Corporate Strategic Planning - Corporate Strategic PlanningCorporate Strategic PlanningCorporate Strategic PlanningCorporate Strategic Planning

7/25/2019 Corporate Strategic Planning - Corporate Strategic PlanningCorporate Strategic PlanningCorporate Strategic Planni

1/29

corporate strategic planning

Definition

Systematicprocessof determining goalsto be achieved in the foreseeable future. It

consists of: (1) Management'sfundamentalassumptionsabout the future economic,

technological, and competitiveenvironments. () Setting of goals to be achieved !ithin

a specified timeframe. (") #erformanceof S$%& analysis. () Selecting main and

alternative strategiestoachievethe goals. () ormulating, implementing,

and monitoringthe operationalor tactical plansto achieve interim ob*ectives.

+ead more: http:!!!.businessdictionary.comdefinitioncorporate-strategic-planning.htmli/002poI32e

Mission and Vision Statements in StrategicPlanning

There are various issues to consider in making an organizational strategic plan. Strategic plans oftenmean a change in organizational structure or a move toward change. Change can be a difficult processand sometimes requires time. It is important to get employees on board with the decision making process.

This can be articulated through the mission and vision statement of the organization. Articulating andrepeating the positives of the move toward change in the organization will help employees stay engagedand motivated in the process.

Strategic Planning

Change is an essential component of strategic planning. This involves moving the organization or

program forward to create or change something. Some plans are created out of the need for the

organization to move in a certain direction and other plans develop organically. !ission and vision

statements will be important to help communicate the goals of the plan to employees and the public.

Mission Statement

"eaders should emphasize the current mission statement to employees which clarifies the purpose and

primary measurable ob#ectives of the organization. A mission statement is meant for employees and

leaders of the organization. Strategic plans may involve changing the mission statement to reflect a new

direction of the organization. $ighlighting the benefits of the change and minimizing the deficits will help

employees and the public buy into the change.

7/25/2019 Corporate Strategic Planning - Corporate Strategic PlanningCorporate Strategic PlanningCorporate Strategic Planni

2/29

Vision Statement

Like mission statements, vision statements help to describe the organization's purpose.

Vision statements also include the organization values. Vision statements give direction for

employee behavior and helps provide inspiration. Strategic plans may reuire a marketing

strategy, !hich could include the vision statement to also help inspire consumers to !ork!ith the organization.

Purpose and "ene#ts

Strategic planning !ill likely have its successes and failures. Leaders should celebrate the

little successes to!ard meeting ob$ectives, !hich are part of the mission and vision

statement. %he mission statement !ill help measure !hether the strategic plan aligns !ith

the overall goals of the agency. %he vision statement helps to provide inspiration to

employees. &mployees !ho feel invested in the organizational change are more likely to

stay motivated and have higher levels of productivity.

onsiderations

( successful change !ill involve communicating and repeating mission and vision

statements, !hich helps prevent people from becoming discouraged in the event of small

failures along the !ay. Leaders should continue to highlight the strengths of the strategic

plans and involve important stakeholders in the process. &ngaging employees and

volunteers !ill help them to recognize and take o!nership of the change. )nvolving

employees also helps to provide more minds to prevent possible problems.

7/25/2019 Corporate Strategic Planning - Corporate Strategic PlanningCorporate Strategic PlanningCorporate Strategic Planni

3/29

First, mission and vision provide a vehicle for communicating an organizations purpose and values

to all key stakeholders. Stakeholders are those key parties who have some influence over the

organization or stake in its future. You will learn more about stakeholders and stakeholder analysis

later in this chapter; however, for now, suffice i

*hat )s the +ole of Leadership in Strategic)mplementation

Implementing corporate strategy requires a team effort headed by your organization%s leadership team.&ach person involved in change management has their responsibilities and it is important for the entireorganization to understand the role of leadership in strategic implementation to make delegatingresponsibility more effective.

)nvolvement

Strategic implementation of any kind of new company policy or program requires participation from all of

the departments that will be affected. Company leadership needs to identify what those departments are

and create an implementation team that consists of representatives from each affected group.

!anagement needs to create a structure that identifies various group leaders the responsibilities of those

group leaders and an accountability system that insures that the implementation team meets its timetablefor getting the new program or policy in place.

)nterest

Implementing change or any new strategy within a company requires a feeling of urgency on the part of

the entire company. It is the #ob of management to create that urgency by e'plaining to the staff why the

implementation is necessary. "eadership needs to help the employees understand how the company

7/25/2019 Corporate Strategic Planning - Corporate Strategic PlanningCorporate Strategic PlanningCorporate Strategic Planni

4/29

benefits from the new implementation but it also needs to get the organization to see the setbacks of not

making a change.

Monitoring

Strategic implementation within a company is not an e'act process. It is a dynamic procedure that needsto be monitored by management and altered to meet implementation goals. It is the responsibility of

leadership to put a monitoring system in place analyze the data that is being generated during the

implementation and make any necessary changes to make the implementation more efficient.

-et Step

Implementing a corporate strategy or change is often done in phases. The company leadership needs to

be able to identify when each phase of a strategic implementation is complete and be ready to transition

the company to the ne't phase. (or e'ample if the company is bringing in a new software program for

customer management then the first phase of the program may be to implement it in the sales

department. !anagement needs to identify when the proper alterations to the software have been made

that will allow it to be implemented in other parts of the company.

Author of the Smart ) (ast mini*course " trategic Management"

View more slides

Smart Executive

Results-based Leadership

Articulate Your Vision

Set Stretch Goals

Leadership vs !anagement

!a"or Leadership St#les

Leadership Attributes

7/25/2019 Corporate Strategic Planning - Corporate Strategic PlanningCorporate Strategic PlanningCorporate Strategic Planni

5/29

QuickMBA/ Strategy/ Levels of Strategy

$ierarchical "evels of Strategy

Strategy can be formulated on three different levels+

corporate level

business unit level

functional or departmental level.

,hile strategy may be about competing and surviving as a firm one can argue thatproducts not corporations compete and products are developed by business units. Therole of the corporation then is to manage its business units and products so that each iscompetitive and so that each contributes to corporate purposes.

Consider Te'tron Inc. a successful conglomerate corporation that pursues profitsthrough a range of businesses in unrelated industries. Te'tron has four core businesssegments+

Aircraft * -/ of revenues

Automotive * 0/ of revenues

Industrial * -1/ of revenues

(inance * 2/ of revenues.

,hile the corporation must manage its portfolio of businesses to grow and survive thesuccess of a diversified firm depends upon its ability to manage each of its product

7/25/2019 Corporate Strategic Planning - Corporate Strategic PlanningCorporate Strategic PlanningCorporate Strategic Planni

6/29

lines. ,hile there is no single competitor to Te'tron we can talk about the competitorsand strategy of each of its business units. In the finance business segment fore'ample the chief rivals are ma#or banks providing commercial financing. !anymanagers consider the business level to be the proper focus for strategic planning.

Corporate Level Strategy

Corporate level strategy fundamentally is concerned with the selection of businesses inwhich the company should compete and with the development and coordination of thatportfolio of businesses.

Corporate level strategy is concerned with+

3each * defining the issues that are corporate responsibilities4 these might

include identifying the overall goals of the corporation the types of businesses inwhich the corporation should be involved and the way in which businesses willbe integrated and managed.

Competitive Contact * defining where in the corporation competition is to belocalized. Take the case of insurance+ In the mid*5116%s Aetna as a corporationwas clearly identified with its commercial and property casualty insuranceproducts. The conglomerate Te'tron was not. (or Te'tron competition in theinsurance markets took place specifically at the business unit level through itssubsidiary 7aul 3evere. 8Te'tron divested itself of The 7aul 3evere Corporationin 5119.:

!anaging Activities and ;usiness Interrelationships * Corporate strategy seeksto develop synergies by sharing and coordinating staff and other resourcesacross business units investing financial resources across business units andusing business units to complement other corporate business activities. Igor

Ansoff introduced the concept of synergy to corporate strategy.

!anagement 7ractices * Corporations decide how business units are to begoverned+ through direct corporate intervention 8centralization: or through moreor less autonomous government 8decentralization: that relies on persuasion andrewards.

Corporations are responsible for creating value through their businesses. They do so bymanaging their portfolio of businesses ensuring that the businesses are successfulover the long*term developing business units and sometimes ensuring that eachbusiness is compatible with others in the portfolio.

7/25/2019 Corporate Strategic Planning - Corporate Strategic PlanningCorporate Strategic PlanningCorporate Strategic Planni

7/29

Business Unit Level Strategy

A strategic business unit may be a division product line or other profit center that canbe planned independently from the other business units of the firm.

At the business unit level the strategic issues are less about the coordination ofoperating units and more about developing and sustaining a competitive advantage forthe goods and services that are produced. At the business level the strategyformulation phase deals with+

positioning the business against rivals

anticipating changes in demand and technologies and ad#usting the strategy toaccommodate them

influencing the nature of competition through strategic actions such as vertical

integration and through political actions such as lobbying.

!ichael 7orter identified three generic strategies8cost leadership differentiationand focus: that can be implemented at the business unit level to create a competitiveadvantage and defend against the adverse effects of the five forces.

Functional Level Strategy

The functional level of the organization is the level of the operating divisions and

departments. The strategic issues at the functional level are related to businessprocesses and the value chain. (unctional level strategies in marketing financeoperations human resources and 3)< involve the development and coordination ofresources through which business unit level strategies can be e'ecuted efficiently andeffectively.

(unctional units of an organization are involved in higher level strategies by providinginput into the business unit level and corporate level strategy such as providinginformation on resources and capabilities on which the higher level strategies can bebased. =nce the higher*level strategy is developed the functional units translate it intodiscrete action*plans that each department or division must accomplish for the strategy

to succeed.

Recommended Reading

!intzberg $enry "ampel >. Ahlstrand ;. Strategy Safari:A Guided Tour through the Wilds of StrategicManagement

7/25/2019 Corporate Strategic Planning - Corporate Strategic PlanningCorporate Strategic PlanningCorporate Strategic Planni

8/29

Strategy Safariorganizes the seemingly disconnected aspects of strategic management into 56 differentschools of thought. (or e'ample the basic strategic planning model that was popular in the 5196%s is partof The 7lanning School and !ichael 7orter%s theories are part of The 7ositioning School. StrategySafariprovides an overview of each school and presents a balanced view of each including advantagesand disadvantages. ;ecause of its comprehensive and insightful approachStrategy Safaripresents ane'cellent overview of the field of strategic management.

QuickMBA/ Strategy/ Strategic lanning

The Strategic 7lanning 7rocess

In today%s highly competitive business environment budget*oriented planning or

forecast*based planning methods are insufficient for a large corporation to survive and

prosper. The firm must engage in strategic planningthat clearly defines ob#ectives andassesses both the internal and e'ternal situation to formulate strategy implement the

strategy evaluate the progress and make ad#ustments as necessary to stay on track.

A simplified view of the strategic planning process is shown by the following diagram+

!"e Strategic lanning rocess

7/25/2019 Corporate Strategic Planning - Corporate Strategic PlanningCorporate Strategic PlanningCorporate Strategic Planni

9/29

Mission &

Objectives

Environmental

Scanning

Strategy

Formulation

Strategy

Implementation

Evaluation

& Control

Mission and Objectives

The mission statement describes the company%s business vision including theunchanging values and purpose of the firm and forward*looking visionary goals that

guide the pursuit of future opportunities.

?uided by the business vision the firm%s leaders can define measurable financial and

strategic ob#ectives. (inancial ob#ectives involve measures such as sales targets and

earnings growth. Strategic ob#ectives are related to the firm%s business position and

may include measures such as market shareand reputation.

7/25/2019 Corporate Strategic Planning - Corporate Strategic PlanningCorporate Strategic PlanningCorporate Strategic Planni

10/29

Environmental Scan

The environmental scan includes the following components+

Internal analysis of the firm

Analysis of the firm%s industry 8task environment:

&'ternal macroenvironment 87&ST analysis:

The internal analysis can identify the firm%s strengths and weaknesses and the e'ternal

analysis reveals opportunities and threats. A profile of the strengths weaknesses

opportunities and threats is generated by means of a S,=T analysis

An industry analysis can be performed using a framework developed by !ichael 7orter

known as 7orter%s five forces. This framework evaluates entry barriers suppliers

customers substitute products and industry rivalry.

Strategy ormulation

?iven the information from the environmental scan the firm should match its strengths

to the opportunities that it has identified while addressing its weaknesses and e'ternalthreats.

To attain superior profitability the firm seeks to develop a competitive advantageover its

rivals. A competitive advantage can be based on cost or differentiation. !ichael 7orter

identified three industry*independent generic strategiesfrom which the firm can choose.

Strategy !mplementation

The selected strategy is implemented by means of programs budgets and procedures.

Implementation involves organization of the firm%s resources and motivation of the staff

to achieve ob#ectives.

The way in which the strategy is implemented can have a significant impact on whetherit will be successful. In a large company those who implement the strategy likely will be

different people from those who formulated it. (or this reason care must be taken to

communicate the strategy and the reasoning behind it. =therwise the implementation

might not succeed if the strategy is misunderstood or if lower*level managers resist its

implementation because they do not understand why the particular strategy wasselected.

7/25/2019 Corporate Strategic Planning - Corporate Strategic PlanningCorporate Strategic PlanningCorporate Strategic Planni

11/29

Evaluation " #ontrol

The implementation of the strategy must be monitored and ad#ustments made as

needed.

&valuation and control consists of the following steps+

5.

7/25/2019 Corporate Strategic Planning - Corporate Strategic PlanningCorporate Strategic PlanningCorporate Strategic Planni

12/29

national prosperity is created, not inherited. )t does not gro! out of acountry3s natural endo!ments, its labor pool, its interest rates, or its

currency3s value, as classical economics insists.

( nation3s competitiveness depends on the capacity of its industry to

innovate and upgrade. ompanies gain advantage against the !orld3s bestcompetitors because of pressure and challenge. %hey bene#t from havingstrong domestic rivals, aggressive home4based suppliers, and demandinglocal customers.

)n a !orld of increasingly global competition, nations have become more, notless, important. (s the basis of competition has shifted more and more to thecreation and assimilation of kno!ledge, the role of the nation has gro!n.ompetitive advantage is created and sustained through a highly localized

process. 0i5erences in national values, culture, economic structures,

institutions, and histories all contribute to competitive success. %here arestriking di5erences in the patterns of competitiveness in every country6 no

nation can or !ill be competitive in every or even most industries.7ltimately, nations succeed in particular industries because their homeenvironment is the most for!ard4looking, dynamic, and challenging.

%hese conclusions, the product of a four4year study of the patterns ofcompetitive success in ten leading trading nations, contradict theconventional !isdom that guides the thinking of many companies andnational governments8and that is pervasive today in the 7nited States. 92or

more about the study, see the insert :Patterns of -ational ompetitiveSuccess.;< (ccording to prevailing thinking, labor costs, interest rates,echange rates, and economies of scale are the most potent determinants ofcompetitiveness. )n companies, the !ords of the day are merger, alliance,

strategic partnerships, collaboration, and supranational globalization.Managers are pressing for more government support for particular industries.(mong governments, there is a gro!ing tendency to eperiment !ith various

policies intended to promote national competitiveness8from e5orts tomanage echange rates to ne! measures to manage trade to policies torela antitrust8!hich usually end up only under mining it. 9See the insert:*hat )s -ational ompetitiveness;

7/25/2019 Corporate Strategic Planning - Corporate Strategic PlanningCorporate Strategic PlanningCorporate Strategic Planni

13/29

ash=o! )mplications

for 1ro!ing "usinesses

The growth of your business should have a positive impact as it implies that you may be

increasing profits increasing market share employing more staff buying or leasing

larger premises e'panding your product range or even gaining a better reputation.

These are great outcomes and if managed correctly your business will thrive. !anaged

poorly you run the risk of insolvency and your business could fail.

(ny gro!th should be planned and re=ected in budgets including your

cash=o! forecast. >our pro#t and loss budget is used to manage the

revenue and ependiture !hereas the cash=o! is used to forecast the timing

7/25/2019 Corporate Strategic Planning - Corporate Strategic PlanningCorporate Strategic PlanningCorporate Strategic Planni

14/29

of the payments and receipts. %herefore, !hen planning your gro!th you

should be clear !hat it is you are going to be doing, ho! you are going to do

it and !hen you are going to do it.

@ou need to be very clear about the costs that will be incurred and when they will be

paid as well as when you e'pect income to be received. Some important factors youneed to be mindful of when planning for growth are+

Are there seasonal factors that will affect my cashflow

7/25/2019 Corporate Strategic Planning - Corporate Strategic PlanningCorporate Strategic PlanningCorporate Strategic Planni

15/29

know your business. As a result the lending organisation is more likely to lend you thefunds and you may be able to negotiate a better deal with reduced costs. This washighlighted in our case study on $erb ;oothwhere the (ounder ) C&= Chris ;oothdiscussed how the Cal'a software helped when applying for a bank loan. In relation tothe presentation and accuracy of the cashflow forecast Chris stated DThe fact that they

married up with the 7rofit ) "oss and ;alance Sheet reports from !@=; certainlyimpressed themE..F Chris also discussed the importance of being able to foresee inadvance when cashflow will be short and how he can take action and stated D>ust thisweek I saved G0666 by reviewing my e'penses and changing one of my suppliers. IwouldnHt have been prompted to do that if I hadnHt been using Cal'aHs cashflowforecast.F

@our budget and cashflow forecast should clearly incorporate the elements of thegrowth and when they are likely to occur so you can monitor and avoid surprises. Thisallows you to actively manage your business and make considered and informeddecisions as they are needed. This will give you greater control and confidence with the

growth of your business without it adversely impacting on the viability of your business.

A#$#Littles Life%cycle approac" to strategic planning

assessing suitability

life cycle analysis

7/25/2019 Corporate Strategic Planning - Corporate Strategic PlanningCorporate Strategic PlanningCorporate Strategic Planni

16/29

positioning

66.5 Introducing ;usiness 7ortfolio

!anagement Many people are familiar !ith the term 4portfolio management4 in the financial sense. &he

term implies that you manage your money in a !ay that ma/imi0es your return and minimi0es

your ris5. &his includes understanding the different investment alternatives available and

pic5ing the ones that best achieve your overall financial goals and strategy. %ne si0e does not

fit all. &he investment decisions you ma5e !hen you are "6 are different from the ones you

ma5e !hen you are . 7ou don't loo5 at each investment in isolation, but in the conte/t of

the entire portfolio.

Example: 7ou may have a bond fund that is not doing as !ell as your stoc5 funds. 8o!ever,

you may decide to 5eep it because it provides balance to your entire portfolio and helps reduce

your overall ris5. 2epending on mar5et conditions, you may find that your stoc5 funds are

suddenly do!n, but your bond fund is no! providing the counterbalancing strength. 9i5e!ise,

you may turn do!n buying a 4hot tip4 stoc5 because the ris5 is too high and the purchase

!ould not fit !ithin your portfolio strategy.

Example: 7ou may prefer stoc5s and shares for their greater potential,

but you still !ish to diversify in such a !ay as to reduce ris5. 7ou have

shares in an airline but the problem is that as the price of oil goes up the

airline profits go do!n and so do their share values. In this case it !ould not ma5e sense to

buy shares in a second airline it !ould ma5e more sense to buy shares in an oil company.

&his !ay !hen oil is in short supply, the price goes up and so do the value of oil company

shares ; offsetting the fall in value of the airline shares. &he point is that you need to identify

the underlying drivers affecting your goals, in this case, the price of oil.

In more recent times, this same 4portfolio management4 concept has become popular as a

!ay to manage business investments.

7/25/2019 Corporate Strategic Planning - Corporate Strategic PlanningCorporate Strategic PlanningCorporate Strategic Planni

17/29

completed, !or5 in-progress and !or5 that has been approved for the future. urther, it helps

you come up !ith the baseline that you can subse=uently use to measure ho! !ell you are

managing the portfolio to meet the department's needs.

inancial portfolio management does not focus on costs, since the assumption is that

e/penditures !ill result in the purchase of an asset (stoc5s, bonds, etc.) or a service (trading

fee, investment advice, etc.). 9i5e!ise, !hen you manage your !or5 as a portfolio, you

change the emphasis from the costs of each portfolio component to the value provided. If the

value (and alignment) is right, the !or5 !ill get authori0ed. If the value is not there, the !or5

should be eliminated, cut or bac5logged.

%n some !ebsites, you !ill find lin5s to order boo5s. %n others, you find a professor's notes

from a college class. Many others !ill offer consulting help. %n this #ortfolioStep !ebsite, you

!ill find most of !hat you need to successfully establish and manage portfolios of !or5.

%rgani0ations of all si0es can use #ortfolioStep. Smaller business units and departments !ill

not use all of the processes and features offered. 9arger organi0ations !ill be able to use much

more. &he larger and more sophisticated your unit or department is, the more material from

#ortfolioStep you can leverage.

7/25/2019 Corporate Strategic Planning - Corporate Strategic PlanningCorporate Strategic PlanningCorporate Strategic Planni

18/29

7/25/2019 Corporate Strategic Planning - Corporate Strategic PlanningCorporate Strategic PlanningCorporate Strategic Planni

19/29

Matching Structure With Strategy

Introduction&ach organization that eists has a distinctive organization structure. (n organization

structure can be vie!ed as the re=ection of the institutions past history, internal politics as!ell as reporting relationships. )t is the responsibility of the top management to makecertain that the organization structure supports the company3s strategy. )n situations !herethe organization structure does match the strategy, then it ought to be customized to #t thestrategy. Prior to matching organization structure !ith strategy, it is essential for themanagement to comprehend the di5erent eisting organization structure. %his is consideredto be crucial as it aids in determining !hich organization structure ought to be adopted forthe company3s strategies. (nderson 9?@AA

7/25/2019 Corporate Strategic Planning - Corporate Strategic PlanningCorporate Strategic PlanningCorporate Strategic Planni

20/29

$uontAnalysis 8also known as the dupontidentity$uontequation $uont Modelorthe $uontmethod: is an e'pression which breaks 3=& 8return on equity: into three parts. Thename comes from the$uontCorporation that started using this formula in the 516s.

7/25/2019 Corporate Strategic Planning - Corporate Strategic PlanningCorporate Strategic PlanningCorporate Strategic Planni

21/29

7/25/2019 Corporate Strategic Planning - Corporate Strategic PlanningCorporate Strategic PlanningCorporate Strategic Planni

22/29

2uture of Strategic Management.

Strategic management is !hen a company !orks to strategize or

really, really !ork hard and make sure that they3re doing the best in

every area as it relates toC

Marketing

accounts payable

accounts receivable

production

sales

human resources

and other departments

7/25/2019 Corporate Strategic Planning - Corporate Strategic PlanningCorporate Strategic PlanningCorporate Strategic Planni

23/29

)f you !ant to increase your clients, and other areas that they may

be focused on in yourbusiness, then that means you need to

supervise every area and aspect and focus on !hat they are doing.

&nvironmental Scanning Industry Analysis CompetitiveIntelligence and &T=7 Study

ENVIRO

INTRODUCTION

Strategic analysis is basically concerned with the structuring of the relationship

between a business and its environment. The environment in which business opera

has a greater influence on their successes or failures. There is a strong linkage

between the changing environment the strategic response of the business to such

changes and the performance. It is therefore important to understand the forces of

e'ternal environment the way they influence this linkage. The e'ternal environment

which is dynamic and changing holds both opportunities and threats for the

organisations. The organisations while attempting at strategic realignments try to

capture these opportunities and avoid the emerging threats. At the same time the

changes in the environment affect the attractiveness or risk levels of various

investments of the organizations or the investors.

7/25/2019 Corporate Strategic Planning - Corporate Strategic PlanningCorporate Strategic PlanningCorporate Strategic Planni

24/29

A"J& C$AIK

7/25/2019 Corporate Strategic Planning - Corporate Strategic PlanningCorporate Strategic PlanningCorporate Strategic Planni

25/29

7/25/2019 Corporate Strategic Planning - Corporate Strategic PlanningCorporate Strategic PlanningCorporate Strategic Planni

26/29

Scenario planning also called scenariothinking or scenarioanalysis is astrategicplanningmethod that some organizations use to make fle'ible long*term plans. It is inlarge part an adaptation and generalization of classic methods used by military intelligence.

Strategic Management> Scenario Planning

Scenario #lanning

&raditional forecasting techni=ues often fail to predict significant changes in the firm's

e/ternal environment, especially !hen the change is rapid and turbulent or !hen

information is limited. onse=uently, important opportunities and serious threats may beoverloo5ed and the very survival of the firm may be at sta5e. Scenario planning is a tool

specifically designed to deal !ith ma*or, uncertain shifts in the firm's environment.

Scenario planning has its roots in military strategy studies. 8erman >ahn !as an early

founder of scenario-based planning in his !or5 related to the possible scenarios associated

!ith thermonuclear !ar (4thin5ing the unthin5able4). Scenario planning !as transformed

into a business tool in the late 1?@6's and early 1?A6's, most notably by #ierre $ac5 !ho

7/25/2019 Corporate Strategic Planning - Corporate Strategic PlanningCorporate Strategic PlanningCorporate Strategic Planni

27/29

developed the scenario planning system used by +oyal 2utchShell.

7/25/2019 Corporate Strategic Planning - Corporate Strategic PlanningCorporate Strategic PlanningCorporate Strategic Planni

28/29

factor. or e/ample, consider the e/treme case in !hich a variable had a very large

range such that it might be rated a 16 on a scale of 1 to 16 for variation, but in

!hich the variable had very little impact on the firm so that the strength of impact

rating !ould be a 1. Multiplying the t!o together !ould yield 16 out of a possible

166, revealing that the variable is not highly critical.

7/25/2019 Corporate Strategic Planning - Corporate Strategic PlanningCorporate Strategic PlanningCorporate Strategic Planni

29/29

starting from the present. &he story should be internally consistent for the selected

scenario so that it describes that particular future as realistically as possible. B/perts

in specific fields may be called upon to devlop each story, possibly !ith the use of

computer simulation models. 3ame theory may be used to gain an understanding of

ho! each actor pursuing its o!n self interest might respond in the scenario. &he goal

of the stories is to transform the analysis from a simple matri/ of the obvious range

of environmental factors into decision scenarios useful for strategic planning.

?. Duantify the impact of each scenario on the firm, and formulate appropriate

strategies.

Industry analysis