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Strategic Planning

Strategic planning is a series of goal-directed decisions and actions that align your skills and resources with market threats and opportunities to ensure long-term profitability and growth. This approach guides the entire firm, unifies strategy-related decisions, and integrates organizational efforts.

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Strategic Planning

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  1. Strategic Planning

  2. Definition: Strategic Planning= A series of goal-directed decisions & actions matching your skills & resources (strengths & weaknesses) w/ market threats & opportunities

  3. EVOLVING MARKET OPPORTUNITIESand/or threats RESOURCES & OBJECTIVES Strategic Planning LONG RUN PROFITABILITY AND GROWTH

  4. “If you don’t know where you are going any route will get you there.”Chris Bartlett,Harvard Business School

  5. Benefits of “Strategic Planning” objectives • Guides entire firm regarding -what it is you are trying to do & achieve • Unifies numerous strategy-related decisions and organizational efforts Strategy Operations

  6. What makes a decision strategic? • Multi-functional in scope & consequences • Requires choice & trade-offs, integration & alignment

  7. Forces you to make choices on what you will & won’t do

  8. Separation of Strategic Planning & Marketing Implementation Very Much Strategic Planning • Commitment • Understanding • Responsibility Time Spent Strategy Implementation Very Little Chief Executive Officer Mid-level Managers Customer Contact

  9. The Problem… • Only 5% of workforce aware of “the” strategy • Only 25% of managers have incentives linked to strategy • 60% of organizations don't link budgets & strategy • 85% of executive teams spend <1 hour/ month discussing strategy • 90% fail to execute strategy successfully Robert S. Kaplan and David P. Norton The Strategy-Focused Organization,

  10. Situation/SWOT Analysis Strategic Planning Functional Integration Performance Assessment The Big Picture • Company • Consumers • Competitors • Conditions • PEST Marketing Growth &Competitive Strategies • Profits • Mrkt Share • ROA • ROS • ROE • Asset T/O • Stock • Mrkt Cap R&D Production HR Finance

  11. Situation & SWOT Analysis answers 1st of 3 Critical Questions:

  12. Strategic Planning answers next 2 critical Q’s 1.Where are we now? 2.Where do we want to go? 3.How do we get there?

  13. 2. Where do we want to go? • What business should we be in? • Market positions to stake out? • Consumer needs & segments serve? • Outcomes to achieve?

  14. Final Question answered by Strategic Planning: 1.Where are we now? 2.Where do we want to go? 3.How do we get there? *Growth, Competitive & Functional Strategies

  15. Corporation Sensors Unit Nano-Tech Unit Cons.Elec. Unit Finance Production Marketing HR / R&D Growth, Competitive & Functional Strategies Span 3 Levels of MGT Corporate-Level :In what business should we compete? Business-Level: How should we compete? Functional-Level : How do we coordinate?

  16. Corporation Level 1-Corporate Strategy In which businesses do we compete? Corporation ?

  17. DIAGEO PLC Burger King Guinness Old El Paso Mexican food Green Giant Liquor Textron Bell helicopters E-Z-GO golf cars Jacobsen turf care United Technologies Pratt & Whitney aircraft engines Cessna Aircraft Carrier Heating & AC Otis Elevators

  18. Once decided what businesses to compete in –need to decide - what Products & Markets to compete w/& in= Growth Strategy

  19. Growth Strategies Present Products New Products Market Penetration- Increase share among existing customers. Product Development Create new products for present markets Present Markets Market Development Attract new customers to existing products New Markets Diversification new products… new markets… new alliances

  20. Corporation Sensors Unit Nano-Tech Unit Cons.Elec. Unit Finance Production Marketing HR / R&D Competitive Strategies Span Level 2 of MGT Corporate-Level :In what business should we compete? Business-Level: How should we compete? Functional-Level : How do we coordinate?

  21. STRATEGIC BUSINESS UNIT MARKET COMPETITOR COMPETITOR COMPETITOR A B C Level 2: Business Unit Strategy: How do we Compete? Focus? Price? Quality?

  22. What Advantage can we create & sustain against our competitors? & w/in which Market Segments should we compete?

  23. Strategic Thinking- the ten big ideas 6. Resource allocation models – • Porter: strategic choices are set of basic generic strategies • (low cost, differentiation, market focus)

  24. Porter “What is Strategy” • Porters Generic Strategies • Strategies & Mission Statements

  25. Cost: Design, produce, market more efficiently than competitors You can Formulate Strategy based on what Competitive advantage you focuson: Differentiation: Deliver unique & superior value in terms of product quality, features, service

  26. Business-Level Strategy:Cost Leadership • Advantages • A cost leader is able to charge lower prices • Even at same price more efficient cost leader generates greater profitability

  27. Generic Business-Level Strategy: Differentiation Create a product that customers perceive as distinct/unique & offer superior quality/service Advantage Customers expect & willing to pay premium prices

  28. You can Formulate Strategy thru your Competitive Scope:Number & Nature of segments compete w/in-

  29. Generic Strategies Competitive Advantage Cost Uniqueness Cost Leadership Broad Differentiation Broadtarget Competitive Scope Focused Cost Leadership Focused Differentiation Narrowtarget

  30. & You can also Formulate Strategy by-Riding a Products Life Cycle • Adjust Marketing Mix according to natural Drift of products w/in segments-

  31. Put them all together &… • Cost/Quality Differentiation • Number & nature of segments compete w/in • Riding the Product Life Cycle

  32. Competitive Strategy Matrix Number & nature of segments compete w/in Ride Product LifeCycle #2 #3 Compete on: Broad Market Niche Mrkt Evolving Mrkt Cost #1 Product Quality

  33. Competitive Strategy Matrix Broad Mrkt Niche Mrkt Evolving Mrkt Compete on: Cost Product Quality

  34. An overall cost leader will attempt to be low-cost producer in every segment of the market.

  35. -- seeks to dominate the price sensitive market segments. • --sets prices below all competitors — and still be profitable

  36. Products will be allowed to age & change in appeal from High End, to Traditional, and eventually Low End buyers.

  37. Competitive Strategy Matrix Broad Mrkt Niche Mrkt Evolving Mrkt Compete on: Cost Product Quality

  38. match customers ideal criteria for positioning, age, and reliability.

  39. 3rd Level of Strategy Corporate Level Business unit Level Functional Strategy Information systems Research & development Manufacturing Finance Marketing Human resources

  40. Level 3 Functional Strategy How do we coordinate?

  41. Situation/SWOT Analysis Strategic Planning Functional Integration Performance Assessment The Big Picture • Company • Consumers • Competitors • Conditions • PEST Marketing Growth &Competitive Strategies • Profits • Mrkt Share • ROA • ROS • ROE • Asset T/O • Stock • Mrkt Cap R&D Production HR Finance

  42. INTERNAL STRATEGIC ALIGNMENT FINANCE Achieved when : All Decisions made by & within all functional areas are in sync w/ one another, As well as with the overall strategic direction of the firm PRODUCTION MARKETING

  43. For INTERNAL STRATEGIC ALIGNMENTto occur: • Marketing/R&Dmust be operating in a manner that is complementary toProduction • Which is complementary toHuman Resources • Which is complementary toFinance.

  44. Examples of Strategic Alignment

  45. Distinctive Competencies When all decisions made by & within all functional areas are in sync w/ one another, As well as w/ your overall strategic direction -- you achieve… Distinctive Competencies

  46. Distinct competencies needed to achieve selected competitive strategy Competitive Advantage* Distinctive Competencies *Achieved when you sustain profits above Industry Average

  47. Areas in which you can develop “Distinct Competencies” • MARKETING: Awareness & Accessibility • R&D: Product innovation & design • PRODUCTION: Plant Automation & utilization • Human Resources: Worker Expertise & Training

  48. Cost LeadershipStrategic Choices • A cost leader does not try to be industry innovator • The overriding goal is- increased efficiency & lower costs relative to rivals • Will seek to minimize costs in marketing, R&D & production

  49. Achieving Competitive Advantage thru Cost-Focused Strategy • Allows for good profit margins on sales while keeping prices low especially in price-sensitive segments… Functional Alignment

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