STRATEGIC PLANNING MODEL

15th April 2015

STRATEGIC ANALYSIS FRAMEWORKStep 1: Define the destination

Strategic direction▪ Mission▪ Vision▪ Leadership

Step 2: Environmental analysis

Strategic analysis▪ Analysis of the internal environment (Value Chain analysis)▪ Analysis of the external environment (PESTEL, Porters 5-forces)▪ SWOT analysis

Step 3: Generate alternative

Strategic alternatives▪ Diversification (new products, new markets)▪ M&A (Verticle / Horizontal integration)▪ Joint Ventures

Step 4: Select the best: implement and monitor

Strategic selection▪ Strategic choice▪ Resource allocation▪ Evaluation and control▪ Feedback

STEP 1: DEFINE THE DESTINATION Mission

A mission statement is a brief description of a company’s fundamental purpose. A mission statement answers the question ‘Why do we exist?’

Vision

A vision statement provides inspiration, answers the question ‘Where do we want to go?’

A mission statement focuses on a company’s present state, while a vision statement focuses on a company’s future

Values

Core values are the principles that guide an organisation’s internal conduct as well as its relationship with the external world

Leadership

Leadership is vital to communicate the organisation’s strategic direction clearly to all staff

STEP 2: ENVIRONMENTAL ANALYSISInternal analysis

Value chains

External analysis

PESTEL Porter’s five forces Competitor analysis

SWOT Analysis

STEP 3: STRATEGIC ALTERNATIVES (1)

Corporate-level strategy

Corporate-strategy is relevant for a parent company managing several business units across a range of industries.

Corporate-level strategy deals with the industries (or markets) an organisation seeks to compete in.

Business-level strategy

Business-strategy is relevant for a single business unit or product competing in a single industry.

Business-level strategies are focused on how an organisation competes in a single market or industry.

Functional-level strategy

Functional-level strategy deals with specific management functions such as production, marketing or accounting.

It is concerned with the objectives for that specific function and the allocation of resources among different operations within that functional area.

STEP 3: STRATEGIC ALTERNATIVES (2) – CORPORATE-LEVEL STRATEGYDiversification

Related products and markets

New markets

Unrelated product or markets

Merger: two organisations agree to go forward as a single new company

Acquisition: one organisation clearly takes over another organisation

Verticle integration vs horizontal integration

Withdraw from certain markets

Discontinuation of selling certain products or services

Involves two (2) or more organisations joining under a contractual agreement for a partiular business undertaking

Mergers & acquisitions

Joint venture

Stability (Hold)

Streamline

Selling a business unit, usually for underperforming business

May occur when an organisation is made an offer that is too good to resist

Divestment

Continuing the current activities of the organisation without any significant change in direction

STEP 3: STRATEGIC ALTERNATIVES (3) – BUSINESS-LEVEL STRATEGYBroad low-cost

provider

Appealing to a wide spectrum by achieving a lower cost structure than its rival

By offering a point of difference around products or services that is different from its rivals and appeals to a broad spectrum

By offering a point of difference to customers that appeals to a narrow band of customers

Providing excellent value to customers by offering high-quality goods or services to customers at a lower cost profile than its rivals

Broad differentiation provider

Best-cost provider

Focused strategy based on low costs

Focused strategy based on differentiation

By achieving a lower cost profile than rivals, and that is focused on delivery to a narrow band of customers

IMD STRATEGIC PLANNING MODELInternal analysis

Value chains Resource Based View

External analysis

PESTEL Porter’s five forces Competitor analysis Risk analysis

SWOT