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Lecture 5

This document outlines key concepts in strategic planning and management. It discusses the three levels of planning - corporate, business, and functional. At the corporate level, the four grand strategies are described: growth, stability, turnaround/retrenchment, and combinations. Business-level strategies include prospecting, defending, and analyzing. Functional strategies involve marketing, operations, human resources, finance, and R&D. Industry analysis and competitive advantage are also addressed.

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52 views21 pages

Lecture 5

This document outlines key concepts in strategic planning and management. It discusses the three levels of planning - corporate, business, and functional. At the corporate level, the four grand strategies are described: growth, stability, turnaround/retrenchment, and combinations. Business-level strategies include prospecting, defending, and analyzing. Functional strategies involve marketing, operations, human resources, finance, and R&D. Industry analysis and competitive advantage are also addressed.

Uploaded by

LKjfuiewfb Efhkbnvsb Dhudiouhw
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 PPT, PDF, TXT or read online on Scribd
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Planning

Process
Lecture 5
1

Learning
Learning Outcomes
Outcomes
After studying this chapter, you should be able to:
1. Definition of Planning.
2. State the differences among the three strategic levels:
corporate, business, and functional.
3. Explain the reason for conducting a company situation
analysis.
4. Describe the four grand strategies: growth, stability,
turnaround and retrenchment, and a combination of
these.
5. Describe the three corporate growth strategies:
concentration, integration, and diversification.
2

Learning
Learning Outcomes
Outcomes (contd)
(contd)
6.

Describe the three business-level adaptive strategies: prospecting, defending, and analyzing.

Planning Dimensions
Planning
Determining what you want to accomplish and
developing approaches to achieving your
objectives.

Planning Dimensions:

Exhibit 51

Strategic and Operational Planning


Strategic Planning
The process of developing a mission and long-range
objectives and determining in advance how they will be
accomplished.

Operational Planning
The process of setting short-range objectives and
determining in advance how they will be accomplished.

Strategy
A plan for pursuing the mission and achieving objectives.

The Strategic Planning Process

Exhibit 52

Strategic Planning
Corporate-Level Strategy
The plan for managing multiple lines of
businesses

Business-Level Strategy
The plan for managing one line of business

Functional-Level Strategy
The plan for managing one area of the business

Strategic and Operational Levels

Exhibit 53

Industry and Competitive Situation


Analysis

Situation Analysis

Focuses on those features in a companys environment


that most directly affect its options and opportunities.

Five Competitive Forces (Porter)

Rivalry among competing sellers in the industry


Threat of substitute products and services
Potential new entrants
Power of suppliers
Power of buyers

Competitive Advantage
Core Competency
A functional capability (strength) that the firm does well
and one that creates a competitive advantage for the firm.

Benchmarking
The process of comparing an organizations products or
services and processes with those of other companies.

Scanning the Environment


Searching the external environment for opportunities and
threats.

Setting Objectives
Objectives
State what is to be accomplished in singular,
specific, and measurable terms with a target date.

Goals
Are general targets to be accomplished that are
translated into actionable objectives.

Management by Objectives (MBO)


Management by Objectives
Step 1. Set individual objectives and plans.
Step 2. Give feedback and evaluate performance.
Step 3. Reward according to performance.

Sources of MBO Failures


Lack of top management commitment and followthrough on MBO.
Employees negative beliefs about managements
sincerity in its efforts to include them in the decisionmaking process.
1

Corporate-Level Strategy
Grand Strategies

Growth Strategies

Growth

Concentration

Stability

Backward and forward


integration

Turnaround and
retrenchment
Combination

Related and unrelated


diversification

Portfolio Analysis: BCG Matrix

Exhibit 510

Business-Level Strategies
Adaptive Strategies
Prospecting

Aggressively offering new products and/or entering


new markets.

Defending

Staying with the present product line and markets,


and maintaining or increasing customers.

Analyzing

A midrange approach between prospecting and


defending, moving cautiously into new markets.

Competitive Strategies

Differentiation
Competing on the basis of features that distinguish
one firms products or services from those of
another.
Cost Leadership
The firm with the lowest total overall costs has a
competitive advantage in price-sensitive markets.
Focus
Concentrating competitive efforts on a particular
market segment, product line, or buyer group.

Functional-Level (Operational)
Strategies
Marketing

Operations

Responsible for determining which products to provide, how


they will be packaged, how they will be advertised, where they
will be sold and how they will get there, and how much they
will be sold for.
Responsible for systems processes that convert inputs into
outputs.

Human Resources

Responsible for working with all the other functional


departments in the areas of recruiting, selecting, training,
evaluating, and compensating employees.

Functional-Level (Operational) Strategies (contd)


Finance
Responsible for financing the business activities by
raising money through the sale of stock or bonds or
through loans, deciding on the debt-to-equity ratio,
paying off the debt and dividends to shareholders,
keeping records of transactions, developing budgets,
and reporting financial results.
Other Functional-Level Strategies
Research and development (R&D) is important to
remaining competitive.

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