1. ENGM 742: Engineering Management and Labor Relations
Strategic Planning
Forecasting
Goals and Objectives
Decision Making

2. Planning Provides method for identifying objectives
Design sequence of programs and activities to achieve objectives

3. Effective Planning Plan to plan – not left to chance!
People implementing plan should be involved in preparing plan

4. Planning What must be done? Who will do it? How will it be done?
When must it be done?
How much will it cost?
What do we need to do it?

5. Planning What is the Problem/Purpose? Establish Goal/Objectives
What Client Need Is Being Satisfied by the Project?
Identify Success Criteria

6. The Foundation for Planning
Mission
Purpose or Goal
Objectives
Strategies All Customer Driven

7. Definitions Mission Goals Strategy
Overall goal for an organization and reason for an organization’s existence
Includes vision, values, beliefs
Goals
Organizational – desired state that org attempts to reach.
Operative - ends sought thru operating procedures of the org
Legitimacy, direction and motivation, decision guidelines, performance criteria
Strategy
Plan for interacting with the competitive environment to achieve organizational goals.

8. Strategic Planning

10. Strategic Plan
Suggests ways (strategies) to identify and to move toward desired future states
Consists of the process of developing and implementing plans to reach goals and objectives

11. Strategic Plan
Not a business plan
Not an operational plan

12. Strategic Management
The process through which managers formulate and implement strategies geared toward optimizing strategic goal achievement, given available environmental and internal conditions.
Strategy formulation
Strategy implementation

13. Strategic Process Strategy Formulation Strategy Implementation Mission
&
Strategic
Goals
Competitive
Analysis
* Strengths
* Weakness
* Opportunities
* Threats
Specific
Strategies
* Corporate
* Business
* Functional
Carry
Out
Plans
Maintain
Control
Assess
Environmental
Factors
Organizational

14. Levels of Strategy Corporate Level Business Level Functional Level
global organizational strategies
Business Level
best means of competing within a particular business
strategic business unit
Functional Level
action plans for specific functional areas

15. Basic Issues in Business Strategy
External
What is the structure of this industry?
What are the major competitive forces
What are the major trends?
Example: the Cola Wars

16. Basic Issues in Business Strategy
Internal
What skills, capabilities, and resources do we have that will allow us to do better than average in this industry?
What are our sources of sustainable competitive advantage?
Example: Southwest Airlines

17. Which came first…
…The position an organization has chosen in its industry or the development of the capabilities which put the organization in that position?

18. Competitive Analysis
SWOT
Strengths
Weaknesses
Opportunities
Threats

19. Class Exercise
Imagine you wish to open a deli-style restaurant within walking distance of the SDSM&T campus. In a small group, conduct a SWOT analysis for this potential new venture.

21. TOWS Matrix
Used to help identify strategic responses to the SWOT analysis
Strengths (S)
Weaknesses (W)
Opportunities (O) SO
Use strengths to take advantage of opportunities WO
Overcome weaknesses by taking advantage of opportunities
Threats (T) ST
Use strengths to avoid threats WT
Minimize weaknesses and avoid threats

22. Porter’s 5 Force Model Rivalry Bargaining power of customers
Bargaining power of suppliers
Threat of new entrants
Threat of substitute products or services

23. Determinants of Rivalry
Industry growth
Distribution of market shares
Fixed costs and storage costs
Differentiation
Switching costs
Competitor diversity
Barriers to exit

24. Bargaining Power of Customers / Suppliers
Relative concentration
Impact on supplier volume
Impact on buyer cost
Impact on buyer quality
Product differentiation
Switching costs
Threat of forward / backward integration
Industry profitability

25. Threat of New Entrants Capital requirements Economies of scale
Product differentiation
Switching costs
Access to distribution
First mover advantages
Industry growth
Strength of established competitors

26. Threat of Substitutes Product differentiation Switching costs
Customer loyalty
Generic options

27. Corporate Level Strategies
Grand
Strategies
Growth
Stability
Defensive
Concentration
Vertical Integration
Diversification
Harvest
Turnaround
Divestiture
Bankruptcy
Liquidation

28. Portfolio Strategies
A method of analyzing an organizations mix of businesses in terms of both individual and collective contributions to strategic goals
Three Common
BCG (Boston Consulting Group)
GE Business Screen
Product/Market Evolution Matrix

29. BCG Growth Matrix Relative Market Share Market Growth Rate High Low
Stars
Question Marks
Cash Cows
Dogs

30. Product-Process Life Cycle$
Maturity
Decline
Growth
Introduction
Time

31. Product/Market Evolution Matrix
Competitive Position
Develop
Growth
Shakeout
Maturity
Decline
Strong Average Weak
Life Cycle Stage

32. Open Systems Methodology for Organizational Effectiveness
Stakeholder Analysis
What need exists within the external environment?
Create Mission
Why does this organization exist?
How does the organization intend to fulfill environmental need?
Identify Operative Goals to Achieve Mission
What are the desired tangible, measurable outcomes?
Identify Strategy to Achieve Goals
What tactics or methodology should be used to achieve goals?
Assess Effectiveness and Respond
Is the organization successfully achieving desired results?

33. Step 1: Stakeholder Analysis
Identify key stakeholders and environmental needs
Customers
Employees
Suppliers
Stockholders
Questions to consider:
What are the needs of the environment?
What void can be filled by this organization?
What resources are available to the organization?
Government
Community
Unions
Many others

34. Step 2: Create Mission Mission Mission Statement
An organizations official overall goal
Includes internal and external elements such as:
Reason for existence
Vision for the future
Values & Beliefs
Target market & customers
Mission Statement
Method for communicating what the organization stands for and their desired identity
Communicates legitimacy to interested stakeholders

35. Vision
A vision statement describes in graphic terms where the goal-setters want to position themselves in the future.

36. Vision Example Eastman Chemical Company
“To Be the World's Preferred Chemical Company”

37. Vision – Microsoft (1980’s)
"A personal computer on every desk, and every computer running Microsoft software."

38. Mission Statement Resembles a vision statement
Has a more immediate business focus with a time horizon

39. Mission Example
The mission of Southwest Airlines is dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit.
9/9/05

40. Step 3: Identify Operative Goals
Identify desired measurable and tangible outcomes
More tactical than official goals
Examples of Operative Goals
Overall Performance: profitability, growth, volume
Resource: acquisition of needed material and financial resources
Market: market share or desired market standing
Employee Development: training, promotion, safety
Innovation and Change: readiness to adapt to unexpected changes
Productivity: output achieved from available resources

41. Planning Goal Statement
Gives purpose and direction
Used as continual point of reference for questions regarding scope or purpose

42. Planning Objectives More detailed goal statement Clarifies goal
How do we go about it?
To (action verb)
Consistent with organization

43. Planning Develop Objectives
Specific
Measurable
Attainable
Realistic
Time-limited

44. Goals and Objectives Drucker’s Objectives for Organizational Survival
Market Share
Innovation
Productivity
Physical and Financial Resources
Manager Performance and Development
Worker Performance and Attitude
Profitability
Social Responsibility

45. Step 4: Identify Strategy
Porter’s Competitive Strategies Model
Competitive Advantage
Low Cost
Uniqueness
Low-Cost
Leadership
(Dell Computer)
Differentiation
(Starbucks)
Broad
Competitive Scope
Focused
Low-Cost
Leadership
(Enterprise Rent-a-Car)
Focused
Differentiation
(Edward Jones
Investments)
Narrow

46. Organizational Design Outcomes of Strategy: Porter’s Competitive Strategies
Strategy: Differentiation
Organization Design:
Learning orientation; acts in a flexible, loosely knit way, with strong horizontal coordination
Strong capability in research
Values and builds in mechanisms for customer intimacy
Rewards employee creativity, risk-taking, and innovation
Strategy: Low-Cost Leadership
Organization Design:
Efficiency orientation; strong central authority; tight cost control, with frequent, detailed control reports
Standard operating procedures
Highly efficient procurement and distribution systems
Close supervision; routing tasks; limited employee empowerment

47. “Voodoo Doughnut – Getting Noticed in a Crowded Market”

48. Step 5: Assess Effectiveness
Methods for Determining Effectiveness
Goal Approach
Focus on output and productivity
Easiest to measure
Resource-Based Approach
Focus on ability to acquire necessary resources
Useful when other measures are difficult to obtain
Internal Process Approach
Focus on efficiency and internal health of organization
Competing Values Approach
Recognizes difficulty of measuring multiple goals

49. Step 5: Assess Effectiveness

50. Benchmarking What it is
Measuring company processes by those of the best competitors
in your industry
outside your industry
domestic and foreign
Learning how others do process
Adapting what you learn to your own company
Taking action to meet or exceed the best
Becoming the new industry leader

51. Benchmarking What it is not a mechanism for resource reductions
its aim is not “downsizing”
performance evaluation of individuals and groups within company
something you do half-heartedly
program, panacea, fad, or public relations campaign

52. Metrics Financial Product performance Unit operation
System operational
Aggregated measures of performance
Long term competitive capability
Technological capability
Technical personnel
Interactions with other activities

53. “Making Strategy Simple” https://www.youtube.com/watch?v=6GrwY51Sbo4

54. Organizational Learning
A learning organization is involved in both knowledge creation and behavioral changes based on the new knowledge.
Knowledge as an important resource
Institutional memory
Continuous improvement