Lesson 4

PLANNING AND STRATEGIC

MANAGEMENT

Management Information Systems

Mrs. Rosemarie M. Coronejo
Math-IT Dept, IAS, FEU

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 Learning Objectives
Summarize the basic steps in any planning process

Describe how strategic planning should be integrated with

tactical and operational planning

Identify elements of the external environment and internal

resources of the firm to analyze before formulating a
strategy

Summarize the types and choices available for corporate

strategy

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 Learning Objectives
Discuss how companies can achieve competitive advantage
through business strategy

Define core competencies and explain why they provide

the foundation for business strategy

Describe the keys to effective strategy implementation

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Organizations have a purpose
thats why they need goals !

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 Purposes of Goals
Provide guidance and a unified direction for
people in the organization
Have a strong affect on the quality of other
aspects of planning
Serve as source of motivation for employees
of the organization
Provide an effective mechanism for evaluation
and control of the organization.

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 Kinds of Goals
Mission Statement is a statement of an
organizations fundamental purpose.
Strategic goals are goals set by and for top
management of the organization that address broad,
general issues.
Tactical goals are set by and for middle managers;
their focus is on how to operationalize actions to
strategic goals
Operational goals are set by and for lower-level
managers to address issues associated with tactical
goals. 6
 Kinds of Plans
Strategic plans
Outlines resource allocation, priorities and action steps to
achieve strategic goals. The plans are set by and for top
management.
Tactical plans
A plan aimed at achieving the tactical goals set by and
for middle management.
Operational plans
Plans that have a short-term focus. These plans are set by
and for lower-level management.
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Hierarchy of Goals and Plans

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 Nature of Strategic Management
Strategy
A comprehensive plan for accomplishing an organizations
goals.
Strategic Management
A comprehensive and ongoing management process
aimed at formulating and implementing effective
strategies. A way of approaching business opportunities
and challenges.
Effective Strategies
Strategies that promote a superior alignment between the
organization and its environment and the achievement of
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its goals.
 Strategic Management
Is concerned with:
Making decisions about an organizations
future direction for growth, renewal and
transformation, and
Implementing these policies.
The strategic management process can be
broken into two phases strategic planning
and strategic implementation.

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 Strategic Planning
Is making decisions about:
Determining the organizations mission;
Formulating policies to guide the organization in
establishing objectives, choosing a strategy, and
implementing the chosen strategy;
Establishing long-range and short-range
objectives to achieve the organizations mission;
Determining the strategies that are to be used in
achieving the organizations mission.
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 Strategic Implementation
Is concerned with:
Developing the organizational structure to achieve
the strategy;
Identifying and quantifying the resources required
to support the achievement of the objectives;
Ensuring that the activities necessary to accomplish
the strategy are performed effectively;
Monitoring the effectiveness of the strategy in
achieving the organizations objectives.
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Decision Making and the Planning
Process

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The Planning Process

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 An Overview of
Planning Fundamentals
Planning
Plans are the conscious, systematic process of
decisions about goals and activities that an
individual, work unit, or organization will pursue in
the future
A decision process in which you decide what to do
and how to do it
Various types of plans include single-use,
standing, and contingency plans

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 Types of Operational Plans
Single-use plans
Designed to achieve a set of goals that are not likely to
be repeated in the future (programs, projects)

Standing plans
Focus on ongoing activities designed to achieve an
enduring set of goals (policies, SOPs, rules and
regulations)

Contingency plans
Actions to be taken when a companys initial plans
have not worked or require sudden change
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 Contingency plans
Contingency is the determination of alternative
courses of action to be taken if an intended plan is
unexpectedly disrupted or rendered inappropriate.
These plans help managers to cope with uncertainty
and change.

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 The Basic Planning Process
Step 1: Situational Analysis
Step 2: Alternative Goals and Plans using
SMART Goals
Step 3: Goal and Plan Evaluation
Step 4: Goal and Plan Selection
Step 5: Implementation
Step 6: Monitor and Control

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 Step 1: Situational Analysis
Gather, interpret, and summarize all
information relevant to the planning issue in
question

The outcome of this step is identification and

diagnosis of planning assumptions, issues, and
problems

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Step 2: Alternative Goals and Plans
Generate alternative goals that may be used in
the future
Once a range of alternative is generated,
alternatives can be evaluated
SMART Goals: (Specific, Measurable, Attainable,
Relevant, Time-bound)
Plans are the actions or means managers intend
to use to achieve organizational goals

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 Step 3: Goal and Plan Evaluation
First, managers must evaluate the advantages,
disadvantages, and potential effects of each
goal and plan

Second, managers must prioritize goals

Third, managers must consider implications of

alternative plans for meeting high-priority
goals
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 Step 4: Goal and Plan Selection
Managers select the most appropriate and
feasible goals and plans after assessing
alternatives

Scenarios
A narrative that describes a particular set of future
conditions

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 Step 5: Implementation
The best plans are useless unless
implemented
Successful implementation requires that plans
be linked to other systems, particularly budget
and reward systems
Managers and employees must
Understand the plan
Have the resources to implement the plan
Be motivated to implemented the plan

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 Step 6: Monitor and Control
Monitoring allows managers to determine if
the plan is succeeding

Controlling makes modifications as part of the

planning cycle

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 Tactical and
Operational Planning
Strategic goals and plans are the foundation for planning
done by middle-level and frontline managers

Tactical A set of procedures for translating broad

planning strategic goals and plans into specific
goals and plans that are relevant to a
distinct portion of the organization
Operational The process of identifying the specific
planning procedures and processes required at
lower levels of the organization
For middle-level and frontline managers to accomplish
their jobs, it is critical that top managers communicate
the strategy to all levels of the organization
 Aligning Tactical, Operational, and
Strategic Planning

Organizations must aligning tactical,

operational, and strategic planning

Each plan must be mutually supportive

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Example of a Strategy Map

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 Strategic Planning
Strategic plans have a strong external orientation and
cover major portions of the organization

Strategic planning A set of procedures for making

decisions about the organizations
long-term survival
Strategic goals Major targets or end results relating to
the organizations long-term survival,
value, or growth
Strategy A pattern of actions and resource
allocations designed to achieve the
organizations goals
 Strategic Planning
Strategic management
A process that involves managers from all parts of
the organization in the formulation and
implementation of strategic goals and strategies

Both large and small organizations benefit from the

planning framework discussed next

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The Strategic Management Process

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 The Strategic Management Process
Step 1: Establishment of Mission, Vision, and Goals

Step 2: Analysis of External Opportunities and Threats

Step 3: Analysis of Internal Strengths and Weaknesses

including Resources and Core Competencies
Step 4: SWOT Analysis and Strategy Formulation including
Corporate Strategy, the BCG Matrix, and Business
Strategy
Step 5: Strategy Implementation

Step 6: Strategic Control

 Mission and Vision
Mission is the reason for which the
organization exists and what it will do. It
describes the products/service to be supplied,
the markets to be served and the technology
to be applied, if critical.
Vision statement answers the question, What
do we want to become? It is futuristic and
long term.

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 Mission
Mission is an organizations basic purpose and scope of
operations.
McDonalds To be our customers favorite place and way to
eat
Microsoft We work to help people and businesses
throughout the world to realize their full potential
Allstate To be the best...serving our customers by
providing peace of mind and enriching their quality
of life through our partnership in the management
of the risks they face
 Vision
The strategic vision describes the long-term direction and
strategic intent of the company
DuPont To be the worlds most dynamic science
company, creating sustainable solutions
essential to a better, safer and healthier life for
people everywhere
City of Together we create a community of good
Redmond, neighbors
WA
Great Lakes To enhance and become an integral part of the
Naval training mission of the Naval Service Training
Museum Command, Great Lakes, by instilling in our
newest sailors a strong sense of tradition and
heritage in the United States
 Goals
Strategic goals evolve from the mission and vision of the
organization.

Strategic goals for the City of Redmond, WA include:

Enhance citizen engagement in city issues
Sustain the natural systems and beauty of the community

Sustain a safe community with a coherent,

comprehensive, cohesive approach to safety
Maintain economic vitality
 Step 2: Analysis of External
Opportunities and Threats
An accurate evaluation of the competitive environment and
macroenvironment are key to successful strategic
management

Stakeholders
Groups and individuals who affect and are affected by the
achievement of the organizations mission, goals, and
strategies

The difference between an opportunity and a threat

depends on how the company positions itself strategically

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Step 3: Analysis of Internal Strengths and Weaknesses
including Resources and Core Competencies

Analysis of internal strengths and weaknesses provides an inventory

of existing functions, skills, resources, and overall performance level
Resources
Inputs to a system that can enhance performance
Resources are a source of competitive advantage only if they create
value, are rare, difficult to imitate, and are organized
Core competence
A unique skill and/or knowledge an organizational possesses
that gives it an edge over competitors
Benchmarking
The process of assessing how well one companys basic
functions and skills compare with those of another company or
set of companies
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Resources and Core Competencies

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 Step 4: SWOT Analysis and Strategy
Formulation including Corporate Strategy,
BCG Matrix and Business Strategy

SWOT Examples
Strengths Skilled management, positive cash flow,
brands
Weaknesses Lack of spare production capacity,
absence of reliable suppliers
Opportunities New technology that improves
efficiency, new market niche
Threats Competitors entrance into niche market
once the niche proves profitable
Corporate Strategy

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 Types of Corporate Strategies
Corporate strategy identifies a set of businesses, markets, or
industries in which an organization competes and the distribution
of resources among those entities
Concentration Strategy employed for an organization that
operates a single business and competes in a
single industry
Vertical Acquisition or development of new businesses
integration that produce parts or components of the
organizations product
Concentric Strategy used to add new businesses that
diversification produce related products or are involved in
related markets and activities
Conglomerate Strategy used to add new businesses that
diversification produce unrelated products or are involved in
unrelated markets and activities
Boston Consulting Group Matrix

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 BCG Matrix
(Boston Consulting Group)
A method of evaluating businesses relative to the
growth rate of their market and the organizations
share of the market.
The matrix classifies the types of businesses that a
diversified organization can engage as:
Dogs have small market shares and no growth
prospects.
Cash cows have large shares of mature markets
Question marks have small market shares in quickly
growing markets.
Stars have large shares of rapidly growing markets.
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 Business Strategy
Business strategy describes the major actions by
which a business competes in a particular market
Low-cost A strategy an organization uses to build
strategies competitive advantage by being efficient
and offering a standard, no-frills product
Differentiati A strategy and organizations uses to build
on strategy competitive advantage by being unique in
its industry or market segment along one
or more dimensions
Functional Strategies implemented by each
strategies functional area of the organization to
support the organizations business
strategy
 Step 5: Strategy Implementation
1. Define strategic risks
2. Assess organization capabilities
3. Develop and implementation agenda
4. Create an implementation plan

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 Step 6: Strategic Control
Strategic control system
A system designed to support managers in
evaluating the organization's progress regarding
its strategy and, when discrepancies exist, taking
corrective action

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 Planning and Strategic Value
Planning helps deliver strategic value by
concentrating organizational efforts

Skilled managers realize the important of

alignment of goals and implementation of
those goals

Planning is at the heart of these efforts

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