Business Strategy and Planning/Strategy

Planning
Session 2
Strategy vs Operations
Operational vs strategic

“Operational” is something that helps things to work smoothly today and

requires constant attention.

While

“Strategic” is something from the world of top managers, defined for a

longer-term, often less tangible, but still very important.
Strategic vs Operational Goals
Strategic Goal Operational Goal
● Doing things differently. Doing the ● Doing things better. Doing things
right things. right.

● Long-term (2-4 years) ● Short-term (week, month, quarter)

● Aligned with mission/vision ● Aligned with strategic goals

● Gives coherence to the ● Allows achieving strategic goals by

operational goals giving workable execution plan

● Sustainable advantages. Long- ● Best practices. Short term

term profitability. profitability.
How to Find Out If The Goal Is a Strategic or an
Operational One?

Goal A: Answer customer queries regularly

Goal B: Answering customer queries faster

Goal C: Improving customer support service during 2

years
How to Find Out If The Goal Is a Strategic or an Operational One?

Just because “Improving customer support service during 5 years” is a long-term

broad goal, it doesn't make it a strategic one!

The main question is

● If the company actually needs to have a better customer service (point 3 in the
checklist) or
● Everything is just fine now…

In other words:

Does improving customer support service lead a company to where it wants to be in its
dream-future?
Short and Clear: the Difference Between Strategic and
Operational Goals
● It is big enough to give you a sense of direction for a long period,
● It is aligned with your mission-vision,
● It is outside of your comfort zone, so you are forced to reinvent things rather than
just improve,
● It is measurable, so you can find one or two good KPIs for it,
● It is achievable. You know how to divide it into smaller operational goals, or at
least where to start.
There is nothing bad about having a long list of goals; it’s a good way to keep a record
of interesting ideas and action plans. But still, any business needs a strategy:
● A strategy helps to keep a direction towards the “north.”
● A strategy helps to filter goals that don’t fit, and it gives coherence to the ones
that are left.
Stages of Strategic
Management
The Stages
The strategic-management process consists of three stages:

● Strategy formulation
● Strategy implementation
● Strategy evaluation
Strategy Formulation
Strategy formulation includes developing a vision and mission, identifying an
organization’s external opportunities and threats, determining internal strengths and
weaknesses, establishing long-term objectives, generating alternative strategies, and
choosing particular strategies to pursue.

It answers questions such as

● What new businesses to enter?

● What businesses to abandon?
● How to allocate resources?
● Whether to expand operations or diversify?
● Whether to enter international markets?
● Whether to merge or form a joint venture?
● How to avoid a hostile takeover?
Strategy Implementation
Strategy implementation requires a firm to establish annual objectives, devise
policies, motivate employees, and allocate resources so that formulated
strategies can be executed.

Strategy implementation often is called the “action stage” of strategic

management. Implementing strategy means mobilizing employees and
managers to put formulated strategies into action.

Often considered to be the most difficult stage in strategic management. Why

do you think so?
Strategy evaluation
Strategy evaluation is the final stage in strategic management. Managers
desperately need to know when particular strategies are not working well;
strategy evaluation is the primary means for obtaining this information.

All strategies are subject to future modification because external and internal
factors are constantly changing.

Three fundamental strategy-evaluation activities are

(1) reviewing external and internal factors that are the bases for current
strategies,

(2) measuring performance, and

(3) taking corrective actions

Peter Drucker says the prime task of strategic management is thinking
through the overall mission of a business: . . . that is, of asking the question,
“What is our business?”

● This leads to the setting of objectives,

● The development of strategies,
● and the making of today’s decisions for tomorrow’s results.

This clearly must be done by a part of the organization that can see the entire
business; that can balance objectives and the needs of today against the
needs of tomorrow; and that can allocate resources of men and money to key
results.
Strategic-Management Model