Chapter 4 ~Planning and Strategic Management~
Review Chapter 4 :
~Planning and Strategic Management ~
An Overview of Planning Fundamentals
The
Basic Planning Process, because planning is a decision
process—you’re deciding what to do and how to go about doing it—the important
steps followed during formal planning are similar to the basic decision-making
steps:
Step 1: Situational Analysis
Step 2: Alternative Goals and Plans
Step 3: Goal and Plan Evaluation
Step 4: Goal and Plan Selection
Step 5: Implementation
Step 6: Monitor and Control
Levels of Planning
1. Strategic
Planning: Involves making decisions about the
organization’s long-term goals and strategies.
2. Tactical
and Operating Planning: Tactical
planning translates broad strategic goals and plans into specific goals and
plans that are relevant to a definite portion of the organization, such as a
functional area like marketing. Operating planning identifies the specifics
procedures and process required at lower levels of the organization.
3. Aligning
Tactical, Operational and Strategic Planning: One method for aligning the organization’s strategic and operational goals
is a strategy map. A strategy map provides a tool managers can
use to communicate their strategic goals and enable members of the organization
at every level to understand the parts they will play in helping to achieve
them. The map illustrates the four key drivers of a firm’s long-term success:
the skills of its people and their ability to grow and learn; the effectiveness
of its internal processes; its ability to deliver value to customers; and
ultimately its ability to grow its financial assets.
Strategic Planning
1. Step 1:
Establishment of Mission, Vision, and Goals
The
mission is a clear and concise expression of the basic purpose of the
organization. It describes what the organization does, whom it does it for, its
basic good or service, and its values.
2. Step 2:
Analysis of External Opportunities and Threats
Successful
strategic management depends on an accurate and thorough evaluation of the
competitive environment and macro-environment.
3. Step 3:
Analysis of Internal Strengths and Weaknesses
As managers
conduct an external analysis, they will also assess the strengths and
weaknesses of major functional areas inside their organization.
Resources and Core Competencies: Resources
are inputs to production (recall system theory) that can be accumulated over
time to enhance the performance of a firm. Core competence is something a
company does especially well relative to its competitors.
Benchmarking: The
processing of assessing how well one company’s basic functions and skills
compare with those of another company or set of companies.
4. Step
4: SWOT Analysis and Strategy Formulation
A comparison of strengths, weaknesses,
opportunities, and threats that helps executives formulate strategy
Corporate Strategy: Identifies the set of business, markets, or industries in which the
organization compete and the distribution of resources among those businesses.
Business Strategy: defines the major actions by which an organization builds and strengthens
its competitive position in the marketplace.
5. Step
5: Strategy Implementation
Strategic managers also must unsure
that the new strategies are implemented effectively and efficiently. By paying
closer attention to rhe processes by which strategies are implemented,
executives, managers, and employees can make sure that strategic plans are
actually carried out.
6. Step
6: strategic Control
A system designed to support managers in
evaluating the organization’s progress regarding its strategy and, when
discrepancies exist, taking corrective action.
