PowerPoint Presentation by Charlie Cook The Strategic and Operational Planning Process Chapter 5 Copyright © 2003 South-Western/Thomson Learning. All rights.

PowerPoint Presentation by Charlie CookPowerPoint Presentation by Charlie Cook

The Strategic and Operational The Strategic and Operational Planning ProcessPlanning ProcessThe Strategic and Operational The Strategic and Operational Planning ProcessPlanning Process

Chapter 5Chapter 5Chapter 5Chapter 5

Copyright Copyright © © 2003 South-Western/Thomson Learning. All rights reserved.2003 South-Western/Thomson Learning. All rights reserved.

Copyright © 2003 by South-Western/Thomson Learning. All rights reserved. 5–2

Learning OutcomesLearning Outcomes


Learning Outcomes (cont’d)Learning Outcomes (cont’d)


PlanningPlanning

• Planning Dimensions –The level of management developing the plan–The type of plan (strategic or operational)–The scope of the plan (broad or narrow)–The time horizon of the plan (short- or long-term)–The plan’s repetitiveness (standing or single-use)


Planning DimensionsPlanning Dimensions

Exhibit 5–1


Types of PlansTypes of Plans

• Standing Plans–Policies, procedures, and rules developed for

handling repetitive situations.–Policies

• General guidelines to be followed when making decisions.

–Procedures• A sequence of actions to be followed in order to achieve

an objective.

–Rules• A statement of exactly what should or should not be

done.


Types of Plans (cont’d)Types of Plans (cont’d)

• Single-Use Plans–Programs and budgets developed for handling

nonrepetitive situations.–Program

• A set of activities designed to accomplish an objective over a specified period of time.

–Program development• Set project objectives.

• Break the project down into a sequence of steps.

• Assign responsibility for each step.

• Establish starting and ending times.

• Determine the resources needed for each step.



• Single-Use Plans–Budget

• Represents the funds allocated to operate a unit for a fixed period of time.

• Is a planning tool initially and becomes a control tool after implementation of the plan.


Standing versus Single-Use PlansStanding versus Single-Use Plans

Exhibit 5–2




• Contingency Plans–Alternative plans to be implemented if

uncontrollable events occur.–Developing a contingency plan

• What might go wrong in my department?

• How can I prevent it from happening?

• If it does occur, what can I do to minimize its effect?

• Why Managers Don’t Plan–Claimed lack of time–Tendency toward action


Strategic and Operational PlanningStrategic 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.


The Strategic ProcessThe Strategic Process

Exhibit 5–3


Strategic PlanningStrategic Planning

• Corporate-Level Strategy–The plan for managing multiple lines of

businesses

• Business-Level Strategy–The plan for managing one line of business

• Functional-Level Strategy–The plan for managing one area of the business


Strategic and Operational LevelsStrategic and Operational Levels

Exhibit 5–4


Industry and Competitive Situation Analysis

Industry and Competitive Situation Analysis

• Situation Analysis–Draws out those features in a company’s

environment that most directly frame its strategic window of options and 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


Starbuck’s Five-Force Competitive Analysis

Starbuck’s Five-Force Competitive Analysis

Exhibit –5


Company Situation Analysis StepsCompany Situation Analysis Steps

Exhibit 5–6

1. Assessment of the present strategy based on performance.

1. Assessment of the present strategy based on performance.

2. SWOT analysis.2. SWOT analysis.

3. Competitive Strength Assessment (competitive advantage).

3. Competitive Strength Assessment (competitive advantage).

4. Conclusions concerning competitive position.

4. Conclusions concerning competitive position.

5. Determination of the strategic issues and problems that need to be addressed through strategic processes.

5. Determination of the strategic issues and problems that need to be addressed through strategic processes.


SWOT Analysis for Starbucks Coffee

SWOT Analysis for Starbucks Coffee

Exhibit 5–7


Competitive Strength Assessment for Starbucks Coffee

Competitive Strength Assessment for Starbucks Coffee

Exhibit 5–8


Competitive AdvantageCompetitive 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 organization’s

products or services and processes with those of other companies.

• Environmental Scanning–Searching the external environment for

opportunities and threats.


Setting ObjectivesSetting Objectives

• Objectives–State what is to be accomplished in singular,

specific, and measurable terms with a target date.

• Goals–Are general targets to be accomplished that are

translated into actionable objectives.


Writing Objective ModelWriting Objective Model

Model 5–1


Criteria That Objectives Should MeetCriteria That Objectives Should Meet

Exhibit 5–9


Management by Objective (MBO)Management by Objective (MBO)

• Management by ObjectivesStep 1. Set individual objectives with plans

jointly with employees.

Step 2. Give feedback and evaluate.

Step 3. Reward performance according to results.

• Sources of MBO Failures–Lack of top management commitment and follow-

through on MBO.–Employees’ negative beliefs about management’s

sincerity in its efforts to include them in the decision-making process.


Corporate-Level StrategyCorporate-Level Strategy

• Grand Strategies–Growth–Stability–Turnaround and

retrenchment–Combination

• Growth Strategies–Concentration–Backward and

forward integration–Related and Unrelated

diversification


Corporate Grand and Growth StrategiesCorporate Grand and Growth Strategies

Exhibit 5–10


Portfolio Analysis: BCG MatrixPortfolio Analysis: BCG Matrix

Exhibit 5–11


The Entrepreneurial Strategy MatrixThe Entrepreneurial Strategy Matrix

Exhibit 5–12a


The Entrepreneurial Strategy Matrix:

Appropriate Strategies

The Entrepreneurial Strategy Matrix:

Appropriate Strategies

Exhibit 5–12b


Business-Level StrategiesBusiness-Level Strategies

• Adaptive Strategies–Prospecting

• Aggressively offering new products and/or entering new markets.

–Defending• Staying with the present product line and markets, and

maintaining or increasing customers.

–Analyzing• A midrange approach between prospecting and

defending, moving cautiously into new markets.


Selecting Adaptive StrategiesSelecting Adaptive Strategies

Exhibit 5–13



Competitive StrategiesCompetitive Strategies

• Differentiation–Competing on the basis of features that

distinguish one firm’s products or services from those of another.

• Cost Leadership–The firm with the lowest total overall costs has a

competitive advantage in price-sensitive markets.

• Focus–Concentrating competitive efforts on a particular

market segment, product line, or buyer group.


Product Life Cycle: StarbucksProduct Life Cycle: Starbucks

Exhibit 5–14



Functional-Level Operational StrategiesFunctional-Level Operational Strategies

• Marketing–Which products to produce; how will they be

packaged, advertised, distributed, and priced?

• Operations–Which processing systems to use to convert

inputs into outputs with quality and efficiency?

• Human Resources–How to recruit, select, train, evaluate, and

compensate the workforce?


Functional-Level Operational Strategies (cont’d)

Functional-Level Operational Strategies (cont’d)

• Finance–How to acquire the necessary equity or debt

capital, meet the investment returns expectations of investors and shareholders; maintain an accounting system that optimizes the use of financial resources.

• Other Functional Strategies–Research and development (R&D) is important to

remaining competitive.

PowerPoint Presentation by Charlie Cook The Strategic and Operational Planning Process Chapter 5 Copyright © 2003 South-Western/Thomson Learning. All rights.

Documents

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learning outcomes contd

action slide

plans policies

plans repetitiveness

planning planning dimensions

singleuse plans exhibit

planning tool