Strategic Planning

&
Decision Making
Course Code: EM-503
By
Dr. Aqeel Ahmed
 Sessional Marks Distribution

Test (MCQs based on computer) : 20 Marks

Presentation/ Report : 10 Marks
Assignment: 05 Marks
Class Participation: 05 Marks
Total sessional marks: 40 Marks
 Books
• Strategic Management
(A competitive advantage approach)
By Fred R.David
14th or latest edition
• Strategic Management
(Formulation, implementation and control)
By John A Pearce
 Lecture-1

Introduction to Strategic Planning

 Topics to be covered
 Defining strategy and strategic management
 Difference between the strategy and planning
 Arguments in favor of strategic approach
 Arguments against the strategic approach
 Different Strategy approaches
 The rational planning process (Strategy formulation)
 Emergent strategy
 Leader ship styles
 Defining strategy
3 Big Strategic Questions.
1. What’s the company’s present situation?
2. Where does the company need to go from
here?
• Business(es) to be in and market positions
to stake out.
• Buyer needs and groups to serve.
• Direction to head.
3. How should it get there?
• A company’s answer to “how will we get
there?” is its strategy
 Defining strategy
A course of action, including the specification of resources
required, to achieve a specific objective.

Management’s “action plan” to:

• Grow the business
• Attract and please customers
• Compete successfully
• Conduct operations
• Achieve the targeted levels of organizational
performance
 Defining strategy
Different levels of strategy
 Defining strategy
Corporate strategy:
• What business should you be in?
• Looks at the whole range of business opportunities.

Business strategy:
• Battle plans, tactics used to fight the competition in the
industry that your company currently participates.

Functional strategy:
• Operational methods and value adding activities that you
choose for your business.
 Defining strategic management

• Art & science of formulating, implementing, and

evaluating cross-functional decisions that enable
an organization to achieve its objectives.
• In essence, the strategic plan is a company’s
game plan
Defining strategic management
Strategic Management achieves a firm’s success
through integration
Difference b/w the strategy & planning
Strategy is about
• understanding your environment and
• making choices about what you will do.
Planning is about
• making choices about how to use the resources you
have and
• the actions you will take to achieve the choices
made in your strategy
 Arguments in favor of
strategic approach
• Strategy helps minimize risk
• Avoids short-term behavior
• Improves stakeholder perceptions
• Encourages environmental analysis e.g. critical to
react to change
• Evidence indicates performance can be improved
using strategic approaches
• Integration and coordination of activities and
processes
 Arguments against the
strategic approach
• Difficult to plan when environment changing,
uncertain or complex
• Encourages ‘conformity’ stifling innovation e.g. the
corporate straightjacket
• Infrequently reviewed e.g. chosen long-term strategy
may not keep pace with change
• Implementation often managed poorly
• Rational planning a complex methodology and costly
for small businesses
Different Strategy approaches
The Rational Planning Emergent strategies
Process
Top-down and centralized Bottom-up and
decentralized
Time horizon 2-10 years Time horizon indefinite
Formal planning Informal planning
Complex and costly More complex and less
costly
Stable and certain Dynamic and uncertain
environment environment
Inflexible Flexible
 The rational planning process
Top-down (centralized) and formalized approach to strategic planning.
Originated from the USA e.g. the planning horizon for the organization could be
over 2-10 years.

Advantages Disadvantages

For transformational or radical change Rational planning can be too

rigid and bureaucratic e.g. no use
for the small business
Copes with the uncertain future by Rational planning can stifle
providing long term plans innovation e.g. locked into plans

Helps integrate and coordinate No use for dynamic or uncertain

complex organizations environments e.g. plans quickly
become ‘out of date’
The rational planning process
 Emergent strategy
Informal and bottom-up (decentralised approach) allowing
strategic courses of action to be developed from both tactical
and operational levels within the organisation.

Advantages Disadvantages

Quicker change or repositioning for Chaotic organisation that lacks

the organisation e.g. lower strategic
levels ‘closer to the customer’
Tactical and operational levels an
extensive source of innovative ideas
Greater motivation to other strategic
Levels
Supports culture of flexibility,
learning and enterprise
control over planning.
Lack of long-term direction.
Organisation too reactive,
‘muddling through’
Requires entrepreneurial skills
from staff which may not exist
 Leader ship styles

Two contrasting leadership styles generally exist,

democratic and autocratic.
• Democratic is based on democracy and social
equality.
• Autocratic a bossy way and often aggressive and
dominating.