Strategic Planning Process – Case Analysis
The Strategic Planning Process:
The Strategic Planning Process involves numerous steps in evaluating the effectiveness of a firm’s performance relative to its competitors. To assess each of the components of a business, selected evaluative tools must be used. The tools are meant to serve as guidelines and not specific decision points. Management must decide upon the most appropriate pathway for the firm to follow given the input from both the internal and external environment.
The I/O Model [Industrial Organization] advances the notion that the external environment plays the major role in deciding the firm’s strategic actions.
The Resource-Based Model states that the internal environment, in terms of its resources and capabilities, is more critical to the determination of strategic actions than is the external environment.
I/O ModelResource-Based Model
A firm exits in an Industry. In this industry, there are five main forces that suggest an industry’s profitability (its rate of return on invested capital relative to its cost of capital):
The industry’s structural characteristics are important to understand in order to position the firm to compete effectively.
Key to the evaluation of a firm’s internal and external environments are the
following evaluative tools. Each must be thoroughly considered before a strategic action can be taken.
Mission statement Analyze the Mission Statement and its components
SWOT analysisConduct a Strengths, Weaknesses, Opportunities and Threats analysis. Use the data to construct a TOWS Matrix.
IFE/EFE MatrixInternal and External Factors of the firm are evaluated and given weight as to importance in the firm’s ability to perform.
Competitive MatrixAssess the competition and develop a profile of the evaluative criteria used to monitor the market.
TOWS MatrixConstruct a TOWS Matrix to assess the position of the firm in the market or industry where the firm operates.
BCG MatrixRelative market share position of the firm and the participants in the industry.
SPACE MatrixThe type of strategy to be used in competing is developed to make the best use of available resources.
QSPM MatrixDetermining the relative attractiveness of feasible alternative actions is the purpose of this technique.-
Strategy-Formulation Analytical Framework:
Stage 1: The Input Stage
EFE MatrixCompetitive Profile MatrixIFE Matrix
Stage 2: The Matching Stage
TOWS MatrixSPACE MatrixBCG Matrix
Stage 3: The Decision Stage
Nine (9) Components of a Mission Statement:
Customers:Who are the firm’s customers?
Products or Services:What are the firm’s major products or services?
Markets:Geographically, where does to firm compete?
Technology:Is the firm technologically current?
Concern for survival, Is the firm committed to growth and financial growth and profitability:soundness?
Philosophy:What are the basic beliefs, values, aspirations, and ethical priorities of the firm?
Self-concept:What is the firm’s distinctive competence or major competitive advantage?
Concern for Public Image:Is the firm responsive to social, community, and environmental concerns?
Concern for Employees:Are the employees a valuable asset of the firm?
In this course, we will learn how to formulate, implement and evaluate strategies for the firm as it competes in a complex market.
A Business is not what you create in a vacuum……..nor can an effective Policy be randomly developed or involuntarily implemented.
Development of a Business comes from Strategy……..without a Strategy there can be no Direction……..without Direction there can be no Decision-Making…….without Decision Making there can be no Outcome………if there
is no Outcome….there is no Action!
Therefore………An effective Business Strategy must start with a defined set of circumstances, via Strategic Initiatives, from which we can understand how our decisions will impact the environment that surrounds us.
In this environment, we find several ways to define our understanding:
Two Types of Knowledge:
TacitThat knowledge that is most difficult to duplicate. We acquire Tacit knowledge over time via our life experiences and via our ways of learning. Often called Implied knowledge because it is not expressed openly in the normal course of doing business. Tacit knowledge is costly to acquire and more difficult to maintain.
Ask a child why he or she is doing something and the reply may be ‘because’. This is not to mean that there was a random act being conducted but rather there was learning through observation or direct instruction by a more informed person (a parent).
ExplicitThat knowledge that is written and specifically expressed. Rules, regulations, and standards of behavior are examples. It is knowledge that is more easily transferred because of its portability. It also cost less to acquire and maintain.
Ask a sales clerk in a store a question about why the business performs a selected task in the manner being exhibited by the individual and the response may be ‘it’s our policy’.
Two Types of Sources of Data:
PrimaryData that we produce or create on our own. Information procured from raw data derived from sources such as surveys, observations, questionnaires and interviews. Primary data is more timely and under the control of the
researcher. It also can be more easily manipulated.
SecondaryData that has been created by others and already exists. Examples include reports, research documents, studies performed by analysts and published articles developed by academics via the rigors of research. Two types of Evidence
EmpiricalThe accounting of an event based on experiment or the rigor of research. Example: A study where data has been analyzed and upon which a definitive statement is based about the event or phenomenon being stated.
“Managers who are educated in the field of finance make better investment decisions. The study I conducted showed that the more education and training an individual possesses in the discipline of finance, the better their effectiveness in making investment choices.”
AnecdotalAn accounting of some event that has not been proven to be accurate through a tested analysis of the phenomenon. Example: A casual story or accounting of an event is reported without any specific evidence that would support the observation.
“I think Managers who conduct business make very good investment decisions.”
My job is to challenge your previous educational experiences and enhance your ability to THINK about Policy and its impact upon Business Decisions.
We accomplish this task by analyzing a Business Policy case. A business policy case describes and organization’s external and internal conditions and raises issues concerning the firm’s mission, strategies, objectives, and policies.
Most information in a business policy case is established fact but it also contains opinions, judgements and beliefs not founded on fact or any empirical evidence.
It is our job as Leaders and Management to discern fact from fancy and develop a course of action that the firm can take to reach its goals and effectively compete in the marketplace. BUSINESS PLANPOLICY
An Effective Policy begins with Strategic Planning. Development and Implementation of the Strategic Plan is the hallmark of an excellent Leader. Without Leadership there can be no effective planning, therefore no effective Policy.
Strategic Planning Process – Case Analysis