FundamentalsOrganizationalReal Examples Three tracks Brown/Eisenhardt Text Wheelen/Hunger Text Guest Speakers Case Studies Student Profiles Supplemental Reading Packets Lecture Material

What Is Strategic Planning ? Change oriented process Focuses on the future Matches core competencies with external market needs Develops operating models for profitability over a given time horizon Provides the vision and direction for the organization

The Need for Planning What business are we in? Company values-”why are we in this business?” Systematic approach to growing the business Recognize when/how to change Developing profitable operating models Aligning organizations for efficient execution

New Business –Entrepreneur self assessment –Available resources Emerging Business –Follow a strategic planning model –All organizations are involved –Focus on growth and change

Barriers to Planning Short-term focus-”you’re only as good as your last quarter”. Perception that formalized planning constrains and limits flexibility. Intuitive, unwritten plans are sufficient Planning process is viewed as extracurricular Organizational/cultural issues

Benefits of Strategic Planning Filters data to recognize change agents Determines where the business is going and where it is not Establishes competitive awareness Engages employees as contributors and implementers Allows for external parties to review and/or contribute

Forces of Change Response of competitors Proliferation of technology Rising and shifting customer demands Push for improved products and services Economic trends Drive for quality and efficiency Changing rules and regulations New and unexpected crisis

Customers EmployeesOwners Value Creation Who Do We Create Value For?

Value Product Leadership Customer Intimacy Operational Excellence How Do We Create Value?

Develop Mission & Vision Perform Situational Analysis Set Objectives & Craft Strategies Implement Strategy Assess Value Creation & Provide Feedback Feedback Strategic Management Framework Compare with Text pp. 1 & 20

Value Creation Example Committed Team of Employees Employee Value Delighted Customers & Favorable Public image Customer Value Operational Excellence Superior Financial Performance Outstanding Shareholder Return Owner Value

Balanced Scoreboard Model MeasurementTargetInitiative Financial Customer Internal Learning Operating Income Satisfaction surveys Inventory turns % skills available + 6% +3 pnt 7:1 50% yr 1 Skills training J.I.T. Direct sales channel Margin improvement

Building the Planning Environment Become an extension of your customers organization Challenge existing procedures and routines Encourage risk taking Be accepting of and learn from mistakes Encourage diverse opinions Trust and teamwork begin with open communication

Foundations of Resistance Not convinced of the need for change Not wanting to loose something of value Not understanding the implications and assuming the worst Fear of failure or lessened effectiveness Low tolerance to change

Manage for Growth and Change Establish the need for change Provide a vision for change Listen and address the resistance Develop a plan for change Get people involved in planning and working through the details

Setting Direction for Growth and Change Establish a vision for the organization “A man on the moon by the end of the decade”- John F. Kennedy The crystal ball visionary doesn’t exist Business vision evolves from experience and insight

Setting Direction for Growth and Change Communicate the vision People need to know they have a part in the vision Most successful leaders are evangelistic about there vision

Develop Mission & Vision Perform Situational Analysis Set Objectives & Craft Strategies Implement Strategy Assess Value Creation & Provide Feedback Feedback Strategic Management Framework

Vision & Mission Environmental Analysis Industrial Analysis Internal Strengths & Weaknesses Distinctive Core Competencies & Competitive position Analysis Phase Strategy Development Phase Growth Strategies Goal Setting Unit Strategy & Tactics Strategic Planning Model

Components of the Vision Statement Clear hope for the future Challenging; inspires excellence Energizing to employees, & customers/clients Memorable Three C’s- Clear, Concise, Compelling

The Mission Statement Clear, crisp, not statements of platitudes Part 1- nature of the business –States Industry, product and/or type of service –States role to customer, a wholesaler, a manufacturer, retailer etc. –States the prime goals of the firm –States target market- who is or will be served.

The Mission Statement Part 2- Management philosophy and underlying values –Communicates the core values that are most central and critical –Value orientation that guides managements actions –Communicates a compelling self image and public image.

Hierarchy of Strategy 1.Corporate Strategy 2.Business Unit Strategy 3.Functional/Departmental Strategy Page 13 Wheelen/Hunger

Types of Strategies Market penetrationMarket Extension Product DevelopmentDiversification Products Present New Present New Markets

Integration Strategies Suppliers Company Distributor Competitor Customers Backward Integration Horizontal Integration Forward Integration

Develop Mission & Vision Perform Situational Analysis Set Objectives & Craft Strategies Implement Strategy Assess Value Creation & Provide Feedback Feedback Strategic Management Framework