3-planning & strategic mananement
TRANSCRIPT
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PLANNING & STRATEGIC
MANAGEMENT LECTURE 3
LECTURER: SARA ASLAM
FALL 2011
KINNAIRD COLLEGE FOR WOMEN
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LECTURE OUTLINE
Planning and Organizational Goals
Purposes of Goals
Kinds of Goals
The Nature of Strategic Management
The Components of Strategy
Types of Strategic Alternatives
Using SWOT Analysis to Formulate Strategy
Evaluating an Organization’s Strengths
Evaluating an Organization’s Weaknesses
Evaluating an Organization’s Opportunities and Threats
Human Resource Management
Instructor: Sara Aslam
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LECTURE OUTLINE (CONT’D)
Formulating Business-Level Strategies
Porter’s Generic Strategies
Strategies Based on the Product Life Cycle
Formulating Corporate-Level Strategies
Single-Product Strategy
Related Diversification
Unrelated Diversification
Managing Diversification
Tactical Planning
Developing Tactical Plans
Executing Tactical Plans
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LECTURE OUTLINE (CONT’D)
Operational Planning
Single-Use Plans
Standing Plans
Contingency Plans
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LEARNING OBJECTIVES
Summarise the planning process and describe
organisational goals.
Discuss the components of strategy and the types
of strategic alternatives.
Describe how to use SWOT analysis in formulating
strategy.
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PLANNING AND ORGANISATIONAL GOALS
The planning process:
“the planning process takes place within an
environmental context. Managers must develop a
complete and thorough understanding of this
context to determine the organisation’s mission and
to develop its strategic, tactical and operational
plans and goals”
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THE PLANNING PROCESS
Strategic goals Strategic plans
Tactical goals
Operational goals Operational plans
The organization’s mission
The Environmental Context
• Purpose • Premises • Values • Directions
Tactical plans
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ORGANISATIONAL GOALS
Goals are critical to organisational effectiveness and
they serve a number of purposes. A number of
different managers must be involved in setting goals.
Purposes of Goals:
Goals serve four important purposes:
The provide guidance and a unified direction for
people in the organisation.
Goal setting practices strongly affect other aspects of
planning. Effective goal setting promotes good
planning and good planning facilitates future goal
setting.
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Goals can serve as a source of motivation for
employees of the organisation.
Provide an effective mechanism for evaluation and
control of the organization
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mission: a statement of an organisation’s
fundamentals purpose.
Kinds of Goals:
Strategic Goals: a goal set by and for top
management of the organisation.
Tactical Goals: a goal set by and for middle
managers of the organisation.
Operational Goals: a goal set by and for lower
managers of the organisation.
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KINDS OF PLANS
Strategic Plans
A general plan outlining resource allocation, priorities,
and action steps to achieve strategic goals. The plans
are set by and for top management.
Tactical Plans
A plan aimed at achieving the
tactical goals set by and for
middle management.
Operational Plans
Plans that have a short-term focus.
These plans are set by and for lower-level managers.
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THE NATURE OF STRATEGIC MANAGEMENT
Strategy
A comprehensive plan for accomplishing an organization’s
goals.
Strategic Management
A way of approaching business opportunities and
challenges–a comprehensive and ongoing management
process aimed at formulating and implementing effective
strategies.
Effective Strategies
Strategies that promote a superior alignment between the
organization and its environment and the achievement of
its goals.
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THE COMPONENTS OF STRATEGY
Distinctive Competence
Something an organization does exceptionally well.
Scope
Range of markets in which an organization will compete.
Resource Deployment
How an organization will
distribute its resources
across the areas in
which it competes.
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TYPES OF STRATEGIC ALTERNATIVES
Business-level Strategy
The set of strategic alternatives that an organization
chooses from as it conducts business in a particular
industry or a particular market.
Corporate-level Strategy
The set of strategic alternatives that an organization
chooses from as it manages its operations
simultaneously across several industries and several
markets.
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TYPES OF STRATEGIC ALTERNATIVES
(CONT’D)
Strategy Formulation
The set of processes involved in creating or determining
the organization’s strategies; it focuses on the content of
strategies.
Strategy Implementation
The methods by which strategies are operationalized or
executed within the organization; it focuses on the
processes through which strategies
are achieved.
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SWOT
ANALYSIS
Strengths
Weaknesses
Opportunities
Threats
Mission
An organization’s fundamental purpose
Best Strategies
SWOT Analysis To formulate strategies that support the mission
Those that support the mission and • exploit opportunities and strengths • neutralize threats • avoid (or correct) weaknesses
Internal Analysis Strengths (distinctive competencies)
Weaknesses Threats
External Analysis Opportunities
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USING SWOT ANALYSIS TO FORMULATE
STRATEGY
Evaluating Organizational Strengths
Organizational strengths
- Skills and abilities enabling an organization to conceive of and
implement strategies.
Distinctive competencies
- Useful for competitive advantage and superior performance.
Sustained competitive advantage
- Occurs when a distinctive competence cannot be easily
duplicated and is what remains after all attempts at strategic
imitations have ceased.
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USING SWOT ANALYSIS TO FORMULATE
STRATEGY (CONT’D)
Evaluating Organizational Weaknesses
Organizational weaknesses are skills and capabilities that do
not enable an organization to choose and implement
strategies that support its mission.
Weaknesses can be overcome by:
investments to obtain the strengths needed.
modification of the organization’s mission
so it can be accomplished with the current
workforce.
Competitive disadvantage is a situation in which an organization fails
to implement strategies being implemented by competitors.
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USING SWOT ANALYSIS TO FORMULATE
STRATEGY (CONT’D)
Evaluating an Organization’s Opportunities and
Threats
Organizational opportunities are areas in the
organization’s environment that may generate high
performance.
Organizational threats are areas
in the organization’s environment that make it difficult
for the organization
to achieve high performance.
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FORMULATING BUSINESS LEVEL STRATEGIES
Porter’s Generic Strategies:
Differentiation strategy
- An organization seeks to distinguish itself from
competitors through the quality of its products or
services.
Overall cost leadership strategy
- An organization attempts to gain competitive advantage
by reducing its costs below the costs of competing
firms.
Focus strategy
- An organization concentrates on a specific regional
market, product line, or group of buyers.
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STRATEGIES BASED ON THE PRODUCT LIFE
CYCLE
A product life cycle is a model that portrays how sales
volumes for products changes over the life of products.
Introduction
Time
Stages
Growth Maturity Decline
High
Low
Sa
les V
olu
me
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FORMULATING CORPORATE LEVEL STRATEGIES
Strategic Business Units
Each business or group of businesses within an
organization engaged in serving the same markets,
customers, or products.
Diversification
The number of businesses an organization is engaged
in and the extent to which these businesses are related
to one another.
Single Product Strategy
A strategy in which an organization manufactures one
product or service and sells it in a single geographic
market.
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FORMULATING CORPORATE LEVEL STRATEGIES
(CONT’D)
Related Diversification
A strategy in which an organization operates in several different
businesses, industries, or markets that are somehow linked.
Bases of Relatedness in Implementing
Related Diversification
Basis of Relatedness Examples
Similar technology Phillips, Boeing, Westinghouse, Compaq
Common distribution and marketing skills RJR Nabisco, Phillip Morris, Procter & Gamble
Common name brand and reputation Disney, Universal
Common customers Merck, IBM, AMF-Head
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MANAGING DIVERSIFICATION
Major Tools for Managing Diversification
Portfolio management techniques
- Methods that diversified organizations use to make decisions about
what businesses to engage in and how to manage these multiple
businesses to maximize corporate performance.
Two important portfolio management techniques
The BCG Matrix
The GE Business Screen
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MANAGING DIVERSIFICATION (CONT’D)
BCG Matrix
A method of evaluating businesses relative to the growth
rate of their market and the organization’s share of the
market.
The matrix classifies the types of businesses that a
diversified organization can engage as:
“Dogs” have small market shares and no growth prospects.
“Cash cows” have large shares of mature markets.
“Question marks” have small market shares in quickly growing
markets.
“Stars” have large shares of rapidly growing markets.
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THE BCG MATRIX
Relative market share
Cash cows Dogs
High
Low
High Low
Question
marks Stars
Ma
rke
t g
row
th r
ate
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TACTICAL PLANNING
Developing and Executing Tactical Plans
Developing tactical plans
• Recognize and understand
overarching strategic plans
and tactical goals
• Specify relevant resource and
time issues
• Recognize and identify human
resource commitments
Executing tactical plans
• Evaluate each course of action
in light of its goal
• Obtain and distribute
information and resources
• Monitor horizontal and vertical
communication and integration
of activities
• Monitor ongoing activities for
goal achievement
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OPERATIONAL PLANNING
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CONTINGENCY PLANNING
Contingency is the determination of alternative courses of
action to be taken if an intended plan is unexpectedly
disrupted or rendered inappropriate. These plans help
managers to cope with uncertainty and change.
Ongoing planning process
Action point 1 Action point 2 Action point 3 Action point 4
Develop plan,
considering
contingency events
Implement plan and
formally identify
contingency events
Specify indicators
for the contingency
events and develop
contingency plans for
each possible event
Successfully complete
plan or contingency
plan
Monitor contingency event indicators and
implement contingency plan if necessary
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THANK YOU!
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