PowerPoint Presentation by Charlie Cook

The University of West Alabama

Copyright 2006 Thomson Business and Economics.
All rights reserved.
Chapter 5
The Strategic
and Operational
Planning Process
52 Copyright 2006 Thomson Business and Economics. All rights reserved.
Planning Dimensions
Planning
Determining what you want to accomplish and
developing approaches to achieving your
objectives.
Planning Dimensions:
Exhibit 51
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Strategic and Operational Planning
Strategic Planning
The process of developing a mission and long-
range 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.
54 Copyright 2006 Thomson Business and Economics. All rights reserved.
The Strategic Planning Process
Exhibit 52
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Strategic and Operational Levels
Exhibit 53
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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
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Porters 5 Forces Model
Starbuckss Example
Exhibit 54
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Parts of a Company Situation Analysis
Exhibit 55
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.
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SWOT Analysis for
Starbucks Coffee
Exhibit 56
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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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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
512 Copyright 2006 Thomson Business and Economics. All rights reserved.
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.
513 Copyright 2006 Thomson Business and Economics. All rights reserved.
Corporate Grand and Growth Strategies
Exhibit 59
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Portfolio Analysis: BCG Matrix
Exhibit 510
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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.
516 Copyright 2006 Thomson Business and Economics. All rights reserved.
Strategies for Starbucks over the Product Life Cycle
Exhibit 513