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CONFIDENTIAL

Strategic Plan Template

STRATEGY PLANNING INSTRUCTIONS

• The objective of these templates is to provide completeness and
consistency of Business Unit (“BU”) strategic plan submissions. These templates are not intended to replace or constrain BU strategic thinking and should be adapted to reflect a particular BU’s sectoral context as required

• Each section begins with a summary that is based on a synthesis
of questions and analyses that follow. The suggested approach would be to first complete the relevant back-up analyses and then work towards the overall synthesis y

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TABLE OF CONTENTS

I. Executive summary II. Environmental and internal assessment A. Industry dynamics and its implications B. Competitive assessment C. C Internal assessment III. Strategic definition and implications A. Strategy articulation B. B Strategic initiatives C. Financial projection D. Risks/contingencies and strategic alternatives IV. Exhibits IV E hibits

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BU STRATEGIC PLAN DEVELOPMENT
Environmental and internal assessment Industry dynamics and implications p Strategic definition and implications g p

• What are the major
changes in industry dynamics and resulting opportunities and risks? t iti d i k ? Strategy articulation

• What strategy will your BU
pursue over the next 3 years?

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• What are your competitive
Competitive assessment t th d strengths and weaknesses? Strategic initiatives

• What will be the impact of
j t t i i iti ti ? major strategic initiatives?

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• How does your current
Internal assessment business emphasis fit with industry opportunity and competitive landscape? Financial projections

• What are the expected
financial returns of your strategy?

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Risk/contingeng cies & strategic alternatives

• What strategic alternatives
have you considered? h id d?

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I. EXECUTIVE SUMMARY
Instructions: The Executive S Th E ti Summary provides a synthesis of the Environmental and Internal Assessments and the resultant BU Strategic Plans

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II. ENVIRONMENTAL AND INTERNAL ASSESSMENT

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IIA. INDUSTRY DYNAMICS AND IMPLICATIONS – SUMMARY
? A. What are the major changes in industry dynamics and the resulting opportunities and risks?

Instructions: The answer to this overarching question requires a recapitulation of the section’s main findings
A.1 What industry are you competing in? What are the various segments in the industry? A.2 How is industry structure changing (demand, supply, and industry chain economics)? What are the resulting opportunities and risks? A.3 What is the expected competitor conduct? What are the resulting opportunities and risks? A.4 future A 4 What are the present and f t re external factors that could present new opportunities and risks? 6

Instructions: These subsections contain a 1-2 sentence summary of the relevant findings

IIA. INDUSTRY DYNAMICS AND IMPLICATIONS – BACK-UP 1
A 1What industry are you A.1What competing in? What are the various segments in the industry? Industry definition:
• Industry definition • Industry segmentation
– Definition – Sizing

Instructions: Exhibit 1 could provide a useful framework for answering this question

Industry segmentation:

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IIA. INDUSTRY DYNAMICS AND IMPLICATIONS – BACK-UP 2
A 2H A.2How i industry is i d t structure changing with respect to demand, supply, and industry chain economics? What are the resulting opportunities and risks?
• Economics of demand
– By segment – Substitutes, ability to differentiate – Volatility, cyclicality • Economics of supply – Producer concentration and diversity – Import competition – Capacity utilization – Entry/exit barriers – Cost structure (fixed and variable) • Industry chain economics – Customer and supplier bargaining power

Instructions: Exhibit 2,3 or 4 could provide a useful framework for answering this question

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IIA. INDUSTRY DYNAMICS AND IMPLICATIONS – BACK-UP 3
A.3 A 3 What is the expected competitor conduct? What are the resulting opportunities and risks?
• Major industry competitor moves
– – – – – – Marketing initiatives Industry capacity changes M&As, divestitures Vertical integration/disaggregation Alliances and partnerships Cost control and efficiency improvements

Instructions: Exhibit 2,3 or 4 could provide a useful framework for answering this question

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IIA. INDUSTRY DYNAMICS AND IMPLICATIONS – BACK-UP 4
A.4 A 4 What are the present and future external factors that could present new opportunities and risks?
• Impact and likelihood of major industry discontinuities
– Changes in regulation/government policy – Technological breakthroughs

Instructions: Exhibit 2,3 or 4 could provide a useful framework for answering this question

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IIB. COMPETITIVE ASSESSMENT – SUMMARY
B. What are your competitive strengths and weaknesses? Instructions: The answer to this overarching question requires a recapitulation i it l ti of the section’s main findings

B.1 What are the capabilities required to succeed in this industry?

B.2 How do you compare against these necessary capabilities?

Instructions: These subsections contain a 1-2 sentence summary of the relevant findings

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IIB. COMPETITIVE ASSESSMENT – BACK-UP 1
• Privileged assets that create competitive advantage e.g. physical assets location/”space”, advantage, e g assets, location/ space

B.1 What are the capabilities required to succeed in this industry?

distribution/sales network, intangible assets (intellectual capital, network, brands, talents)

• Distinctive skills/competencies that create competitive advantage, e.g.innovation, talent
development

Instructions: I t ti Exhibit 5 could provide a useful framework for answering this question

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IIB. COMPETITIVE ASSESSMENT – BACK-UP 2
B.2 How do you compare against these necessary capabilities?
• Strengths and weaknesses of your competitive position vs necessary capabilities vs. • Benchmark performance against the industry’s relevant key performance indicators (KPIs)*,
with margin and market share as the required minimum

Strengths and weaknesses of your competitive position vs. necessary capabilities:

I t ti Instructions: Exhibits 6 and 7 could provide a useful framework for answering this question

Benchmark performance against the relevant industry’s KPIs:

Instructions: Exhibit 8 could provide a useful framework for answering this question

* KPIs are a handful of levers that drive the value of the industry/business 13

IIC. INTERNAL ASSESSMENT – SUMMARY
C How does your current business emphasis fit with the industry opportunities and C. the competitive landscape? Instructions: The answer to this overarching question requires a recapitulation of the section’s main findings

C.1 Which segments of the business are providing the highest returns? C.2 What have been the performance trends along major BU KPIs? C.3 Which intangible assets* could be near-term potential sources of value?
* Please refer to Exhibit 12 for further description 14

Instructions: These subsections contain a 1 2 sentence 1-2 summary of the relevant findings

IIC. INTERNAL ASSESSMENT – BACK-UP 1
• Relevant BU segments (based on customer product geography channel) customer, product, geography, • Operating contribution estimates for each segment

C.1 Which segments of the business are providing the highest returns?*

Instructions: Exhibit 9 could provide a useful framework for answering this question

* Based on latest available, 1-2 year historical financial statements 15

IIC. INTERNAL ASSESSMENT – BACK-UP 2
• KPI performance trends over the last 3-5 years e g return on capital employed (ROCE) 3 5 years, e.g. (ROCE),
operating income, margins, capital employed

C.2 What have been performance trends along major BU KPIs?

• Assessment of underlying trend drivers • Expected evolution ROCE = Operating income x (1 tax rate) (1All interest bearing debt (short and long) + minority interest + stockholders’ equity

Instructions: Exhibits 10 and 11 could provide a useful framework for answering this question

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IIC. INTERNAL ASSESSMENT – BACK-UP 3
C.3 Which intangible assets could be nearterm potential sources of value?
• Identification of in-house intellectual property, talent, networks, brand/image property talent networks in house • Conversion into sources of value

Instructions: Exhibit 12 could provide a useful framework for answering this question

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III. STRATEGIC DEFINITION AND IMPLICATIONS

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IIIA. STRATEGY ARTICULATION – SUMMARY
A. What strategy will your BU pursue over the next 3 years?

Instructions: The answer to this overarching question requires a recapitulation of the section’s main findings

A.1 Where to compete?

A.2 What is your customer value proposition for the different segments you are going to serve? A.3 What is your business model? A.4 How does your chosen gy p y strategy exploit industry opportunities and address industry/competitive threats?

Instructions: These subsections contain a 1-2 sentence f th l t summary of the relevant findings

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IIIA. STRATEGY ARTICULATION – BACK-UP 1
• Where are you going to compete along these dimensions and why: – Target market – Distribution channels – Product (breadth and depth) – Geographic scope

A.1 Where to compete?

Instructions: Exhibit E hibit 13 could provide ld id a useful framework for answering this question

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IIIA. STRATEGY ARTICULATION – BACK-UP 2
A.2 A 2 What is your customer value proposition for the different segments you are going to serve? Who is your target customer?
• • • • Target customer definition Benefits that you will offer the customers Product pricing Position against competition vis-à-vis the benefits provided and the price charged

What are the explicit benefits you provide to your customers?

What perceived value do you provide to the customer better than competition?

How much value do your customers attach to the benefits you provide?

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IIIA. STRATEGY ARTICULATION – BACK-UP 3
• Delivery and communication of customer value proposition (value delivery system) • Competitive advantage in delivering these benefits to the customer

A.3 What is your business model?

How will the value proposition be provided and communicated?

Instructions: Exhibit 15 could provide a useful framework for answering this question

Which of your BU’s existing strengths can be leveraged? What skills/capabilities do you need to build?

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IIIA. STRATEGY ARTICULATION – BACK-UP 4
A 4 How does your chosen A.4 strategy exploit the industry opportunities and address the industry/competitive threats?
• Industry attractiveness and implication review • Alignment of strategy and environmental realities

Instructions: A review of the section on Industry Dynamics and Implications, together with the frameworks used (Exhibit 2,3 or 4) is useful for answering this question

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IIIB. STRATEGIC INITIATIVES – SUMMARY
B. What will be the impact of major strategic initiatives? Instructions: The answer to this overarching question requires a recapitulation of the section’s main findings
B1. What major strategic initiatives are required to successfully implement your selected business model? B2. What are the sources of value created from each strategic initiative?

B3. How much value will be created from each strategic initiative?

Instructions: These subsections contain a 1-2 sentence summary of the relevant findings

B4. What resources will each strategic initiative require?

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IIIB. STRATEGIC INITIATIVES – BACK-UP 1
B.1 B 1 What major strategic initiatives are required to successfully implement your selected business model?
• Possible strategic initiatives list

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