Planning and Strategic Management

Planning and Strategic Management

The Basic Planning Process

Planning involves six steps:

1. Situational Analysis — gather, interpret, and summarise all relevant information
2. Alternative Goals and Plans — identify goals (targets) and plans (actions), including contingency plans
3. Goal and Plan Evaluation — assess advantages, disadvantages, and potential effects
4. Goal and Plan Selection — choose the most appropriate and feasible option
5. Implementing — ensure employees understand the plan and have resources and motivation; link to budget and reward systems
6. Monitoring and Controlling — measure actual performance against goals and take corrective action

Types of Planning

• Strategic planning — long-term goals and strategies for the whole organisation
• Tactical planning — translates broad strategic plans into specific goals for functional areas
• Operational planning — identifies specific procedures at lower organisational levels

The Strategic Management Process

1. Establish mission, vision, and goals — mission = basic purpose; vision = long-term direction
2. Analyse external opportunities and threats — scan stakeholders and the macroenvironment
3. Analyse internal strengths and weaknesses — financial, marketing, operations, HR, and core capabilities
4. SWOT analysis and strategy formulation — compare internal strengths/weaknesses with external opportunities/threats
5. Strategy implementation — define tasks, assess capabilities, develop agenda
6. Strategic control — monitor progress and take corrective action

Core Capabilities

A core capability is the unique skill and/or knowledge an organisation possesses that gives it an edge over competitors. Resources can be tangible (real estate, raw materials) or intangible (reputation, culture, patents).

Corporate Strategy Options

• Concentration — focus on a single business
• Vertical integration — expand into suppliers or distributors
• Concentric diversification — enter related businesses
• Conglomerate diversification — enter unrelated businesses

The BCG matrix categorises business units as Stars (high growth, strong position), Cash Cows (low growth, strong position), Question Marks (high growth, weak position), or Dogs (low growth, weak position).

Business Strategy

• Low-cost strategy — build competitive advantage through efficiency and standard products
• Differentiation strategy — build competitive advantage by being unique in the industry