Strategic PlanningStrategy Development and Goal

SettingChapter 8 pages 204-216

Strategic PlanningLearning Objectives:

Comprehend the differences among commonly-used business and corporate strategies

Understand the value of goals as the “success measures” of the organization

Steps in the Strategic Planning Process

1.Review (set, clarify) organization’s mission & values

2.Evaluate external & internal environment3. Select/confirm strategies for

competitive advantage4.Devise goals to achieve desired results

(success measures)

Strategy DefinitionThe major course of action an

organization takes to achieve its mission and goals

An integrated set of choices which create sustainable competitive advantage

Developing a StrategyAnswer the questions:

Who will be served? What customer needs will be satisfied? How will customer needs be satisfied?

Developing a StrategyStrategies are usually based on:

Unique strengths or competencies you already have or can develop

Identified customer needs or market segments not being well-served by current players

“Attractive” industry segments

Major Business Strategies

Cost LeadershipDifferentiation

Cost LeadersValue similar to competitionBut at a lower costGain competitive advantage by

being ever vigilant about the cost of each activity the firm performs

DifferentiatorsOffer greater perceived value to

customersKeep costs comparable to

competitorsRequires high understanding of

customer needs, and meeting them in a unique way

Creating Value through Competitive Advantage

020406080

100120140

Added MarginStd. MarginCost

Business Strategy RefinementsApply sub-strategy based on which

market segments you choose to serve

Business Strategy RefinementsDifferent ways to segment a market:

price need customer type geography

Business Strategy RefinementsCost Leader Differentiator

Overall: All segments All segments

Focus/Niche: Few selectsegments

Few selectsegments

Product/Life Cycle

Several relatedsegments

Several relatedsegments

Common Corporate Strategies

StabilityGrowthRetrenchment

Common Corporate StrategiesGrowth strategy

Horizontal integration Vertical integration

Forward integrationBackward integration

Concentric diversification Conglomerate diversification

Steps in the Strategic Planning Process

1.Review (set, clarify) organization’s mission & values

2.Evaluate external & internal environment3.Select/confirm strategies for competitive

advantage4. Devise goals to achieve desired

results (success measures)

Organizational GoalsWhat do you want to achieve?Define success measures - what

matters to you?

Organizational GoalsCommon Success Measures

Profitability Stock price Market share Customer satisfaction Employee well-being Environmental sustainability Community building

What is a “good” goal?Stated in terms of outcomes (vs.

activity)MeasurableClear time frameChallenging but attainableCommunicatedDocumented

Strategic Planning Process Summary

1.Set direction mission, vision, values

2.Conduct a situation analysis analyze internal and external environments

3.Develop strategies competitive and growth strategies

4.Devise goals to achieve desired results your success measures

The 8-Step Planning Process1.Review (set, clarify) organization’s mission & values2.Evaluate external & internal environment3.Select/confirm strategies for competitive advantage4.Devise goals to achieve desired results 5. Develop a operational plans 6. Allocate resources to accomplish the plans7. Document and communicate 8. Review results, adjust, re-plan

FridayOperational PlanningRemaining steps in the planning

processLab reports dueMight want to read ahead to Chapter

9: Planning Tools & Techniques