Source: Based on Barney, Jay, B. Gaining and Sustaining a Competitive Advantage, Addison-Wesley, 1996
31

Internal Analysis
Porter's Value Chain looks at how a competitive advantage can be sustained through an efficient and/or differentiated
management of the value chain
Porter’s value chain
Technological Development
Human Resource management
Firm Infrastructure
Procurement
Inbound
Logistics Operations
Outbound
Logistics
Support
activities
Primary
activities
Marketing
and Sales Service
Source: Porter, Michael E. Competitive Advantage: Creating and Sustaining Superior Performance, Free Press, 1985
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6. Environmental Analysis
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1 2 3 4 5
Analyzing the company's external environment
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PESTEL analysis factors
PESTEL analysis helps organizations to identify and understand the external factors that may impact their strategic decisions and actions. It also
helps them to explore the opportunities and threats that may arise from these factors. You can find more information and examples in these
resources:
PESTEL analysis is a useful tool for analyzing the external factors that affect an organization or its activities, but it also has some limitations, such
as:
 It can’t offer the full picture: PESTEL analysis only focuses on the macro-level factors that are outside the control of the organization. It does
not consider the micro-level factors that are internal to the organization, such as its strengths, weaknesses, resources, capabilities, culture,
etc.
 Factors change quickly: PESTEL analysis is based on assumptions and projections about the current and future state of the external factors.
However, these factors are dynamic and volatile and can change rapidly due to various events and developments. Therefore, PESTEL
analysis may become outdated or irrelevant if it is not updated regularly and frequently.
 Simple isn’t always better: PESTEL analysis is a simple and easy-to-use tool that can provide a general overview of the external factors that
affect an organization or its activities. However, simplicity can also be a drawback, as it may oversimplify or generalize the complex and
nuanced reality of the external environment.
 Most data isn’t easily found: PESTEL analysis requires a lot of data and information about the external factors that affect an organization or its
activities. However, finding and accessing such data and information can be challenging, time-consuming and costly, as it may involve various
sources, methods and techniques. Some data and information may not be readily available or accessible, while some may be unreliable or
inaccurate.
34
PESTEL analysis factors

Environmental Analysis
These sample factors can be considered when undertaking a PEST, to analysis and to provides for a more comprehensive coverage
of environmental forces
PESTEL analysis sample factors
Political
Government policy
Foreign policy
Trade policy and
restrictions
Tax policy
Fiscal policy
Labour laws
Political
stability/instability
Military considerations
Environmental laws
P
Economic
Economic growth
Inflation
Interest rates
Exchange rates
Consumers disposable
income of
Business disposable
income
Financing conditions
Taxation
E
Social
Population growth
rates
Demographics
Age distribution
Health profiles
Career attitudes
Consumer confidence
Customer buying
trends
Cultural trends
S
Technological
Emerging technologies
Maturity of
technologies
innovation training
and trends
Production of goods
and services
Distribution of goods
and services
Communication with
target markets
T
Sample
35
E L
Environmental Legal
Environmental
regulations
Pollution and
green house gas
emissions levels
Increased focus on
sustainability
Promotion of
good business
ethics
Climate and
weather trends
Geographical
location and
accessibility
Competitive
legislation
Consumer rights and
laws
Product labelling
requirements
Advertising rules and
restrictions
Health and safety
standards, laws and
regulations
Labour laws
Potential new laws
and regulations

7. Industry Analysis
100 mph 100 mph
1 2 3 4 5
Analyzing the company’s industry
36

Porter’s five forces analysis
Porter’s five forces analysis is a framework for understanding the competitive forces at work in an industry, and which drive the way economic value is
divided among industry actors. It was first described by Michael Porter in his classic 1979 Harvard Business Review article, and it has become a widely used
tool for analyzing the attractiveness and profitability of an industry .
Porter’s five forces are:
 Competitive rivalry:
This force refers to the intensity and frequency of competition among the existing firms in an industry. It depends on factors such as the number, size,
diversity and differentiation of competitors, the industry growth rate, the level of fixed costs, the degree of product innovation, the exit barriers, etc.
 Threat of new entrants:
This force refers to the ease and likelihood of new firms entering the industry and competing with the existing firms. It depends on factors such as the entry
barriers, the economies of scale, the capital requirements, the access to distribution channels, the customer loyalty, the government policies, etc.
 Threat of substitutes:
This force refers to the availability and attractiveness of alternative products or services that can satisfy the same customer needs as the industry’s products
or services. It depends on factors such as the relative price, performance, quality, convenience and availability of substitutes, the switching costs for
customers, the customer preferences, etc.
 Bargaining power of suppliers:
This force refers to the ability and influence of suppliers to affect the price, quality, quantity and terms of supply of inputs or resources that are needed by the
industry’s firms to produce their products or services. It depends on factors such as the number, size, concentration and differentiation of suppliers, the
availability of substitute inputs, the importance of inputs to the industry’s firms, the switching costs for industry’s firms, etc.
 Bargaining power of buyers:
This force refers to the ability and influence of buyers or customers to affect the price, quality, quantity and terms of purchase of products or services that are
offered by the industry’s firms. It depends on factors such as the number, size, concentration and differentiation of buyers or customers, the availability of
substitute products or services, the importance of products or services to buyers or customers, the switching costs for buyers or customers, etc.
37

Industry Analysis
Porter’s Five Forces Analysis can be used to better understand the industry in which an company operates
Bargaining power
of Buyers
Bargaining power of
Suppliers
Threat of New Entrants
Threat of
Substitution
Rivalry among
Competitors
Threat of New
Entrants
38

Industry Analysis
Porter’s five forces analysis - key factors to consider
 Number of customers
 Size of each order
 Differences between competitors
 Price sensitivity
 Ability to substitute
 Switching costs
Bargaining power of Buyers
 Ease of entry
 Time and cost of entry
 Cost advantages
 Technology protection
 Barriers to entry
 Specialist knowledge
Threat of New Entrants
 Number of competitors
 Quality differences
 Other differences
 Switching costs
 Customer loyalty
 Costs of leaving market
Competitive Rivalry
 Substitute price performance
 Switching costs
 Buyer propensity to substitute
 Trade-off of substitutes
Threat of Substitution
 Number of suppliers
 Size of suppliers
 Uniqueness of input/service
 Ability to substitute inputs
 Switching costs
 Supplier concentration
Bargaining power of Suppliers
Can buyers easily switch
to another product?
How much power do suppliers
have? How much power to buyers have?
How easy is it for new
competitors to enter the
market? How competitive is
the market?
39

Industry life cycle
The industry life cycle is a concept that describes the stages of evolution and development of an industry over time. It helps you to understand the
changes in the competitive environment, customer preferences, and growth opportunities of an industry
The industry life cycle typically consists of four stages:
 Introduction : This is the stage when a new industry is born, usually as a result of a new product, service, or technology that
creates a new market or satisfies an unmet need. The industry is characterized by high uncertainty, low demand, high costs,
low profits, high innovation, and few competitors. The firms in this stage focus on developing and marketing their offerings,
educating customers, establishing standards, and attracting investors. The strategies for this stage include differentiation,
niche marketing, and skimming pricing.
 Growth : This is the stage when the industry reaches its peak, as the market becomes saturated, and the growth rate slows down or
stabilizes. The industry is characterized by low demand, low growth rate, high revenues, declining profits, intense competition, and market
consolidation. The firms in this stage focus on maintaining their market share, reducing their costs, increasing their customer loyalty, and
defending their competitive position. The strategies for this stage include cost leadership, differentiation, market development, and
diversification.
 Maturity : These are products or business units that have a low relative market share and a high market growth rate. They are in fast-growing
markets but face strong competition. They require substantial investment to increase their market share and to compete with the market
leaders. They generate low revenues but also high costs. The goal is to invest in or discard question marks depending on their chances of
becoming stars or cash cows.
 Decline: This is the stage when the industry contracts, as the demand declines due to changing customer preferences,
technological obsolescence, social or environmental factors, or regulatory pressures. The industry is characterized by low
demand, negative growth rate, low revenues, low or negative profits, reduced competition, and market exit or failure. The
firms in this stage focus on surviving or exiting the industry gracefully. The strategies for this stage include harvesting,
divesting, liquidating, or niche marketing. 40

Industry Analysis
Business strategy must adapt to the industry life cycle stage
Industry size may be represented in “industry sales”
The industry life cycle analysis helps you to identify the current and future state of an industry and to formulate appropriate strategies for each
stage of the life cycle
Industry life cycle
Industry
Size
Time
Stage
Inception
Development
Growth
Maturity
Decline
41

Industry Analysis
Combining the Industry Life Cycle with Porter’s 5 Forces can offer a better understanding of the industry’s strategic dynamics
Industry life cycle with Porter’s five forces
Competitive Force Inception Growth Maturity Decline
New entrants First movers Me too Consolidation Divest
Power of Buyers Limited Seller’s market Growing Buyer’s market
Power of Suppliers Medium High Decreasing Limited
Threat from substitutes N/A Limited Growing High
Competitive rivalry Limited Low High Declining
42

8. Market Analysis
100 mph 100 mph
1 2 3 4 5
Understanding the market
43

Market Analysis
The BCG portfolio matrix is a framework for portfolio management that allows you to prioritize different products or business units based on two dimensions:
relative market share and market growth rate. Relative market share measures how competitive a product or business unit is compared to its main rivals in
the same market. Market growth rate measures how attractive a market is in terms of its potential for expansion and profitability
The BCG portfolio matrix classifies products or business units into four categories,
 Stars:
These are products or business units that have a high relative market share and a high market growth rate. They are the leaders in their markets and have
high future potential. They require significant investment to maintain or increase their market share and to take advantage of the growth opportunities. They
generate high revenues but also high costs. The goal is to turn stars into cash cows when the market growth slows down.
 Cash cows:
These are products or business units that have a high relative market share and a low market growth rate. They are mature and stable in their markets and
have low competition. They require little investment to maintain their market share and generate high profits and cash flows. The goal is to milk cash cows
for cash to reinvest in stars or question marks.
 Question marks:
These are products or business units that have a low relative market share and a high market growth rate. They are in fast-growing markets but face strong
competition. They require substantial investment to increase their market share and to compete with the market leaders. They generate low revenues but
also high costs. The goal is to invest in or discard question marks depending on their chances of becoming stars or cash cows.
 Dogs:
These are products or business units that have a low relative market share and a low market growth rate. They are in slow-growing or declining markets and
have weak competitive positions. They require little investment but also generate low profits and cash flows. The goal is to liquidate, divest, or reposition
dogs unless they are complementary to other products or serve a strategic purpose.
44
The BCG portfolio matrix

Market Analysis
The BCG Portfolio Matrix can help establish priorities in a portfolio of business/products
The BCG portfolio matrix
DOG
STAR
CASH COW
PROBLEM
CHILD
Market Share
Market
Growth
Rate
High
Low
Low High
45

Market Analysis
Common earning and cashflow characteristics may not always be clear cut and potential strategy should be validated further
The BCG portfolio matrix with characteristics
DOG
Earnings: Low, unstable
Cash Flow: Neutral or negative
Strategy: Divest
STAR
Earnings: High, stable, growing
Cash Flow: Neutral
Strategy: Invest for growth
CASH COW
Earnings: High, stable
Cash Flow: High, stable
Strategy: Milk it
PROBLEM CHILD
Earnings: Low, unstable, growing
Cash Flow: Negative
Strategy: Analyse if can be grown into
a star or degenerate into a dog
Market Share
Market
Growth
Rate
High
Low
Low High
46

Market Analysis
Plotting of businesses/products on the matrix may also incorporate a size dimension (e.g. revenues, sales volume, etc.)
The BCG portfolio matrix - plotted
DOG
STAR
CASH COW
PROBLEM
CHILD
Market Share
Market
Growth
Rate
High
Low
Low High
47

Market Analysis
The McKinsey/GE Matrix can be used to identify a potential strategic direction for a portfolio of businesses
McKinsey/GE matrix
Grow
Build
Selectively
Build
Build
Selectively
Limited
Expansion
Hold
Protect
Harvest Manage
Low
Medium
High
Low Medium High
Industry
Attractiveness
48

Market Analysis
The McKinsey/GE matrix is a framework that evaluates your products, services or business units based on two dimensions: industry
attractiveness and competitive strength. Industry attractiveness measures how profitable and attractive a market is, considering factors such as
market size, growth rate, profitability, competition, regulation, etc.
The McKinsey/GE matrix classifies your products, services or business units into nine cells, each with its own
strategic implication:
 High industry attractiveness and high competitive strength:
These are your stars. They are in attractive and profitable markets and have strong competitive positions. They generate high revenues and profits
but also require high investments to maintain or increase their market share and to take advantage of the growth opportunities. You should invest
in them selectively to ensure their long-term success.
 High industry attractiveness and medium competitive strength:
These are your question marks. They are in attractive and growing markets but face strong competition. They have potential to become stars but
also risk becoming dogs. They require substantial investments to increase their market share and to compete with the market leaders. You should
invest in them carefully and selectively based on their chances of becoming stars or cash cows
 High industry attractiveness and low competitive strength:
These are your wildcats. They are in attractive and growing markets but have weak competitive positions. They have potential to become question
marks or stars but also risk becoming dogs. They require high investments to improve their competitive strength and to capture the market
opportunities. You should invest in them cautiously and monitor them closely for signs of improvement or decline
 Medium industry attractiveness and high competitive strength:
These are your cash cows. They are in mature and stable markets and have strong competitive positions. They generate high profits and cash
flows but require little investments to maintain their market share. You should harvest them for cash to reinvest in stars or question marks
49
The McKinsey/GE matrix

Market Analysis
 Medium industry attractiveness and medium competitive strength:
These are your average performers. They are in moderate markets and have moderate competitive positions. They generate moderate revenues
and profits but also require moderate investments to maintain their market share and to keep up with the market changes. You should maintain
them at their current level and invest in them selectively based on their potential for improvement or decline.
 Medium industry attractiveness and low competitive strength:
These are your pets. They are in moderate markets but have weak competitive positions. They generate low revenues and profits but also require
low investments to sustain their operations. You should divest them or reposition them unless they are complementary to other products or serve a
strategic purpose
 Low industry attractiveness and high competitive strength:
These are your winners. They are in unattractive and declining markets but have strong competitive positions. They generate high profits and cash
flows but require little investments to defend their market share and to exploit the remaining market opportunities. You should harvest them for
cash or divest them at the right time before the market deteriorates further
 Low industry attractiveness and medium competitive strength:
These are your losers. They are in unattractive and declining markets and have moderate competitive positions. They generate low profits and
cash flows but require moderate investments to maintain their market share and to survive the market challenges. You should divest them or
reposition them as soon as possible before they become dogs
 Low industry attractiveness and low competitive strength:
These are your dogs. They are in unattractive and declining markets and have weak competitive positions. They generate negative or negligible
profits and cash flows but require high investments to improve their competitive strength and to cope with the market threats. You should divest
them or liquidate them immediately before they drain your resources further
50
The McKinsey/GE matrix

Market Analysis
Various factors can be used for “industry attractiveness” and “competitive position”
An identified potential strategic direction should be validated further
McKinsey/GE matrix – potential actions
Grow
 Invest in growth
 Maintain strength
Build Selectively
 Focus on key strengths
 Overcome weaknesses
 Withdraw if unsuccessful
Build
 Build on key strengths
 Address weaknesses
 Seek market leadership
Build Selectively
 Invest in attractive segments
 Defend position
 Use productivity to increase
profitability
Limited Expansion
 Expand while managing risks
 Otherwise:
 minimize investments and
increase efficiency, or
 harvest
Hold
 Manage earnings
 Protect existing business
 Concentrate investments in
profitable/low risk segments
Protect
 Manage current business
 Focus on attractive segments
 Defend position
Harvest
 Sell at best possible value
 Cut Fixed cost
 Avoid Investment
Manage
 Protect position
 Review product line
 Minimize investments
Low
Medium
High
Low Medium High
Industry
Attractiveness
51

Market Analysis
Plotting of businesses/products on the matrix may also incorporate a size dimension (e.g. revenues, sales volume, etc.)
McKinsey/GE matrix - plotted
Grow
Build Selectively Build
Build Selectively
Limited Expansion
Hold
Protect
Harvest Manage
Low
Medium
High
Low Medium High
Industry
Attractiveness
52

9. Competitor Analysis
100 mph 100 mph
1 2 3 4 5
Identifying current and potential competitors
53

Competitor Analysis
Competitor analysis is the process of researching and analyzing your competitors to gain insight into their products, sales, and marketing
strategies. It helps you to understand your competitive position in the market, identify your strengths and weaknesses, and discover opportunities
and threats
Competitor analysis involves several steps, such as:
 Identify your main competitors:
These are the businesses that offer similar products or services to the same target market as you. You can use online tools, such as Google,
social media, industry directories, etc., to find out who they are.
 Gather information about your competitors:
You can use various sources, such as their websites, social media profiles, customer reviews, annual reports, press releases, etc., to collect data
about their products, prices, features, benefits, quality, customer service, etc.
 Analyze your competitors’ strengths and weaknesses:
You can use various frameworks, such as SWOT analysis, Porter’s five forces analysis, etc., to evaluate how well your competitors perform in the
market and what are their advantages and disadvantages compared to you.
 Evaluate your competitors’ strategies and objectives:
You can use various methods, such as benchmarking, mystery shopping, surveys, etc., to understand what are your competitors’ goals and how
they plan to achieve them. You can also assess how successful they are in implementing their strategies and what are their results.
 Identify your competitive advantage and opportunities:
Based on the information and analysis you have done, you can determine what makes you different from and better than your competitors and
how you can communicate that to your customers. You can also identify areas where you can improve your products or services or create new
ones to meet customer needs better than your competitors.
54
Competitor Analysis

Competitor Analysis
Correctly identifying the relevant competitors is a key step
They may include both existing as well as potential new competitors
Competitor identification
 Offer same products/services
 Offer products/services that meet similar customer needs
 Compete for limited capacity in the same distribution channels
 Compete for target consumer’s attention, money or other
resource
Existing
 New entrants, due to:
 ability to overcome any entry barriers
 natural growth strategy
 likely synergy in the industry
 Suppliers or buyers able to easily integrate forwards or
backwards
Potential
Sample
55

Competitor Analysis
Competitive benchmarking by relevant industry indicators
Strong Weak
Indicator Company Competitor 1 Competitor 2 Competitor 3
Financial
Sales
Cost of goods
Gross margin
Ratios
Return on Equity
Gross Margin(%)
SG&A (%)
Marketing
Market share
Price
Volume
56

Competitive profile matrix (CPM)
The CPM helps you to compare your firm with your competitors in terms of their strengths and weaknesses on the critical success factors for your
industry. It also helps you to identify areas where you can improve your performance or exploit your competitors’ weaknesses.
The CPM involves the following steps:
 Identify your main competitors: These are the firms that offer similar products or services to the same target market as you.
 Identify the critical success factors: These are the factors that are essential for achieving competitive advantage and customer
satisfaction in your industry. You can use various sources, such as industry reports, customer feedback, expert opinions, etc.,
to determine what they are.
 Assign weights to each critical success factor : These are the numbers that indicate the relative importance of each factor for
your industry. They range from 0.0 (low importance) to 1.0 (high importance) and should add up to 1.0. You can assign weights
subjectively or objectively based on your judgment or data analysis.
 Rate each firm on each critical success factor: These are the numbers that indicate how well each firm performs on each
factor compared to its rivals. They range from 1 (major weakness) to 4 (major strength) and can be assigned subjectively or
objectively based on your judgment or data analysis.
 Calculate the score for each firm on each critical success factor: This is the result of multiplying the weight by the rating for each factor.
It shows how well each firm performs on each factor in terms of its importance for the industry.
 Calculate the total score for each firm : This is the sum of all scores for each factor for each firm. It shows how well each firm
performs overall in terms of its strengths and weaknesses.
57

Competitor Analysis
Applying an importance weight and a current capability rating allows for a more informative comparison between the company and its competitors
The CPM can be presented in a table format, as shown below:
Critical Success Factor Weight Rating Score Rating Score Rating Score
o Product quality 0.15 4 0.60 3 0.45 2 0.30
o Customer service 0.10 3 0.30 4 0.40 1 0.10
o Innovation 0.20 2 0.40 3 0.60 4 0.80
o Market share 0.25 3 0.75 2 0.50 4 1.00
o Brand reputation 0.15 4 0.60 3 0.45 2 0.30
o Cost structure 0.15 2 0.30 4 0.60 3 0.45
Total score
Strong Weak
Company Competitor 1 Competitor 2 Competitor 3
Key Success Factor Importance
(Total =100%)
Current
Capability
Weighted Score
Current
Capability
Weighted Score
Current
Capability
Weighted Score
Current
Capability
Weighted Score
Market share % [1, 2, 3 or 4] 0.0 [1, 2, 3 or 4] 0.0 [1, 2, 3 or 4] 0.0 [1, 2, 3 or 4] 0.0
Product quality % [1, 2, 3 or 4] 0.0 [1, 2, 3 or 4] 0.0 [1, 2, 3 or 4] 0.0 [1, 2, 3 or 4] 0.0
Price competitiveness % [1, 2, 3 or 4] 0.0 [1, 2, 3 or 4] 0.0 [1, 2, 3 or 4] 0.0 [1, 2, 3 or 4] 0.0
Financial Position % [1, 2, 3 or 4] 0.0 [1, 2, 3 or 4] 0.0 [1, 2, 3 or 4] 0.0 [1, 2, 3 or 4] 0.0
Management % [1, 2, 3 or 4] 0.0 [1, 2, 3 or 4] 0.0 [1, 2, 3 or 4] 0.0 [1, 2, 3 or 4] 0.0
Marketing % [1, 2, 3 or 4] 0.0 [1, 2, 3 or 4] 0.0 [1, 2, 3 or 4] 0.0 [1, 2, 3 or 4] 0.0
[Add Text] % [1, 2, 3 or 4] 0.0 [1, 2, 3 or 4] 0.0 [1, 2, 3 or 4] 0.0 [1, 2, 3 or 4] 0.0
Total 100.00% 0.0 0.0 0.0 0.0
Current capability rating: 1=Major Weakness, 2=Minor Weakness, 3=Minor Strength, 4=Major Strength
58

10. Strategic Synthesis
100 mph 100 mph
1 2 3 4 5
Bringing it all together
59

Strategic Synthesis
Situation analysis drives strategy formulation and plans
1 3 4
2
Situation
Analysis
Internal Analysis
•Management
•Marketing
•Customer relationships
•Finance
•Human resources
•Technology
•Distribution/delivery
External Environment
•Political and legal
•Economic environment
•Market dynamics
•Industry characteristics
•Competitive climate
Strengths
Weaknesses
Threats
Opportunities
Strategic and
Operational
Objectives
Strategic and
Operational Plans
Financial Projections
60

Strategic Synthesis
The SWOT analysis captures key external and internal drivers, which then can be used as a basis for strategy formulation
SWOT analysis - key elements and actions
Exploit
Opportunities
Build on
Strengths
Counter
Threats
Address
Weaknesses
Strengths/Weaknesses
Factors within the control of the
unit/company
Opportunities/Threats
Factors outside the control
of the unit/company
61

Strategic Synthesis
SWOT analysis – key questions to consider
Internal
 What external challenges can hinder
our progress?
 Are there significant shifts that are
impacting our industry?
 What economic factors could hurt our
financial viability?
Threats
 What opportunities have we
identified but have not explored?
 Are there any emerging trends
that we can exploit?
Opportunities
 What do we do exceptionally well?
 What key assets and resources do we
have?
 What do customers consider as our
strengths?
 What core competencies are we strong
in?
 What other key advantages do we
have?
Strengths
 What could we do better?
 What core competencies are we weak
in?
 What do customers consider as our
weaknesses?
Weaknesses
External
Sample
62

Strategic Synthesis
SWOT analysis - potential factors to consider
Potential Strengths Potential Weaknesses Potential Opportunities Potential Threats
 Solid strategy
 Strong financial position
 Clear market leadership
 Strong brand name
image/reputation
 Better product quality
 Product innovation capabilities
 Proprietary technology
 Good customer service
 Cost advantages
 Beneficial partnerships or
alliances
 Unclear strategic direction
 Weak finances/ excessive debt
 Low profitability
 Higher costs than rivals
 Weak marketing capabilities
 Lack of key skills/competencies
 Outdated facilities
 Internal operating challenges
 Limited product line
 Lagging R&D
 Serving additional customer
groups
 Expanding to new geographic
areas
 Expanding product line
 Transferring skills to new
products
 Vertical integration
 Taking market share from rivals
 Acquisition of rivals
 Alliances or JVs to expand
coverage
 Openings to exploit new
technologies
 Openings to extend brand
name/image
 Entry of potent new competitors
 Loss of sales to substitutes
 Slowing market growth
 Adverse shifts in exchange rates
and trade policies
 Costly new regulations
 Vulnerability to business cycle
 Growing leverage of customers
or suppliers
 Reduced buyer need for product
 Unfavorable demographic
changes
Internal External
Sample
63

Strategic Synthesis
A prioritization of the key internal factors using an Internal Factor Evaluation matrix based on weights and ratings can add
more reliability to a SWOT analysis
Internal Factor Evaluation (IFE) matrix
Internal Strengths Importance
(Total =100%)
Current
Capability
Weighted Score
[Add Text] % [3 or 4] 0.0
[Add Text] % [3 or 4] 0.0
[Add Text] % [3 or 4] 0.0
[Add Text] % [3 or 4] 0.0
[Add Text] % [3 or 4] 0.0
Internal Weaknesses
[Add Text] % [1 or 2] 0.0
[Add Text] % [1 or 2] 0.0
[Add Text] % [1 or 2] 0.0
[Add Text] % [1 or 2] 0.0
[Add Text] % [1 or 2] 0.0
Total 100.00% 0.0
Current capability rating: 1=Major Weakness, 2=Minor Weakness, 3=Minor Strength, 4=Major Strength
64

Strategic Synthesis
A prioritization of the key external factors using an External Factor Evaluation matrix based on weights and ratings can add
more reliability to a SWOT analysis
External Factor Evaluation (EFE) matrix
External Opportunities Importance
(Total =100%)
Response
Capability
Weighted
Score
[Add Text] % [1 ,2 , 3 or 4] 0.0
[Add Text] % [1 ,2 , 3 or 4] 0.0
[Add Text] % [1 ,2 , 3 or 4] 0.0
[Add Text] % [1 ,2 , 3 or 4] 0.0
[Add Text] % [1 ,2 , 3 or 4] 0.0
External Threats
[Add Text] % [1 ,2 , 3 or 4] 0.0
[Add Text] % [1 ,2 , 3 or 4] 0.0
[Add Text] % [1 ,2 , 3 or 4] 0.0
[Add Text] % [1 ,2 , 3 or 4] 0.0
[Add Text] % [1 ,2 , 3 or 4] 0.0
Total 100.00% 0.0
Response capability rating: 1=Weak, 2=Average, 3=Above Average, 4=Strong
65

11. Strategy Formulation
100 mph 100 mph
1 2 3 4 5
Identifying strategic alternatives and options
66

Strategy Formulation
Larger diversified companies may have to address issues related to managing a portfolio of businesses, such as where to
focus their efforts, how to maximize synergies and ways to optimize shared costs
Strategy levels – a typical large company
Strategic Business Unit (SBU)
Corporate Strategy
Corporate Level Managers
Business Unit Level Managers
Functional Strategy
Functional Managers
Operating Strategies
Operating Managers
67

Smaller single business companies and Strategic Business Units (SBUs) of larger companies can focus on business specific
strategy
Strategy levels – a typical small company
Business Strategy
Executive Level Managers
Functional Strategy
Functional Managers
Operating Strategies
Operating Managers
68

Porter’s Generic Strategies can help identify the overall strategy of a company
When comparing to similar competitors, other tools may be needed to understand the difference in positioning
Porter’s generic strategies
3.a Cost 3.b. Differentiation
2. Differentiation Strategy
1. Cost Leadership Strategy
Competitive Advantage
Market
Segment
Broad
Narrow
Lower cost Differentiation
3. Focus Strategy
69

Larger companies may need to deploy a wide range of strategy types at different times in their life cycle
Strategy types
Forward integration
Integration Strategies
Seek partial or full control over distributers or retailers
Backward integration Seek partial or full control over suppliers
Horizontal integration Seek partial or full control over competitors
Market penetration
Intensive Strategies
Seek increased market share for existing products/services in existing
markets
Market development Introducing existing products/services into a new market
Product development Seeking increased sales by improving existing or developing new
products/services
Related diversification
Diversification Strategies
Introducing new but related products/services
Unrelated diversification Introducing new and unrelated products/services
Retrenchment
Defensive Strategies
Undertaking cost/asset resections to counter declining sales/profits
Divesture Devesting of parts of the company
Liquidation Liquidating all company assets
70

Taking Financial Strength, Industry Strength, Competitive Advantage and Environmental Stability into account can help
identify potential strategy types to consider
SPACE matrix
71
Competitive
 Backward integration
 Forward integration
 Horizontal integration
 Market penetration
 Market development
 Product development
Aggressive
 Backward integration
 Forward integration
 Horizontal integration
 Related or unrelated diversification
Conservative
 Related diversification
Defensive
 Retrenchment
 Divesture
 Liquidation
High Financial Strength
High
Industry
Strength
Low
Competitive
Advantage
Low Environmental Stability
Internal
External
Internal External

Ansoff’s Matrix can help identify corporate growth opportunities based on four strategic alternatives
Ansoff’s matrix
72
Market Penetration
Diversification
Product Development
Market Development
Product
Market
New
Current
Current New

Under each strategic alternative various actions can be considered
Ansoff’s matrix – potential actions
Market Penetration
 Status quo
 Grow share
 Consolidation
 Withdrawal
Diversification
Product Development
 New Product
 New Service
Market Development
 New market development
 New Regional distribution
Product
Market
New
Current
Current New
Horizontal Integration
Conglomerate
Diversification
Concentric
Diversification
Vertical Integration
73

Under a Blue Ocean Strategy approach a company would look to pursue opportunities in an uncontested market making the
competition irrelevant, at least initially
Blue ocean strategy
 Compete in existing market
space
 Beat the competition
 Exploit existing demand
 Make the value/cost trade off
 Pursue a strategic choice of
differentiation or low cost
Red ocean strategy
 Create uncontested market space
 Make the competition irrelevant
 Create and capture new demand
 Break the value/cost trade off
 Pursue both differentiation and low
cost
Blue ocean strategy
Value
Cost
Value
Innovation
74

Strategies to avoid, transfer, mitigate or manage identified risks should be formulated considering the impact and probability of such
risks
Risks with low probability but a very high impact should also be considered
Risk management process
Business Strategies,
Goals,
&
Objectives
Evaluate Risks
Risk Planning
Analyze Risks
Identify Risks
Treat Risks
Monitor and Report
75

With the parameters of likelihood and impact ratings clearly defined, an overall risk rating can be obtained by multiplying the likelihood
rating by the impact rating assigned to a given risk
While some are rated as medium, risks with a critical impact rating should at least be considered
Risk rating matrix
Impact
1
(Low)
2
(Moderate)
3
(High)
4
(Significant)
5
(Critical)
Likelihood
5
(Highly Probable)
5
(Low)
10
(Medium)
15
(High)
20
(Significant)
25
(Critical)
4
(Probable)
4
(Low)
8
(Medium)
12
(Medium)
16
(High)
20
(Significant)
3
(Possible)
3
(Low)
6
(Low)
9
(Medium)
12
(Medium)
15
(High)
2
(Improbable)
2
(Low)
4
(Low)
6
(Low)
8
(Medium)
10
(Medium)
1
(Highly
Improbable)
1
(Low)
2
(Low)
3
(Low)
4
(Low)
5
(Medium)
Sample
76

Contingencies should include strategies and tactics that may be deployed should the associated risk materialize
Risks and contingencies
Risk Type Risk Description Likelihood Impact Contingencies
[Add Text]  [Add Text]  [Add Text]
[Add Text]
 [Add Text]  [Add Text]
Impact
1
(Low)
2
(Moderate)
3
(High)
4
(Significant)
5
(Critical)
Likelihood
1
(Highly
Improbable)
2
(Improbable)
3
(Possible)
4
(Probable)
5
(Highly
Probable)
77

12. Strategy Implementation
100 mph 100 mph
1 2 3 4 5
Aligning, monitoring and evaluating the strategy
78

Strategy Implementation
Strategy implementation is a crucial step in the strategic management process, as it determines whether your strategy will succeed or fail. Without effective
implementation, even the best strategy will remain on paper and will not produce the desired results. Strategy implementation is a complex and challenging
process that requires careful planning, coordination, monitoring, and control.
Aspects of strategy implementation:
 Alignment : ou need to ensure that your strategy is aligned with your organizational structure, culture, systems, processes, and
capabilities. You also need to align your strategy with the expectations and needs of your stakeholders, such as customers, employees,
suppliers, investors, regulators, etc. Alignment helps to create coherence and consistency across your organization and to avoid
conflicts and confusion
 Communication : You need to communicate your strategy clearly and effectively to your employees and other stakeholders. You need
to explain the rationale, benefits, and implications of your strategy and how it relates to their roles and responsibilities. You also need to
communicate the progress and results of your strategy implementation and solicit feedback and suggestions for improvement.
Communication helps to create awareness, understanding, and commitment among your employees and stakeholders and to foster
collaboration and engagement
 Leadership : You need to demonstrate strong leadership skills and behaviors to implement your strategy successfully. You need to
provide direction, guidance, support, and motivation to your employees and stakeholders. You also need to model the values and
principles that underpin your strategy and inspire others to follow them. Leadership helps to create trust, confidence, and loyalty among
your employees and stakeholders and to overcome resistance and challenges
 Execution : You need to execute your strategy effectively and efficiently to achieve your desired outcomes. You need to define the
specific actions and initiatives that are required to implement your strategy and assign them to the appropriate people or teams. You
also need to allocate the necessary resources, such as time, money, equipment, etc., to support the execution of your strategy.
Execution helps to create value for your customers and stakeholders and to measure the impact of your strategy
 Evaluation: You need to evaluate the performance and results of your strategy implementation regularly and systematically. You need to establish the
criteria and indicators that will help you assess whether you are meeting your goals and objectives or not. You also need to collect and analyze relevant
data and information that will help you identify the strengths and weaknesses of your strategy implementation and the opportunities and threats that may
affect it. Evaluation helps to create learning and improvement for your organization and to adjust or revise your strategy if needed 79

The McKinsey 7S Model can be very useful in ensuring strategic alignment between the key elements of a company
McKinsey 7S model
Staff
Skills
Shared Value
Style
Systems
Structure
Strategy
Soft S
Hard S
Capabilities and competencies within
the company
Values and beliefs of the company
People and how they are trained, developed, and
motivated
Leadership and operating
approach of the company
Formal and informal
procedures that govern the
activities of the company
Long-term direction and of the
company
The organization, interrelationships and
responsibilities within the company
80

The balanced scorecard can serve as a powerful strategic planning, alignment, monitoring and evaluation tool
Balanced scorecard
Vision
and
Strategy
81

Balanced scorecard - cause and effect
Financial Objectives
Profitability
Growth
Shareholder
Value
Vision/Mission/Values
Customer Objectives
Price
Service
Quality
Learning and Growth Objectives
Innovation
Satisfaction /
Retention
Productivity
Learning
Client
Acquisition
Product Dev.
Cost
What is
important to our
shareholders?
To satisfy our
customers and
shareholders, which
internal processes
must we excel at?
To excel in our
processes, what
human resources
should we have?”
To achieve our
financial objectives,
what customer needs
must we serve?
Objectives are
set from top to
bottom
Cause and effect
is mapped from
the bottom up
Internal Objectives
Financial Objectives are paramount, however:
 Financial targets are for the most part trailing
indicators, not allowing for early corrective
measures
 They require offering the right
product/service, having the right internal
systems, run by qualified and motivated
personnel
Whether implementing a full balanced scorecard
or not, key non-financial objectives and
indicators are important to ensure the delivery of
financial objectives and to monitor the progress
towards them
82

The balance scorecard can be used to cascade strategies and strategic objectives to all levels of the company
Balanced scorecard – cascading strategies and objectives
83

Strategy map – strategic theme
Operating Efficiency
Strategic Theme:
Financial
Learning
and
Growth
Customer
Internal
Will our people do that?
Higher
volume
Training
Low
prices
Fewer
resources
Timely service
Process
efficiency
Increased
profitability
What will drive operating efficiency in
order to increase profitability?
How will we satisfy our target
customers?
What must we focus on internally?
Performance
based rewards
Sample
84

Strategy map – sample objective, measures, targets and initiatives
Financial
Learning
and
Growth
Customer
Internal
Operating Efficiency
Strategic Theme:
Higher
volume
Training
Low
prices
Fewer
resources
Timely service
Process
efficiency
Increased
profitability
Performance
based rewards
 Fast production
time
Objectives
 20 Minutes
 10%
Target
 Cycle time
optimization
Initiative
 Average production
time per unit
 Increase in number
of units produced
per hour
Measurement
What
must be
achieved?
How the
achievement level
will be measured?
What is the
target level
to achieve?
Key initiatives and
action plans need to
achieve the objective
Sample
85

At this stage in the process, specific short-term objectives are formulated
While the Goals/Objectives terminology is sometimes reversed, the differentiation remains
Objectives vs goals
Goal
Objective
Short statement, high-level
Longer statement, more descriptive
Broad in scope (e.g. BHAG)
Narrow in scope (SMART)
Directly relates to the mission statement
Indirectly relates to the mission statement
Covers a long time period
(e.g. 5+ years)
Covers short time period
(e.g. 1 year budget cycle, up to 2 years)
86

SMART objectives enable the company to track its progress against the adopted strategy and to consider corrective actions
as appropriate
Objectives - SMART
Objective
Specific
Measurable
Achievable
(yet challenging)
Relevant
S
M
A
R
Time bound
T
 Grow sales revenue by x% this year compared to last year.
 By x date, achieve x% rating on the customer satisfaction
survey
 Operate x stores up by year end from x stores last year
 Cut overhead costs by x% per quarter for the next x quarters
Examples
87

88
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Strategic Planning Cycle & Tactics ( A to Z ).ppsx

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