Programme Title Corporate Strategy& Planning

Date
Translation by English department
Member Name Jameel Saleh Jameel Laban
Member Number

Section A: B:

In the last years, World economic has witnessed vital changes which changed
trade from the local sphere into international horizons. According to the concepts of
modern business, the whole world turned to be the Market, i.e. you may use a
computer set which is manufactured in China, some of its components are made in
Japan, and the processing system is from America. Also, you may wear pantaloons
which are made in Morocco, Italian sun glasses, and a watch from Switzerland. You
can take Spanish or Chile drink, and then drink Kenyan coffee, you also can buy a car
made in Korea or Europe and may use a cell phone which is made in Turkey an so on.

Nowadays, The Globalization becomes the reality of the world.

Before proceeding to the meaning of Environmental Scanning, we shall realize the
meaning of environment in Business Corporation, which is divided according to
functions into two sections; the first section is the Internal Environment which is
concerned with the scientific research in the corporation, and which studies and
analyzes the corporation’s points of strength and weakness. The second section is
concerned with the External Environment, i.e. the corporation’s challenges in the
market, Marketing, Employment, and the opportunities that the corporation should
catch and invest efficiently.

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 Environmental Scanning is the operation of monitoring the different
information and data from the internal and external environment perfectly through
using SWOT Analysis which studies and analyzes the advantages and disadvantages
of the information extracted from both internal and external environment.

SWOT Tool

In order to analyse the conditions and activities in the corporation, we shall

use SWOT tool to analyze strength, weakness, opportunities, and threatens to which
any corporation or venture may be exposed. SWOT is applied according to the work
shop strategy and according to the organizational vision which is used in the strategic
planning work shops. SWOT analysis may take more than 4 hours to be achieved
depending upon the thoroughgoingness and profoundness of the analysis. It is
necessary to pause the workshop in order to gather more information. SWOT analysis
is a part of strategic workshops which include many employees from the
corporation’s different departments and other individuals of external sources such as
the targeted categories. Management should recruit a coordinator to guide and
organise the SWOT analysis and to maintain time and guarantee the implementation
of the corporation’s continuous vision.

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1-Environmental Scanning:

Firstly, External Environment analysis: External Environment contains variables,

i.e. Opportunities and Threats which are outside the organisational structures and are
not under the control of the top management in the short run. The external
environment includes two elements or groups which are;
A- The Societal Environment: it concludes all the external factors that affect the
short and the long term organizational decisions such as the economic, technological,
culture, social, political, and legislative forces.
B- The Task Environment: It includes all elements and groups which have direct
impact on the basic organizational operations such as shareholders, Government,
special- interest groups, and trade associations.

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 Secondly, Internal Environment analysis: It consisted of variables such as
strength and weakness points within the corporation which are under the control of
the top management in the short run. The internal Environment includes;
A- The organizational structure: it includes communications, authority, leadership
order which are stipulated in the organizational structure.
B- Culture: it includes the beliefs, expectation and hopes, and the shared values of the
organization’s members.
C- Resources: it includes corporation’s assets such as financial assets, human skills
and abilities, and managerial abilities and talents.
The requirements of Environmental Scanning:
Realization the variables of external environment are one of the main necessary steps
in Environmental Scanning. These variables are:
1- Economic Forces which control exchange:

Economic system is a group of economic, legal, social relationships which

control the economic life in a certain society and time. Economic system focuses on
the relationships, basis, and fundamentals which govern the mutual influence and the
interaction between humans’ needs from one side and the available natural, human,
cognitive, and technological resources from the other side. Economic system is an
important part of the social system, for it influences on it and is affected by it.
Antonelli defined the economic system as it a group of relationships and corporations
which characterizes the economic life of a certain group. While Sombart defined the
economic system as the shape which is consisted of the following three elements:
-Essence: is the group of stimulus and motives which operates the economic
activities.
-Shape: is the group of social, legal, and structural factors which draw the frame
work of economic activity and the relationships between all the participants in the
economic activity such as the type of ownership, work system, and government’s role
in the economical life of the society.

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- Tangible content: is the technical level of the production like the productions
methods level of advancement by which corporations manufacture commodities and
provide services.
The nature of economic system is determined through the logical Overlapping
between the aforementioned three factors. Sombart affirms that element of shape, is
the basic determiner of the system nature, for it expresses the spirituality which
reflects the creed, upon which the system was devised. Spirituality harmonizes also
with certain level of the advancement in production methods. Marxian analysis was
depended on the economics standards as a tool to distinguish between the economic
systems, as he considered it with other social and legal forces, which are in harmony
with it; the superstructure which derived and generated from the common method of
production which is composed of social production forces and production
relationships, and which differentiates between the economic systems according to
the ownership of production methods, and the class which governs it.
2- Technological forces which generate problem-solving inventions:

Lalande dictionary defines technology as a group of well-specified operations and

procedures, which are transferable and changeable and which aim at achieving some
useful outcomes. Technology, firstly, is the operations and procedures which are
determined precisely and aiming at achieving certain objective; secondly, Technology
is teachable, developable and can be spread, educated inside a certain society, thus it
is social. Thirdly, Technology achieves certain utilitarian practical objectives, i.e.
technology is not luxury, but it is to satisfy the need of man, hence we grasp the
proverb says: “Necessity is the mother of invention”. If man changes the nature by
using technology into technology, i.e. turned the nature into products and
technological equipments to use it to change nature to produce whatever nature can
not provide him with, he would turn into an educated and cultured human being, who
lives with and by the equipments, and perhaps will live for it.

3-Political-legal forces which impose its laws:

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Politics governs the commercial relations between commercial corporations
especially the international corporation, and it controls the commercial privileges that
a country grants to other one .The political forces determine the volume and quality of
commercial exchange between countries.

4- socio-cultural forces which state the morals and manners of conduct:

Nowadays, Countries` cultures and civilizations begin to change quickly, also the
scientific institutes and educational programmes are always changing, scientists
introduce new hypothesis in different issues every day. Every hypothesis, right or
wrong, leaves an impact on peoples` beliefs. Cultural conversion changed every
aspect in man life, individually or socially, and altered peoples` morals and
behaviours, it weakened the religious belief inside people and upset the fixed morals,
and it decreased the importance of piety and purity. This conversion has lead to
discrepancy in virtue and vice standards. Traditions and customs have lost its value,
and in some cases new customs have prevailed. Right and wrong have mingled in the
new culture; besides the sound and useful teachings, we find many wrong and
harmful practices which is reflected on business especially in international trade.
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The First Question:
Question B:

Michel E. Porter wrote an analytical study about the essential reasons for the success
of the multi-national corporations. Through his analysis on some of these
corporations, its environment, and the factors of its success in international markets,
he divided success factors into groups such as resources, demand, supply, production
sector-related relationships, and management in corporation. SWOT analysis
(Strengths, weaknesses, Opportunities, Threats) is a tool which permits us to design
the corporation’s current position according to the aforementioned four standards.
This analysis is an effective tool in taking decisions, for realizing points of strengths

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and weaknesses is the main concern of the corporation; thus the management can set
plans and carry out work according to it. On the contrary, opportunities and external
threatens are difficult to adjust and can not be controlled.

Examples for points of strengths:

- Talent or remarkable experience.
- Invaluable financial resources.
- Invaluable human resources.
- Invaluable organizational resources.
- Intangible invaluable resources such as patents, fame, and so on.
- An achievement or success which grants the corporation a preference or
privileges.
- Alliances or cooperative partnerships.

Points of weaknesses: is an internal factor. Points of weaknesses are what the

corporation have not, what should be improved in the corporation, or what the
corporation should avoid in its performance.

Examples for points of weaknesses:

- Workers have not sufficient skills to perform their tasks.
- Working systems is inefficient.
- Information about competitors is not sufficient.
- Corporation does not cope with the technological development.

Examples for Opportunities:

- To provide new clients with the service.
- To enter new markets.
- To target new sectors.
- There are not powerful competitors.

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Examples for Threats:
- The existence of new competitors.
- Economic Recession.
- Political or economic changes.

The more intensifier the competition in an industry or trade is, the more the
corporation’s position be at risk, for there are possibilities of a decline in
corporation’s profits. While lacking of competitive powers is a sign of a good
profit opportunity for the corporation. Michel Porter notices that corporations are
more concerned with the competition intensity in their industries. The strategic
planner can evaluate each competition as follows: strong, medium, weak.
Every new corporation is eager to increase its profits and to attract more
customers, but the elements which impede its work are:
1- Economic status:
Any corporation is influenced severely by the economic status; the more stable the
economy in the corporation environment is, the more profits the corporation can
gain are. Thus there is a positive relation between profits and economic stability of
the corporation’s environment and community.

2- Variety of Products:
The most important factor for gaining more profits in Commercial Corporation is
the variety products, for the diversification in products types make a competition
which increases the profits massively.

3- Capital Requirements:
Any corporation which is seeking profits should have initial estimations and
alternative financial plans for market’s ups and downs, or for the economic status.
There must be sufficient capital and a good plan for spending according to
recognized and acknowledged priorities.

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 4-Switching costs:
Switching products is an issue which has negative or positive impact according to
its role. This process may increase the corporation’s costs. These costs are not
calculated, but it should be planned for in the alternative plans.

5-Access to distribution channels:

Every successful corporation is seeking firstly to secure its distribution channels.
Without effective channels of distribution, products would be accumulated in
storehouses and be vulnerable to damage and rottenness which make the
corporation susceptible to inevitable losses. Corporation which has good and
efficient channels of distribution becomes protected from any losses, for it is able
to deliver its products to consumers easily and by the cheapest costs which is
considered to be from the actual profits of the corporation.

6- Cost disadvantages independent of size:

The complete disengagement between production costs and production volume
leads the corporation to misreading the market and makes the corporation
vulnerable to an absolute loss.
7- Government policy:
Porter sees that there are some conflicts between dependant corporations; he says
that the reasons of such conflicts are:
1- Number of competitors: corporations regard each other attentively; the less the
competitors are, the more they are observing each other.
2- Industry growth Rate: If the growth rate is slow, the price war would begin
between corporations.
3- Product or service characteristics: such as location, the ability and facility of
buying the product, and the quality of product.
4- Amount of fixed costs: corporations are obliged to produce fixed amounts of
the product.
5-Capacity: If the expansion is in the same location.

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6- Height of exit barriers.
7-Diversity of rivals: because every corporation has ideas which conflict and
contradict with the ideas of other corporations.

Threats of substitute products or services:

Substitute products are the products which satisfy the same need, it has great
threat and vital impact on corporation production, product dominance in market,
and attracting consumers.

Bargaining power of buyers:

The group of buyers is powerful if the following have achieved:
-A buyer purchases huge quantities of the product from the seller, i.e. the
corporation.
-corporation will manufacture the desired product by itself.
- There are many suppliers to provide and produce the desired service or product.
-When the process of changing suppliers costs little and takes place without any
losses in market.
-There is a Decline in the cost of Product when compared with the value which
consumers would pay.
-There are Profit stimulators, for corporation would gain low profit from the
powerful purchasers.
-Product quality is not the standard in purchasing and selling.

Bargaining power of suppliers:

The group of suppliers is powerful if the following have been applied:
-Major corporations concerned with supplier’s industry.
-product and service are unique and excellent.
-There is a difficulty in imitating the product or providing a substitute for it.
-There is a competition between suppliers about the power and share in the
corporation.

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-A buyer purchases small quantities.
Relative power of other stakeholders:
This power should be added to Porter’s list .the power of stakeholders varies
according to the industry, but it is important all the time.

Industry Evolution:
Most industries develop in a certain phase of its life cycle; afterwards, they
become necessary commodities. After any expansion the Corporation may
encounter a decline in its sales, thus it has to pay attention to avoid it.

Categorizing international industries:

According to Porter, both multi-domestic and global Industries are diverse and
different. Multi-domestic industry is various in the local markets, while the global
industry is in different countries and depends on developing and making
adjustments for the product to cope with the requirements of the importing or
exporting country. Corporation type, multi-domestic or global, depends on the
product type, and its development and competency.
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Section B: A:

The directional strategy is categorized according to general orientation into three

grand strategies which are as follows:
A- Growth Strategies: is the type which is concerned with Market and
competition, i.e. marketing environment and the competitive environment of the
corporation. Its main objective is to establish the competitive position of the
corporation through many methods the most important of which are, Expansion,
commodities improvement, variation, innovation and renovation, acceding new
markets, introducing excellent and unique commodity or service, and so on.

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B- Retrenchment strategies: these strategies are primarily concerned with the
corporation’s internal environment as they targeting delicacies, deficiency or
internal threats through reducing the numbers of produced commodities or reset
up the organizational structure or train the manpower to increase their functional
competency. This type of strategies also is used for challenging market’s threats
or the external environment, or the external competitive environment such as
confronting price war or the accelerating technological development.

C- Stability Strategies: these strategies are concerned with inter-organizational

changes. It would appear that these changes are limited in its methods and
frequency, but in the same time it is essential. These changes include a limited
amendment in commodity, service, and market. The objective of this type of
strategies is to allocate the resources of the corporation in one direction or more.

We can say that Stability strategies do not mean the absolute consistency or not
performing any change or take the appropriate decision about corporation’s
commodities or services, activities, or markets. Corporations adopt this type of
strategies or adopt the defense mode in some cases such as:
1- When the Corporation is going on providing the same market, i.e. consumer,
with the same commodity or service.
2- When the strategic decisions of the corporation focus on performing additional
adjustments or developing task performance methods, i.e. the occupational
activities such as, marketing and production.
3- When the Corporation is satisfied with its share of market.
4- When the commodity or service of the corporation reaches maturity stage.
5- When the corporation manufactures a product which can not be imitated or
developed and which is out of competition with the substitute commodities for
long term or in the short run at least.

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Strategic management is a group of decisions and managerial concepts which
determines the corporation’s vision and mission in the long run, in the light of its
competitive advantages, and which seeks to implement it through studying, follow
up, and evaluate environment opportunities and threats and evaluates its relation
with the organizational weaknesses and strengths, and to achieve balance between
the different interests of stakeholders.

Strategy Formulation:
It is concerned with setting up long-term plans to compare environment
opportunities and threats with the organizational strengths and weaknesses, thus it
includes an identification about the corporation mission, stating objectives which
should be achieved, and setting up strategies and policies which direct the
business.

Strategy Implementation:
It is concerned with putting these strategies into actions through programmes,
budgets, and procedures. These operations require changes in the organizational
culture, structures, and management systems within the entire corporation. The
three levels of strategy are;
1- Corporate Strategy: describes the whole trends of corporation and which
reflects the corporation general inclination towards growth and managing its
business and production lines to have a balance in its products. Corporation’s
strategy determines the decisions about the kind of businesses which the
corporation can engage and be involved in. also it describes the flow of funds and
resources within the different departments of corporation, and states the relations
of the corporation with the basic groups in environment.
2- Business strategy: It is sometimes called the competitive strategy, usually, it
devised according to the strategic business units (SBU), and which focuses on
improving the competitive position of the corporation products or services in a
certain industry or a specified market sector.

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3- Functional Strategy: it is concerned with making enhancement in
performance; so it sets up and devises strategies to improve the performance
within the existing internal shackles.
-Strategic planning in order to expand or enter new markets.
-Core competency.
- Develop new offers or technological invention.
-Product shape.
-Quality studies.
-Market & Consumer Studies.
Implementation of this strategy requires many prerequisites, the most important
are:
1-Programmes: are the activities and the necessary steps for implementing and
achieving corporation’s strategy. Management chooses the suitable programme
for the strategy which is under-implementation, or makes a contract with another
corporation to make use of its experience in the field of programming these
strategies.
Through:
- Action plans and programmes.
-The several activities related to these plans and programs.
-Stating the responsibilities of these activities.
-Define the necessary resources.
-Follow up and evaluate the performance.

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 Action Plan Sample
National Objective
Organizational
Objective
Objective of
corporation
serial Activity Starting Ending Responsibilities Necessary Performance
Date Date Resources indicator

2- Budget: is a statement about corporation’s financial allocations, in which both

expenditures and income are illustrated. Most corporations require specific
financial credit in order to invest.
3- Procedures: are the steps planned by corporation’s planning team in order to
run work efficiently.
4-Evaluation and Control: through follow up decisions and monitoring its
outcomes, for performance is the final outcome of the activities, thus both
evaluation and control is considered to be the final step in strategic management.
Implementing Evaluation and control through:
-Recording programmes and activities outcomes.
- Trace work programmes and procedures.
- Assessing operations and performance.
- Identifying Points of strengths and establishing and supporting it.
-Identifying points of weaknesses and setting up solutions to avoid and challenge
it.

Do and don’t in strategic planning:

Do:

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-Depend on the competitive capacities of the corporation.
-Realize members’ needs and demands.
- Balance between resources and outcomes.
- Make members participate in setting up and implementing programmes.
- Recognize the previous or future organizational structure.
- set up high standards and levels.
Do not:
- Do every thing.
- -believe that the most important objective of corporation is to gain more
financial resources.
- Establish the corporation according to the organizational structure.

Feedback (Step towards learning):

Decision makers should allocate time to revise and adjust plans according to the
requirements of Market, consumer, marketing operations when there is a decline
in performance levels generally. They should set up programmes which assist in
adjusting and developing or even replacing these plans with alternative plans
which is designed attentively for getting ready for any urgent situation which may
encounter market or economic in general.
__________________________________________________________________
Section C:

A-The organizational Life Cycle:

The organizational Life Cycle is like man life cycle, it pass through many growth
stages through which the corporation develops to reach its decline stage, then to
die. This cycle is represented through corporation products life cycle in marketing;
these stages are:
1-Birth:
This is the stage in which corporation determines its business field, the targeted
markets, and in which it begins its activities.

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2-Growth:
This stage is an important indicator in the life cycle of any corporation, as the
corporation growth rate represents its capability to continue its work.
3- Maturity:
When the corporation grows and reaches the sufficient degree of growth and
professionalism, you can call it as mature corporation. The longer this stage is, the
most important the role of corporation in marketing operations in general
becomes; thus corporation will have high position in its industry. Experts consider
this stage to be the indicator of corporation position in the market, for it is the only
stage in which many rivals and innovations, which could extend the life cycle of
the corporation, take place.
4-Decline:
If the corporation can not solve the political, economic, funding, managerial crises
which encounter it in withdrawal stage, the corporation would move from the
stage of maturity into the stage of decline.
5- Death:
If the corporation is plunged in its crises and can not put an end to them, it would
directly move into the stage of death.
No body can deny that there are corporation which pass through and encounter all
these five stages in sequence. Also there are great numbers of corporations which
move into bankruptcy directly without passing through stage of maturity for
example. Some corporations may last in the stage of growth long time.
Corporation can solve this problem by recruiting excellent and professional
marketing team under the supervision of a competent manager, in order to monitor
and control the situation and any problem which may endanger the corporation,
and to extend the life cycle of the corporation.

B- Total Quality Management (TQM):

This kind of management is concerned with achieving the best possible quality in
corporation .It has four objectives which are:

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-Total Quality Management seeks improving and developing Product Quality.
-This management aiming at responding to consumers` needs with all available
allowed methods.
-This management is characterized by its flexibility in changing according to
customer needs.
- The most important basic on which management depends is reducing costs
through improving quality.
It is obvious from this management that problems exist due to the imperfect
procedures and the lazy or apathetic employees.

Total Quality Management Ingredients:

-An intensive focus on customer satisfaction.
-Satisfying the external and the internal customer as well.
- Evaluate each variable in corporation operations accurately.
-Continuous improvement and development of products and services.
-Establishing new work relations based on trust and strengthening the good
relations.

C-Activity-based Costing (ABC):

Accounting methods varies in corporations; there is a new method to calculate the
product indirect and fixed cost or the group of products according to the value-
based activities going into that product.
The advantage of this method is that it enables accountants to make the value-
chain analysis more accurately than the traditional cost accounting method, for it
introduce the actual image of the operations; for example, a factory which produce
dolls more than teddy bears, every day after finishing producing dolls ,
accountants must re-programme the machinery. Most overheads are expended in
order to re-programme the machinery to switch from dolls to teddy bears. In the
Traditional accounting method, the overheads will be more in teddy bears while in
the ABC accounting method, the overheads will be in the dolls. This method

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enables the accountants to clarify product activities in order to calculate the costs
easily and directly. Corporation has to sell teddy bears with higher price than dolls
in order to cover production costs; also it has to produce both products according
to strategic base.

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