Transcript What exactly is strategic planning?

Introduction
What exactly is strategic planning?
Historical Progression of Business
Planning
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1900s, budgeting and controls; focus was on deviation
from the budget. It assumed that the past would repeat
itself.
1950s, long-range planning; it also assumed that the
past would repea itself but the future could be
forecasted based on an analysis of trends
1960s, strategic planning, assumed that simple trend
analyses based on past occurances were inadequate. It
considered forecasts of future changes in the marketing
environment (customers and competitors). Its
foundation is continuous scanning of the environment
and internal abilities to develop quick responses to
sudden changes.
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What exactly is strategic
planning?
Strategic planning involves decisions that are made
by the management of an organization as it pursue
its mission and objectives. These decisions include
the types of products to offer and in what markets
to sell them, the allocation of resources to that end,
the establishment of policies and procedures, and
the appropriate distribution of employee
responsibilities. This decision-making process is
influenced by events occurring in the internal and
external environments of the firm.
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A strategic marketing plan is the joint
preparation of a strategic (long-term) plan with
supportive functional plans, to assure a
compatible and continuous fit bewteen the
organization’s goals and capabilities and its
competitive environment.
It is a long-term plan to enchance the firm’s
competitive position or a plan that encloses the
firm’s primary strategies, especially those related
to its product or services and market.
Important parts of the definition:
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joint preparation of a strategic marketing plan with supportive
functional plans; the annual functional plans must flow
directly from strategic plans. Strategic decisions provide
general guidelines for the planning needs of the
functional departments (marketing, management operations, finance)
assurance of a compatible and continuous fit; long-term profit
is determined by a series of short-term profits
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compatible and continuous fit between the organization’s
goals and capabilities and its competitive environment;
strengths and weaknesses of the business, and
the opportunities and threats in the environment
should be analyzed. Strategic controls must go
on about (1) changes in the capabilities of the
business, (2) critical events taking place in the
environment – primarily the customers and
competitors. Controls consist of determining
whether the firm is achieving its objectives: if
not, why?
Strategic Management
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The goal in strategic management is to match
the resources of the firm to the threats and
opportunities that exist in the environment in
order to achieve long-term survival of the firm.
Strategic Marketing Concept
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Marketing concept; determining the needs of
customers and then satisfying those needs better than
competitors
Strategic marketing concept; focusing all planning and
implementational activities on the primary goal of longterm customer satisfaction at a profit. Satisfaction of
the customer over the long term requires continuous
monitoring of the environment, incorporating findings
into long- and short-term plans, achieving a sustainable
competitive advantage, and enlisting the cooperation of
employees to support the firm’s mission.
Central questions to be answered;
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What is the firm’s current strategy and position in the
market? How does the firm’s current abilities match up
to future strategic requirements? Are there minor or
major problems?
What is happening in the environment now and how
might that be expected to change in the future
(primarily customers and competitors)?
What should the firm’s short- and long-term strategy be
in light of the analysis? Are radical or moderate changes
in existing strategies required to meet current and
future customer needs?
Strategic Marketing Model
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Mission statement; basically the firm’s overall
purpose
Internal analysis; in-depth analysis of the
performance of each key functional area of the
company to expose the company’s strengths and
weaknesses
Environmental analysis; covers the analysis of
(1) the remote environment – PEST and (2) the
operating environment – PECCS. Together they
are referred to as the situational analysis
PEST: political regulations, the economy, societal trends, and technology
PECCS: personnel, ecology, customers, competitors and suppliers
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Strategic Marketing; concerns the long-term or broad
focus of the firm related to grand strategies, the chosen
product and market segments (portfolio analysis,
expansion strategies etc.)
Long-term Objectives; objectives for multiyear period –
three to five years.
Annual Objectives; objectives of the firm for the first
year. They flow from the long-term objectives but they
are more specific (daily, weekly, monthly, quarterly)
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Functional Strategies; express how the marketing mix
variables will be used to achieve the firm’s grand
strategies. Other strategies for the operations, human
resources and finance departments should also be
addressed. (what?)
Action Plans and Policies; they are temporary actions
(referred to as tactics) necessary to carry out strategies.
(how, when, by who, how much?)
Controls; consist of ongoing monitoring and measuring
of the actual performance of the firm compared with
its proposed objectives. General abilities of the firm
and the environment must also be monitored.
Key Terms
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Strategy; refers to the plan for achieving a goal or
objective. “It reflects a pattern in a sream of conscious
managerial decisions, aimed at ensuring organizational
adaptation”.
Tactic; a term closely related to strategy – a specific
action or means for accomplishing a strategy. The most
common usage is for short-term actions of a firm.
(Depending on the context, actions on the five-year
plans may be referred as strategy, actions on yearly
plans may be referred as tactics.)
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Strategic; in business, the term strategic generally refers
“something important” and is utilized in many different
contexts such as strategic marketing plan, strategic
assets and resources, strategic issues or concerns,
strategic thinking (seeing the big picture).
Levels of Strategy Decisions
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There are three levels of organizational
strategies (decisions) – (1) corporate, (2)
business, and (3) functional levels. Decisions
made at each level vary in importance, specificity
and degree of centralization.
Corporate-level strategies; are made by the top
management of a company (by CEO, CFO).
Such decisions are normally associated with
multi-business corporations.
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These decisions generally concern; the corporation’s
public and internal image, the degree of social
responsibility desired, major resource allocations
(invest, hold or milk, harvest, divest), with what
businesses the corporation should be involved,
financing of possible expansion internally through
existing businesses or through dept or equity funding.
Business-level strategies; are concerned with how the
business will compete in its particular industry. They
focus on the firm’s product mix, customer and
geographic markets served, exploitation of the firm’s
specific competencies, and achievement of one or more
sustainable competitive advantages. Business and
corporate-level strategies are the long-term portion of
the strategic marketing plan.
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Functional-level strategies; made by the managers and
the employees of various functional departments. They
are primarily concerned with the preparation and
implementation of policies and action plans that
support the objectives and strategies set by the
corporate- and business-level managers. (bottom-up)
Strategy level
Focus
ThoseTime Frame
responsible
Level 1:
Corporate
Strategy
What set of busi- Top
nesses should
management
we be in?
Level 2:
Business
Strategy
How do we comPresident of
pete within this
SBUs
particular
industry?
Level 3:
Details the courFunctional ses of action in
Strategy
the functional
areas of management
Specificity
5-10 years
Broad
1-5 years
Somewhat
specific
VP of Marketing Less than 1 year
VP of Operations
Detailed plan
Strategic Aggression
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There are five basic divisions of organizational
characteristic or strategic aggression:
Proactive; being a leader rather than the follower,
constantly assess the environment - opportunities and
threats
Reactive; having risk to be known as a “copy-cat” rather
than “innovative”, mostly followed
Passive; focusing simply on what have been done,
focused on standardization and cost minimization, does
not monitor the environment
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Adaptive; being flexible to adopt to the relatively stable
environment, the company wants to continue with its
current highly or reasonable successful strategies, but
remain open to changes if the right opportunity
presents itself.
Discordant; poorly positioned firms, unsure about how
to deal with its current position and the best
opportunities. This strategy is not selected but acquired
through poor performance.
Time Horizon
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The strategic marketing plan has two time
horizons: one is the long-term or strategic
portion, normally about three to five years for
the hospitality industry; the other is the shortterm (one year or less) or functional portion.
Although the strategic portion is for longer than
one year, it is generally updated each year. The
reason for the annual update is that internal and
environmental factors change.