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Chapter 5

The
The Strategic
Strategic
and
and Operational
Operational
Planning
Planning Process
Process

PowerPoint Presentation by Charlie Cook


The University of West Alabama
Copyright 2006 Thomson Business and Economics.
All rights reserved.

Learning
Learning Outcomes
Outcomes
After studying this chapter, you should be able to:
1.

Describe how strategic planning differs from operational planning.

2.

State the differences among the three strategic levels: corporate,


business, and functional.

3.

Explain the reason for conducting an industry and competitive situation


analysis.

4.

Explain the reason for conducting a company situation analysis.

5.

List the parts of an effective written objective.

6.

Describe the four grand strategies: growth, stability, turnaround and


retrenchment, and a combination of these.

7.

Describe the three corporate growth strategies: concentration,


integration, and diversification.

8.

Describe the three business-level adaptive strategies: prospecting,


defending, and analyzing.

9.

State the difference between standing plans and single-use plans.

Copyright 2006 Thomson Business and Economics. All rights reserved.

52

Learning
Learning Outcomes
Outcomes (contd)
(contd)
10. Define the following key terms:
strategic planning corporate growth strategies
operational planning
merger
strategy
acquisition
strategic levels business portfolio analysis
corporate-level strategy adaptive strategies
business-level strategy functional strategies
functional-level strategy
standing plans
situation analysis policies
SWOT analysis procedure
benchmarking rules
objective single-use plans
management by objectives (MBO) contingency plans
grand strategy
Copyright 2006 Thomson Business and Economics. All rights reserved.

53

Ideas
Ideas on
on Management
Management at
at Starbucks
Starbucks
1.

What are some of Starbuckss strategic and operational plans?

2.

What is Starbuckss mission? What are its six guiding principles?

3.

What does five-force competitive analysis reveal about the growth


potential of Starbucks? Identify the companys strengths, weaknesses,
opportunities, and threats.

4.

What objectives has Starbucks established?

5.

What is the corporate grand strategy and primary growth strategy at


Starbucks? Name some of the companys failed growth strategies.

6.

What types of adaptive and competitive strategies does Starbucks


currently employ? Which stage in the product life cycle has coffee
reached in the U.S. market?

7.

What type of functional and operational plans does Starbucks have?

Copyright 2006 Thomson Business and Economics. All rights reserved.

54

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

Planning Dimensions:

Exhibit 51
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55

Strategic
Strategic and
and Operational
Operational Planning
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.

56

The
The Strategic
Strategic Planning
Planning Process
Process

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

57

Strategic
Strategic Planning
Planning
Corporate-Level Strategy
The plan for managing multiple lines of
businesses

Business-Level Strategy
The plan for managing one line of business

Functional-Level Strategy
The plan for managing one area of the business

Copyright 2006 Thomson Business and Economics. All rights reserved.

58

Strategic
Strategic and
and Operational
Operational Levels
Levels

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

59

Industry
Industry and
and Competitive
Competitive Situation
Situation Analysis
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.

510

Starbuckss
StarbuckssFive-Force
Five-Force
Competitive
CompetitiveAnalysis
Analysis

Exhibit 54
Copyright 2006 Thomson Business and Economics. All rights reserved.

511

Parts
Parts of
of aa Company
Company Situation
Situation Analysis
Analysis
1.1.Assessment
Assessmentof
ofthe
thepresent
presentstrategy
strategybased
based
on
performance.
on performance.
2.2.Strengths,
Strengths,Weaknesses,
Weaknesses,Opportunities,
Opportunities,
and
Threats
(SWOT)
analysis.
and Threats (SWOT) analysis.

3.3.Assessment
Assessmentof
ofcompetitive
competitivestrength
strengthand
and
identification
of
competitive
advantage.
identification of competitive advantage.

4.4.Conclusions
Conclusionsconcerning
concerningcompetitive
competitive
position.
position.

5.5.Determination
Determinationof
ofthe
thestrategic
strategicissues
issuesand
and
problems
that
need
to
be
addressed
problems that need to be addressed
through
throughthe
thestrategic
strategicplanning
planningprocess.
process.
Exhibit 55
Copyright 2006 Thomson Business and Economics. All rights reserved.

512

SWOT
SWOTAnalysis
Analysis for
for
Starbucks
Starbucks Coffee
Coffee

Exhibit 56
Copyright 2006 Thomson Business and Economics. All rights reserved.

513

Competitive
CompetitiveStrength
StrengthAssessment
Assessment for
for Starbucks
Starbucks Coffee
Coffee

Exhibit 57
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514

Competitive
Competitive Advantage
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.
Copyright 2006 Thomson Business and Economics. All rights reserved.

515

Setting
Setting Objectives
Objectives
Objectives
State what is to be accomplished in singular,
specific, and measurable terms with a target
date.

Goals
Are general targets to be accomplished that are
translated into actionable objectives.

Copyright 2006 Thomson Business and Economics. All rights reserved.

516

Writing
Writing Effective
Effective Objectives
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.

Copyright 2006 Thomson Business and Economics. All rights reserved.

517

Criteria
Criteria That
That Objectives
Objectives Should
Should Meet
Meet

Exhibit 58
Copyright 2006 Thomson Business and Economics. All rights reserved.

518

Copyright 2006 Thomson Business and Economics. All rights reserved.

519

Management
Management by
by Objectives
Objectives (MBO)
(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.

520

Corporate-Level
Corporate-Level Strategy
Strategy
Grand Strategies

Growth Strategies

Growth

Concentration

Stability

Backward and
forward integration

Turnaround and
retrenchment
Combination

Copyright 2006 Thomson Business and Economics. All rights reserved.

Related and
unrelated
diversification

521

Corporate
Corporate Grand
Grand and
and Growth
Growth Strategies
Strategies

Exhibit 59
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522

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523

Portfolio
Portfolio Analysis:
Analysis: BCG
BCG Matrix
Matrix

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

524

The
TheEntrepreneurial
Entrepreneurial
Strategy
StrategyMatrix
Matrix

Adapted with permission from Business Horizons 40


(MayJune), 7377. Sonfield, M. C., and Lussier, R.
N. (1997). The Entrepreneurial Strategy Matrix. A
Model for New and Ongoing Ventures. 1997 by
Indiana University Kelley School of Business.

Exhibit 511
Copyright 2006 Thomson Business and Economics. All rights reserved.

525

Business-Level
Business-Level Strategies
Strategies
Adaptive Strategies
Prospecting

Aggressively offering new products and/or entering


new markets.

Defending

Staying with the present product line and markets,


and maintaining or increasing customers.

Analyzing

A midrange approach between prospecting and


defending, moving cautiously into new markets.

Copyright 2006 Thomson Business and Economics. All rights reserved.

526

Business-Level
Business-Level Adaptive
Adaptive Strategies
Strategies

Exhibit 512
Copyright 2006 Thomson Business and Economics. All rights reserved.

527

Copyright 2006 Thomson Business and Economics. All rights reserved.

528

Competitive
Competitive Strategies
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.

529

Strategies
Strategiesfor
forStarbucks
Starbucks over
over the
theProduct
Product Life
LifeCycle
Cycle

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

530

Copyright 2006 Thomson Business and Economics. All rights reserved.

531

Functional-Level
Functional-Level (Operational)
(Operational) Strategies
Strategies

Marketing

Operations

Responsible for determining which products to provide,


how they will be packaged, how they will be advertised,
where they will be sold and how they will get there, and
how much they will be sold for.
Responsible for systems processes that convert inputs
into outputs.

Human Resources

Responsible for working with all the other functional


departments in the areas of recruiting, selecting, training,
evaluating, and compensating employees.

Copyright 2006 Thomson Business and Economics. All rights reserved.

532

Functional-Level
Functional-Level (Operational)
(Operational) Strategies
Strategies (contd)
(contd)
Finance
Responsible for financing the business
activities by raising money through the sale of
stock or bonds or through loans, deciding on
the debt-to-equity ratio, paying off the debt and
dividends to shareholders, keeping records of
transactions, developing budgets, and reporting
financial results.

Other Functional-Level Strategies


Research and development (R&D) is important
to remaining competitive.

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533

Types
Types of
of Plans
Plans
Standing Plans
Policies, procedures, and rules developed for
handling repetitive situations.
Policies
General guidelines to be followed when making
decisions.

Procedures
A sequence of actions to be followed in order to
achieve an objective.

Rules
A statement of exactly what should or should not be
done.

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534

Copyright 2006 Thomson Business and Economics. All rights reserved.

535

Types
Types of
of Plans
Plans (contd)
(contd)
Single-Use Plans
Programs and budgets developed for handling
nonrepetitive situations.
Program
A set of activities designed to accomplish an
objective over a specified period of time.

Program development

Set project objectives.


Break the project down into a sequence of steps.
Assign responsibility for each step.
Establish starting and ending times.
Determine the resources needed for each step.

Copyright 2006 Thomson Business and Economics. All rights reserved.

536

Types
Types of
of Plans
Plans (contd)
(contd)
Single-Use Plans (contd)
Budget

Represents the funds allocated to operate a unit for


a fixed period of time.
Is a planning tool initially and becomes a control
tool after implementation of the plan.

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537

Standing
Standing Plans
Plans versus
versus Single-Use
Single-Use Plans
Plans

Exhibit 514
Copyright 2006 Thomson Business and Economics. All rights reserved.

538

Types
Types of
of Plans
Plans (contd)
(contd)
Contingency Plans
Alternative plans to be implemented if
uncontrollable events occur.
Developing a contingency plan

What might go wrong?


How can I prevent it from happening?
If it does occur, what can I do to minimize its effect?

Copyright 2006 Thomson Business and Economics. All rights reserved.

539

Implementing
Implementing and
and Controlling
Controlling Strategies
Strategies

Implementing

Top and middle managers plan, whereas lower-level


functional managers and employees implement
strategies.
Successful implementation requires effective and
efficient support systems.

Controlling

The process of establishing and implementing


mechanisms to ensure that objectives are achieved.
Measuring progress toward achievement of objectives
and taking corrective action when needed.
Staying within the budget when appropriate or changing
it when necessary to meet changes in the environment.

Copyright 2006 Thomson Business and Economics. All rights reserved.

540

Appendix

Time
Time
Management
Management

PowerPoint Presentation by Charlie Cook


The University of West Alabama
Copyright 2006 Thomson Business and Economics.
All rights reserved.

Learning
Learning Outcomes
Outcomes
After studying this appendix, you should be able to:
1. Explain the use of a time log.
2. List and briefly describe the three steps in the time management
system.
3. Define the following key terms:
time management
time management system

Copyright 2006 Thomson Business and Economics. All rights reserved.

542

Analyzing
Analyzing Time
Time Use
Use

The Time Log

A daily diary that tracks your activities and enables you to determine
how you spend your time each day.

Analyzing Time Logs

Determine how much time you are spending on your high-priority (HP)
and low-priority (LP) responsibilities.
Identify areas where you spend too much time (TT).
Identify areas where you do not spend enough time (NT).
Identify major interruptions (I) that keep you from doing what you want
to get done.
Identify tasks that could be delegated to someone else (D).
How much time does your boss control (B)? How much time do your
employees control (E)? How much time do others outside outside your
department control (O)? How much time do you actually control (M)?
Look for crisis situations (C).
Look for habits, patterns, and tendencies.

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543

Daily
Daily Time
Time Log
Log

Exhibit A51
Copyright 2006 Thomson Business and Economics. All rights reserved.

544

AATime
Time Management
Management System
System
Key components of a time management
system:

Priorities
Objectives
Plans
Schedules

The Time Management Process


Step 1. Plan each week.
Step 2. Schedule each week.
Step 3. Schedule each day.

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545

Weekly
Weekly Planner
Planner

Exhibit A52
Copyright 2006 Thomson Business and Economics. All rights reserved.

546

Weekly
Weekly Schedule
Schedule

Exhibit A53
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547

Daily
Daily Schedule
Schedule

Exhibit A54
Copyright 2006 Thomson Business and Economics. All rights reserved.

548

AATime
Time Management
Management System
System (contd)
(contd)
Scheduling Tips
Dont be too optimistic; schedule enough time
to do each task.
Once tasks are prioritized and scheduled, focus
on only one at a time.
Schedule high-priority items during your prime
time, when you perform at your best.
Try to set aside a regular time-slot for activities
or events that you cannot anticipate.
Do not perform an unscheduled task before
determining its priority.

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