Strategic

Planning
Module 1:
Basic Concepts of Strategic Planning and Management
 Surviving in a VUCA World
• Today’s organizations must become more analytical and
nimble so they can respond to both sudden and gradual
change in a world that is Volatile, Uncertain, Complex, and
Ambiguous
• Stability in a VUCA world is provided by:

Management Strategy

Awareness Direction
Discipline Growth

2
 What is Strategy?

• Strategy is about winning….Strategy is not a detailed plan or

program of instructions; it is a unifying theme that gives coherence
and direction to the actions and decisions or an individual or
organization …..Robert Grant, Contemporary Strategy Analysis

• Strategy is about competitive position, about differentiating

yourself in the eyes of the customer, about adding value through a
mix of activities different from those used by competitors
…..Michael Porter, Harvard Business Review 1996

• Strategy is a plan, a "how," a means of getting from here to there.

Strategy is perspective, that is, vision and direction
…..Henry Mintzberg, The Rise and Fall of Strategic
Planning

3
 Strategic Planning

• Strategic planning is an organizational management activity

that is used to set priorities, focus energy and resources,
strengthen operations, ensure that employees and other
stakeholders are working toward common goals, establish
agreement around intended outcomes/results, and assess
and adjust the organization's direction in response to a
changing environment.
• It is a disciplined effort that produces fundamental decisions
and actions that shape and guide what an organization is, who
it serves, what it does, and why it does it, with a focus on the
future. Effective strategic planning articulates not only where
an organization is going and the actions needed to make
progress, but also how it will know if it is successful.
 Common Strategic Plan Theme

Long-Term Strategy (2 – 5 Years)

Where we are Where we want How do we

Where we now to be get there?
were

Trend Analysis Mission Vision Strategic Plan

5
 Strategic Planning Process

• SWOT analysis • Define vision,

• PESTLE analysis Phase 1 mission,
• Internal alignment Environmental Phase 2 • Create long term
strategy
Scan/Assessmen Formulation • Establish strategic
t goals

• Establish short-term
• Review & refine (annual) goals
strategies
Phase 4 Phase 3 • Create action plans
Implementatio •
• Measure performance Evaluation & •
Allocate resources
Communicate &
• Take corrective action
Sustainment n& Execution motivate employees

6
 Why Strategy?

Competition for
customers &
resources

Time allowance for Necessity for

gaining ROI from effective &
change efficient operations

Focus on retention Ability to deal with

of competitive and respond to
advantage change

7
 Strategic Lens – How We View Strategic Planning

Physical or knowledge Revenue, costs,

based strengths value generation

Continual organizational
development through learning
Economic performance
against industry standards

Organizational relationships
Supply Chains
Contacts & industry advisers

Employee assets against

organization success
Competitive advantage of
implementation & continuous
improvement

Internal & External factors

8
 Offensive and Defensive Strategies

Offensive Defensive
Strategy Strategy
Intended to increase the Intended to protect the
market share or leadership market share position of an
position of an organization at organization against the
the expense of competitors offensive strategy activities
of competitors

9
 Types of Organization Strategies (Miles & Snow)

They are innovative, seek out new

Attempt to protect their market
opportunities, take risks and grow
from new competitors. They devote
by encouraging creativity and
primary attention to improving the
flexibility. These organizations
efficiency of their existing
often are the creators of change
operations. Defenders can be
and uncertainty to which their
competitors must respond. In such
Prospector Defender successful especially when they exist
in a declining industry or a stable
an environment, creativity is more
environment.
important then efficiency.

No consistent strategic structure Analyzer strategies attempt to

relationship. The organization takes maintain their current businesses and
whatever actions appear to be the be somewhat innovative in new
most expedient at the time to meet businesses. Existing products with
immediate market needs. Sometimes Reactor Analyzer efficient operations are maintained
these organizations are innovative, for regular customers, while other
sometimes they attempt to reduce products are targeted toward new,
costs, and sometimes they do both. more dynamic environments.

10
 Different Levels of Strategy

Corporate Most Common Strategies

Level

Global Business
Level Level

Less Common Strategies

Network Functiona
Level l Level
11
Strategy for Different Levels of the Organization

Corporate • Broadest strategy level

Level • Where to compete
• What to develop
Strategy

• Compete in a specific market

Business Unit • Advantage over rivals in chosen
Level Strategy market

Functional • Resources to support other

levels
Level • Includes people, skills,
knowledge, process, etc.
Strategy
12
 Organizational Benefits of Strategic Planning

Enhanced • Dialogue
Communicatio • Participation
n

Deeper/Improv • Of others’ views

ed • Of what the company is
Communication doing/planning and why

Greater • To achieve objectives

Commitment • To implement strategies
• To work hard
• Alignment of
employees
The Result toward
business
success
 Why Some Firms Ignore Strategic Planning

Waste of
Fire-Fighting Too Costly
Time

Content Fear of
Laziness
with Success Failure

Over- Prior Bad Fear of the

Confidence Experience Unknown
14
 Strategic Planning Components

Premeditated &
deliberate course Planned
of action
Change

Strategic
Planning
Unplanned
management Emergent
decisions made at
various levels Change

15
 Modern Approach to Strategic Formulation

S
T
R
Planned A Emergence
Design T

©Allan Gardner, 2019

Al Rights Reserved
E
Strategy is developed by G Strategy is continually enacted
senior management team through decisions made by
and pushed down Y lower levels and pushed up

16
 Henry Mintzberg’s Five P’s of Strategy

Plan Ploy Pattern

A consciously intended Specific maneuvers to What worked in past
course of action outsmart opponents can work in the future

Position Perspective
Environmental fit and Influence of culture &
relationship with other collective thinking on
organizations organizational strategy

By understanding each ‘P’, a robust business strategy that

takes full advantage of organization's strengths and
capabilities can be developed
17
 Scenario Planning & Implementation

• The process of identifying one or more likely and major

environmental changes against which to test the
organization’s ability to respond
• Factors to consider for scenario planning:
– Identifying the time frame
– Describing alternative futures that fit into this time frame
– Identifying the risks and benefits associated with each possible
scenario
• Advantages of implementation
– Generate more creative and plausible strategies
– Help with exploration of ideas, building consensus around options
– Create a realistic picture of potential future events that is understood
by more people
18
 Mission

• A shorter term version of the vision, incorporating the values

and expectations of the major stakeholders and contemporary
environmental factors
• The mission should clearly show why the organization exists,
its main activities and its future position within the industry
• The mission should also reflect the key values and ethical
positions of the organization

• A mission statement answers the question:

Where are we now?

19
 Characteristics of a Mission Statement

A mission statement should:

• Define what the organization is

• Define what the organization aspires to be
• Limited to exclude some ventures
• Broad enough to allow for creative growth
• Distinguish the firm from all others
• Serve as framework to evaluate current activities
• Stated clearly so that it is understood by all
 Examples of Mission Statements

To inspire and nurture the human spirit — one person, one cup and one neighborhood at a time.

To create a better everyday life for many people. Our business idea supports this vision by
offering a wide range of well-designed, functional home furnishing products at prices so low
that as many people as possible will be able to afford them.

Devon Energy is a result oriented oil and gas company that builds value for its shareholder
through its employees by creating an atmosphere of optimism, teamwork, creativity,
resourcefulness and by dealing with everyone in an open and ethical manner.

Our mission is to enable economic growth through infrastructure and energy development,
and to provide solutions that support communities and protect the planet.
 Vision

• Vision is the desired long term, future state of the

organization, often used to inspire and motivate employees
with hopes of a lofty and successful future.
• A philosophical goal of what an organization would like to
achieve or accomplish in the mid-term or long-term future.
• It is intended to serve as a clear guide for choosing current
and future courses of action

• A vision statement answers the question:

Where to we want to go?

22
Examples of Vision Statements
To fulfill dreams through the
experiences of motorcycling

Our vision is to be earth’s most customer-centric company;

to build a place where people can come to find and discover
anything they might want to buy online.

Empower people through great software

anytime, anyplace, and on any device.

To bring inspiration and innovation to every athlete* in the

world. *If you have a body, you are an athlete.

To accelerate the world’s transition to sustainable energy.

 Values

• Values are the operating philosophies or principles that guide

an organization's internal conduct as well as its relationship
with its customers, partners, and shareholders.

• Value statement is a brief description of the stakeholders and

the behaviors that the organization considers to be most
important. Organizations are now including corporate social
responsibility (CSR) in their value statements.

24
Examples of Value Statements

Aptose Bioscience
Examples of Value Statements

Prudential Insurance
 Key Organization Stakeholders

Employees Customers Suppliers

Local
Creditors Unions
Community
Gov’t
Owners
Agencies

©Allan Gardner, Sept 2019 All Right

27
Reserved
 Expectations of Key Stakeholders
Stakeholder Typical Expectations of Organizations

Owners • Return on investment

• Growth in earnings
Staff members • Pay and fringe benefits
• Satisfaction with working conditions
Customers • Satisfaction with price, quality & service
Suppliers • Satisfaction with payments
• Future sales potential
Creditors • Ability to pay debts
Unions • Willingness to bargain fairly
Local community officials • Involvement of organization’s members in local
affairs
• Lack of damage to the community’s environment
Government agencies • Compliance with laws
• Avoidance of penalties and reprimands
28
 Strategic Goals and Objectives

• What an organization and its people must do to

Strategic Goals fulfill the mission

• Specific results that an organization seeks to

Long-Term Objectives achieve within 3 – 5 years

Short-Term Objectives • Milestones that must be met within 6 - 12 months

to achieve long-term strategic objectives
(Annual)

• The detailed steps at the functional level that are

Action Plans required to meet short-term strategic objectives

• The financial, physical, human and technological

Resource Allocation resources needed to achieve stated objectives

©Allan Gardner, Dec 2019 All Right Reserved 29

Cascading Goals from Strategy

Vision
Mission, Values

Strategies & Long Term Strategic

Objectives
Annual Goals

Departmental Goals

Individual Goals & Actions

30
 Strategic Goals and Value Creation

• Value creation
– A way of defining the outputs of the organization which is broader
than profitability and considers all forms of contribution to the
environment in which it operates
– Value creation has different meanings for different stakeholders
• Examples:
– Shareholders – share price and dividends
– Customers – price, quality, customer service, innovation
– Community – employment opportunities, charity, taxes, goodwill
– Public sector – transparency, efficient use of funds, services

31
 SMART Goals and Objectives

• The establishment of all objectives should be created using

the S.M.A.R.T. philosophy. What do we mean by a S.M.A.R.T.
objective? S.M.A.R.T. is an acronym that is used to guide the
development of measurable goals. Each objective should be:

Specific
Measurable
Achievable
Relevant
Time-Bound

32
 Smart Goals

• Specific
Specific answers the questions "what is to be done?" "how will you know it is
done?" and describes the results (end product) of the work to be done.
• Measurable w/Measurement
Measurable w/Measurement answers the question "how will you know it
meets expectations?" and defines the objective using assessable terms
(quantity, quality, frequency, costs, deadlines, etc.).
• Achievable
Achievable answers the questions "can the person do it?" "Can the
measurable objective be achieved by the person?"
• Relevant
Relevant answers the questions, "should it be done?", "why?" and "what will
be the impact?"
• Time-oriented
Time-oriented answers the question, "when will it be done?" It refers to the
fact that an objective has end points and check points built into it.

33
 Benefits of Strategic Planning

Financial Non-Financial
Benefits Benefits

1. Research indicates that organizations using 1. Besides helping firms avoid financial demise,
strategic-management concepts are more strategic management offers other tangible
profitable and successful than those that do benefits, such as an enhanced awareness of
not. external threats, an improved understanding of
2. Firms with planning systems more closely competitors’ strengths, increased employee
resembling strategic-management theory productivity, reduced resistance to change, and
generally exhibit superior long-term financial a clearer understanding of performance-reward
performance relative to their industry. relationships.
2. In addition to empowering managers and
employees, strategic management often brings
order and discipline to an otherwise struggling
firm.
34
 Strategic Decision-Making
• Strategic decisions consider the entire organization and
represent a complex aspect of business planning. Strategy
entails making major changes for the organization and
recognizing that the business environment is not static and
will continue to evolve
• The goal of making strategic decisions is to implement policy
that aims to move the organization toward its long-term goals.
Strategy takes into account an organization's resources,
threats to it and available opportunities.
• Strategic decisions always represent a risk because these
decisions deal with the future. While a company can make
strategic decisions based on relevant information, the
organization can never predict the future with certainty.
Because of this, a business must take precautions when
implementing strategic decisions. 35
 Strategic, Administrative & Operational
Decision-Making
Strategic Decisions Administrative Decisions Operational Decisions
Strategic decisions are Administrative decisions Operational decisions are
long-term decisions are taken daily. not frequently taken.
These are considered These are short-term based These are medium-period
where the future planning decisions. based decisions.
is concerned.
Strategic decisions are These are taken according These are taken in
taken in accordance with to strategic and operational accordance with strategic
organizational mission and decisions. and administrative
vision. decisions
These are related to overall These are related to These are related to
counter planning of the working of employees in an production.
organization. organization.
These deal with These are in welfare of These are related to
organizational growth. employees working in an production and factory
organization. growth.
36
 Three Characteristics of Strategic Decisions

• Rare
– Strategic decisions are unusual and typically have no precedent to
follow.
• Consequential
– Strategic decisions commit substantial resources and demand a great
deal of commitment from people at all levels.
• Directive
– Strategic decisions set precedents for lesser decisions and future
actions throughout an organization

37
 Strategic Decision-Making Process

1. Evaluate current performance results

2. Review corporate governance
3. Scan and assess the external environment
4. Scan and assess the internal corporate environment
5. Analyze strategic (SWOT) factors
6. Generate, evaluate and select the best alternative strategy
7. Implement selected strategies
8. Evaluate implemented strategies

38