Chapter 5

The Strategic
and Operational
Planning Process

PowerPoint Presentation by Charlie Cook

The University of West Alabama
Copyright 2006 Thomson Business and Economics.
All rights reserved.

Planning
Planning Dimensions
Dimensions
Planning
Determining what you want to accomplish and
developing approaches to achieving your
objectives.

Planning Dimensions:

Exhibit 51
Copyright 2006 Thomson Business and Economics. All rights reserved.

52

Strategic
Strategic and
and Operational
Operational Planning
Planning
Strategic Planning
The process of developing a mission and longrange 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.
Copyright 2006 Thomson Business and Economics. All rights reserved.

53

The
The Strategic
Strategic Planning
Planning Process
Process

Exhibit 52
Copyright 2006 Thomson Business and Economics. All rights reserved.

54

Strategic
Strategic and
and Operational
Operational Levels
Levels

Exhibit 53
Copyright 2006 Thomson Business and Economics. All rights reserved.

55

Industry
Industry and
and Competitive
Competitive Situation
Situation Analysis
Analysis
Situation Analysis
Focuses on those features in a companys
environment that most directly affect its 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

Copyright 2006 Thomson Business and Economics. All rights reserved.

56

Porters
Porters55Forces
ForcesModel
Model
Starbuckss
StarbuckssExample
Example

Exhibit 54
Copyright 2006 Thomson Business and Economics. All rights reserved.

57

Parts
Parts of
of aa Company
Company Situation
Situation Analysis
Analysis
1.1.Assessment
Assessmentof
ofthe
thepresent
presentstrategy
strategybased
based
on
performance.
on performance.
2.2.Strengths,
Strengths,Weaknesses,
Weaknesses,Opportunities,
Opportunities,
and
Threats
(SWOT)
analysis.
and Threats (SWOT) analysis.

3.3.Assessment
Assessmentof
ofcompetitive
competitivestrength
strengthand
and
identification
of
competitive
advantage.
identification of competitive advantage.

4.4.Conclusions
Conclusionsconcerning
concerningcompetitive
competitive
position.
position.

5.5.Determination
Determinationof
ofthe
thestrategic
strategicissues
issuesand
and
problems
that
need
to
be
addressed
problems that need to be addressed
through
throughthe
thestrategic
strategicplanning
planningprocess.
process.
Exhibit 55
Copyright 2006 Thomson Business and Economics. All rights reserved.

58

SWOT
SWOTAnalysis
Analysisfor
for
Starbucks
StarbucksCoffee
Coffee

Exhibit 56
Copyright 2006 Thomson Business and Economics. All rights reserved.

59

Competitive
Competitive Advantage
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 organizations
products or services and processes with those
of other companies.

Scanning the Environment

Searching the external environment for
opportunities and threats.
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510

Writing
Writing Effective
Effective Objectives
Objectives
Max E. Douglass model for writing effective
objectives:
(1) the word to, followed by
(2) an action verb,
(3) a statement of the single, specific, and
measurable result to be achieved, and
(4) a target date.

To achieve a 6% overall return on fourth quarter

sales.

SMART Objectives
Specific
Measurable
Achievable
Realistic
Time

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511

Management
Management by
by Objectives
Objectives (MBO)
(MBO)
Management by Objectives
Step 1. Set individual objectives and plans.
Step 2. Give feedback and evaluate performance.
Step 3. Reward according to performance.

Sources of MBO Failures

Lack of top management commitment and
follow-through on MBO.
Employees negative beliefs about
managements sincerity in its efforts to include
them in the decision-making process.

Copyright 2006 Thomson Business and Economics. All rights reserved.

512

Corporate
Corporate Grand
Grand and
and Growth
Growth Strategies
Strategies

Exhibit 59
Copyright 2006 Thomson Business and Economics. All rights reserved.

513

Portfolio
Portfolio Analysis:
Analysis: BCG
BCG Matrix
Matrix

Exhibit 510
Copyright 2006 Thomson Business and Economics. All rights reserved.

514

Competitive
Competitive Strategies
Strategies
Differentiation
Competing on the basis of features that
distinguish one firms 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.
Copyright 2006 Thomson Business and Economics. All rights reserved.

515

Strategies
Strategiesfor
forStarbucks
Starbucksover
overthe
theProduct
ProductLife
LifeCycle
Cycle

Exhibit 513
Copyright 2006 Thomson Business and Economics. All rights reserved.

516