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Strategic Planning: Dr. Mehran Sepehri Dr. Ali Kermanshah Graduate School of Management
Strategic Planning: Dr. Mehran Sepehri Dr. Ali Kermanshah Graduate School of Management
Spring 1385-86
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -7
Thinking Strategically:
The Three Big Strategic Questions
1. Where are we now?
2. Where do we want to go?
Business(es) to be in and market positions to stake out
Buyer needs and groups to serve
Outcomes to achieve
3. How will we get there?
A company’s answer to “how
will we get there?” is its strategy
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -10
Strategic Management
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -11
Strategic Management
achieves a firm’s success
through integration ––
Management Marketing
Finance/Accounting Production/Operations
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -12
What Is Strategy?
Consists of the combination of competitive
moves and business approaches used by
managers to run the company
Management’s “game plan” to
Attract and please customers
Stake out a market position
Compete successfully
Grow the business
Achieve targeted objectives
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -13
The Hows That
Define a Firm's Strategy
How to please customers
How to respond to changing Strategy
market conditions is HOW
to . . .
How to outcompete rivals
How to grow the business
How to manage each functional piece of the
business and develop needed organizational
capabilities
How to achieve strategic and financial objectives
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -14
The What of a Company’s Strategy
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -15
ﺯﻳﺮ ﻓﺮﺍﻳﻨﺪﻫﺎﻱ ﻣﺪﻳﺮﻳﺖ ﺍﺳﺘﺮﺍﺗﮋﻳﻚ
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -16
Strategy Formulation
Long-Term Objectives
Alternative Strategies
Strategy Selection
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -17
Issues in Strategy
Formulation
9New
9Newbusiness
business
opportunities
opportunities
9Businesses
9Businessesto toabandon
abandon
9Allocation
9Allocationof ofresources
resources
9Expansion
9Expansionor or
diversification
diversification
9International
9Internationalmarkets
markets
9Mergers
9Mergersor orjoint
jointventures
ventures
9Avoidance
9Avoidanceof ofhostile
hostile
takeover
takeover
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -18
Strategy Implementation
Annual Objectives
Policies
Employee Motivation
Resource Allocation
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -19
Strategy
Implementation
Action
ActionStage
Stageof
ofStrategic
Strategic
Management
Management––
9Most
9Mostdifficult
difficultstage
stage
9Mobilization
9Mobilizationof ofemployees
employees
&&managers
managers
9Interpersonal
9Interpersonalskills
skills
critical
critical
9Consensus
9Consensuson ongoal
goal
pursuit
pursuit
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -20
Strategy Evaluation
Internal Review
External Review
Performance Metrics
Corrective Actions
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -21
Strategy
Evaluation
Final
FinalStage
Stageof
ofStrategic
Strategic
Management
Management
9Subject
9Subjecttotofuture
future
modification
modification
9Today’s
9Today’ssuccess
successnono
guarantee
guaranteeofoffuture
futuresuccess
success
9New
9New&&different
differentproblems
problems
9Complacency
9Complacencyleadsleadsto
to
demise
demise
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -22
Tasks of Strategic Management
Task 1 Task 2 Task 3 Task 4 Task 5
Develop a Craft a
Implement Evaluate &
Strategic Set Strategy
& Execute Make
Vision Objectives to Achieve
Strategy Corrections
& Mission Objectives
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -23
Developing a Vision and Mission
The First Task of Strategic Management
Begins with thinking strategically about
The firm’s future business makeup
The task is to
Create a roadmap of a company’s future
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -24
Missions vs. Strategic Visions
A mission A strategic vision
statement focuses concerns a firm’s
on current future business
business activities path
Business(es) The kind of company
company is in now it is trying to become
Customer needs Customer needs to
currently being be satisfied in the
served future
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -25
Competitive Advantage
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -26
Achieving Sustained
Competitive Advantage
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -27
Integrating Intuition and
Analysis
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -28
Integrating Intuition and
Analysis
Judgment
Feelings
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -29
Integrating Intuition & Analysis
Intuitive Thinking
Influence all Analyses
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -30
Adapting to Change
Timely changes
Effective Adaptation
E-commerce
Demographics
Technology
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -32
Adapting to Change – Key
Strategic Management
Questions
What kind of business should
we become?
Are we in the right fields
Are there new competitors?
What strategies should we
pursue?
How are our customers
changing?
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -33
Key Terms
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -34
Key Terms
Vision Statement –
What do we want to become?
Mission Statement –
What is our business?
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -35
Key Terms
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -36
Key Terms
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -37
Key Terms
Opportunities & Threats
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -38
Key Terms
Opportunities & Threats
Take
Takeadvantage
advantageof
of
External
ExternalOpportunities
Opportunities
Strategy Formulation
Avoid/minimize
Avoid/minimizeimpact
impactof
of
External
ExternalThreats
Threats
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -39
Key Terms
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -40
Key Terms
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -41
Key Terms
Strengths & Weaknesses
Assessing the Internal Environment
Financial Ratios
Performance Metrics
Internal Factors
Industry Averages
Survey Data
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -42
Key Terms
Long-term Objectives
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -43
Key Terms
Long-term Objectives
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -44
Key Terms
Strategies
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -45
Key Terms
Strategies
Some Examples
• Geographic expansion
• Diversification
• Acquisition
• Market penetration
• Retrenchment
• Liquidation
• Joint venture
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -46
Key Terms
Annual Objectives
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -47
Key Terms
Policies
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -48
Example Strategies in Action in 2005
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -49
Example Strategies in Action in 2005
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -50
Comprehensive strategic management model
External
Audit
Chapter 3
Internal
Audit
Chapter 4
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -51
Strategic Management Model
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -52
Strategic Management Model
1. Identify Existing --
• Vision
• Mission
• Objectives
• Strategies
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -53
Strategic Management Model
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -54
Benefits of Strategic
Management
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -55
Benefits of Strategic
Management
Financial Benefits
• Improvement in sales
• Improvement in profitability
• Productivity improvement
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -56
Benefits of Strategic
Management
Non-Financial Benefits
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -57
Benefits of Strategic
Management (Greenley)
1. Identification of Opportunities
2. Objective view of management problems
3. Improved coordination & control
4. Minimizes adverse conditions & changes
5. Decisions that better support objectives
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -58
Benefits of Strategic
Management (Greenley – cont’d)
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -59
Benefits of Strategic
Management (Greenley – cont’d)
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -60
Why Some Firms Do No
Strategic Planning
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -61
Why Some Firms Do No
Strategic Planning
¾Fear of failure
¾Overconfidence
¾Prior bad experience
¾Self-interest
¾Fear of the unknown
¾Suspicion
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -62
Business Ethics & Strategic
Management
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -63
Business Ethics & Strategic
Management
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -64
Business Ethics & Strategic
Management
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -65
Business Ethics & Strategic
Management
Misleading advertising
Misleading labeling
Harm to the environment
Insider trading
Dumping flawed products on foreign markets
Poor product or service safety
Padding expense accounts
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -66
Natural Environment
Perspective
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -67
Natural Environment
Perspective
Voluntary standards
ISO 14001 standard for Environmental
Management System
Firms minimize harmful effects on
environment
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -68
The Nature of Global
Competition
International/multinational corporations
Parent company
Host country
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -69
The Nature of Global
Competition
Cultural differences
Norms
Values
Work ethic
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -70
Advantages of International
Operations
¾Absorb excess capacity
¾Reduce unit costs
¾Spread risk over wider markets
¾Low-cost production facilities
¾Less intense competition
¾Lower taxes
¾Economies of scale
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -71
Disadvantages of International
Operations
¾Difficult communications
¾Underestimate foreign competition
¾Cultural barriers to effective management
¾Complications arising from currency
differences
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -72