The Strategic Planning Process

1
The Strategic Planning Process

• Small Business Management
• Entrepreneurship
• AAEC 3454
• Dr. Alex White

2
Who Cares?

• Common problems
• Losing focus
• Straying from core business
• Getting blind-sided
• Not anticipating change vectors
• Not thinking long-term
• Maurice Clarett syndrome (any former VT players
  come to mind?)
• Missing out on opportunities
• Not seeing market trends or industry trends
• Strategic Planning helps you
• Think before acting
• Stretch your brain
• Anticipate change
• Be proactive rather than reactive

3
Strategic Planning

• Establish a clear direction for management and
  employees to follow
• Define in measurable terms what is most important
  for the business
• Allocate resources more efficiently
• Anticipate problems and take steps to avoid
  and/or eliminate them
• Establish a basis for evaluating performance of
  management key employees
• Provide a management framework which can be used
  to facilitate quick response to changing
  conditions, unplanned events, and deviations from
  plans

4
Strategic Planning ProcessSteps for Remaining
Competitive

• 1. Define the firms mission
• 2. Establish and prioritize goals objectives
• 3. Assess the firm - strengths and weakness
• 4. Assess the external environment
• - opportunities and threats
• 5. Develop evaluate alternative strategies
• 6. Select strategy
• 7. Implement strategy
• 8. Maintain the vision

5
Mission / Vision Statement

• Defines the purposes of the firm and answers the
  question
• Why are we really in business?
• What business are we really in?
• What are we actually producing/selling?
• What are our social responsibilities?
• How does it fit owners personal mission?

6
Three Cornerstones of a Mission Statement
Product
MISSION
7
Establish Objectives / Goals

• Translate the mission into measurable terms.
  Objectives are quantifiable statements that
  include short, intermediate, and long-term time
  frames.
• Increase sales by 30 percent in the next year
  through value added markets
• Adapt technology to reduce labor cost by 25
  percent in the next five years
• Increase production by 40 percent in the next
• three years
• Implement a retirement program for employees
• within the next year

8
DRIVE SMART
Long-term goals should be D irectional R
ealistic I nspirational V isible E ncompassing
Short intermediate goals should be S
pecific M easurable A ttainable R ewarding T imed
9
SWOT Analysis

• Strength
• Weakness
• Opportunity
• Threat

Internal
External
10
SWOT AnalysisInternal

• Things you manage
• Abilities and limitations of management
• Skills of employees and staff
• How modern and efficient is the business
• location
• facilities / equipment
• human resource
• financial
• marketing
• technology
• environmental
• globally competitive

11
SWOT AnalysisExternal

• Things you manage around
• What are the major opportunities?
• Easing of regulation
• New or complementary products
• Favorable macro economy
• What are the major threats?
• New or changing competition
• Tightening of regulations
• Change in trends

12
Develop and Prioritize Alternative Strategies

• Develop alternative plans which describe the
  methods for attaining objectives and gaining
  competitive advantage.
• Brainstorm
• Marketing
• Production
• Financial and Budgeting
• Evaluate alternative strategies from your
  brainstorming
• Controls monitoring systems

PRIORITIZE
13
Contingency Plans

• The Hewlett-Packard Principle
• What if
• ALWAYS have an escape plan!
• Think how you will get out before you get in!
• Critical part of a business plan!
• Usually required by lenders
• 3 aspects to focus on
• What if my goals are not being met
• What if my business is MORE successful that
  expected
• What if I just want to get out or make changes

14
Select and Implement Strategy
Select and implement the strategies that will
enable the business to achieve the desired
objectives. Take Action! Walk the Walk!