define strategic planning

7/29/2019 Define Strategic Planning

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1.Define strategic planning. Distinguish its difference from long range planning.Explain the significance of strategic planning in rapid changing business

environment.

a.

Strategic planning is a means of establishing major directions for theorganisation. Through strategic planning, resources are concentrated in a

limited number of major directions in order to maximize benefits to

stakeholders--those we exist to serve and who are affected by the choices

we make. In higher education, those stakeholders include students,

employers of graduates, funding agencies, and society, as well as internal

stakeholders such as faculty and staff. Strategic planning is a structured

approach to anticipating the future and "exploiting the inevitable." The

strategic plan should chart the broad course for the entire institution for the

next five years. It is a process for ensuring that the budget dollars follow the

plan rather than vice versa. Strategic planning is not just a plan for growth

and expansion. A strategic plan can and often does guide retrenchment and

reallocation.

b. It is sometimes thought that strategic planning is just another buzz word forlong-range planning. There are major differences between strategic planning

and garden variety long-range planning. First, strategic planning is much

more sensitive to the external environment than long-range planning.

Traditionally, long-range planning was inwardly focused. The goals and

objectives were formulated with minimal attention to the larger system inwhich the institution functioned. Traditional long-range planning could be

conducted with minimal involvement of stakeholders, those affected by the

plan. Strategic planning, particularly the model in Figure 1.1 which has been

used in a variety of departments, offices, and colleges on the UW-Madison

campus, relies on information from internal and external stakeholders

regarding their needs, expectations and requirements as the foundation for

planning.

Related to the first difference is the fact that traditional long-range planningtends to maintain the status quo over time. Assuming that the future will be

a linear extension of the present, planners typically spend little time

attempting to reshape the organization. Strategic planning is much more

likely to result in a deliberate shift in direction or refocusing of mission in

light of changes, actual or anticipated. Since long-range planning has

generally been oriented to the status quo, visioning was not a critical

component. Strategic plans, however, are developed around a vision of

success or a vision of the desired future. This idealized word picture

represents the best possible future for the institution. The plan helps the

make this shared vision a reality.


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2.Discuss major components of strategic management processCompany Mission

The mission of a company is the unique purpose that sets it apart from othercompanies of its type and identifies the scope of its operations. In short, themission describes the companys product, market, and technological areas ofemphasis in a way that reflects the values and priorities of the strategic decisionmakers.


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Social responsibility is a critical consideration for a companys strategic decisionmakers since the mission statement must express how the company intends tocontribute to the societies that sustain it. A firm needs to set social responsibilityaspirations for itself, just as it does in other areas of corporate performance.

Internal Analysis

The company analyzes the quantity and quality of the companys financial, human,and physical resources. It also assesses the strengths and weaknesses of thecompanys management and organizational structure. Finally, it contrasts thecompanys past successes and traditional concerns with the companys currentcapabilities in an attempt to identify the companys future capabilities.

External Environment

A firms external environment consists of all the conditions and forces that affectits strategic options and define its competitive situation. The strategicmanagement model shows the external environment as three interactive segments:

the remote, industry, and operating environments.

Strategic Analysis and Choice

Simultaneous assessment of the external environment and the company profileenables a firm to identify a range of possibly attractive interactive opportunities.These opportunities arepossible avenues for investment. However, they must bescreened through the criterion of the company mission to generate a set ofpossible and desiredopportunities. This screening process results in the selectionof options from which a strategic choice is made.

Long-Term Objectives

The results that an organization seeks over a multiyear period are its long-termobjectives. Such objectives typically involve some or all of the following areas:profitability, return on investment, competitive position, technological leadership,productivity, employee relations, public responsibility, and employeedevelopment.

Generic and Grand Strategies

Many businesses explicitly and all implicitly adopt one or moregenericstrategies characterizing their competitive orientation in the marketplace. Lowcost, differentiation, or focus strategies define the three fundamental options.Enlightened managers seek to create ways their firm possesses both low cost and

differentiation competitive advantages as part of their overall generic strategy.They usually combine these capabilities with a comprehensive, general plan ofmajor actions through which their firm intends to achieve its long-term objectivesin a dynamic environment. Called the grand strategy, this statement of meansindicates how the objectives are to be achieved.

Action Plans and Short-Term Objectives

Actions plans translate generic and grand strategies into action by incorporating

four elements. First, they identify specific functional tactics and actions to beundertaken in the next week, month, or quarter as part of the businesss effort tobuild competitive advantage. The second element is a clear time frame forcompletion. Third, action plans create accountabilityby identifying who is


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responsible for each action in the plan. Fourth, each action in an action planhas one or more specific, immediate objectives that are identified as outcomesthat action should generate.

Functional Tactics

Within the general framework created by the businesss generic and grandstrategies, each business function needs to identify and undertake activitiesunique to their function that help build a sustainable competitive advantage.Managers in each business function develop tactics which delineate the functionalactivities undertaken in their part of the business and usually include them as acore part of their action plan. Functional tactics are detailed statements of themeans or activities that will be used to achieve short-term objectives andestablish competitive advantage.

Policies that Empower Action

Speed is a critical necessity for success in todays competitive, global

marketplace. One way to enhance speed and responsiveness is to force/allowdecisions to be made whenever possible at the lowest level inorganizations. Policies are broad, precedent-setting decisions that guide orsubstitute for repetitive or time-sensitive managerial decision making. Creatingpolicies that guide and preauthorize the thinking, decisions, and actions ofoperating managers and their subordinates in implementing the businesss strategyis essential for establishing and controlling the ongoing operating process of thefirm in a manner consistent with the firms strategic objectives.

Restructuring, Reengineering, and Refocusing the Organization

Until this point in the strategic management process, managers have maintained a

decidedly market-oriented focus as they formulate strategies and beginimplementation through action plans and functional tactics. Now the process takesan internal focusgetting the work of the business done efficiently and effectivelyso as to make the strategy successful. What is the best way to organize ourselvesto accomplish the mission? Where should leadership come from? What valuesshould guide our daily activateswhat should the organization and its people belike? How can we shape rewards to encourage appropriate action? The intensecompetition in the global marketplace has made this traditional internally focused set of questionshow the activities within their business are conductedrecast itself with unprecedented attentiveness to the marketplace. Downsizing,

restructuring, and reengineering are terms that reflect the critical stage instrategy implementation wherein managers attempt to recast their organization.

Strategic Control and Continuous Improvement

Strategic control is concerned with tracking a strategy as it is being implemented,detecting problems or changes in its underlying premises, and making necessaryadjustments. In contrast to postaction control, strategic control seeks to guideaction in behalf of the generic and grand strategies as they are taking place andwhen the end results are still several years away. The rapid, accelerating changeof the global marketplace of the last 10 years has made continuous improvementanother aspect of strategic control in many organizations. Continuous improvement

provides a way for managers to provide a form of strategic control that allowstheir organization to respond more proactively and timely to rapid developments in


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hundreds of areas that influence a businesss success. Exhibit 1 -6 describes howYahoos e-commerce strategy was significantly undermined by its managementsfailure to see fundamental shifts in its industry.

3.What is environmental analysis? Briefly Explain ETOP as a technique ofenvironmental analysis

An environmental analysis evaluates internal and external factors affecting anorganization's performance, especially its marketing effort. Internal factors arereferred to as the strengths and weaknesses of the organization. External factorsare opportunities and threats presented by forces outside of the company. Ingeneral, this information is used by strategic planners in forecasting trends a yearor more in advance. This method is distinct from surveillance, which focuses on aspecific area or time.

A common synonym for environmental analysis is SWOT analysis, an acronym forstrengths, weaknesses, opportunities, and threats. Another equivalent termis environmental scanning, referring to the ongoing nature of evaluating trends.

In this type of analysis, internal strengths may include a stable workforce,proprietary systems and methods, and other factors. Internal weaknesses mayinclude labor-union problems, obsolete equipment, or aging facilities. Externalopportunities can include new-market creation, beneficial alliances, and positivetrade agreements. External threats may be comprised in part of negativegovernmental regulations, international conflict, or natural disasters.

Using environmental analysis, strategic planners evaluate the operating

environment and establish organizational goals. They determine whether or notthe goals are obtainable with existing strategies. If they are not, new strategiesmust be developed or old ones must be adjusted. Several sources of informationguide their strategic decisions.

A constant stream of pertinent information is necessary to perform an analysis.Online, printed, and TV business news sources report on external conditions thatmay impact operations and performance. Planners evaluate and use this data todetermine the best course of action to avoid problems or to capitalize onopportunities. Metrics evaluating overall performance are another data streamused in strategic planning.

An organization's health and performance as a whole, rather than focusing on theperformance of one part, is an important aspect. With a comprehensive overviewof external forces, an organization is more able to respond to positive events aspart of its growth strategy. Conversely, early threat identification allowsorganizational leadership to take timely action in developing a survival strategy.

Environmental analysis uses internal metrics in evaluating employeeperformance, customer satisfaction, maintenance costs, and similar factors. Thesemetrics can be used to take early corrective action or to offer rewards to workersor customers. The outcomes of these measures should be monitored closely andadjusted as necessary.
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There are more uses for this type of analysis than just fine-tuning performance. Itis also central in identifying opportunities, such as new markets or the acquisitionof new technology before its competitors. Its on-going nature makes it a valuabletool for evaluating the financial potential of various strategies.

4.Identify any five anticipated changes in business environment forinformation technology. Explain them with examples.

5.Define SWOT analysis. Identify various internal strengths of automobilecompany in various functional areas

A tool that identifies the strengths, weaknesses, opportunities and threats of anorganization. Specifically, SWOT is a basic, straightforward model that assesseswhat an organization can and cannot do as well as its potential opportunitiesand threats. The method of SWOT analysis is to take the information from anenvironmental analysis and separate it into internal (strengths and weaknesses)and external issues (opportunities and threats). Once this is completed, SWOTanalysis determines what may assist the firm in accomplishing its objectives,and what obstacles must be overcome or minimized to achieve desired results.

Internal Factors: Strengths and Weaknesses (S, W)

Internal factors include your resources and experiences. General areas toconsider are:

Human resources - staff, volunteers, board members, target population Physical resources - your location, building, equipment (Does your

building have a prime location? Does it need renovations?)

Financial - grants, funding agencies, other sources of income Activities and processes - programs you run, systems you employ Past experiences - building blocks for learning and success, your

reputation in the community

External Factors: Opportunities and Threats (O, T)

Cast a wide net for the external part of the assessment. No organization, group,program, or neighbourhood is immune to outside events and forces. Consideryour connectedness, for better and worse, as you compile this part of yourSWOT list.

Forces and facts that your group does not control include:

Future trends - in your field (Is research finding new treatments?) or theculture (Do current movies highlight your cause?)

The economy - local, national, or international Funding sources - foundations, donors, legislatures


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Demographics - changes in the age, race, gender, culture of those youserve or in your area

The physical environment (Is your building in a growing part of town? Isthe bus company cutting routes?)

Legislation (Do new federal requirements make your job harder...oreasier?)

Local, national or international eventsExample

David gives an example for Campbell Soup Company that stresses financialgoals, but it also illustrates how you can pair the items within a SWOT grid todevelop strategies. (This version of the chart is abbreviated.)

STRENGTHS

1. Current profit ratioincreased2. Employee moralehigh3. Market share hasincreased

WEAKNESSES

1. Legal suits notresolved2. Plant capacity hasfallen3. Lack of strategicmanagement system

OPPORTUNITIES

1. Western Europeanunification2. Rising healthconsciousness inselecting foods3. Demand for soupsincreasing annually

Opportunity-Strength(OS) Strategies

Acquire food companyin Europe (S1, S3, O1)Develop new healthysoups (S2, O2)

Opportunity-Weakness(OW) Strategies

Develop newPepperidge Farmproducts (W1, O2, O3)

THREATS

1. Low value of dollar2. Tin cans are notbiodegradable

Threat-Strength (TS)Strategies

Develop newbiodegradable soupcontainers (S1, T2)

Threat-Weakness (TW)Strategies

Close unprofitableEuropean operations(W3, T1)

This example also illustrates how threats can become opportunities (and viceversa). The limitation of tin cans (which aren't biodegradable) creates anopportunity for leadership in developing biodegradable containers.

6.Discuss briefly the factors which govern the choice of appropriate strategyfrom different alternatives. How this choice is influenced by the past

strategy?

7.Under what circumstances the CEO of the company prefers


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a. Stable growth strategyb. Strategy of diversification

8.Discuss the role of quality leadership and structure of the organisation in theimplementation of strategy.

9.Write notes on any threea. Value chain approach to an internal analysis

b. Product/Market evolutionc. Mission statement of an organisationd. Approach to resource allocation in the implementation of strategye. Strategy formulation process.

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