Strategic Planning: Goal and Strategy
Formulation1; Implementation and Best
Practices
Formulation of Goals: Goals are what a business unit
wants to achieve.
First perform a SWOT analysis
Next, formulate goals with specificity as to time (by when it will
be performed) and magnitude or quantity (by how much it will
be changed). An organization will normally have a mixture of
goals.
Order your goals from broad to specific categories: for example
from increasing net earnings by 20%-dansk- to increase
revenues by 15% and reduce expenses by 12 % in certain areas.
Confirm that your goals relate realistically to the results of the
SWOT analysis performed.
Examine your goals to make sure they are not at cross purposes
with one another. For example, short term versus long term
goals; sales goals versus profit goals; high growth versus low
risk; development of new products versus deepening existing
markets.
This process is often called Management by Objective or MBO
Strategy Formulation: Strategy is How a business unit
will achieve what it wants. Michael Porter, HBS professor
and worldwide competitive strategy expert breaks types of
strategy into three categories:
An Overall Cost Leadership Strategy
A Differentiation Strategy
A Focus Strategy
Overall Cost Leadership: Lowest overall production and
delivery in order to win the largest market share. Problem
is that there will always be lower priced labor and
production markets.
Differentiation: Marked by superior performance in an
area of customer satisfaction versus pricing value. This can
1
Philip Kotler Marketing Management 1997
be in service, style, quality, technology or the like. Quality
and production skill go hand in hand. Italian knitted goods,
for example.
Focus: In this strategy, a company will segment its market
and seek to be the leader in either cost of differentiation.
Pitfalls: To not pursue a clear strategy is to be subject to
falling in the middle, the bathtub syndrome, where the
company is neither a volume leader nor a price leader.
Alliances: More and more companies are forming
strategic marketing alliances with the realization that they
can not compete effectively in a multitude of markets. These
alliances can be in the following areas:
Product and or service alliances- licensing; joint
marketing such as Amex and Mbna Bank; Pixar and
Disney until recently
Promotional alliances- Burger king and Disney Lion
King
Logistics-Abbott Labs warehousing and distribution
and 3m medical supplies
Pricing- Amex hotel and rental car discounts
Program Formulation: Once strategies are set, programs
have to be created to support the eventual implementation
of the strategy. The cost of this support and implementation
must be budgeted.
Implementation and Feedback: Successful
implementation of strategic planning is a function of clarity
of purpose and alignment in a company as much as anything
else. This is convincingly set forth in Built to Last. Feedback
or the monitoring of results and changes in the external and
internal environment are as necessary a part of a successful
business as the creation of the strategy itself. As is often
quoted, he only thing certain in life is change.
Marketing Process: Even though we have covered the
marketing process first, it is usually the natural follow up to
a formulation of goals and strategies and is used to help
implement them successfully.
