Three tracks
Fundamentals
Organizational
Real Examples
Wheelen/Hunger
Text
Brown/Eisenhardt
Text
Guest Speakers
Case Studies
Student Profiles
Supplemental Reading Packets
Lecture Material
What Is Strategic Planning ?
• Change oriented process
• Focuses on the future
• Matches core competencies with
external market needs
• Develops operating models for
profitability over a given time horizon
• Provides the vision and direction for the
organization
The Need for Planning
• What business are we in?
• Company values-”why are we in this
business?”
• Systematic approach to growing the business
• Recognize when/how to change
• Developing profitable operating models
• Aligning organizations for efficient execution
• New Business
– Entrepreneur self assessment
– Available resources
• Emerging Business
– Follow a strategic planning model
– All organizations are involved
– Focus on growth and change
Barriers to Planning
• Short-term focus-”you’re only as good as your
last quarter”.
• Perception that formalized planning
constrains and limits flexibility.
• Intuitive, unwritten plans are sufficient
• Planning process is viewed as extracurricular
• Organizational/cultural issues
Benefits of Strategic Planning
• Filters data to recognize change agents
• Determines where the business is going
and where it is not
• Establishes competitive awareness
• Engages employees as contributors and
implementers
• Allows for external parties to review
and/or contribute
Forces of Change
•
•
•
•
•
•
•
•
Response of competitors
Proliferation of technology
Rising and shifting customer demands
Push for improved products and services
Economic trends
Drive for quality and efficiency
Changing rules and regulations
New and unexpected crisis
Who Do We Create Value For?
Customers
Value
Creation
Employees
Owners
How Do We Create Value?
Product
Leadership
Value
Customer
Intimacy
Operational
Excellence
Strategic Management Framework
Perform
Situational
Analysis
Feedback
Product
Leadership
Value
Customer
Intimacy
Develop
Mission & Vision
Operational
Excellence
Set Objectives
& Craft Strategies
Implement
Strategy
Assess Value Creation
& Provide Feedback
Compare with Text pp. 1 & 20
Value Creation Example
Customer Value
Employee Value
Delighted
Customers &
Favorable
Public image
Committed
Team of
Employees
Owner Value
Superior
Financial
Performance
Operational
Excellence
Outstanding
Shareholder
Return
Balanced Scoreboard Model
Measurement
Target
Initiative
Margin
improvement
Financial
Operating
Income
+ 6%
Customer
Satisfaction
surveys
+3 pnt Direct sales
channel
Internal
Learning
Inventory
turns
% skills
available
7:1
J.I.T.
50%
yr 1
Skills
training
Building the Planning
Environment
• Become an extension of your customers
organization
• Challenge existing procedures and routines
• Encourage risk taking
• Be accepting of and learn from mistakes
• Encourage diverse opinions
• Trust and teamwork begin with open
communication
Foundations of Resistance
• Not convinced of the need for change
• Not wanting to loose something of value
• Not understanding the implications and
assuming the worst
• Fear of failure or lessened effectiveness
• Low tolerance to change
Manage for Growth and Change
•
•
•
•
•
Establish the need for change
Provide a vision for change
Listen and address the resistance
Develop a plan for change
Get people involved in planning and
working through the details
Setting Direction for Growth and
Change
• Establish a vision for the organization
“A man on the moon by the end of the
decade”- John F. Kennedy
• The crystal ball visionary doesn’t exist
• Business vision evolves from
experience and insight
Setting Direction for Growth and
Change
• Communicate the vision
• People need to know they have a part in the
vision
• Most successful leaders are evangelistic
about there vision
Strategic Management Framework
Perform
Situational
Analysis
Feedback
Product
Leadership
Value
Customer
Intimacy
Develop
Mission & Vision
Operational
Excellence
Set Objectives
& Craft Strategies
Implement
Strategy
Assess Value Creation
& Provide Feedback
Strategic Planning Model
Analysis Phase
Vision
&
Mission
Environmental
Analysis
Industrial
Analysis
Internal
Strengths &
Weaknesses
Distinctive
Core Competencies
& Competitive position
Strategy Development Phase
Growth
Strategies
Goal
Setting
Unit
Strategy
&
Tactics
Components of the Vision
Statement
•
•
•
•
Clear hope for the future
Challenging; inspires excellence
Energizing to employees, & customers/clients
Memorable
• Three C’s- Clear, Concise, Compelling
The Mission Statement
• Clear, crisp, not statements of platitudes
• Part 1- nature of the business
– States Industry, product and/or type of service
– States role to customer, a wholesaler, a
manufacturer, retailer etc.
– States the prime goals of the firm
– States target market- who is or will be served.
The Mission Statement
• Part 2- Management philosophy and
underlying values
– Communicates the core values that are most
central and critical
– Value orientation that guides managements
actions
– Communicates a compelling self image and public
image.
Hierarchy of Strategy
1. Corporate Strategy
2. Business Unit Strategy
3. Functional/Departmental Strategy
Page 13 Wheelen/Hunger
Types of Strategies
Markets
Present
Present
Products
New
New
Market penetration
Market Extension
Product Development
Diversification
Integration Strategies
Suppliers
Horizontal Integration
Backward Integration
Company
Forward Integration
Distributor
Customers
Competitor
Strategic Management Framework
Perform
Situational
Analysis
Feedback
Product
Leadership
Value
Customer
Intimacy
Develop
Mission & Vision
Operational
Excellence
Set Objectives
& Craft Strategies
Implement
Strategy
Assess Value Creation
& Provide Feedback