1. Planning and Strategic Management
Chapter Four
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

2. Learning Objectives
LO1 Summarize the basic steps in any planning process.
LO2 Describe how strategic planning should be integrated with tactical and operational planning.
LO3 Identify elements of the external environment and internal resources of the firm to analyze before formulating a strategy.
LO4 Define core capabilities and explain why they provide the foundation for business strategy.

3. Learning Objectives (cont.)
LO5 Summarize the types and choices available for corporate strategy. LO6 Discuss how companies can achieve competitive advantage through business strategy. LO7 Describe the keys to effective strategy implementation.

4. Decision Making Stages and Formal Planning Steps
Figure 4.1

5. Planning
Planning
conscious, systematic process of making decisions about goals and activities that an individual, group, work unit, or organization will pursue in the future.
a purposeful effort that is directed and controlled by managers and often draws on the knowledge and experience of employees throughout the organization.

6. The Basic Planning Process
Step 1 Situational Analysis Step 2 Alternative Goals and Plans Step 3 Goal and Plan Evaluation Step 4 Goal and Plan Selection Step 5 Implementation Step 6 Monitor and Control

7. Situational Analysis Situational analysis
A process planners use, within time and resource constraints, to gather, interpret, and summarize all information relevant to the planning issue under consideration.

8. Alternative Goals and Plans
Should stress creativity and encourage managers and employees to think in broad terms about their jobs.
Goal
A target or end that management desires to reach
Specific, measurable, attainable, relevant, time-bound - SMART

9. Question
___________ are the actions or means managers intend to use to achieve organizational goals.
Missions
Plans
Strategies
Services
The correct answer is b – plans. See next slide

10. Alternative Goals and Plans
The actions or means managers intend to use to achieve organizational goals
Contingency plans
sets of actions to be taken when a company’s initial plans have not worked well or if events in the external environment require a sudden change

11. Goal and Plan Evaluation
Managers will evaluate the advantages, disadvantages, and potential effects of each alternative goal and plan.
Must prioritize those goals and even eliminate some of them.
Managers must consider carefully the implications of alternative plans for meeting high priority goals.

12. Goal and Plan Selection
Managers will select the option that is most appropriate and feasible
The evaluation process will identify the priorities and trade-offs among the goals and plans
Scenario
A narrative that describes a particular set of future conditions.

13. Implementation
Managers and employees must understand the plan, have the resources to implement it, and be motivated to do so
Successful implementation requires a plan to be linked to other systems in the organization, particularly the budget and reward systems

14. Monitor and Control
Managers must continually monitor the actual performance of their work units against the unit’s goals and plans.
Manager’s also need to develop control systems to measure that performance and allow them to take corrective action when the plans are implemented improperly or when the situation changes

15. Strategic Planning Strategic planning Strategic goals
A set of procedures for making decisions about the organization’s long-term goals and strategies
Strategic goals
major targets or end results that relate to the long-term survival, value, and growth of the organization.

16. Strategic Planning Strategy
A pattern of actions and resource allocations designed to achieve the organization’s goals

17. Strategic Planning Where will we be active? How will we get there?
How will we win in the marketplace?
How fast will we move and in what sequence will we make changes?
How will we obtain financial returns?

18. Hierarchy of Goals and Plans
Figure 4.2

19. Tactical and Operational Planning
Tactical planning
A set of procedures for translating broad strategic goals and plans into specific goals and plans that are relevant to a distinct portion of the organization, such as a functional area like marketing.

20. Tactical and Operational Planning
The process of identifying the specific procedures and processes required at lower levels of the organization.

21. The Strategy Map
Figure 4.3

22. Strategic Planning Strategic management
A process that involves managers from all parts of the organization in the formulation and implementation of strategic goals and strategies.

23. The Strategic Management Process
Figure 4.4

24. Question
An organization’s __________ is the basic purpose and scope of operations.
Mission
Strategy
Goal
Policy
The correct answer is a - mission. See next slide

25. Establishment of Mission, Vision, and Goals
An organization’s basic purpose and scope of operations.

26. Establishment of Mission, Vision, and Goals
Strategic vision
the long-term direction and strategic intent of a company
provides a perspective on where the organization is headed and what it can become

27. Analysis of External Opportunities and Threats
Stakeholders
Groups and individuals who affect and are affected by the achievement of the organization’s mission, goals, and strategies

28. Analysis of Internal Strengths and Weaknesses
Resources
Inputs to a system that can enhance performance
Tangible, intangible assets

29. Internal Resource Analysis
Table 4.2

30. Resources and Core Competencies
Figure 4.5

31. Analysis of Internal Strengths and Weaknesses
Benchmarking
process of assessing how well one company’s basic functions and skills compare with those of another company or set of companies.
goal of benchmarking is to thoroughly understand the “best practices” of other firms and to undertake actions to achieve both better performance and lower costs

32. SWOT Analysis and Strategy Formulation
A comparison of strengths, weaknesses, opportunities, and threats that helps executives formulate strategy.

33. SWOT Analysis and Strategy Formulation
Corporate strategy
The set of businesses, markets, or industries in which an organization competes and the distribution of resources among those entities
Concentration
A strategy employed for an organization that operates a single business and competes in a single industry.

34. SWOT Analysis and Strategy Formulation
Vertical integration
The acquisition or development of new businesses that produce parts or components of the organization’s product
Concentric diversification
A strategy used to add new businesses that produce related products or are involved in related markets and activities.

35. Summary of Corporate Strategies
Figure 4.7

36. BCG Matrix
Figure 4.8

37. SWOT Analysis and Strategy Formulation
Low-cost strategy
A strategy an organization uses to build competitive advantage by being efficient and offering a standard, no-frills product
Differentiation strategy
A strategy an organization uses to build competitive advantage by being unique in its industry or market segment along one or more dimensions.

38. Strategy Implementation
Define strategic risks
Assess organization capabilities
Develop an implementation agenda
Create an implementation plan

39. Strategic Control Strategic control system
A system designed to support managers in evaluating the organization’s progress regarding its strategy and, when discrepancies exist, taking corrective action.

40. Video: Ball Corporation
What tactical planning steps did Ball Corporation take to innovate and remain competitive in the packaging industry?
Where do canning jars fit into the BCG matrix?