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PowerPoint Presentation by Charlie Cook
The University of West Alabama
Copyright 2006 Thomson Business and Economics.
All rights reserved.
Chapter 5
The Strategicand Operational
Planning Process
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52Copyright 2006 Thomson Business and Economics. All rights reserved.
Planning Dimensions
Planning Determining what you want to accomplish and
developing approaches to achieving your
objectives.
Planning Dimensions:
Exhibit 51
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53Copyright 2006 Thomson Business and Economics. All rights reserved.
Strategic and Operational Planning
Strategic Planning The process of developing a mission and long-
range objectives and determining in advance
how they will be accomplished.
Operational Planning
The process of setting short-range objectives
and determining in advance how they will be
accomplished.
Strategy
A plan for pursuing the mission and achieving
objectives.
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54Copyright 2006 Thomson Business and Economics. All rights reserved.
The Strategic Planning Process
Exhibit 52
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55Copyright 2006 Thomson Business and Economics. All rights reserved.
Strategic and Operational Levels
Exhibit 53
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56Copyright 2006 Thomson Business and Economics. All rights reserved.
Industry and Competitive Situation Analysis
Situation Analysis Focuses on those features in a companys
environment that most directly affect its optionsand opportunities.
Five Competitive Forces (Porter) Rivalry among competing sellers in the industry
Threat of substitute products and services
Potential new entrants
Power of suppliers
Power of buyers
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Porters 5 Forces Model
Starbuckss Example
Exhibit 54
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Parts of a Company Situation Analysis
Exhibit 55
1. Assessment of the present strategy basedon performance.
2. Strengths, Weaknesses, Opportunities,
and Threats (SWOT) analysis.
3. Assessment of competitive strength and
identification of competitive advantage.
4. Conclusions concerning competitive
position.
5. Determination of the strategic issues and
problems that need to be addressed
through the strategic planning process.
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SWOT Analysis for
Starbucks Coffee
Exhibit 56
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Competitive Advantage
Core Competency A functional capability (strength) that the firm
does well and one that creates a competitive
advantage for the firm.
Benchmarking The process of comparing an organizations
products or services and processes with those
of other companies.
Scanning the Environment
Searching the external environment for
opportunities and threats.
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Writing Effective Objectives
Max E. Douglass model for writing effective
objectives: (1) the word to, followed by (2) an action verb, (3) a statement of the single, specific, and
measurable result to be achieved, and (4) a target date.
To achieve a 6% overall return on fourth quartersales.
SMART Objectives
Specific Measurable Achievable Realistic Time
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Management by Objectives (MBO)
Management by ObjectivesStep 1. Set individual objectives and plans.
Step 2. Give feedback and evaluate performance.
Step 3. Reward according to performance.
Sources of MBO Failures
Lack of top management commitment and
follow-through on MBO.
Employees negative beliefs aboutmanagements sincerity in its efforts to include
them in the decision-making process.
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Corporate Grand and Growth Strategies
Exhibit 59
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514Copyright 2006 Thomson Business and Economics. All rights reserved.
Portfolio Analysis: BCG Matrix
Exhibit 510
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515Copyright 2006 Thomson Business and Economics. All rights reserved.
Competitive Strategies
Differentiation Competing on the basis of features that
distinguish one firms products or services fromthose of another.
Cost Leadership The firm with the lowest total overall costs has a
competitive advantage in price-sensitivemarkets.
Focus Concentrating competitive efforts on aparticular market segment, product line, orbuyer group.
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516Copyright 2006 Thomson Business and Economics. All rights reserved.
Strategies for Starbucks over the Product Life Cycle
Exhibit 513