Chapter 7. Foundations of Planning Chapter 8. Strategic Management

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Chapter 7. Foundations of Planning Chapter 8.
Strategic Management

• The Planning Process
• Determine the goal
• The importance of goals
• The hierarchy of goals
• The criteria of effective goals?
• Review the present situation
• Recognize limiting factors
• Develop the plan
• Implement the plan
• Think about this How are you using planning to
  manage your personal life? What are your
  long-term goals?

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Types of Plans

• Strategic plans
• Long-term plans that establish the organizations
  overall goals and develops the action plans to
  achieve the goal
• Intermediate Plans
• Plans that are limited in scope and of shorter
  duration, usually responsibility of middle
  management
• Operational Plans
• Plans that specify the details of how the
  objectives are to be achieved, usually developed
  at the lower organizational level
• Contingency Plans
• Plans that provide alternative courses of action
  to follow

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Understanding Strategic Management

• Define the mission and objectives
• Description of the organizations purpose,
  philosophy, customers and products/services Who
  are we? What do we do?
• Develop the strategies
• Integrated sets of decisions and action plans
  developed to pursue the goals/objectives of the
  organization
• Has three levels
• Implement the strategies
• Carry out the decisions made during the
  formulation stage
• Monitor results

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Step 1 in Strategy Formulation SWOT Analysis

• Identify opportunities and threats External
  environment analysis
• Economic sector
• Technological sector
• Legal/regulatory sector
• Sociocultural sector
• Global sector
• Identify strengths and weaknesses Internal
  Analysis
• Exercise S.W.O.T. of your university!

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Corporate Level Strategy

• Grand Strategy
• Growth pursue growth through acquisition,
  diversification or new product development
• Stability strategy attempts to preserve status
  quo
• Retrenchment reducing the size or diversity of
  operations

Valuable Strength Critical Weakness
Corporate Growth Strategies
Corporate Stability Strategies
Corporate Stability Strategies
Corporate Retrenchment Strategies
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Abundant Environmental Opportunities
Critical Environmental Threats
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Corporate Level Strategy (II)

• Portfolio Management The BCG Model
• Using market growth rate and relative market
  share, multiple business lines within a companys
  portfolio are classified into one of the four
  categories
• Star High growth, high market share
• Question mark High growth, low market share
• Cash cow Low growth, high market share
• Dog Low growth, low market share

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Step 2 in Strategy Formulation Industry Analysis
Potential Entrants
Threat of New Entrants
The Industry Rivalry among Existing Firms
Suppliers
Buyers
Power of Suppliers
Power of Customers
Threat of Substitute Products
Substitutes
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Business Level Strategy

• The generic business level strategy
• Low cost leadership
• Examples?
• Differentiation
• Examples?
• Focus
• Examples?
• Integrated low cost/differentiation Strategy
• Examples?

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Business Level Strategy The Adaptation Model

• This model attempts to match business strategies
  with environmental conditions
• Defender strategy
• Prospector strategy
• Analyzer strategy
• Reactor strategy

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