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Financed by Supported by Implemented in cooperation with
Strategic Planning
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Introduction to strategic planningConducting strategic planningPreparation for Strategic PlanningUseful Skills to Have When Strategic PlanningVision, mission and values statementsStrategic AnalysisForecasting –tools and methodsSetting Strategic Evaluating and selecting strategic alternativesWriting and Communicating the Plan
Outline
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Strategic LeadersStrategic
management process
IntroductionStrategy
Formulation(planning)
Strategy Implementatio
n
Control of implementatio
n(evaluation
and monitoring)
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Process to determine:Where are we now?Where do we want to be?How are we going to get there?How will we know if we got there?
A strategic plan is a document and result of the formal strategic planning phase.
Strategic Planning
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Defining the organizations purpose
Establishing realistic goals and objectives
Communicating these goals
Focusing the organizations resources on key priorities
Defining baseline measurements
Building consensus
Provide clearer focus
Build strong teams of employees
Increase productivity
Solve major problems
Develop a sense of ownership of the plan
Why strategic planning?
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When an organization is getting started, as part of the business plan, along with marketing, financial and operational plans
In preparation for a major new investment (for example: developing a new department or line of products)
At least once a year in time to identify organizational goals to be achieved next year.
When should strategic planning be done?
* During the implementation the progress should be reviewed
frequently and regularly.
* There is no one model that fits all, so the elected approach will
depend on the context of the organization.
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Vision-Based (Goal-Based) Strategic PlanningIssues-Based PlanningAlignment ModelScenario PlanningReal-Time Planning
*can be used individually or in combination
Types of Strategic Planning
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1• Identify your purpose (mission statement)
2• Establish a vision statements
3• Select the goals your organization must reach
4• Identify specific approaches
5• Identify specific action plans to implement each strategy
6• Compile the mission, vision, strategies, and action plans
in a Strategic Plan Document
7• Monitor the implementation of the Plan and update as
needed
Vision Based - steps
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1• Identify the current, major issues facing the
organization
2• Brainstorm ideas to address each major issue
3• Compile the issues and ideas into a Strategic
Plan Document
4• Monitor the implementation of the Plan and
update as needed.
Issues Based
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1
• Outline the organization’s mission, programs, resources, and needed support
2
• Identify what is working and what needs adjustment
3
• Identify how these adjustments should be made
4
• Include the adjustments as strategies in the strategic plan
Alignment Model
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1• Select several external factors and imagine related
changes, which might influence the organization
2
• For each change in a force discuss three different future organizational scenarios (best, worst, and ok cases)
3• Suggest what the organization might do in each of these
three scenarios
4• Detect common strategies which could be addressed
5
• Select the most likely external changes and identify the most reasonable strategies the organization could take to respond.
Scenario Planning
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Plan for a Plan Are we really ready for strategic
planning?Who is doing the planning?Why are you doing strategic
planning?What is the scope of our plan?What planning model should we
use?How might the model be
implemented?What is your schedule for
developing the plan?Who will be involved? How?
When?
Will you need an outside facilitator?
What materials will be needed?What terms/titles will you use?Will you need to train the planner
and if yes how?How will you get buy-in of
members of the organization?How will you ensure
implementation of the plan?
How will you change the plan as needed?
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Creative Thinking
Decision Making
Problem Solving
Meeting Management
Facilitating in Face-to-Face Groups
Group-Based Problem Solving and Decision Making
Conflict Management in Groups
Skills for Strategic Planning
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Vision: a compelling description either of where the organization will be after implementing its strategic plan or as an idealistic picture of the more general future
Vision, Mission, and Values Statements
Mission: what is the organization’s role in achieving the future outlined in the vision statement, should include
Whom does the organization serveWhich customer needs does it seek to satisfyWhat does it do to satisfy that need?
Values: Core of the organization’s culture, which should drive behavior of employees and management
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• (B)PEST(LE)• Porters’ five forces analysis
External analysis
• Boston Consulting Group Portfolio Matrix
• McKinsey/ General Electric Portfolio Matrix
• Functional Analysis• Porters value chain
Internal analysis
• SWOT analysis• Stakeholders analysisCombined
Strategic Analysis
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• what degree does the government intervene in the economy or the goods and services the government wants to supply or not.
Political factors-
• economic growth, interest/ exchange/inflation rates
Economic Factors:
• cultural aspects - trends in social factors have an affect on the demand for certain products.
Social Factors:
• technological aspects such as R&D activity• may determine barriers to entry, minimum
efficient production level and influence outsourcing decisions.
Technological Factors:
PEST Analysis
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Expansion of the PEST analysis
• discrimination laws, consumer laws, anti-trust, these laws may affect how a company operates and the costs.
Legal factors
• ecological and environmental aspects (especially those impacting tourism or farming)
Environment Factors
• Demographic• RegulatoryOther factors:
PESTLE Analysis
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Tool for understanding the dynamics of the industry
What are the drivers for competitors
Porter 5 Forces Analysis
Threat of new entrants
Threat of substitute products/ services
Bargaining power of customers
Bargaining power of suppliers
Intensity of competitive rivalry
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Profitable markets will attract new entrants, increasing the number of competitors thus decreasing the profitability of all competitors in the industry– thus companies will have to pay attention to new entrants
If a company is new they should expect counter actions and design strategies to address this.
1. Threat of New Entrants
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Referring to both products/services from another company and products that satisfy the same customer need, which doesn’t need to come from the same industry.
Factors influencing customers to substitute products are:level of product propensity to substitute, price for value ratio of substitute, switching costs, level of product differentiation, number of substitute products available in the market,the ease of substitution.
2. Threat of Substitute Products or Services
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Ability of customers to condition the company.Based on how relevant the individual buyer is to the
companyCustomer buying power is strong if:
customers are concentrated or buy large amounts of the product,
if the products are standardized or non-differentiated,low switching costs for choosing an alternate product, the buyer has numerous alternatives, the buyer is price sensitive
3. Bargaining Power of Customers
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Suppliers may be a source of power when: there are few substitutes, supplier switching costs are high, there is a high degree of inputs, there is a high impact of inputs on costs or differentiation,
low presence of substitutes,there is significantly more buyers than suppliers
4. Bargaining Power of Suppliers
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Intensity is higher if: the competitors are numerous and/or relatively equal, there is weak economic growth, there are high fixed costs, there is a lack of differentiation or switching costs are low,there are high exit barriers.
5. Intensity of Competitive Rivalry
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Stakeholders: individuals and structures within the organization and individuals and organizations in its environment that have an influence on the organization
Stakeholders Analysis
• STEPS
• Identify and classify the stakeholders
• Determine and analyze stakeholders interest
• Determine and analyze stakeholders potential influence
• Define priorities – by selecting stakeholders with highest influence on the strategy implementation• Determine ways of getting priority stakeholders on board for implementation of the strategy.
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How well do the different aspects of the organization serve the strategy implementation. ‘Alignment’
Internal Analysis of the Organization
Tools for internal analysis• Boston Consulting Group Portfolio Matrix• McKinsey/ General Electric Portfolio Matrix• Functional Analysis• Porters value chain
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Porters value chain model
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Delphi Method
Scenario Method
Simulation Method.
Extrapolation of Trend
Regression Analysis
Brainstorming
Sensitivity Analysis
Forecasting- Tools and Methods
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Setting Strategic Direction
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SWOT Matrix
Strengths• What are your assets? Which is
strongest?• What differentiates you from your
competitors?• Is your business debt free or have a
better debt structure than your competitors?
• Do you have a broad customer base?• What unique resources do you have?• Do you have a sustainable competitive
advantage?
Weaknesses• What areas do you need to improve on?• What necessary expertise do you lack?• In what areas do competitors have an
edge?• Are you relying on one customer too
much?• Do you have adequate cash flow to
sustain you?• Do you have adequate profit levels?• Are you over leveraged (too much
debt)?
Opportunities• What external changes present
opportunities?• What trends might impact your
industry?• Is there talent elsewhere you might
acquire?• Is a competitor failing to service the
market?• Is there an unmet need/want you can
fulfill?• Are trends emerging you can profitably
service?
Threats• Is there a better competitor in your
market?• Is there an entity who may become a
competitor tomorrow?• Is your intellectual property secured?• What if your supplier runs out of
product and you experience an extended shortage?
• What if there is a natural disaster?, Customers go bankrupt?, your website is hacked?, or you get ‘sued?
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TOWS Strategic Alternatives Matrix
External Opportunities (O)1.2.3.
External Threats (T)1.2.3.
Internal Strengths (S)1.2.3.
SO“Maxi-Maxi”
- use strengths to maximize opportunities
ST“Maxi-Mini”
- use strengths to minimize threats
Internal Weaknesses (W)1.2.3.
WO“Mini-Maxi”
-minimize weaknesses by taking advantage of
opportunities
WT“Mini-mini”
- minimize weaknesses and avoid threats
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General strategic direction - survival and developmentBusiness strategy covers what the company produces, for whom, and how
it creates a competitive advantage?Two basic strategies:
Portfolio strategyCompetitive strategy
Besides a business strategy a company should also have Administrative andOperational plans
Basic requirements for success: long-term organizational objectives must have an upper hand on short-term, organizational level objectives must have an upper hand on the objectives of the
organizational parts.
Defining Possible Strategies
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= Determine volume and direction of future business of the company.
Portfolio strategy
MARKET
PRODUCT
EXISTING NEW
EXISTING
Market penetration
- existing market with the existing
products
Product development -
existing market with new products
NEW
Market development
- new market with the existing products
Diversification - new market with
new products
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Cost leadership
•producing with lower cost that the competitors
Differentiation
•of products and services on account of image, characteristics, technologies and sales methods, servicing...
Focus •on specific market or group of consumers within the market (niche strategy)
Competitive strategy
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1 •Defining strategic alternatives
2 •Defining objectives in accordance with which the strategic alternative should be evaluated
3 •Estimating and valuating impact of each strategic alternative on objectives
4 •Comparing results of valuation and selecting strategic alternatives
Evaluating and Selecting Alternatives
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Body of the Strategic Development Plan:Executive SummaryOrganizational DescriptionMission, Vision and Values Statements Goals and Strategies
Writing and Communicating the Plan
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Situational Analysis DataBudget PlanningAction and/or operating planFinancial ReportsMonitoring and Evaluation of Plan
Provisional Elements and/or Appendices: