7. STRATEGIC PLANNINGSTRATEGY, STRATEGY MAKERS, LEVELS OF STRATEGY, LONG-TERM OBJECTIVES, STRATEGIC PLANNING, PRODUCT-MARKET MATRIX, STRATEGIC PLAN AND OPERATIONAL PLANS

Corporate strategy

• pattern of major objectives, purposes or goals and essential policies or plans for achieving those goals

• stated in such a way as to define what business the company is in or is to be in

• the kind of company it is or is to be

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STRATEGISTS

• Involved in the strategic management proces

• Several levels of management

• The board of director, president, the chief executive officer, the chief operatingofficer, and the division managers

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THE STRATEGIC DECISION MAKERS

• Competent individuals to success in the strategic management process

• Top management

• Board of directors

• Planning staff

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THE STRATEGIC DECISION MAKERS

• Competent individuals to success in the strategic management process

• Top management

• Board of directors

• Planning staff

• The final responsibility rests with top management

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Top Management

English Czech

president prezident, leader

chief executive officer výkonný ředitel

vice presidentviceprezident, zástupce prezidenta,

místopředseda

executive vice president výkonný viceprezident

comittee výbor, komise

chairperson předseda

board of directors dozorčí rada

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CEO• The CEO must understand that strategic management is his responsibility. Parts of this task, but

certainly not all of it, can be delegated.

• The CEO is responsible for establishing a climate in the organization that is congenial to strategic management.

• The CEO is responsible for ensuring that the design of the process is appropriate to the unique characteristics of the company.

• The CEO is responsible for determining whether there should be a corporate planner. If so, the CEO generally should appoint the planner (or planners) and see that the office is located as close to that of the CEO as practical.

• The CEO must get involved in doing planning.

• The CEO should have face-to-face meetings with executives for making plans and should ensure that there is a proper evaluation of the plans and feedback to those making them.

• The CEO is responsible for reporting the results of the strategic management process to the board of directors.

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BOARD OF DIRECTORS

• Elected by stockholders and given ultimate authority and responsibility

• Chairperson who is responsible for overseeing board business and standing committees

• A strategy committee works with CEO to develop strategic management process

• Consisting of both outsiders and insiders.

• Role in the strategic management process:

• Commonly audits an organization's strategic management process to make it more effective and efficient

• Guides the affairs of corporation and protects stockholder interests

• Strategic decisions are evaluated by the board of directors 8

Key Terms in Strategic Management

• STRATEGY

• TACTICS

• POLICY

• PURPOSE

• MISSION

• GOALS (VISIONS)

• OBJECTIVES

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STRATEGY

• Strategies are the means by which long-term objectives will be achieved.

• The role of strategy is to identify the general approaches that the organizationutilize to achieve its organizational objectives.

• The choice of strategy is so central to the study and understanding of strategicmanagement.

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TACTICS

• specifics actions the organization might undertake in carrying its strategy

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POLICY

• The means by which objectives will be achieved

• Policies include guidelines, procedures, rules, programs, and budgets established to support efforts to achieve stated objectives

• Policies become important management tools for implementing them

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PURPOSE

• Outlines why the organization exists

• Includes a description of its current and future business

• The purpose of an organization is its primary role in society, a broadly defined aim(such as manufacturing electronic equipment) that it may share with many other organizations of its type

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MISSION

• The unique reason for its existence that sets it apart from all others

• Describes why the organization exists and guides what it should be doing. Often, the organization's mission is defined in a formal, written mission statement

• Decisions on mission are the most important strategic decisions, because the mission is meant to guide the entire organization

• Although the terms "purpose" and "mission" are often used interchangeably, to distinguish between them may help in understanding organizational goals

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GOALS (VISIONS)

• A desired future state that the organization attempts to realize

• Provide a standard of performance

• Provide a basis for planning and management control related to the activities of the

organisation

• Provide guidelines for decision making and justification for actions taken

• Influence the structure of the organisation and help determine the nature of technology

employed

• Help to develop commitment of individuals and groups to the activities of the organisation

• Give an indication of what the organisation is really like, its true nature and character

• Serve as a basis for the evaluation of change and organisation development

• Are the basis for objectives and policies of the organisation

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GOALS (VISIONS)

Goals must exhibit several characteristics:

• be understandable

• contain a time

• be carefully drawn

• be subject to alignment

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OBJECTIVES

• Often used interchangeably with goal

• Usually refer to specific targets for which measurable results can be obtained

• The end points of an organization's mission

• Refer to the specific kinds of results the organizations seek to achieve through its existence and operations

• Define what it is the organization hopes to accomplish, both over the long and short term

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OBJECTIVES

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10 Most Important Business Objectives

by George N. Root III, studioD

• PROFITABILITY

• PRODUCTIVITY

• CUSTOMER SERVICE

• EMPLOYEE RETENTION

• CORE VALUES

• GROWTH

• MAINTAIN FINANCING

• CHANGE MANAGEMENT

• MARKETING

• COMPETITIVE ANALYSIS19

Setting Goals and Objectives in Business Plan

• Well-chosen goals and objectives point a new business in the right directionand keep an established company on the right track.

• When establishing goals and objectives, try to involve everyone who will have the responsibility of achieving those goals and objectives after you lay them out.

• APPROACH #1: TIE GOALS TO YOUR MISSION

• APPROACH #2: USE GOAL-SETTING ACES

• APPROACH #3: COVER ALL THE BASES

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APPROACH #1: TIE GOALS TO YOUR MISSION

• If your mission statement doesn’t suggest a list of goals, you may want to reevaluate it to see whether it really captures what your business is all about. 21

APPROACH #2: USE GOAL-SETTING ACES

Most goals define:

• positive outcomes

• to avoid pitfalls

• to eliminate

To help develop goals that cover all the bases, use the acronym ACES as you tick through the following key questions:

• Achieve: What do you want to attain in the future?

• Conserve: What do you want to hang on to?

• Eliminate: What do you want to get rid of?

• Steer clear: What do you want to avoid?22

APPROACH #3: COVER ALL THE BASES

Day-to-day work goals are directed at increasing your company’s everyday effectiveness.

• order tracking, office management, customer follow-up

Problem-solving goals address specific challenges that confront your business.

• low employee morale, low quality of service issues

Development goals encourage the acquisition of new skills and expertise.

• for employees, for yourself, freelancer or an independent contractor

Innovation goals help you find new ways to improve the:

• products or services that the company offers, how you market your company, how you distribute and deliver what your company sells

Profitability goals set your sights on where you want your bottom line to be23

MAKE FINAL CHOICES

To fine-tune each goal, it is good to follow these guidelines:

• Keep each goal clear and simple.

• Be specific.

• Be realistic.

• Don’t be afraid to push yourself and think big.

• Make sure that your goals are in sync with your mission.

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The Strategic Management Process

• Long-run perspective

• 5 or 10 years into the future

• Dynamic industries

• The system of corporate values

• The corporate culture

• All managerial process of change, such as leadership, planning, control, and human resources management

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The Strategic Management Process

• Identify the business's fundamental values and the goals and objectives

• Assess the business's environment

• Assess the business' resources and capabilities

• Identify or form the organization's component's (internal units, organizational structure)

• Develop the management and decision-making structure

Without knowledge of its values, an organization cannot develop a mission, goals, and objectives.

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The Strategic Management Process

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FUNDAMENTALVALUES

BUSINESS'S ENVIRONMENT

BUSINESS' RESOURCES

ANDCAPABILITIES

ORGANIZATION'S COMPONENT'S

MANAGEMENTAND

DECISION-MAKING

STRUCTURE

The Strategic Management Process

• Strategic management – a "total" system perspective and not the process of choosing from among alternative long-range plans.

• An accelerating rate of change in technical, social, political, and economic forces.

• The management process has become more difficult, requiring greater skills in planning, analysis, and control.

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Product-Market Evolution Matrix

• Competitive position of the company

• Determined by its internal and external factors

• 15 squares matrix was created by ch. W. Hofer

Matrix is created on the basis of two criteria:

• The maturity of the sector, divided into 5 phases

• The competitive position of companies in the sector

Circles:

• Represent different areas of activity in the company

• The size of the circle is proportional to size of the sector

• Sometimes segments could be added to the circle, which reflect the market share ofcompany in the sector

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Product-Market Evolution Matrix

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Product-Market Evolution MatrixProducts A

• dilemmas that have chance of success with appropriate marketing strategies and financial aid

• a developing winner

• relatively large share of the market combined with its being at the development stage of product-market evolution and its potential for being in a strongcompetitive position make it a good candidate for receiving more corporate resources

Products B

• winners, require appropriate marketing strategies and financial aid

• if company has limited resources for advertising managers must make a choice between products A and B

• somewhat similar to A

• a strategy would have to be developed to overcome the low market share in order to justify more investments

Products C

• potential losers, the weak position, the sector in the growth phase – managers should make additional analyses to rule out the possibility of going throughthe shock phase

• need to overcome the low market share and weak competitive position in order to justify future investments

Products D

• despite the current difficulties can become market leaders or profitable producers

• is in a shakeout period, has a relatively large share of the market, and is in a relatively strong position

• investment should be made to maintain that position

Products E and F

• profitable, so it is possible to introduce other products in the phase of shock and generate considerable profits

• cash cows and should be used for cash generation

Products G and H

• the losers are in the exit phase of the market, ahead of the full withdrawal managers should use strategies for "gathering the harvest"

• a dog

• should be managed to generate cash in the short run, if possible; however, the long-run strategy will more the likely be divestment or liquidation.

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Operational Planning

• Day to day activities

• To support the strategic planning

• Short run objectives

• Middle-level management

Operational plans should contain:

• clear objectives

• activities to be delivered

• quality standards

• desired outcomes

• staffing and resource requirements

• implementation timetables

• a process for monitoring progress

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Operational Planning

BASIS FOR COMPARISON STRATEGIC PLANNING OPERATIONAL PLANNING

MeaningThe planning for achieving the vision of the

organization is Strategic Planning.

Operational Planning is a process of deciding

in advance of what is to be done to achieve

the tactical objectives of business.

Time Horizon Long term planning, years, decades Short term planning, up to year, day-to-day

Approach Extroverted, external and internal environment Introverted, internal environment

Modifications Generally, the plan lasts longer. The plan changes every year.

Performed by Top level management Middle level management, junior

Scope Wide, general mannerNarrow, give fine details on how tasks shoul

be carried out

Emphasis on Planning of vision, mission and objectives.Planning the routine activities of the

company.

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Thank you.lucie.povolna@ujep.cz

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