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.