You are on page 1of 72

Strategic Planning

Spring 1385-86

Dr. Mehran Sepehri


Dr. Ali Kermanshah
Graduate School of Management

Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385


1
Session 1 – Saturday 14th Bahman 85
• Strategic Planning Fundamentals
• Definitions, Terms, and Terminology
• Overview of Concepts and Importance

Chapter 1 Strategic Management: Concepts & Cases


11th Edition, Fred David, Prentice Hall, 2006

The Nature of Strategic Management

What Is Strategy and


Why Is It Important?
What goes into Strategy?
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -2
Fred R. David, Ph.D. is an
internationally recognized
About the Author: strategic planning scholar,
author, and consultant
He received a BS and MBA degree
„ Fred R.. David, Ph.D. from Wake Forest University and a
Ph.D. in strategic management from
the University of South Carolina. He is
the Tran-South Professor of Strategic
Management at Francis Marion
University in Florence, South Carolina.
His Strategic Management textbook,
is used in more than 400 colleges and
universities to teach strategic
planning. The textbook is very
practitioner and skills-oriented.
This book has been translated into
Farsi, Spanish, German, Japanese
and Chinese and is widely used
worldwide.

Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -3


Themes in 11th ed. of the Text
• Global Considerations –
impact virtually all strategic decisions
• E-commerce –
vital strategic management tool
•Natural environment –
important strategic issue

• Why Strategic Management Is a Process?


• Who Performs the Tasks of Strategy?
• Benefits of “Managing Strategically”?
• Terms to Remember!
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -4
Power of Saying No!
„ Case of Start-up company
„ Excellent at Operations
„ Trying to please everyone
„ Doing a bit of everything
„ Working harder, not smarter

„ Not growing, little profit


„ No focus, no direction
„ Losing to specialty stores
Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -5
Prime Task of
Strategic Management

Peter Drucker: -- Think through the


overall mission of a business. Ask
the key question: “What is our
Business?”

Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -6


‫ﭼﺎﻟﺶ ﻫﺎﻱ ﺳﺎﺯﻣﺎﻧﻲ‬

‫ﺭﻓﺘﺎﺭ ﻭﺍﻛﻨﺸﻲ ﺑﻪ ﺟﺎﻱ ﺭﻓﺘﺎﺭ ﻛﻨﺸﻲ‬ ‫„‬

‫ﻋﺪﻡ ﻭﺟﻮﺩ ﻓﺮﻫﻨﮓ ﺗﻔﻜﺮ ﺩﺭ ﻣﻮﺭﺩ ﺁﻳﻨﺪﻩ‬ ‫„‬

‫ﻋﺪﻡ ﺁﮔﺎﻫﻲ ﻭ ﺍﻃﻤﻴﻨﺎﻥ ﮐﺎﺭﮐﻨﺎﻥ ﺍﺯ ﺁﻳﻨﺪﻩ ﺳﺎﺯﻣﺎﻥ‬ ‫„‬

‫ﻋﺪﻡ ﻫﻤﺴﻮﻳﻲ ﻧﻴﺮﻭﻱ ﻫﺎﻱ ﺩﺍﺧﻠﻲ‬ ‫„‬

‫ﺍﻧﻔﮑﺎﮎ ﺑﻴﻦ ﺩﻏﺪﻏﻪ ﻫﺎﻱ ﺭﻫﺒﺮﺍﻥ ﻭ ﮐﺎﺭﮐﻨﺎﻥ ﺳﺎﺯﻣﺎﻥ‬ ‫„‬

‫ﻧﺎ ﻫﻤﮕﻮﻧﻲ ﺳﺎﺧﺘﺎﺭ ﺳﺎﺯﻣﺎﻧﻲ ﺑﺎ ﺍﻫﺪﺍﻑ ﻭ ﺍﺳﺘﺮﺍﺗﮋﻱ ﻫﺎ‬ ‫„‬

‫ﻋﺪﻡ ﺗﺨﺼﻴﺺ ﻣﺘﻮﺍﺯﻥ ﻣﻨﺎﺑﻊ ﺩﺭ ﺭﺍﺳﺘﺎﻱ ﺩﺳﺘﻴﺎﺑﻲ ﺑﻪ ﺍﻫﺪﺍﻑ‬ ‫„‬

‫ﻋﺪﻡ ﻭﺟﻮﺩ ﻣﺒﻨﺎﻱ ﻣﻨﺎﺳﺐ ﺑﺮﺍﻱ ﺍﺭﺯﻳﺎﺑﻲ ﮐﺎﺭﮐﻨﺎﻥ‬ ‫„‬

‫‪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 -8


Strategic Management –
Defined

Art & science of formulating,


implementing, and evaluating,
cross-functional decisions that
enable an organization to achieve
its objectives

Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -9


‫ﺗﻌﺎﺭﻳﻒ ﺑﺮﻧﺎﻣﻪ ﺭﻳﺰﻱ ﺍﺳﺘﺮﺍﺗﮋﻳﻚ‬

‫ﻓﺮﺁﻳﻨﺪ ﺩﺍﺋﻤﻲ ﻭ ﻧﻈﺎﻡ ﻣﻨﺪﻱ ﻛﻪ ﺑﺎ ﺭﺍﻫﻨﻤﺎﻳﻲ ﺍﻋﻀﺎﺀ ﻳﻚ ﺳﺎﺯﻣﺎﻥ‪،‬‬ ‫„‬

‫ﺗﺼﻤﻴﻤﺎﺗﻲ ﺭﺍ ﺩﺭ ﻣﻮﺭﺩ ﺁﻳﻨﺪﻩ ﺍﺗﺨﺎﺫ ﻣﻲ ﻧﻤﺎﻳﺪ ﻭ ﻫﻤﭽﻨﻴﻦ ﺭﻭﻳﻪ ﻫﺎ ﻭ‬


‫ﻋﻤﻠﻴﺎﺕ ﻣﻮﺭﺩ ﻧﻴﺎﺯ ﺟﻬﺖ ﻧﻴﻞ ﺑﻪ ﺁﻳﻨﺪﻩ ﻣﻮﺭﺩ ﻧﻈﺮ ﺭﺍ ﺗﻮﺳﻌﻪ ﻣﻲ ﺩﻫﺪ ﻭ‬
‫ﻧﺤﻮﻩ ﺍﻧﺪﺍﺯﻩ ﮔﻴﺮﻱ ﻣﻮﻓﻘﻴﺖ ﺭﺍ ﺗﻌﻴﻴﻦ ﻣﻲ ﻧﻤﺎﻳﺪ‪.‬‬

‫ƒ ﻋﻠﻢ ﻭ ﻫﻨﺮ ﺗﺪﻭﻳﻦ‪ ،‬ﺍﺟﺮﺍﺀ ﻭ ﺍﺭﺯﻳﺎﺑﻲ ﺗﺼﻤﻴﻤﺎﺕ ﻭﻇﻴﻔﻪ ﺍﻱ ﻣﺨﺘﻠﻒ‪،‬‬


‫ﺟﻬﺖ ﻛﻤﻚ ﺑﻪ ﺳﺎﺯﻣﺎﻥ ﺩﺭ ﺭﺍﺳﺘﺎﻱ ﻧﻴﻞ ﺑﻪ ﺍﻫﺪﺍﻑ ﺍﺳﺘﺮﺍﺗﮋﻳﻚ‬

‫ﺍﺑﺰﺍﺭ ﻧﻴﻞ ﺑﻪ ﺍﻫﺪﺍﻑ ﺑﻠﻨﺪ ﻣﺪﺕ ﺳﺎﺯﻣﺎﻥ‬ ‫„‬

‫‪Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385‬‬ ‫‪Session 1 -10‬‬
Strategic Management

In essence, the strategic plan is a


company’s game plan

It is fundamental planning, away from


daily operations to bring focus & direction

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

Research & Development MIS

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

‫ﻓﺮﺁﻳﻨﺪ ﻣﺪﻳﺮﻳﺖ اﺳﺘﺮاﺗﮋﻳﻚ ﺷﺎﻣﻞ ﺳﻪ ﻣﺮﺣﻠﻪ اﺳﺖ‬


‫ﻃﺮﺡﺭﻳﺰﻱ ﺍﺳﺘﺮﺍﺗﮋﻱﻫﺎ ﻭ ﺍﺭﺯﻳﺎﺑﻲ ﺁﻥ‬

‫ﺍﺭﺯﻳﺎﺑﻲ ﺗﺤﻘﻖ ﺍﺳﺘﺮﺍﺗﮋﻱ‬


‫ﺍﺟﺮﺍﻱ ﺍﺳﺘﺮﺍﺗﮋﻱ‬

‫‪Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385‬‬ ‫‪Session 1 -16‬‬
Strategy Formulation

Vision & Mission

External Opportunities & Threats

Internal Strengths & Weaknesses

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

Revise as Revise as Improve/ Improve/ Recycle


Needed Needed Change Change as Needed

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

‰ Where to take the firm

„ The task is to
‰ Create a roadmap of a company’s future

‰ Decide what future business position to stake out

‰ Provide long-term direction

‰ Give the firm a strong identity

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 Management is Gaining &


Maintaining Competitive Advantage”

“Anything that a firm does especially


well compared to rival firms”

Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -26
Achieving Sustained
Competitive Advantage

1. Adapting to change in external trends,


internal capabilities and resources

2. Effectively formulating, implementing &


evaluating strategies

Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -27
Integrating Intuition and
Analysis

The strategic management process


attempts to organize quantitative and
qualitative information under conditions
of uncertainty

Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -28
Integrating Intuition and
Analysis

Intuition is based on:


‰ Past experiences

‰ Judgment

‰ Feelings

Intuition is useful for decision making in:


‰ Conditions of great uncertainty

‰ Conditions with little precedent

Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -29
Integrating Intuition & Analysis

Intuition & Judgment Analytical Thinking

Involve Management at all levels

Intuitive Thinking
Influence all Analyses

Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -30
Adapting to Change

Organizations must monitor events


„ On-going process
„ Internal and external events

„ Timely changes

Effective Adaptation

Requires long-term focus


Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -31
Adapting to Change

Rate & magnitude of change


increasing dramatically

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

Strategists – Firm’s success/failure

Various Job Titles:

•Chief Executive Officer (CEO)


•Chief Strategy Officer (CSO)
•President
•Owner
•Board Chair
•Executive Director

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

Opportunities and Threats (External)

‰ Largely beyond the control of a single


organization

Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -36
Key Terms

Opportunities & Threats (External)


Analysis of Trends:
• Economic
• Social
• Cultural
• Demographic/Environmental
• Political, Legal, Governmental
• Technological
• Competitors

Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -37
Key Terms
Opportunities & Threats

Environmental Scanning (Industry Analysis)

‰ Process of conducting research and


gathering and assimilating external
information

Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -38
Key Terms
Opportunities & Threats

Basic Tenet of Strategic Management

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

Strengths & Weaknesses (Internal)

‰ Controllable activities performed especially


well or poorly

Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -40
Key Terms

Strengths & Weaknesses (Internal)

Typically located in functional areas of the firm


• Management
• Marketing
• Finance/Accounting
• Production/Operations
• Research & Development
• Computer Information Systems

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

‰ Mission-driven pursuit of specified results


more than one year out

Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -43
Key Terms

Long-term Objectives

Essential for ensuring the firm’s success


• Provide direction
• Aid in evaluation
• Create synergy
• Focus coordination
• Basis for planning, motivating, and
controlling

Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -44
Key Terms

Strategies

‰ Means by which long-term objectives are


achieved

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

‰ Short-term milestones that firms must


achieve to attain long-term objectives

Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -47
Key Terms

Policies

‰ Means by which annual objectives will be


achieved

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

Long-Term Generate, Implement Implement Measure &


Vision
Objectives Evaluate, Strategies: Strategies: Evaluate
&
Select Mgmt Issues Marketing, Performance
Mission
Strategies Fin/Acct,
R&D, CIS
Chapter 2 Chapter 5 Chapter 6 Chapter 7 Chapter 8 Chapter 9

Internal
Audit

Chapter 4

Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -51
Strategic Management Model

Strategic Management Process

‰ Dynamic & Continuous


‰ More formal in larger organizations

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

2. Audit external environment


3. Audit internal environment
4. Establish long-term objectives
5. Generate, evaluate & select
strategies
6. Implement selected strategies
7. Measure & evaluate performance

Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -54
Benefits of Strategic
Management

• Proactive in shaping firm’s future

• Initiate and influence firm’s activities


• Formulate better strategies
•Systematic, logical, rational

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

• Improved understanding of competitors strategies


• Enhanced awareness of threats
• Reduced resistance to change
• Enhanced problem-prevention capabilities

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)

6. Effective allocation of time & resources


7. Internal communication among personnel
8. Integration of individual behaviors
9. Clarify individual responsibilities
10. Encourage forward thinking

Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -59
Benefits of Strategic
Management (Greenley – cont’d)

11. Encourages favorable attitude toward


change
12. Providesdiscipline and formality to the
management of the business

Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -60
Why Some Firms Do No
Strategic Planning

¾Poor reward structures


¾Fire-fighting
¾Waste of time
¾Too expensive
¾Laziness
¾Content with success

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

Business Ethics defined –

‰ Principles of conduct within organizations


that guide decision making and behavior

Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -63
Business Ethics & Strategic
Management

Good business ethics –

‰ Prerequisite for good strategic management

Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -64
Business Ethics & Strategic
Management

Code of business ethics –

‰ Provides basis on which policies can be


devised to guide daily behavior and
decisions in the workplace

Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -65
Business Ethics & Strategic
Management

Business practices always considered unethical –

‰ 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

ISO used to gain strategic advantage

‰ ISO 9000 focuses on quality control


‰ > 1.5 million companies incorporate ISO

Strategic Planning – MBA Sharif – Dr. Sepehri – Spring 1385 Session 1 -67
Natural Environment
Perspective

ISO 14000 standards

‰ 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

Strategy implementation may be difficult

‰ 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

You might also like