S trategy D esign and P lanning
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Transcript of S trategy D esign and P lanning
Strategy Design and Planning
Chapter Outline The strategic design approach the strategic planning approach The Design versus The Planning Model A Model for strategic planning
The strategic The strategic design approachdesign approach
Seven PremisesSeven Premises strategy formation should be a
controlled, conscious process. the CEO is “the” strategist. strategy formation must be kept simple
and informal.
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The strategic The strategic design approachdesign approach
Strategies should be unique. strategy design should be full-blown,
not incremental. strategies should be articulated. once the first 6 premises are completed
the strategy can be implemented.
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The Strategic Planning ApproachThe Strategic Planning Approach
3 premises3 premises strategy formation should be a
controlled process. responsibility rests with the CEO in
principle, and executed by staff planners.
strategies emerge full-blown, to be explicated for implementation.
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differences between the design and differences between the design and planning approachesplanning approaches
the design model emphasizes simplicity and informalness while the planning model uses an intricate array of procedures.
The planning model uses staff planners as major actors, while the design school uses them as minor actors in the implementation process.
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A combination modelA combination modelThe basic Plan FormatThe basic Plan FormatI. I. mission statementmission statement a. business definitiona. business definition b. long-term objectivesb. long-term objectivesII. II. scan of external environmentscan of external environment a. industry environmenta. industry environment b. macroenvironmentb. macroenvironmentIII. III. scan of internal environmentscan of internal environment a. value chain analysisa. value chain analysis b. financial analysisb. financial analysis c. assessment of strengths and weaknessesc. assessment of strengths and weaknessesiv. iv. business strategy statementbusiness strategy statementv. v. integrated programsintegrated programs
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i. The mission statement
1. What business should we be in?1. What business should we be in?2. Why do we exist?2. Why do we exist?3. What is unique about our organization?3. What is unique about our organization?4. Who are our principal customers?4. Who are our principal customers?5. What are our principal products/services, present 5. What are our principal products/services, present
and future? and future?
6. What are our principal market segments, present 6. What are our principal market segments, present and future? and future?
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The mission statement7. What are our principal outlets/distribution channels, 7. What are our principal outlets/distribution channels,
present and future? present and future?
8. How is our business different than it was three and 8. How is our business different than it was three and five years ago? five years ago?
9. What is likely to be different about our business 9. What is likely to be different about our business three and five years in the future? three and five years in the future?
10. What are our principal economic concerns?10. What are our principal economic concerns?11. What philosophical issues are important to our 11. What philosophical issues are important to our
future? future?
12. What special considerations do we have regarding 12. What special considerations do we have regarding stakeholder groups? stakeholder groups?
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Stakeholder groups
owners/ stockholders/ investors/ constituents
board of directors parent organization legislative bodies employees
customers/ clients/ users
suppliers general public
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Stakeholder groups
owners/ stockholders/ investors/ constituents
board of directors parent organization legislative bodies employees
customers/ clients/ users
suppliers general public
ii. long-term objectives marketingmarketing profitabilityprofitability physical and financial resourcesphysical and financial resources productivityproductivity worker performanceworker performance management developmentmanagement development innovationinnovation social responsibilitysocial responsibility stockholder responsibilitystockholder responsibility size/ growth/ diversificationsize/ growth/ diversification
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iii. scan of internal environment and financial analysis
value chain analysisvalue chain analysis financial analysisfinancial analysis
$ leverage ratios$ liquidity ratios$ activity ratios$ profitability ratios
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iii. scan of internal environment and financial analysis
value chain analysisvalue chain analysis financial analysisfinancial analysis
$ leverage ratios$ liquidity ratios$ activity ratios$ profitability ratios
dupont financial analysis
salesminus
costs
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dupont financial analysis
salesminus
costsnet profit
sales
dupont financial analysis
salesminus
costsnet profit
sales net profit marginTIMES
asset turnover
salestotal assets
dupont financial analysis
salesminus
costsnet profit
sales net profit marginTIMES
asset turnover
salestotal assets
total debttotal assets
(1-Debt Ratio)
[divided by]
roi
roe
iv. the strategy statement
Answers the five questions ofAnswers the five questions of::1 What should be our future driving force?2 How does this differ from our current
driving force?3 What changes will be needed to meet
the future driving force?4 How is this compatible with the mission?5 How is this compatible with the
conclusions from our strategic analysis?
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v. integrated programs
The seven StepsThe seven Steps Identify results needed to accomplish
each long-term objective. select 5 to 10 most critical results
required to achieve the long-term objective.
reach agreement on each integrated program.
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integrated programs
Reach agreement on what is needed concerning results, timetable, resource, accountability, and feedback mechanism.
invite review and comment from management levels.
Complete final documentation. Implement and evaluate.
strategic choicestrategic choice
Links strategy formulation Links strategy formulation to strategy to strategy implementation.implementation.
Choice
strategic choicestrategic choice
Links strategy formulation Links strategy formulation to strategy to strategy implementation.implementation.
Choice
Formulation and ImplementationFormulation and Implementation
Corporate Strategy:
Pattern of purposes and
policies defining
the company
and its business.
Formulation(Deciding what to do)
Implementation(Achieving Results)
1. opportunity and Risk.
2. material, technical, financial, and managerial resources.
3. personal values and aspirations.
4. Acknowledgment of noneconomic responsibility to society.
1. Organization structure and relationships.
2. Organization processes and behaviors.
3. top leadership
Figure 1 68
relating opportunities to resources
Matching opportunity and competence.
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relating opportunities to resources
Matching opportunity and competence.
Environmental Conditionsand Trends
EconomicTechnicalPhysicalSocialCommunityNationWorld
Schematic development of Schematic development of economic strategyeconomic strategy
Figure 2 73
Environmental Conditionsand Trends EconomicTechnicalPhysicalSocialCommunityNationWorld
Schematic development of Schematic development of economic strategyeconomic strategy
Figure 2
Environmental Conditionsand Trends EconomicTechnicalPhysicalSocialCommunityNationWorld
opportunities and risks
Identification inquiryassessment of risk
Schematic development of Schematic development of economic strategyeconomic strategy
Figure 2
Environmental Conditionsand Trends
opportunities and risks
Distinctive CompetenceCapabilityCapabilityFinancial
ManagerialFunctional
organizational
reputationhistory
Schematic development of Schematic development of economic strategyeconomic strategy
Figure 2
Environmental Conditionsand Trends
opportunities and risks
Distinctive Competence
Corporate resourcesas extending or constraining opportunity
identification ofstrengthsand weaknesses
programs for increasing capability
Schematic development of Schematic development of economic strategyeconomic strategy
Figure 2
Environmental Conditionsand Trends
opportunities and risks
Distinctive Competence
Corporate resources
Consideration of all Combinations
Figure 2
Schematic Schematic development of development of
economic strategyeconomic strategy
Distinctive Competence
Corporate resources
Consideration of all Combinations
Evaluation to determine best match of opportunity
and resources
Figure 2
Schematic Schematic development of development of
economic strategyeconomic strategy
Environmental Conditionsand Trends
opportunities and risks
Distinctive Competence
Corporate resources
Consideration of all Combinations
Evaluation to determine best match of opportunity
and resources
choice of products and markets
Schematic Schematic development of development of
economic strategyeconomic strategy
Figure 2
Environmental Conditionsand Trends
opportunities and risks
Schematic development of economic strategySchematic development of economic strategy
Environmental Conditionsand Trends
opportunities and risks
Distinctive CompetenceCapabilityCapabilityFinancial
ManagerialFunctional
organizational
reputationhistory
Corporate resources
as extending or constraining opportunity
identification of strengths
and weaknesses
programs for increasing capability
evaluation to determine best match of opportunity
and resources
Consideration of all Combinations
choice of products and marketseconomic strategy
Identification inquiryassessment of risk
EconomicTechnicalPhysicalSocialCommunityNationWorld
Figure 216
Generic versus competitive strategy
Generic CompetitiveMMeasure of successeasure of success Sales growth Sales growth Market shareMarket shareRReturn to the firmeturn to the firm Value added Value added Return on investmentReturn on investmentFFunctionunction Provision of value Provision of value Maintaining a defensibleMaintaining a defensible
to the customerto the customer position positionBBasic strategic tasksasic strategic tasks Adapting to change Adapting to change Creating barriers Creating barriers
and and and innovationand innovation deterring rivals deterring rivals
MMethod of expressing ethod of expressing Product/market Product/market Policies leading toPolicies leading to strategystrategy terms terms defensible position defensible positionBBasic approach to asic approach to Study a group of Study a group of Comparison across Comparison across
rivals analysisrivals analysis businesses over businesses over at a given time at a given time timetime
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Questions ?Questions ?