Strategic planning and strategy development

1. FiNET Associates Strategic planning and strategy development Strategic Management Kenny Tay FCCA FCMA CGMA March 2016 Strategy planning and development 2016

2. Part A • Strategic management • Definition of strategic management • Scope and depth of strategic management • Strategy and outcome • Part B • Strategic planning – situation analysis • Corporate goals and mission • The business model and its offering • Environmental assessment • PEST and environmental assessment • Competition and market leadership • Part C • Strategy implementation • SWOT analysis and core competency • Delivery capabilities and constraints • Resources requirements • Outcome of strategy implementation • Performance evaluation and feedback

3. Strategic management Definition of strategic management Scope and depth of strategic management Strategy and outcome Strategy planning and development 2016

4. Strategic management • Strategic management is the process of managing limited resources to achieve stakeholders’ objectives under changing circumstances. • Strategic management contrasts with everyday management processes – • Getting materials and manpower • Scheduling production and output • Making sales deliveries Strategy planning and development 2016

5. Strategic management • Strategic management vs. general management Objectives of stakeholders Changing circumstances Limited resources Strategy planning and development 2016

6. Strategic management • Basic issues involving strategic management – • Maximizing output from limited resources • Preventing potential loss of markets and customers • Ensuring market reach of new products and services Strategy planning and development 2016

7. Strategic management Everyday management Strategic management • Planning • Organizing • Execution • Directing • Controlling • Issues driven • Contextual • Problem solving The Difference Strategy planning and development 2016

8. Strategic management • Strategy • To resolve environmental issues • To overcome resource limitations • Outcome • Achieving approved objectives • Minimizing deviations from plans Strategy planning and development 2016

9. Strategic planning Corporate goals and mission The business model and its offering Environmental scanning Evaluating and selecting the options Strategy planning and development 2016

10. Strategic planning process • Steps • Revisit the corporate vision and mission • Business model review • Environmental scanning Strategy planning and development 2016

11. The Coca Cola Vision • Our vision serves as the framework for our Roadmap and guides every aspect of our business by describing what we need to accomplish in order to continue achieving sustainable, quality growth. • People:Be a great place to work where people are inspired to be the best they can be. • Portfolio:Bring to the world a portfolio of quality beverage brands that anticipate and satisfy people's desires and needs. • Partners:Nurture a winning network of customers and suppliers, together we create mutual, enduring value. • Planet: Be a responsible citizen that makes a difference by helping build and support sustainable communities. • Profit: Maximize long-term return to shareowners while being mindful of our overall responsibilities. • Productivity: Be a highly effective, lean and fast-moving organization. Strategy planning and development 2016

12. The Coca Cola Mission • Our Mission • Our Roadmap starts with our mission, which is enduring. It declares our purpose as a company and serves as the standard against which we weigh our actions and decisions.. • To refresh the world... • To inspire moments of optimism and happiness... • To create value and make a difference. Strategy planning and development 2016

13. Your organization… • Vision ------------------------------------------ • Mission ------------------------------------------ • Does a company necessarily need a Vision and Mission? ………………………………………… Strategy planning and development 2016

14. Business model review • A business model thus describes the rationale of how an organization creates, delivers, and captures value for its stakeholders – • Customers • Shareholders • Financiers • Employees Review of its relevance in a changing environment Strategy planning and development 2016

15. Your organization … • Whether the Business Model is still • Relevant in the current environment • --------------------------------------------------------------------- • Appropriate for the company’s mission • --------------------------------------------------------------------- • Able to create and capture value for its stakeholders • ---------------------------------------------------------------------- Strategy planning and development 2016

16. Environmental scanning Before strategy decisions Strategy planning and development 2016

17. Market and competitor analysis • An assessment of – • Economic cycles • Product demand cycle • Competitive forces and responses • PEST conditions Strategy planning and development 2016

18. Economic cycle analysis • Assessment • Sales ------ ------ ------ ------ ----- • Profit ------ ------ ------ ------ ----- • Cash flow ------ ------ ------ ------ ----- • Investment ------ ------ ------ ------ ----- • Competition ------ ------ ------ ------ ----- D A B C D Strategy planning and development 2016

19. Product demand cycle • Assessment • Sales ------------- ------------- ------------- • Profits ------------- ------------- ------------- • Cash flow ------------- ------------- ------------- • Investment ------------- ------------- ------------- • Competitors ------------- ------------- ------------- Strategy planning and development 2016

20. The BCG matrix • Growth vs. share • Product 1 • -------------- • Product 2 • -------------- • Product 3 • -------------- Market Growth High Low Problem kid Blue sky Dogs or slog? Cash cow Small Large Market share Strategy planning and development 2016

21. Competition and responses • Pressure New comers Existing rivalry Suppliers Buyers New products Strategy planning and development 2016

22. Competitive strategies • How competitors respond – strategic options • Cost leadership __________________ • Differentiation __________________ • Focus strategy __________________ Your company’s strategy option? --------------------------------- Strategy planning and development 2016

23. The PEST assessment • RISK assessment • POLITICAL • ECONOMIC • SOCIAL • TECHNOLOGY Potential threats to the business Strategy planning and development 2016

24. Your organization … • Political – change of government and rules • ------------------------------------------------------------------------- • ------------------------------------------------------------------------- • Economic – the next recession • ------------------------------------------------------------------------- • ------------------------------------------------------------------------- • Social – e.g. demographics, religion and education • ------------------------------------------------------------------------- • ------------------------------------------------------------------------- • Technology – solar power, e – commerce, multilevel marketing • ------------------------------------------------------------------------- • ------------------------------------------------------------------------- Strategy planning and development 2016

25. Evaluating strategy options • Apply tools • Risk analysis • SWOT • Breakeven analysis • Decision trees • Cost benefit assessment • Discounted cash flow analysis • Sensitivity testing • Scenario analysis Using financial assessment tools Strategy planning and development 2016

26. Strategy development exercise • Your company is a diversified business organization and has signed a sole distributorship agreement with a Brazilian automobile manufacturer for an entry level sports car into the domestic executive market. The franchise agreement requires an investment commitment of USD 5 million and would be renewable at the end of 5 years. The target market price on the road is the local currency equivalent of USD40000. • Outline an appropriate strategy and the key considerations for this investment to be successful. Strategy planning and development 2016

27. Strategy implementation SWOT analysis and core competency Delivery capabilities and constraints Resources requirements Outcome of strategy implementation Performance evaluation and feedback Strategy planning and development 2016

28. Implementing the strategy • Developing strategies and creating strategic plans is an easy part. • Without careful consideration on implementation, strategy planning is wasteful and demotivating. • It is therefore essential to recognize implementation of strategy as a crucial part of overall strategic management. Strategy planning and development 2016

29. Organizational competency • SWOT of the organization – a recognition • Strengths ------------------------------------ • Weaknesses ------------------------------------ • Opportunities ------------------------------------ • Threats ------------------------------------ Strategy planning and development 2016

30. Delivery capabilities and constraints • Organization and controls • Making process change • Resource availability – • Finance • People and skills • Business process re-engineering Strategy planning and development 2016

31. Organization for execution 1 • Selected strategies will be executed with • Organization configuration & functions e.g. • Departmental • Divisional • Transnational • Project or • Team Strategy planning and development 2016

32. Organization for execution 2 • Work processes are required for delivery of service or production • Market processes • Deal with contractors & suppliers • Cultural of collaboration • Managing relationships • Control processes • Input - planning, supervision, cultural change • Output - performance targets • Relationships – centralization vs. decentralization Strategy planning and development 2016

33. Process change 1 • Process change may be required for • Greater customer satisfaction • Minimizing resources and wastage • Error minimization • Faster delivery • Existing processes may no longer be suited in a changing market environment Delivery & Quality performance Strategy planning and development 2016

34. Process change 2 • Basic steps • Clarify business vision and process objective • Identify processes to be redesigned or improved • Analyse existing processes for their effectiveness • Identify change levers – e.g. IT capabilities, people, process • Design proto type for testing and adoption Strategy planning and development 2016

35. Business process re engineering • Process re-design requires • Zero base – or starting from scratch • simplification – eliminate redundant elements • Value adding – non value add work to be avoided • Close gaps & disconnects at department boundaries • BPR is about achieving – • Lower costs • Faster delivery • Error free • Maximum customer satisfaction Concept of quality Strategy planning and development 2016

36. Resource availability – finance • Finance • Managing value and the ROI - financial decisions • Investment • Financing • Dividends • Managing budgets and forecasts • Resource allocation for the KRA and KPI achievements • Managing performance Strategy planning and development 2016

37. Resource availability – people • Leadership – leading teams • Visioning • Build teams • Resolving conflicts • Managing performance • Job design and staff development • Task goals and benchmarks • Job enrichment and skills retention • Succession planning Strategy planning and development 2016

38. Managing change @ strategy implementation Strategy planning and development 2016

39. Managing change 1 • A new strategy instigates change • Changes may occur at different levels • Corporate • Project • Department • Operational • Activity Prepare for change – how? Corporate Project Department Operational Activity Strategy planning and development 2016

40. Managing change 2 • Changes are sometime not welcome Managing resistance • Inconvenience -------------------------------- • Fear of unknown -------------------------------- • Lack understanding -------------------------------- • Role of dynamic leadership – winning over people Strategy planning and development 2016

41. Key points in strategy development • Key Points • Your strategy tells you how you'll achieve success, no matter how that success is defined. And whether you're developing a strategy at the personal, team or organizational level, the process is as important as the outcome. • Identify your unique capabilities, and understand how to use these to your advantage while minimizing threats. The process and tools identified above will help you identify a variety of potential strategies for success, so that you can ultimately choose the one that's right for you. • And prepare to change – new strategy means CHANGE! Strategy planning and development 2016

42. Strategy planning and development Questions and answers March 2016 Kuala Lumpur Strategy planning and development 2016

43. Thank you! Kenny Tay FCCA FCMA CGMA Kuala Lumpur Strategy planning and development 2016