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The Strategic Planning Process

The Strategic Planning Process

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Published by Fazal Mahmood

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Published by: Fazal Mahmood on Mar 22, 2010
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The Strategic Planning Process

In today's highly competitive business environment, budget-oriented planning OR forecast-based planning methods are insufficient for a large corporation to survive and prosper. The firm must engage in strategic planning that clearly defines
The Strategic Planning Process
Mission & Objectives

Environmental Scanning

Strategy Formulation

Strategy Implementation

Evaluation & Control

***********Mission and Objectives: company's business vision, The unchanging values & purpose of the firm & forward-looking visionary goals that guide the pursuit of future opportunities. leaders can define measurable financial and strategic objectives. Financial objectives involve measures such as sales targets and earnings growth. Strategic objectives are related to the firm's business position, and may include measures such as market share and reputation.

**************Environmental Scan following components: *Internal analysis of the firm (SWOT) *Analysis of the firm's industry (task environment)(Porter s five factors) *External macro environment (PEST analysis) PEST: Political Economic Social - Technological

****Strategy Formulation The firm should match its strengths to the opportunities that it has identified, while addressing its weaknesses and external threats. To attain superior profitability, the firm seeks to develop a competitive advantage over its rivals. A competitive advantage can be based on cost or differentiation.



The selected strategy is implemented by means of Programs, budgets, and procedures. Implementation involves organization of the firm's resources and motivation of the staff to achieve objectives. Explain the reasoning behind implemented strategy to the employees, Otherwise, the implementation might not succeed if the strategy is misunderstood OR lower-level managers may resist its implementation because they don t understand why the particular strategy was selected.

***Evaluation & Control It should be monitored and adjustments made as needed. Consists of following steps: 1. 2. 3. 4. 5. Define parameters to be measured Define target values for those parameters Perform measurements Compare measured results to the pre-defined standard Make necessary changes

y y y y y y y Company Overview Environmental Analysis Financial Analysis Strategic Issue Recommendations Implementation Q&A

Company Overview y y y y y Created in 1930 as result of a merger Key player in the food and household products industry Maintains dual headquarter/dual chairperson approach Launched Path to Growth strategy (2000) to revive the company Historically grew through acquisitions

Path to Strategy Growth ‡ ‡ ‡ ‡ ‡ Years of slow performance Lack of sound corporate strategy Numerous low-volume brands Small global presence compared to competition Mediocre performance in emerging markets

Elements of Path to Growth ‡ ‡ ‡ ‡ ‡ 5 year growth plan Reduce portfolio to 400 core brands Focus R & D and advertising on leading brands Concentrate on product innovation to fuel internal growth Grow through acquisitions

Objectives of Path to Growth Expectations ‡ ‡ ‡ Achieve double-digit EPS growth Secure a better competitive position in global food and household Build brand value to gain pricing power

Strategic Targets ‡ ‡ ‡ Top-line sales growth of 5-6% annually Increase operating profit margins 11% to over 16% Plan to be accomplished by year end 2004

Is it working? Yes ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ Successfully trimmed unsuccessful brands Leading brands increased sales from 75% to 93% 12 brands with sales of 1B+ Consistent growth in Home & Personal Care Improved overall quality and growth profile of Food portfolio Global procurement programs have delivered 2.4B, excess of 1.6B target Improved capital efficiency Successful integration of Best foods acquisition Operating assets have improved by 9%, exceeding 6% target

No . Unilever was getting there, but getting there too late ‡ ‡ Reported a net loss of $318M In 2004, underlying sales grew by only .4%, leading brands by .9%

‡ ‡ ‡ ‡ ‡ ‡

Issued 1st ever profit warning ahead of third quarter results, 3% decline Lagging behind competitors in terms of marketing and innovation Failure to increase advertising and marketing efforts Still lack focus and effective strategy execution The company remained too local and fragmented Unilever plans to discontinue the Path to Growth Strategy

Strategic Issue What adjustments, both internally and externally, should Unilever make to rebuild a strong and focused competitive strategy? Recommendations 1. Reorganize and streamline Unilever s organizational structure.

2. Implement Unilever Believer product and brand extensions.

An initiative to create an overall umbrella brand across all Unilever s brands that will eventually consolidate various businesses under one name

‡ ‡

Provides a greater clarity of leadership, responsibility, and accountability Allows Unilever to focus on the needs of their customers and consumers thus reigniting growth and increasing sales potential Provides the ability to leverage scale of operations Create a strategic platform for brand management

‡ ‡

Unilever Believer y Program that focuses on brand initiatives to the consumer

Believe in Unilever y Strategy: Use advertising that connects with consumer needs

Strategy Justification y y y y y Consumers demand high quality products that both are convenient and delicious Consumers look for new ways to use products More females are working full time jobs Large population of single-parent households Increase consumer focus on health and nutrition

Lipton Extension Focus on Energy Drinks     Energy drinks jumped 56% in sales last year Market has exceed $100 million Main Competitor: Red Bull Positioning Statement: A Healthier Alternative to

Energy Drinks

Marketing & Advertising y y y y Featured advertisements on how consumers use Ragu EXAMPLE of new product usage A mom showing how she uses Ragu as a base for her chili Call to Action: How Do U Ragu contest & website with new uses

y The created new uses will get our consumer involved in being a Unilever Believer.

Product Line Extension y Focus on Consumers on the Go Ragu Lunch Pack -Ragu sauce -Cooked spaghetti -Garlic Bread

y y

Delivers innovative products that capitalizes on changing consumer preferences Allows Unilever to focus on the needs of their customers and consumers thus reigniting growth and increasing sales potential

Provides a strong competitive platform against major competitors and private label bran

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