STRATEGIC PLANNING PROCESS (OR) RATIONAL MODEL

Mission

Objective

Internal Environment Strategies External Environment

Strategic Option

Strategic Choice

Strategic into Action

(Implementation)

Strategic Control

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Mission
- A Mission is the purpose of an organization and the reason for its existence.
Many entities give a formal expression to their mission in a mission statement.
- ‘A mission describes the organization’s basic function in society, in terms of
the products and services it produces for its customers (Mintzberg).
-should clear and short statement.
-Question
What is our business?
What is our value to customer?
What will our business be?
What should our business be?
Advantages
- Determine directon
- Unified strategy
- Communication of mission to stakeholders
- Basis of competition
- Keep key stakehoholder satisfied
- Help to prevent future misunderstandings
- Improves coordination between various departments, managers and
employees
Disadvantages
- Not present the actual values of the organization
- Often vague
- Often ingnored
Goals and Goals –aims for the entity to achieve,
objectives Objectives-can be measured and should be a specific time by which the
objectives should be achieved.
Characteristics of objective : S.M.A.R.T
Specific – clear statement, easy to understand
Measurable – to enable control that can be measure
Achievable – not easy, not difficulties
Relevant – appropriate to mission and stakeholders(Obj mission
)
Timed bounded – have a time period for achievement (Obj
)

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Strategy Possible course of action
 in order to achieve objectives
try to be fit in between business and the environment

Definition:
The direction and scope of an organization over the long term, which achieves
advantages in a changing environment through its configuration of resources
with the aim of fulfilling stakeholder expectations.

(Environmental changes resources

competences stakeholders expectations
long –term Organisation
။ direction & scope
strategy ။

Strategic Planning
-Long term and corporate planning
-For whole organization

Advantages
- Forces manager to look ahead

- Environmental Fit .
- Imporved control
- Goal congruence

။
- Identified key risks.
Disadvantages
- Planning
- Rapidly changing markets/ environments
- Plan Opportunities

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Freewheeling
opportunism - Plan ။
- Capture opprotunities as they arise
- Opportunities ။

Disadvantages
- Failure to identified risk
- ။
- Strategic drift
Org Long term overall plan Market

- Difficulty in raising finance

- Investors Org future plan org plan
company worthwhile investmet
difficult to convince: Investors ။
Management skill
changing market Understanding & reacting highly skilled
managers ။
Strategic 1. Emergent Strategies
Change
- Freewheeling Opportunism ။
- Business environment Org strategy ။
- Environment Stratetgy ။
- Formal plan ။
- Unforeseen changes different ideas
develop ။
2. Incremental Strategies
- existing strategies small
incremental changes develop ။
- Stable slow business environment
safe ။
Strategic drift Business environment Org Strategy
drift ။
- Remained unchanged or changed incrementally
- Minor changes in the external environmental or industry.

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 Drift -
- Profit , performance ။
- Loss making ။
- So, should change the org’s strategy
Approach to 1. Position-basedsed strategy
Strategic - 1st Identifying opportunities
planning - 2nd Developing strategic capability(Resources) to take advantages
2. Resource Base strategy
- 1st developed on the unique capabilities of the business
- 2nd opportunities capabilities Competitive
advantages ။

Level of 1. Corporate level

Strategy  The whole organization, achievement of entity’s overall objectives.
Eg, Strategic Business Unit(SBU)
(For exam Hotel, Travel& Tours, Construction, Bank
short notes 2. Business level
)  Competitive strategy
Bank AYA, KBZ , MAB, etc competitive
advantages ။
competitive
advantages ။
- Competitive advantage (Tangible : Buildings , Intangible : Brand Name)
- Corporate Level ။

3. Operational level  day to day operation (efficient & effectiveness)

- Manufacturing, distribution, marketing and selling, research an
development
- Support to B

Strategic 1. Strategy as design

Lense 2. Strategy as experience
3. Strategy as idea
- Strategy ၃

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1. Strategy as design (Similar rational model)
- Analysis of current position
- Identification of option
- Evaluation of options,
- Selection of best option
- Finally, the implementation of that option.
Characteristic:
Top-down process
Clear course of action senior manager
Senior management responsibility;
Develop the strategy
Lowe level of mgt operational level deliver ။
2. Strategy as experience
- Past adaptating & extension
။
- Experience Customer needs & wants
idea ။
- Existing strategy ။
- Not to be appropriate for major changes
Characteristic;
-Through past experience
- not suitable for major changes
- no change in Culture
3. Strategy as idea
- Innovation and the needs for new idea.
- Emerge from all level of and organization
- Not from senior mgt
Characteristic;
Innovations
Rapid change
Suitable for major change

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Envrionmental Analysis

Strategy External Environment Internal Environment

။

Environment

External Internal

Macro Micro

(PESTEL) (Customer, Supplier, Competitor)

Indirect Direct
Impact Impact

S.W.O.T Analysis
External Environment  Opportunity, Threat
Internal Environment  Strength, Weakness
(Resource)

Strenght Weakness

Opportunity Thread

Strategic Option
SWOT Analysis strategy strategy
Strategy Strategy Option ။

Maximize Profit / Growth

Maximize Profit  increase in sale , decrease in costs
Growth  Acquisiton or Franchising or Joint Venture or Organic Growth

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Strategic Choice
Strategic option Strategy
။
Criteria  SFA
1. Suitable
-Strength, Opportunity
-Avoid weakness, threat
-Business Profile
2. Feasible (ie : Resources )
3. Acceptable (ie : Shareholder, stakeholders )
Strategic into Action
strategy ။
implementation efficient & effectiveness ။

Comprises:
1. Marketing Mgt
2. Operation Mgt
3. Project Mgt
4. H.R Mgt
5. Organization structure
6. E.business

Strategic Control
mission, objective ။
1. Benchmarking ( )
2. Balance Score Card Method
(4 Perspective : Financial, Customer , Internal, Learning & Growth)
3. Critical Success factor (CSF)
4. Key Performance Indicatior (KPI)

 mission , objectives Strategy

develop ။

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 Environmental Analysis Models

- PESTEL  identify significant factors in the macroenvironment of and entity.

- Porter’s Diamond  Particular countires or regions (competitive advantages over similar
entities in the same industry)
- Porter’s Five forces  competitive environment within a particular industry.

Environmental Analysis
- Strategy development Environmental analysis ။
- Objective business operate Environment ။
- Environment Change environment ။

P.E.S.T.E.L Model  Indirectly impact on organization

Political  Government Policies on education and infrastructure

Fiscal Policy Monetary Policy Government Grant

(Taxation ,Borrowing, (Interest rate, money supply,

Spending) Exchange rate)
- Gov Policies Org Planning activities ။
- Gov tax Tax Incentive ။
tax ။ Tax Holiday ။
- eg, exporter tax ။
- Tax 0% ။ Import level ။
- SME ၃ ။
- Spending
။
- E-learning iT business ။
- Demand , Cost profit effect ။
- Export Exchange rate (import …)

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Economic  Recession, Boom
 Both national and international
 Inflation , growth/ fall GDP, interest rates , tax level, business cycle
- interest rate
interest ။
- business Boom ။ recession
operate ။
- Recession Organisation Sale , profit ။
- Boom growth ။ ။
-
Social  Demographic, Life Style, education (social & culture)
-
- BABY PRODUCT ။
- , Supplement , ။
- Education product ။

Technology  -Business process, product, service

-Affect all aspects of business
- service, product innovate ။
- online ။
- education online ။

Environmental  input : output

Resoruce Air/water pollution
- output ။
- Social ။
- Social ။
- Recycle product ။
- 3P (People, Planet, Profit) ။
- Developed countries Environmental disposal cost
Legal  Company law, Labor law, Tax law ect
- Lobor law
Note
Macro  PESTEL
For exam  Theory Scenario ။

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Porter’s Five Forces  Industrial environment/ Micro Environment

Five Forces (strength and nature of competition )

1. New Entrance -Threats from potential entrant
2. Substitute product – Threats from substitute product or services
3. Supplier Power – the bargaining power of suppliers
4. Customer Power – the bargaining power of customers
5. Competitive rivalry within the industry or market.

1) Threats from potential entrant (new competitor/ new entrance)

- Attracted by the high profits earns by existing competitors
- New entrance will try to establish a share of market
- Depends on how easy or difficult for new competitor to enter the market
- Some market  cost of entering can be high
- other market  cost of entering can be low
- industry/market new entrance barriers ။
- Barrier to entry  low - able to come into the market without difficulty
 Price Strong competitive market ။
 High profit ။
- Barrier to entry  high – difficult for new competitors
 Existing competitor price pressure ။
 High barrier to entry – factors -
 Economies of scale/ capital investment requirement/ Access to
distribution channel/ time to become established/ Know-how/
switching cost, government regulation, etc… new
entrance ။ vice visa
other incustry Barrier high ။

2) Substitute Product
- product
Heating system gas, oil, electricity
Transport air, rail and road
Food & Drink coffee / Te
Plastic – Glass bottle
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 - More attractive ။
o Market / Industry Competition Threat from substitute
product ။

3) Bargaining power of supplier

o supplier
- Supplier power high price ။
- industry low profitability market competitive ။
- Supplier Power strong situation -
o Market Supplier ။
o Substitute product ။
o Supplier product rival supplier differentiated – design,quality
။
o Finished goods importance component ။
o Easily integrate forward- enter the market as competitor of their existing customer
o Supplier competitor ။
- ** Supplier product importance product ။

4) Bargaining power of customer

- customer /buyer buyer power industry profitability reduce
။
- large quantity buyer -
profit ။ Customer power ။
- Powerful customer’s situation
o Volumer of purchases
o Rival suppliers
o Low switching cost from one supplier to anther
o Customer buys Large proportion of total industry output
o Buyer’s profit cost force ။
o Buyer’s supplier and price information ။

5) Competitive Rivalry
- Existing Competitiors competitor ။
- low price profit ။
- Competitive rivalry circumstances: -

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o Competitors ။
o Same size and economic strength
o Slow growth in market
o ။
o High cost of withdrawing (exist cost industry / market
)

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 Stakeholder Analysis

A Stakeholder is a party that has an interest in a company and can either affect or be affected by
the business.
Type of Stakeholder
1.Internal stakeholder  employee , Management Primary Stakeholder
2.Connected stakeholder Customer , Supplier , Bank
3.External stakeholder  Tax authorities, government Secondary Stakeholder

Stakeholder Conflict
Stakeholder conflict is a condition in which different stakeholder have incompatible goals.
Customer  Price , Quality  affect profit ။
Employer  Salaries  affect high cost / low profit
Shareholder  Profit customer , employer conflict ။

 Stakeholder Analysis  using stakeholder mapping

 More influence on Organization’s strategy, decision
 Influence = Power + Interest

Level of Interest

Low High
4 3
Minimum effort Keep Inform
Low
(eg. Employee) (eg, Pressure group)
2 1
Power

Keep Satisfied Key Player

High

(Eg , Tax authorities) (eg, major customer)

1. Power (Low) & Interest (Low)  Minimum effort

2. Power (High) & Interest (High)  Key Player
3. Power (Low) & Interest (High)  Keep inform
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4. Power (High) & Interest (Low)  Keep satisfied
1. Minimum Effort
Mgt instruction minimum effort
ignore ။
2. Key Player
Strategic decision significant influence
Strategy ။ key player
communicate/discuss ။ Senior Mgt power
Stakeholder Senior Mgt power ။
3. Keep Satisfied
Stategy result stakeholder
။

4. Keep Inform
။ Lower Power
Power Power power
။
The Expectations of stakeholders
- Each stakeholder or stakeholder group has different expectations .
- Benefit they expect are different
Rights Duties Expectations

Shareholders Right to vote None Share price growth

Dividend

Directors No right, a legal duty of Advancement,

But have power due care & skill remuneration,status

Senior Employment rights Their delegated task remuneration, status

Expectations of other stakeholder groups

Employee  fair pay for the work , job security career progress ,good working conditions
 High level of skill

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  Highly automated operations Power and influence
train ။

Customer  Quality of the nature of goods or services

Supplier  develop a good business relationship, collaborate on achieving improvements

in the value network.

Communities  provide employment and economic prosperity

General public & government  to show concern for environment ,

 to reduce pollution and develop environment-
friendly ways

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 Industrial Analysis
Products and Services and industry as a whole Different stages –life cycle
Analysis ။

 Industry life cycle and product life cycle

1. Introduction stage
2. Growth Stage
3. Mature Stage
4. Decline Stage

1. Introduction Stage
- Product  New Product to market
- Product innovator ။
- Cost  Launch & marketing cost-High ။
- Production Volume  cost ။
- Unsophisticated ။
-
- Pricing strategy Price elasticity demand
?
- Pioneer companies stage
။
- Cash Product ။
- first mover advantage ။

2. Growth Stage
- Stage Market growth ။
- Sales competitor pioneer Challenge
New segment develop ။
- Demand becomes more sophisticated Competition level ။
- Market profitable Cash flow initial investment
development and launch cost cover ။
- stage stage
defensive strategy Brand ။

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- Economies of scale ( ) price
competitive pressure Product
differentiation ။
3. Maturity stage
- stage Market Shakeout( ) Fully sophisticated demand
။
- High levels of competition prices sensitive ။
- Maturity stage higher of barriers to entry ။
- stage market share (or) niche large market (specialized
segment of market : market position
stage ။
- differentiation, features, brand awareness, price, and customer service
brand of choice enter into decline ။
- Stage product or service ongoing improvement customer

။ (eg, iphone series ) decline

။ (eg,Nokia phone )

4. Decline
* Stage customer ။
- market player competition ။
- weak competitior Market ။
- differentiate market ။
- stage stage
product series out of dated Stage differentiate product
။
(eg., DVD DVD internet download
software ။)
(eg., decline computer, smartphone, tablet
) computer introduction > growth >
maturity>decline )

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 Strategic groups
Number of entities same industry similar strategy , similar way
competition market operate Strategic groups.

 Strategic space
Strategic group grouping Space ။ gap
opportunity initiative ။
gap / space ။

 Competitor Analysis
*Market Share Industry sector or market Other companies
Analysis

၁. characteristics - strategies,
objectives, strengths , weaknesses Information
competitor analysis .
၂. Market place competitor strategies
competitor analysis ။
competitor management organization competitive advantages
understanding ။
၃. past , present, future ။
၄. competitive advantages
။
-

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 Porter’s diamond model
Foreign Country Investment Analysis
National competitive advantages 4 Main Factors + additional 2 factors
1. Factor Conditions
2. Demand Conditions
3. Related and supporting industries
4. Firm strategy, structure and rivary
5. Government
6. Chance

1.Factor Conditions
- Basic , advanced ၂
- Basic unskilled labour and natural environment ( )
- Advance Skilled labour and transport infrastructure advance factor
nation sustained advantages ။
- Investment particular industry basic
advance ။
2. Demand conditions
- home/domestic market cosumer demand
level overseas market comparable
conditions ။
3. Related and supporting industries
- particular industry industries ။
Eg., industry product , services
။
5. Firm strategy, structure and rivalry
- Competitive advantages market significant rivalry competitors
product or services continually develop .
7. Government
policy ?
8. Chance
War , uncertain environment

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