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Presentation on theme: "STRATEGIC PLANNING."— Presentation transcript:


2 A Definition of Strategy
‘Strategy is the direction and scope of an organisation over the long term which achieves advantages for the organisation through its configuration of its resources within a changing environment and to fulfil stakeholder expectations’ Johnson and Scholes (2002)

3 “What is strategy anyway?”
"Strategy is the direction and scope of an organisation over the long term: ideally, which matches its resources to its changing environment, and in particular its markets, customers or clients so as to meet stakeholder expectations.” Johnson & Scholes 'Exploring Corporate Strategy: Text and Cases'

4 Strategic planning is a process which takes into account an organization’s external and internal environments while helping it define its purposes, what it intends to become, and how it will attain its goals.

5 Why Some Firms Do No Strategic Planning
Poor Reward Fire-fighting Waste of Time Too Expensive Laziness Content with Success Fear of Failure Prior Bad Experience Self-Interest Fear of the Unknown Honest Difference of Opinion Suspicion

6 What if we don’t plan? Decision-making by crisis
Plans driven by budget Wasted/inefficient use of resources Unnecessary conflict – mostly over resource allocations No clear direction/vision Unable to quickly respond to opportunities and threats

7 What makes planning strategic?
Considers the environment – external and internal in relation to the organization Involves issues of significance having an impact on the organization's future Involves both analysis and insight

8 Strategic planning is a process.
Purpose is not to produce a document but to result in strategic thinking and acting by the people doing the work in the organization. Documents are used to record both intentions and accomplishments – but they are not the goal of strategic planning.

9 SP should answer the following questions:
Where should the organization be going? Why and how has a particular direction/vision been chosen? What strategies and actions will be necessary to reach our vision? How will resources be marshaled?

10 In other words --- Strategic planning should help us envision our desired future and then put us on course to realize that vision.

11 Strategic planning is not a substitute for:
Leadership Strategic thinking and acting Competence They will work together for the benefit of the members of the organization and stakeholders.

12 Overall process often includes:
Initiation Awareness of need Training Commitment by key people Establishment of key committee(s) Identification of resources needed Discussion of what is to be accomplished

13 Overall process often includes:
Formation of planning groups Coordinating committee Working group Other groups as needed Environmental scan Internal and external contexts Planning assumptions Mandates Vision/vision of success Values/guiding principles Mission

14 Overall process often includes:
Identification of strategic issues/initiatives and selection of issues for action Outcome criteria/expectations for each action item Strategies and action plans Plan for monitoring progress and revising Write the document Implement the process

15 A strategic issue is: A significant challenge or situation the organization can do something about. Involves factors (e.g., mission, mandates, SWOT’s) that make the issue strategic. Entails consequences of not addressing the issue

16 Identifying strategic issues is useful because:
Focuses attention on what is really important. Emphasizes issues rather than answers. Can create “useful tension” necessary for true change. Helps in identifying solutions. Process becomes real for some at this point

17 Strategic Planning The Vision Aims and Objectives:
Communicating to all staff where the organisation is going and where it intends to be in the future Allows the firm to set goals Aims and Objectives: Aims – long term target Objectives – the way in which you are going to achieve the aim

18 Strategic Planning Example:
Aim may be for a chocolate manufacturer to break into a new overseas market Objectives: Develop relationships with overseas suppliers Identify network of retail outlets Conduct market research to identify consumer needs Find location for overseas sales team HQ

19 Strategic Planning Once the direction is identified: Analyse position
Develop and introduce strategy Evaluate: Evaluation is constant and the results of the evaluation feeds back into the vision

20 Components of the General Environment
Economic Demographic Sociocultural Competitive Environment Industry Environment Political/Legal Global Technological 10

21 The SWOT Analysis 1

22 SWOT Analysis Strengths Weaknesses Opportunities Threats

23 Basic Assumption of a SWOT Analysis
Align internal activities with external realities The SWOT analysis provides a framework for analyzing: strengths and weaknesses (internal); and opportunities and threats (external)

24 summarise the results of analyses
The SWOT diagram may summarise the results of analyses Internal Analyses Strengths Weaknesses Opportunities Threats External Analyses

25 The GAP / SWOT Analysis “GAP” What you have to do to get there. The
Vision 3-5 years Situation Audit Where you are today. Where you want to go. What you have to do to get there.

26 The purpose of SWOT Analysis
It is an easy-to-use tool for developing an overview of a company’s strategic situation It forms a basis for matching your company’s strategy to its situation

27 SWOT is the starting point
It provides an overview of the strategic situation. It provides the “raw material” to do more extensive internal and external analysis.

28 The External Environment:
SWOT Analysis The External Environment: 1

29 The External Environment: Opportunities, Threats,
e.g.: Industry Competition, and Competitor Analysis 1

30 Opportunities An OPPORTUNITY is a chance for firm growth or progress due to a favorable juncture of circumstances in the business environment. Possible Opportunities: Emerging customer needs Quality Improvements Expanding global markets Vertical Integration

31 Threats A THREAT is a factor in your company’s external environment that poses a danger to its well-being. Possible Threats: New entry by competitors Changing demographics/shifting demand Emergence of cheaper technologies Regulatory requirements

32 Opportunities and Threats form a basis for EXTERNAL analysis
By examining opportunities, you can discover untapped markets, and new products or technologies, or identify potential avenues for diversification. By examining threats, you can identify unfavorable market shifts or changes in technology, and create a defensive posture aimed at preserving your competitive position.

33 Opportunities and Threats Primarily external in nature
Represent characteristics of: the research environment growth in potential markets changes in the competitive, economic, political/legal, technological, or socio-cultural environments A threat to some is an opportunity to another.

34 Questions on opportunities:
Is there a product/service area that others have not yet covered? Are there emerging trends that fit with your company's strengths? Questions on threats: Are your competitors becoming stronger? Are there emerging trends that amplify one of your weaknesses?

35 The Internal Environment:
SWOT Analysis The Internal Environment: 1

36 The Internal Environment: e.g.: Resources, Capabilities and
Strengths, Weaknesses, e.g.: Resources, Capabilities and Core Competencies 1

37 Strengths A STRENGTH is something a company is good at doing or a characteristic that gives it an important capability. Possible Strengths: Name recognition Proprietary technology Cost advantages Skilled employees Loyal Customers

38 Weaknesses A WEAKNESS is something a company lacks or does poorly (in comparison to others) or a condition that places it at a disadvantage Possible Weaknesses: Poor market image Obsolete facilities Internal operating problems Poor marketing skills

39 Strengths and Weakness form a basis for INTERNAL analysis
By examining strengths, you can discover untapped potential or identify distinct competencies that helped you succeed in the past. By examining weaknesses, you can identify gaps in performance, vulnerabilities, and erroneous assumptions about existing strategies.

40 Realistic and not modest One’s strength is another’s weakness
Strengths Consider from both the view of the firm (product) as well as from customers and competitors Realistic and not modest One’s strength is another’s weakness Questions: What are the firm’s advantages over others? What does the firm do well? What makes you stand out from your competitors?

41 Consider from internal and external viewpoint
Weaknesses Consider from internal and external viewpoint Be truthful so that weaknesses may be overcome as quickly as possible One’s strength is another’s weakness Questions. What is done poorly? What can be improved? What should be avoided?

42 SWOT Analysis Framework

43 SWOT Matrix Internal External + Strengths Opportunities - Weaknesses

44 Getting Started Be realistic about the strengths and weaknesses
Analysis should distinguish between where you are today and where you could be in the future Be specific. Avoid grey areas. Keep the SWOT short and simple. Avoid complexity and over analysis SWOT is subjective.

45 Suggestions for conducting SWOT Analysis:
Be realistic; no need to inflate strengths or be in denial about shortcomings. Distinguish between where your technology is today, and where it could be in the future. Be specific. Avoid grey areas. Always analyze in the context of your competitive environment. Keep your SWOT short and simple.

46 Using the SWOT Analysis
Weaknesses should be looked at in order to convert them into strengths. Try to match your strengths with external opportunities. Threats should be converted into opportunities. Strengths and opportunities should be matched.

47 Expanding Your SWOT Analysis
Delve deeper into the details of the technology. Include more detailed competitor information in the analysis. Take a closer look at the business environment. Expand the reach of a SWOT analysis through surveys.

48 Simple rules for a successful SWOT analysis
Establish the objectives Establish the team Allocate research and information gathering tasks Evaluate listed ideas against Objectives Evaluate the List Action Plan Build the Strategies Review the SWOT

49 Drawbacks of SWOT Usually reflects an existing position and viewpoint
Can look for 'fit' rather than to 'stretch' Snapshot SWOT analysis can very subjective May be too close or far away from the actual activities of the organization Focusing on the internal state vs. The external Align internal efforts with external opportunities Caution: Do not rely on it too much Two people rarely come-up with the same final version of SWOT

50 Conclusion A SWOT analysis when correctly applied, is one tool that could provide an overall picture of the current situation and the outstanding requirements for business organizations. Used creatively, SWOT can form a foundation upon which to construct strategic plans for implementation


52 PEST Political: Local, national and international political developments – how will they affect the organisation and in what way/s? Economic: what are the main economic issues – both nationally and internationally – that might affect the organisation? Social: what are the developing social trends that may impact on how the organisation operates and what will they mean for future planning? Technological: changing technology can impact on competitive advantage very quickly!

53 PEST Examples: Growth of China and India as manufacturing centres
Concern over treatment of workers and the environment in less developed countries who may be suppliers The future direction of the interest rate, consumer spending, etc. The changing age structure of the population The popularity of ‘fads’ like the Atkins Diet The move towards greater political regulation of business The effect of more bureaucracy in the labour market

54 Five-Forces Developed by Michael Porter: forces that shape and influence the industry or market the organisation operates in. Strength of Barriers to Entry - how easy is it for new rivals to enter the industry? Extent of rivalry between firms – how competitive is the existing market? Supplier power – the greater the power, the less control the organisation has on the supply of its inputs. Buyer power – how much power do customers in the industry have? Threat from substitutes – what alternative products and services are there and what is the extent of the threat they pose?

55 Strategy Requires Good Analyses & Choices


Establishing the mission Formulating an organizational philosophy Establishing policies Setting Objectives Developing a strategy Planning the organizational structure Providing personnel

Establishing procedures Providing facilities Providing capital Setting standards Establishing management programmes and operational plans Providing control information Activating people




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