THE NATURE OF STRATEGIC BUSINESS ANALYSIS / STRATEGIC PLANNING

TERMINOLOGIES

Goals - End results

- Relatively broad and general
- Subjective (not easily measured or quantified)
- Qualitative in nature
- Vague

Objectives - End results

- Measurable and quantifiable
- SMART (specific, measurable, attainable, realistic, time-bound)

Strategies - Relatively* long term courses of action to attain certain desired results

*In different contexts, time is interpreted differently

Tactics - Relatively short term courses of action

Procedures - Chronological sequence of required actions for performing a certain task(s)

- Take away the need to use discretion

Policies - Guidelines for decision making

Budget - Financial statement of expected results

- In numerical terms
- In money value

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RATIONAL MODELS OF STRATEGIC PLANNING

1. Strategy

- Relatively long term course of action, including the specification of resources required,
to achieve a specified objective

2. Strategic plan

- A written statement (black n white) of long term goals with a definition of the strategies and policies
which will ensure achievement of these goals

3. Strategic planning

- Vital and necessary for businesses to survive, compete and to stay ahead of competitors
- To ensure continuity and profitability of the organization

4. TWO planning approaches

Rational Non-rational

5. Rational approach to strategic planning

- Focuses on long term orientation of a business for the success of the organization
- Systematic process

6. Rational model to strategic planning : FOUR basic assumptions

- Believes that strategy is a course of action to reach a desired objective

 Strategic intent is formalized and plans devised to support strategy

- Most strategies are top-down

 board of directors, senior mgt responsible for identifying and finalizing most of the strategies

- Planning process can be broken down (procedures)

- There is a beginning and an end (cycle)

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  Easier to give an account, make comparison and analysis

RATIONAL MODEL 1 : PROF. J.C. HIGGINS

1. ELEVEN steps

- Setting objectives
 Quantitative terms
 Also, businesses need to identify constraints limiting them (5Ms : money, material, machine,
manpower, methods)

- Establishing targets
 Long-term orientated objectives broken into smaller manageable units which are attached to
pre-determined intervals (simplify and make easy)
 Ease understanding and attainment

- Internal appraisal / position audit

 Assess organisation’s current state in terms of resources and performance
 Gather info regarding the internal affair of the organization (at that very moment)
 End result : strengths & weaknesses

- Environmental appraisal
 Gather info with regards to the business environment where the organsation is currently
operating in
 End result : opportunities & threats

- Forecasting future performance

 Ascertain what the organization could possibly attain

- Analyzing the gap

 Compare WHAT MUST BE ACHIEVED and WHAT CAPABLE OF ACHIEVED
 If a gap exists, strateg(ies) sought to close the gap

- Identifying and evaluating choices of strategies

 Course of action to close the gap

- Choosing between alternative strategies

 Decision making tools and techniques
 To derive at the most feasible strateg(ies)

- Preparing final corporate plan

 Action plan is finalized (5W and 1H : which, why, who, when, where, how,
crucial for resource planning and allocation )

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- Implementing the chosen strateg(ies)
 Activate the chosen strateg(ies)
 The progress of implementation effort must be observed, monitored and recorded (actual result)

- Evaluating actual performance against corporate plan

 Evaluation -> form of control
 Actual result - Planned/Intended result = Variance (analyse)

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RATIONAL MODEL 2 : JOHNSON, SCHOLES and WHITTINGTON (JSW) 

1. THREE stage/element (linear model/interdependent)

- Strategic Analysis
 Analyse the strategic position of the entity – senior mgt understand the position of the company
in its market (where the company stands now and where it wants to be in the future)
 THREE aspects
i) Environment
- Os and Ts
ii) Strategic capability
- Ss and Ws
iii) Expectation and purposes
- why the entity exist
- presence of a mission statement
- various groups of stakeholders
- organization culture

- Strategic Choice
 Identifying different possible strategies and make a choice of the preferred/appropriate
strategies
 THREE aspects
i) Corporate level strategy
- what the entity should be doing
- decide scope of products and markets
ii) Business level strategy
- how to beat the rivals and win more customers
- cost leadership / differentiation
iii) Development directions and methods
- ‘where’ to grow

Product

Market penetration Product development

Market
Market development diversification

- ‘how’ to grow [IAS]

Internal development
Acquisition and merger
Strategic alliance

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- Strategy in Action
 Implementing the chosen strategies (strategy implementation)
 THREE aspects
i) Organizing
- organization structure
- putting into place a management structure and delegating authority
iv) Enabling
- achieve success through the effective use of its resources
- resources [10Ms]
 Money, manpower, machinery, material, methods,
management, management info, make-up, maintenance, market
v) Managing change
- involves changes and adjustments
- adapt and make progress in the attempt to survive and succeed

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