MBA 841

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MBA 841 Strategic Analysis and Planning Roger
Blackwell www.rogerblackwell.com

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All men see the tactics whereby I conquer, but
what none can see is the strategy out of which
victory is evolved. -Sun Tzu, The Art of War, 500
B.C.
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Changes Affecting Markets
Consolidation Tough economic conditions Changes
in consumer demand demographics Shift in sales
orientation Changes in buying methods Globalizatio
n
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The single greatest danger for successful firms
is to be absolutely clear about why you are
successful.
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What makes some companies good and some companies
great?
The Role of STRATEGIC PLANNING
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Abbott Circuit City Gillette Fannie Mae
Kroger Kimberly-Clark Nucor Philip Morris
Walgreens Pitney Bowes Wells Fargo
1965 2000 General Stocks 1.00
56 Good-to-Great 1.00 471
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STRATEGIC PLANNING
A decisive allocation of resources to a major
course of action.
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The Total
Performance Model The Path to
High Yield Profitability
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TOTAL PERFORMANCE MODEL
Performance Planning
Operations Planning
Administrative Planning
Strategic Planning
Strategic Management
Administrative Management
Operating Management
Performance Management
External Environment
Corporate Resources
Performance Review
Operations Review
Administrative Review
Strategic Review
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TOTAL PERFORMANCE MODEL
External Environment
Human Facilities Capabilities Technology Capital
Other
Consumers Competition Substitutes Channels
Society Other
Corporate Resources
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STRATEGIC PLANNING (Operational View)
A long-run, time-phased plan designed to achieve,
at a high rate of return on investment, a market
position so advantageous that competition can
retaliate only over an extended time interval and
at a prohibitively high cost.
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TOTAL PERFORMANCE MODEL
Strategic Management

• Mission
• Values
• Strategy
• Objectives

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TOTAL PERFORMANCE MODEL
STRATEGIC DECISIONS 1. Identifying the
organizational mission (Long-term vision of what
the company is or is striving to become) a. What
business are we in b. What business
should we be in 2. Developing the organizational
goals
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What Determines Prosperity for
Individuals Companies Countries
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VALUES Shared beliefs or group norms
internalized by an individual
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VALUES Shared beliefs or group norms
internalized by an individual
TERMINAL INSTRUMENTAL Goals
Behavior Motivations Teamwork
Words Actions
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WHERE DO WE GET OUR VALUES?
PEOPLE
FIRMS
Family Peers School Religion Media
Shaping the future makeup of customers,
end-users, and society
Shaping the direction of the organization and its
effectiveness in the market place
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Cumulative Stock Returns of 1 Invested January
1, 1926 - December 31, 1990
6,000 5,000 4,000 3,000 2,000 1,000
Visionary Values 6,356 Comparison Values
955 General Market 415
1926 1936 1948 1960 1972 1976 1984 1
990
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TOTAL PERFORMANCE MODEL
Strategic Management

• Mission
• Values
• Strategy
• Objectives

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TOTAL PERFORMANCE MODEL
Administrative Management

• Policies and procedures
• Information systems
• Personnel and organization
• Resource acquisition and asset management

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TOTAL PERFORMANCE MODEL
Operating Management

• Implementation
• Activating
• Scheduling
• Monitoring
• Controls

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TOTAL PERFORMANCE MODEL
Performance Management

• Sales and sales growth
• Profit
• Stability
• Market share
• E.S.V.

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MEASURING AND ACHIEVING HIGH YIELD
STRATEGIES
Sales Growth Productivity Earnings
Growth ROI 20/20 20
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TOTAL PERFORMANCE MODEL
PRESERVE core values and purpose CHANGE business
strategies and operating practices to adapt to
the changing environment
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TOTAL PERFORMANCE MODEL
Unless management acts, the more successful a
firm has been in the past, the more likely it is
to fail in the future.
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THE 3Ms OF GROWTH AND
PROFITABILITY
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THE 3Ms OF GROWTH AND
PROFITABILITY
More Markets
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THE 3Ms OF GROWTH AND
PROFITABILITY
More Markets More Market Share
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INCREASING MARKET SHARE
Mergers and Acquisitions HRD -Recruiting right
values -Training vs. education
-Measuring/monitoring Goal Customers for
Life
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E-learning
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THE 3Ms OF GROWTH AND
PROFITABILITY
More Markets More Market Share More Margin
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INCREASING MARGIN
Lowering costs Enhanced prices by adding
value Increased demand for more information
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ASSETS VERSUS INFORMATION
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TOTAL PERFORMANCE MODEL
Strategic Management

• Mission
• Values
• Strategy
• Objectives

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Concepts From GOOD TO GREAT
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Concepts From GOOD TO GREAT
1. Level 5 Leadership
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Level 5 Executive
Builds enduring greatness through a paradoxical
blend of personal humility and professional will.
Effective Leader
Catalyzes commitment to and pursuit of a clear
compelling vision, stimulating higher performance
standards.
Competent Manager
Organizes people resources toward the effective
and efficient pursuit of pre-determined objectives
Contributing Team Member
Contributes individual capabilities to
achievement of group objectives works
effectively with others in a group setting
Highly Capable Individual
Makes productive contributions through talent,
knowledge, skills, and good work habits
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LEVEL 5 LEADERSHIP
These leaders channel egos away from themselves
and toward the larger goal of building a great
company. They are incredibly ambitious, but their
ambition is first and foremost for the
institution, not themselves. More plow-horse than
show-horse
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Concepts From GOOD TO GREAT
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FLYWHEEL AND THE DOOM LOOP
Good-to-great transformation often looks dramatic
to the outside, but they feel like organic,
cumulative processes to people on the
inside. These transformations dont happen in one
fell swoop. Build-up then breakthrough
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Concepts From GOOD TO GREAT
1. Level 5 Leadership 2. First WhoThen What
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FIRST WHOTHEN WHAT
COMPARISON COMPANIES
GOOD-TO-GREAT COMPANIES
FIRST WHAT
FIRST WHO
Set vision for where to drive the bus. Develop
road map for driving it.
Get the right people on the bus. Build a
superior executive team.
THEN WHO
THEN WHAT
Enlist a crew of highly capable helpers to make
the vision happen.
Once you have the right people in place, figure
out the best path to greatness.
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FIRST WHOTHEN WHAT
Who questions come before what
decisionsbefore vision, strategy, organization
structure, and tactics. Put your best people on
your biggest opportunities not biggest problems.
The right person has more to do with character
traits and innate capabilities than specific
knowledge or skills.
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Concepts From GOOD TO GREAT
1. Level 5 Leadership 2. First WhoThen
What 3. Confront the Brutal Facts
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CONFRONT THE BRUTAL FACTS
Creating a climate where the truth is heard 1.
Lead with questions, not answers 2. Engage in
dialogue and debate, not coercion 3. Conduct
autopsies, without blame 4. Build red flag
mechanisms that turn information into information
that cannot be ignored
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Concepts From GOOD TO GREAT
1. Level 5 Leadership 2. First WhoThen
What 3. Confront the Brutal Facts 4. Hedgehog
Concept
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THE HEDGEHOG CONCEPT
A simple, crystalline concept that flows from
deep understanding about 1. What you can be the
best in the world at (and what you cant) 2.
What drives your economic engine 3. What you are
deeply passionate about (not stimulate passion,
but discover what makes you passionate)
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Concepts From GOOD TO GREAT
1. Level 5 Leadership 2. First WhoThen
What 3. Confront the Brutal Facts 4. Hedgehog
Concept 5. Culture of Discipline
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CULTURE OF DISCIPLINE
A culture of discipline is not just about action.
It is about getting disciplined people who engage
in disciplined thought and who then take
disciplined action. The more discipline a firm
has to stay within its core competencies, the
more it will have opportunities for growth A
great company will have many once-in-a-lifetime
opportunities Stop doing lists are more
important than to do lists
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Concepts From GOOD TO GREAT
1. Level 5 Leadership 2. First WhoThen
What 3. Confront the Brutal Facts 4. Hedgehog
Concept 5. Culture of Discipline 6.
Technology Accelerators
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TECHNOLOGY ACCELERATORS
Use technology as an accelerator of momentum, not
a creator of it. None of the good-to-great
companies began transformations with pioneering
technology, yet they all became pioneers in the
application of technology once they grasped how
it fit their core competencies. First-mover myth
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Concepts From GOOD TO GREAT
1. Level 5 Leadership 2. First WhoThen
What 3. Confront the Brutal Facts 4. Hedgehog
Concept 5. Culture of Discipline 6.
Technology Accelerators 7. Flywheel, Not Doom
Loop
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FLYWHEEL AND THE DOOM LOOP
Good-to-great transformation often looks dramatic
to the outside, but they feel like organic,
cumulative processes to people on the
inside. These transformations dont happen in one
fell swoop. Build-up then breakthrough
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Planning
Board Financial Shareholders
Employees Management Resources
Commitment
Applying 3Ms
Employee Satisfaction
Market Leadership
Superior Logistics
Customer Service
Market Analysis
Shareholder Satisfaction Increased Cashflow
Strategy Evaluation and Reformulation
Customer Satisfaction
E.S.V.
External Environment
Internal Environment
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STRATEGIC GAPS
Objective
Original sales gap
Sales (millions of dollars)
Original forecast
Time
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STRATEGIC GAPS
Objective
Revised Forecast
Diversification gap
Sales (millions of dollars)
Original forecast
Expansion gap
Time
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Product-market Matrix
Products
New Products with Related Technology
New Products w/ Unrelated Technology
Improve-ments in Present Products
Expansion of Variety of Product Line
Present Products
Assortment Manipulation
Markets
Consumption Markets Same Markets
(9) Horizontal Diversification Strategies
(5) Replacement Strategies
(3) Reformulation Strategies
(1) Market-Penetration Strategies
(7) Product-line Extension Strategies
(6) Market Segmentation/ Product Differentiation
Strategies
(10) Conglomerate Diversification Strategies
(4) Market Extension Strategies
(2) Market-Development Strategies
(8) Concentric Diversification Strategies
New Markets
Resource and/or Distribution Markets
(11) Forward and/or backward integration
strategies
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This time like all times is a good one, if we
but know what to do with it. -Ralph Waldo
Emerson