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Strategic Planning Process

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13 views

Strategic Planning Process

Uploaded by

edserrano
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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STRATEGIC PLANNING PROCESS

Strategic Planning involves developing an overall company strategy for long-run survival and growth.

This process involves:

1.) Defining a Mission: statement of an organization’s purpose; should be market oriented.


2.) Setting Company Objectives: supporting goals and objectives to guide the entire
company.
3.) Designing a Business Portfolio
Business portfolio is a collection of businesses and products that make up the company.
4.) Planning Functional Strategies: detailed planning for each department designed to
accomplish strategic objectives.

A Mission Statement should


 Not be myopic in product terms
 Be meaningful and specific
 Be motivating
 Emphasize the company’s strengths
 Contain specific workable guidelines
 Not be stated as making sales or profits

Example: “To organize the world’s information and make it universally accessible and useful.”

Product Orientation vs. Market Orientation


Company Product Market

Missouri-Pacific Railroad We run a railroad We are a people-and-goods


mover
Xerox We make copying equipment We improve office
productivity
Standard Oil We sell gasoline We supply energy

Columbia Pictures We make movies We entertain people

Setting Company Objectives


Well-developed organizational objectives should be
SMART:
 Specific
 Measurable
 Achievable
 Relevant
 Time-bound
Designing Business Portfolio
 The best portfolio is the one that best fits the company’s strengths and weaknesses to the
opportunities in the environment.
 The company must:
 analyze its current business portfolio or Strategic Business Units (SBU’s)
 decide which SBU’s should receive more, less, or no investment
 develop growth strategies for adding new products or businesses to the portfolio

Portfolio Analysis: a tool by which management identifies and evaluates the various businesses making
up the company.

Strategic Business Unit: a unit of the company that has a separate mission and objectives and that can
be planned independently from other company business.

Growth Share Matrix: A portfolio planning method that evaluates a company’s business unit in terms of
their market growth rate and relative market share.

Analyzing Current SBU’s: Boston Consulting Group


Market Growth Rate
Relative Market Share

High
High Low
Stars Question
QuestionMarks
Marks
High growth & share High growth, low share
Profit potential Highinto
Build growth, low
Stars/ shareout
phase
May need heavy Requires cash to hold out
Build into Stars/ phase
Cash
CashCows
Cows
investment to grow Dogs
Requires
Dogs
cash to hold
market share
market share

Low growth & share


Low growth, high share Lowprofit
Low growth & share
potential
Low growth, high share
Established, successful Low profit potential
Low

Established, successful
SBU’s
SBU’s cash
Produces
4 Produces cash
strategies to pursue to each SBU

 Build – increase investment


 Hold – maintain status quo
 Harvest – decrease investment
 Divest – eliminate

Assessing Growth Opportunities:


1. Intensive growth – opportunities for growth within current business.
2. Integrative growth – opportunities to build or acquire business related to current business.
a. Backward integration – acquiring suppliers
b. Forward integration – acquiring wholesalers or retailers
c. Horizontal integration – acquiring competitors
Intensive growth

Ansoff Matrix (Growth Strategies)

Product/ Market Expansion Grid


Existing New
1. Market Products
ExistingProducts 3. Product
Markets PenetrationDevelopment
2. Market
New 4. Diversification
Markets Development
Product/Market Expansion Grid:

 Market Penetration: increase sales to present customers with current products. How? Cut
prices, increase advertising, get products into more stores.
 Market Development: develop new markets with current products. How? Identify new
demographic or geographic markets.
 Product Development: offering modified or new products to current customers. How? New
styles, flavors, colors, or modified products.
 Diversification: new products for new markets. How? Start up or buy new businesses.

Downsizing: Reducing the business portfolio by eliminating products or business units that are not
profitable or that no longer fit the company’s overall strategy.
SWOT Analysis – Managing Marketing Effort

Internal environment – business elements that we can control (capabilities, resources, processes)

 Customer feedback
 Employee information
External environment – elements that we cannot control

 Environment data
 Industry data
 Competitive data
 Customer feedback

INTERNAL ENVIRONMENT EXTERNAL ENVIRONMENT

1. Strategy 1. Market
2. Structure 2. Competition
3. Systems 3. Socio-cultural
4. Shared Values 4. Technology
5. Skills 5. Economic
6. Staff 6. Environment
7. Style 7. Political / Legal

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