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Strategic Planning and Control

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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Strategic Planning and Control

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  1. Strategic Planning and Control

  2. Planning • Planning Involves: • Determining an organization’s primary objectives and • Developing courses of action to attain them • The Planning PROCESS is:

  3. Planning • This is because it facilitates: • Plans often do and should change • Environmental management concept: • Scanning • Adapting

  4. Levels of Planning HR Global Information Systems Legal Research

  5. Strategic Business Units • A set of related businesses that are managed as profit centers • Separate Management Teams • Separate Resources • Separate Sets of Competitors

  6. Strategic Business Units • Phillip Morris • Cigarettes • Beer • Proctor and Gamble • Baby Products • Coffee • Food Products

  7. 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

  8. Corporate Strategy: Starting with Mission and Goals Mission and Goals Mission is formal and overarching statement of the firm’s essential purpose.

  9. 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

  10. Goals/Objectives • Measurable • Communicated • Reasonable - Achievable • Accepted by those Responsible

  11. Types of Objectives • Dollar or Unit Sales Volume (Capacity) • Target Dollar Profit or % Return • Market Share • Growth • Others

  12. Corporate Strategy Tool: BCG Matrix • Two Key Variables • Relative Market Share (RMS) • Related to Cash Generation

  13. BCG Growth-Share Analysis • Two Key Variables • Industry Growth Rate • Related to Cash Usage

  14. 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)

  15. Portfolio Categories ? High Market Growth Rate Low High Low Relative Market Share

  16. BCG • Question Marks • RMS Low but Mkt Growth High • Questionable – • Require considerable investment and strategic changes to  RMS • Too many ??? • Too few ???

  17. 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

  18. 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

  19. 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

  20. BCG • Dog • Low RMS and Low Mkt Growth • Weak SBU in low growth market • Divest unless…

  21. Portfolio Evolution ? High Market Growth Rate Low High Low Relative Market Share

  22. Portfolio Cash Flows ? High Winners! Market Growth Rate Losers Low High Low Sources & Use of Funds Relative Market Share

  23. BCG • Overarching Goals • Balanced Portfolio • Cash generators • Cash users • Adequate nurturing of future Cash Cows • Adequate nurturing of current Cash Cows

  24. 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?

  25. SBU Strategy: SWOT and Beyond Mission &Goals Opportunities and Threats Emphasis is on EXTERNAL Situation Analysis

  26. Threats &Opportunities • Shifting Buyer Tastes • Changing Demographics • Changing Consumption Patterns • New Technology • Government Policy • New Competition • Others What is it, good or bad?

  27. SWOT Analysis Mission &Goals External Threats & Opportunities Strengths and Weaknesses Situation Analysis Emphasis is on INTERNAL

  28. Strengths & Weaknesses Tough Appraisal! • Distribution • Equipment • Image & Customer Loyalty • Patents • Management • Labor • Productivity Oak Solid Dead Wood

  29. SWOT Analysis SWOT • Strengths • Weaknesses • Opportunities • Threats

  30. SWOT Analysis • Critical that SBU MATCH opportunities with strengths • Critical that SBU recognizes threats and be proactive

  31. 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?”

  32. Product-Market Growth Matrix PRODUCT Old Product New Product Existing Market Market Penetration Product Development MARKET New Market Market Development Diversification

  33. Diversification • Conglomerate • 1980s saw much of this type • New SBUs unrelated to core businesses • Pepsico • Wilson Sporting Goods • North American Van Lines • Kraft • Duracell

  34. 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

  35. 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

  36. Growing By Shrinking

  37. McKinsey Study • Over the long run ... • Product and Market Development Strategies have outperformed ... • Diversification Firms

  38. Strategy • Level 3 – Tactical/Functional • Micro-level strategy • How do we support business level strategy & objectives? • Tactical elements at issue here – for marketing:

  39. 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

  40. Strategy • Level 4 – Operational • Most micro-level strategy • Implementation and control • Requires • Budgets • Targets • Time-frames

  41. 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

  42. 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!

  43. Control • Measurement of Achievements v. Goals • Corrective Actions • Modify Actions • Adjust Goals • Should be Ongoing - Diagnostic and Prescriptive

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