UNIT 2

The Essentials of Planning

STRATEGIC
~ establishes master plans that
PLANNING shape the destiny

Strategic Plan Process

Gather Facts Swot Analysis Review Inputs

Strategic Define Review &

Matrix Strategies Adjust
TACTICAL
PLANNING
~ planning that translates a
firm’s strategic plans into
specific goals by organizational
unit
OPERATIONAL
PLANNING
~ planning that requires specific
procedures and actions at lower
levels in an organization
 3. Analyze
1. Define the 2. Establish environment in
present goals and terms of aids and
situation objectives barriers to goals and
objectives

4. Develop action
6. Implement 5. Develop plans to reach
the plans budgets goals and
objectives

7. Control the
plans

A Framework for Planning

 2. Establish goals &
1. Define the objectives
present situation ~ goals are broader than
~ includes measuring objectives, whereas objectives
success and examining function as smaller goals that
internal capabilities and support bigger goals
external threats
 ~ the manager or planner attempts
3. Analyze environment in to predict which internal and
terms of aids and barriers external factors will foster or
hinder attainment of the desired
to goals and objectives ends
4. Develop action plans
to each goals & ~ the specific steps necessary to
achieve a goal or an objective
objectives
 6. Implement the
5. Develop Budgets Plans
~ requires money to ~ putting the developed
implement plans into use
 *Make
7. Control the Plan Contingency
~ requires money to Plan*
implement ~ is an alternative plan to be
used if the original plan cannot
be implemented or a crisis
develops. “ Plan B”
 NATURE OF BUSINESS
STRATEGY
Strategy Involves
More Than
Operational
Effectiveness

Strategy
~ the
Fit Drives Both
organizational plan, Competitive Business Strategy Rest on
Strategy Unique Activities
or comprehensive Advantage and
Sustainability
program for
achieving its vision,
mission, and goals
in its environment
A Sustainable
Strategic Position
Requires
Trade-offs
DEVELOPMENT OF
BUSINESS STRATEGY
Vision Mission

~ An idealized picture of the ~ The firm’s purpose and where

future of an organization it fits into the world
 3 Major Approaches to
Develop Strategy
1. Gathering 2. Analyzing the
3. Performing SWOT
Multiple Inputs to Realities of the
Analysis
Formulate Strategy Business Situation
SWOT Analysis
~ a method of considering
the strengths, weaknesses,
opportunities,
and threats in a given
situation

Strengths
Weakness
Opportunity
Threats
 4 Steps to a successful
SWOT Analysis
I. It is important to be clear about
what you are doing and why.

II. Select appropriate contributors.

III. Allocate research and

information-gathering tasks.

IV. Create a workshop environment by

encouraging open communication.
LEVELS OF
STRATEGY
✔Corporate-
level
Strategy
~ the total direction of
the enterprise and the
selection of specific
businesses
LEVELS OF
STRATEGY
2 Major Concern of
Corporate- level Strategy

1. The total
direction of the
enterprise.
2. The selection of
specific business.
LEVELS OF
STRATEGY
✔Business-
level
Strategy
~ focuses on the question
of how to compete in each
of our businesses
LEVELS OF
STRATEGY
✔Functional-
Level
Strategy
~ formulated to specify
actions required to
successfully implement
strategies at the corporate
and business levels.
 FIVE COMPETITIVE
FORCES

1. The power of
customer to
affect pricing
and reduce
profit
margins.
FIVE COMPETITIVE
FORCES

2. The power of
suppliers to
influence the
company’s
pricing.
 FIVE COMPETITIVE
FORCES

3. The threat of
similar or
substitute
products to
limit market
freedom and
reduce price
and thus profits.
 FIVE COMPETITIVE
FORCES

4. The level of
existing
competition that
affects
investment in
marketing and
research and
thus erodes
 FIVE COMPETITIVE
FORCES

5. The threat of
new market
entrants
to intensify
competition and
further affect
pricing and
profitability.
Types of Business Strategies
Corporate- level Strategy
1. Strategic Alliances

2. Diversification of
goods and services.

3. Sticking to core
competencies.
Types of Business Strategies
Business- level Strategy

1. Product
Differentiation

2. Focus

3. Cost leadership
Types of Business Strategies
Functional- level Strategy

1. Find and retain the

best people

2. High Speed
Operating Plans
~ the means
through which
strategic plans
alter the destiny
of the firm
policies
~ general
guidelines to
follow in making
decisions and
taking action
procedures
~ a customary
method for
handling an
activity. It guides
action rather than
thinking
rule
~ a specific
course of action or
conduct that must
be followed. It is
the simplest type
of plan.
Management by
Objectives (MBO)
~ a systematic
application of goal
setting and
planning to help
individuals and
firms be more
productive
 MBO Sequential Steps
1. Establishing 2. Establishing
3. Reviewing
organizational unit objectives.
group members
goals. proposal.
 MBO Sequential Steps
5. Creating 6. Reviewing
4. Negotiating or action plans to
agreeing. performance.
achieve
objectives.
THE
END