Planning Dimensions

Planning
Determining what you want to accomplish and
developing approaches to achieving your
objectives.

Planning Dimensions:

Exhibit 51
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51

Strategic and Operational Planning

Strategic Planning
The process of developing a mission and longrange objectives and determining in advance
how they will be accomplished.

Operational Planning
The process of setting short-range objectives
and determining in advance how they will be
accomplished.

Strategy
A plan for pursuing the mission and achieving
objectives.
Copyright 2006 Thomson Business and Economics. All rights reserved.

52

The Strategic Planning Process

Exhibit 52
Copyright 2006 Thomson Business and Economics. All rights reserved.

53

Strategic and Operational Levels

Exhibit 53
Copyright 2006 Thomson Business and Economics. All rights reserved.

54

Industry and Competitive Situation Analysis

Situation Analysis
Focuses on those features in a companys
environment that most directly affect its options
and opportunities.

Five Competitive Forces (Porter)

Rivalry among competing sellers in the industry

Threat of substitute products and services
Potential new entrants
Power of suppliers
Power of buyers

Copyright 2006 Thomson Business and Economics. All rights reserved.

55

Porters 5 Forces Model

Starbuckss Example

Exhibit 54
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56

Parts of a Company Situation Analysis

1. Assessment of the present strategy based
on performance.

2. Strengths, Weaknesses, Opportunities,

and Threats (SWOT) analysis.

3. Assessment of competitive strength and

identification of competitive advantage.

4. Conclusions concerning competitive

position.

5. Determination of the strategic issues and

problems that need to be addressed
through the strategic planning process.
Exhibit 55
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57

SWOT Analysis for

Starbucks Coffee

Exhibit 56
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58

Competitive Advantage
Core Competency
A functional capability (strength) that the firm
does well and one that creates a competitive
advantage for the firm.

Benchmarking
The process of comparing an organizations
products or services and processes with those
of other companies.

Scanning the Environment

Searching the external environment for
opportunities and threats.
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59

Writing Effective Objectives

Max E. Douglass model for writing effective
objectives:

(1) the word to, followed by

(2) an action verb,
(3) a statement of the single, specific, and
measurable result to be achieved, and
(4) a target date.

To achieve a 6% overall return on fourth quarter

sales.

SMART Objectives
Specific
Measurable
Achievable
Realistic
Time

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510

Management by Objectives (MBO)

Management by Objectives
Step 1. Set individual objectives and plans.
Step 2. Give feedback and evaluate performance.
Step 3. Reward according to performance.

Sources of MBO Failures

Lack of top management commitment and
follow-through on MBO.
Employees negative beliefs about
managements sincerity in its efforts to include
them in the decision-making process.

Copyright 2006 Thomson Business and Economics. All rights reserved.

511

Corporate Grand and Growth Strategies

Exhibit 59
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512

Portfolio Analysis: BCG Matrix

Exhibit 510
Copyright 2006 Thomson Business and Economics. All rights reserved.

513

Competitive Strategies
Differentiation
Competing on the basis of features that
distinguish one firms products or services from
those of another.

Cost Leadership
The firm with the lowest total overall costs has a
competitive advantage in price-sensitive
markets.

Focus
Concentrating competitive efforts on a
particular market segment, product line, or
buyer group.
Copyright 2006 Thomson Business and Economics. All rights reserved.

514

Strategies for Starbucks over the Product Life Cycle

Exhibit 513
Copyright 2006 Thomson Business and Economics. All rights reserved.

515