OVERVIEW OF STRATEGIC PLANNING

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OVERVIEWOFSTRATEGIC PLANNING
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Introduction

• Alice Which way should I go?
• Cat That depends on where you are going.
• Alice I dont know where Im going!
• Cat Then it doesnt matter which way you go!
• From Through the Looking Glass, by Lewis Carrol

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Definition
Strategic Planning

• process by which the guiding members of an
  organization
• envision its future and
• develop the necessary procedures and operations
  to achieve that future.

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Strategic Planning Factors
Strategy is

• Coherent, unifying, and integrative pattern of
  decisions,
• Means of establishing organizations purpose,
• Definition of organizations competitive domain

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Strategic Planning Factors
Strategy is

• Response of strengths and weakness to
  opportunities and threats
• Logical system for differentiating roles and
  tasks
• Way of defining the contribution of organization
  to stakeholders

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Planning Hierarchy
Strategic Planning
gt 5 years
Long Range Planning
1-5 years
Operational Planning
lt 1 year
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Why Do Strategic Planning?

• Provides framework for action
• Builds shared vision and goals
• Develops better understanding of environment
• Provides periodic reviews and adjustments
• Motivates managers and employees

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What Strategic Planning Is Not

• Forecasting
• Application of quantitative techniques to
  business planning
• Only future decisions
• Elimination of risks

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What Strategic Planning Does
Answers these questions for an organization

• Where are you going?
• What is the environment?
• How do you get there?

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Basic Strategic Planning Model
1. Environ-mental Scan
2. Strategy Formulation
3. Strategy Implementation
4. Evaluation Control
Feedback
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1. Environmental Scan

• Monitoring, evaluating, and disseminating
  information from internal and external
  environments to key people

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Environmental Variables
Societal Environment
Task Environment
Sociocultural Forces

• Employees
• Unions
• Govts
• Trade Associations

• Shareholders
• Suppliers
• Customers
• Creditors

Internal Enviro

• Structure
• Resources
• Culture

Economic Forces
Political- Legal Forces
Technological Forces
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SWOT Analysis

• Internal environment
• Strengths
• Weaknesses
• External environment
• Opportunities
• Threats

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2. Strategy Formulation

• Mission
• Objectives
• Strategies
• Policies

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Mission

• Gives reason for organizations existence
• Tells what company is providing to society
• Defines fundamental, unique purposes to
  differentiate from other firms
• Identifies scope of operations in terms of
  products and markets
• Includes philosophy, treats employees

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Example Missions

• Maytag Corporation
• To improve the quality of home life by designing,
  building, marketing, and sevicing the best
  appliances in the world.
• Newport News Shipbuilding
• We shall build good ships here -- at a profit if
  we can -- at a loss if we must -- but always good
  ships.

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Objectives

• End results of planned activities
• State what is to be accomplished by when
• Should be quantified if possible
• Some possible areas are
• -- profitability -- efficiency
• -- growth -- shareholder wealth
• -- reputation -- survival
• -- market leadership -- utilization of resources

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Strategies

• Form a comprehensive master plan
• State how the corporation will achieve mission
  and objectives
• Maximize competitive advantage
• Minimize competitive disadvantage

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Policies

• Provide broad guidelines for decision-making
• Link strategy formulation with implementation
• Ensure employees actions support mission,
  objectives, and strategies

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3. Strategy Implementation

• Programs
• Budgets
• Procedures

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4. Evaluation and Control

• Monitors corporate activities and performance
• Compares actual performance with desired results
• Requires clear, prompt, unbiased information
• Continuous feedback - learning process

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Basic Strategic Planning Model
1. Environ-mental Scan
2. Strategy Formulation
3. Strategy Implementation
4. Evaluation Control
Feedback
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Initiation of Strategy

• New CEO
• External intervention
• Threat of change in ownership
• Performance gap

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Summary

• Defined Strategic Planning
• Examined what SP is and is not
• Outlined the 4 step SP model to be used
• Briefly discussed SWOT analysis, Mission, and
  Triggering Events
• Questions?