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Strategic Planning and Control. Planning. Planning Involves: Determining an organization’s primary objectives and Developing courses of action to attain them The Planning PROCESS is:. Planning. This is because it facilitates: Plans often do and should change

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planning
Planning
  • Planning Involves:
    • Determining an organization’s primary objectives and
    • Developing courses of action to attain them
  • The Planning PROCESS is:
planning3
Planning
  • This is because it facilitates:
  • Plans often do and should change
    • Environmental management concept:
      • Scanning
      • Adapting
slide4

Levels of Planning

HR

Global

Information

Systems

Legal

Research

strategic business units
Strategic Business Units
  • A set of related businesses that are managed as profit centers
  • Separate Management Teams
  • Separate Resources
  • Separate Sets of Competitors
strategic business units6
Strategic Business Units
  • Phillip Morris
    • Cigarettes
    • Beer
  • Proctor and Gamble
    • Baby Products
    • Coffee
    • Food Products
strategy
Strategy
  • Level 1 - Corporate
    • Macro-level strategy
      • Mission and Goals
        • What business are we in?
        • What businesses should we be in?
        • How should we allocate $ across SBUs?
      • Tool: BCG Growth-Share Matrix
corporate strategy starting with mission and goals
Corporate Strategy: Starting with Mission and Goals

Mission and

Goals

Mission is formal and overarching statement of the firm’s essential purpose.

mission statements should answer
Mission StatementsShould Answer:
  • What businesses are we in?
    • Avoid Myopic Thinking
  • What businesses should we be in?
    • Think strategically about future
  • What do (or should) we do best?
    • Think about competitive strengths
goals objectives
Goals/Objectives
  • Measurable
  • Communicated
  • Reasonable - Achievable
  • Accepted by those Responsible
types of objectives
Types of Objectives
  • Dollar or Unit Sales Volume (Capacity)
  • Target Dollar Profit or % Return
  • Market Share
  • Growth
  • Others
corporate strategy tool bcg matrix
Corporate Strategy Tool: BCG Matrix
  • Two Key Variables
    • Relative Market Share (RMS)
      • Related to Cash Generation
bcg growth share analysis
BCG Growth-Share Analysis
  • Two Key Variables
    • Industry Growth Rate
      • Related to Cash Usage
bcg growth share analysis14
BCG Growth-Share Analysis
  • Categorize SBUs by Growth and Share and develop strategies
  • Each category has different characteristics
  • Main focus of management is on ability of SBU to generate cash (broad corporate-level focus)
portfolio categories
Portfolio Categories

?

High

Market

Growth

Rate

Low

High

Low

Relative Market Share

slide16
BCG
  • Question Marks
    • RMS Low but Mkt Growth High
    • Questionable –
    • Require considerable investment and strategic changes to  RMS
    • Too many ???
    • Too few ???
slide17
BCG
  • Stars
    • RMS High and Mkt Growth High
    • Growth costs money
      • Attaining and Maintaining market share, etc.
    • Neither a net user or generator of $
    • Companies usually ______ in Stars as they are future Cash Cows
slide18
BCG
  • Cash Cows
    • RMS High and Mkt Growth Low
    • Leaders in Mature Markets
    • Recall PLC, where leaders profit max at mature phase???
    • Slow Mkt Growth means lower investment requirements, so less cash out
    • High RMS means cash in is high
slide19
BCG
  • Cash Cows
    • Strategically, important to:
      • Utilize a holding strategy but
    • Cash Cows that are starved of both $ and intellectual investment will die
    • Funnel $ to high potential ??? and Stars
slide20
BCG
  • Dog
    • Low RMS and Low Mkt Growth
    • Weak SBU in low growth market
    • Divest unless…
portfolio evolution
Portfolio Evolution

?

High

Market

Growth

Rate

Low

High

Low

Relative Market Share

portfolio cash flows
Portfolio Cash Flows

?

High

Winners!

Market

Growth

Rate

Losers

Low

High

Low

Sources &

Use of Funds

Relative Market Share

slide23
BCG
  • Overarching Goals
    • Balanced Portfolio
      • Cash generators
      • Cash users
    • Adequate nurturing of future Cash Cows
    • Adequate nurturing of current Cash Cows
strategy24
Strategy
  • Level 2 – Business Level
    • Mid-level strategy
      • SWOT Analysis
      • What mix of products w/in SBU?
      • Desired positioning?
    • Tool: Product/Market Growth Matrix
      • Which products/segments?
      • Which markets/segments?
sbu strategy swot and beyond
SBU Strategy: SWOT and Beyond

Mission &Goals

Opportunities and

Threats

Emphasis is on

EXTERNAL

Situation

Analysis

threats opportunities
Threats &Opportunities
  • Shifting Buyer Tastes
  • Changing Demographics
  • Changing Consumption Patterns
  • New Technology
  • Government Policy
  • New Competition
  • Others

What is it,

good or bad?

swot analysis
SWOT Analysis

Mission &Goals

External

Threats &

Opportunities

Strengths and

Weaknesses

Situation

Analysis

Emphasis is on

INTERNAL

strengths weaknesses
Strengths & Weaknesses

Tough

Appraisal!

  • Distribution
  • Equipment
  • Image & Customer Loyalty
  • Patents
  • Management
  • Labor
  • Productivity

Oak

Solid

Dead

Wood

swot analysis29
SWOT Analysis

SWOT

  • Strengths
  • Weaknesses
  • Opportunities
  • Threats
swot analysis30
SWOT Analysis
  • Critical that SBU MATCH opportunities with strengths
  • Critical that SBU recognizes threats and be proactive
slide31

SBU Tool: Product-Market Growth Matrix

  • Most companies operate with a strong sales and profit growth imperative (Corporate-level objective).
  • BUT, the question remains – “How do we achieve growth?”
product market growth matrix
Product-Market Growth Matrix

PRODUCT

Old Product

New Product

Existing

Market

Market

Penetration

Product

Development

MARKET

New

Market

Market

Development

Diversification

diversification
Diversification
  • Conglomerate
    • 1980s saw much of this type
    • New SBUs unrelated to core businesses
      • Pepsico
        • Wilson Sporting Goods
        • North American Van Lines
      • Kraft
        • Duracell
diversification34
Diversification
  • Concentric
    • Trend is toward this
    • Divesting of Unrelated SBUs
    • Building with related SBUs
      • Those related to core competencies of the company
        • Distribution
        • Image
        • Manufacturing
growing by shrinking
Growing by Shrinking
  • Current Trend is to Divest
  • Many Conglomerate Diversification Moves Proved Disappointing
  • Focussing on Products and Markets where Firms are Knowledgeable
  • Repudiation of the “Financial Acquisition” strategy
mckinsey study
McKinsey Study
  • Over the long run ...
  • Product and Market Development Strategies have outperformed ...
  • Diversification Firms
strategy38
Strategy
  • Level 3 – Tactical/Functional
    • Micro-level strategy
    • How do we support business level strategy & objectives?
    • Tactical elements at issue here – for marketing:
tactical strategy
Tactical Strategy

Segments and

Targets

  • Product
  • Price
  • Distribution
  • Promotion

Mission &Goals

External

Threats &

Opportunities

Internal

Strengths &

Weaknesses

Identify & Select

Target Segment(s)

Develop the

Marketing Mix

4 P’s

strategy40
Strategy
  • Level 4 – Operational
    • Most micro-level strategy
    • Implementation and control
      • Requires
        • Budgets
        • Targets
        • Time-frames
budgets targets and time
Budgets, Targets, and Time

Required for Implementation, Assessment and

Control

Mission &Goals

External

Threats &

Opportunities

Internal

Strengths &

Weaknesses

Identify & Select

Target Segment(s)

Develop the

Marketing Mix

Set Budgets, Targets,

and Time-Frame

implementation
Implementation
  • Follow the plan
  • Be consistent
  • Be disciplined
  • Be alert to the need to adapt - sideline adjustments
  • Do Things Right the FIRST time!
  • Customers don’t often forgive!
control
Control
  • Measurement of Achievements v. Goals
  • Corrective Actions
    • Modify Actions
    • Adjust Goals
  • Should be Ongoing - Diagnostic and Prescriptive
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