Chapter B4: Planning and

Strategic Management

Instructor: Dao Minh Anh (PhD.)

 Learning Objectives
• Summarize the basic steps in any planning process
• Describe how strategic planning should be integrated
with tactical and operational planning
• Identify elements of the external environment and
internal resources of the firm to analyze before
formulating a strategy
• Summarize the types and choices available for
corporate strategy
• Discuss how companies can achieve competitive
advantage through business strategy
• Define core competencies and explain why they provide
the foundation for business strategy
• Describe the keys to effective strategy implementation
 An Overview of
Planning Fundamentals
• Planning
– Plans are the conscious, systematic process of
decisions about goals and activities that an
individual, work unit, or organization will pursue in
the future
– A decision process in which you decide what to do
and how to do it
– Various types of plans include single-use,
standing, and contingency plans
Levels of Goals/Plans & Their
Importance
External Message
Legitimacy for investors,
customers, suppliers,
Mission
community
Statement

Strategic Goals/Plans
Senior Management
(Organization as a whole) Internal Message
Legitimacy,
motivation,
Tactical Goals/Plans
guides,
Middle Management rationale,
(Major divisions, functions) standards

Operational Goals/Plans
Lower Management
(Departments, individuals)

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 The Basic Planning Process
“Goals are future ends; Plans specify today’s means”.

• Step 1: Situational Analysis

• Step 2: Alternative Goals and Plans using
SMART Goals
• Step 3: Goal and Plan Evaluation
• Step 4: Goal and Plan Selection
• Step 5: Implementation
• Step 6: Monitor and Control
 Tactical and Operational Planning
Strategic goals and plans are the foundation for planning done by middle-
level and frontline managers

Tactical planning A set of procedures for translating broad strategic

goals and plans into specific goals and plans that
are relevant to a distinct portion of the organization

Operational planning The process of identifying the specific procedures

and processes required at lower levels of the
organization

For middle-level and frontline managers to accomplish their jobs, it is

critical that top managers communicate the strategy to all levels of the
organization
Hierarchy of Goals and Plans
 Aligning Tactical, Operational, and
Strategic Planning

• Organizations must align tactical,

operational, and strategic planning

• Each plan must be mutually supportive

Example of a Strategy Map
 Strategic Planning
Strategic plans have a strong external orientation and cover
major portions of the organization

Strategic planning A set of procedures for making decisions

about the organization’s long-term
survival
Strategic goals Major targets or end results relating to the
organization’s long-term survival, value,
or growth
Strategy A pattern of actions and resource
allocations designed to achieve the
organization’s goals
 Strategic Planning
• Strategic management
– A process that involves managers from all parts of
the organization in the formulation and
implementation of strategic goals and strategies

• Both large and small organizations benefit

from the planning framework discussed next
The Strategic Management Process
 The Strategic Management Process
Step 1: Establishment of Mission, Vision, and Goals

Step 2: Analysis of External Opportunities and Threats

Step 3: Analysis of Internal Strengths and

Weaknesses including
Resources and Core Competencies
Step 4: SWOT Analysis and Strategy Formulation including
Corporate Strategy, the BCG Matrix, and
Business Strategy
Step 5: Strategy Implementation

Step 6: Strategic Control

 Organizational Mission
• Mission - organization’s reason for existing
• Mission Statement
– Broadly states the basic business scope and
operations that distinguishes it from similar types
of organizations
– May include the market and customers
– Some may describe company values, product
quality, attitudes toward employees

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 Bristol-Myers Squibb
Mission Statement

Our company’s mission is to extend

and enhance human life by providing
the highest-quality pharmaceutical and
related health care products.

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Southwest Airlines

• Our Mission Statement

The mission of Southwest Airlines is dedication to the highest
quality of Customer Service delivered with a sense of warmth,
friendliness, individual pride, and Company Spirit.
• To Our Employees
We are committed to provide our Employees a stable work
environment with equal opportunity for learning and personal
growth. Creativity and innovation are encouraged for improving
the effectiveness of Southwest Airlines. Above all, Employees will
be provided the same concern, respect, and caring attitude within
the organization that they are expected to share externally with
every Southwest Customer.
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Intel – Vision Statement
• At Intel, we constantly push the boundaries of
innovation in order to make people's lives more
exciting, more fulfilling, and easier to manage. Our
unwavering commitment to moving technology
forward has transformed the world by leaps and
bounds.
• We're a company that's always in motion, fueling an
industry that never rests. We inspire our partners to
develop innovative products and services, rally the
industry to support new products, and drive industry
standards. We do this so that we can collectively
deliver better solutions with greater benefits more
quickly.
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 AMD
• Vision
– A world where the amazing power of AMD technology
improves the quality of people's lives.
• Mission
– Lead through innovative, customer-centric solutions that
empower businesses, enhance the digital lifestyle and
accelerate global digital inclusion.
• Values & Beliefs
– Respect for People
– Integrity
– Our Customers' Success
– Customer-Centric Innovation
– Initiative and Accountability
– Fair and Open Competition 19
 Vinamilk
• Vision
“To become a world grade brand in food and
beverage industry, where people put all their trust
in nutrient and health products”

• Mission
“To deliver the valuable nutrition to community
with our respect, love and responsibility”
 Strategic Goals and Plans
Strategic Goals
• Where the organization wants to be in the future
• Pertain to the organization as a whole
Strategic Plans
• Action Steps used to attain strategic goals
• Blueprint that defines the organizational activities and resource allocations
• Tends to be long term (3, 5, or 10 years)

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 Tactical Goals and Plans
Tactical Goals
⚫ Apply to middle management
⚫ Goals that define the outcomes that major divisions and functional
departments must achieve
Tactical Plans
⚫ Plans designed to help execute major strategic plans
⚫ Shorter time frame than strategic plans (quarter to 1 year)

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 Operational Goals and Plans
Operational Goals
⚫ Specific, measurable results
⚫ Expected from departments, work groups, and individuals
Operational Plans
⚫ For organization’s lower levels that specify action steps toward
achieving operational goals
⚫ Tool for daily and weekly operations
⚫ Schedules are an important component

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 Planning and Strategic Value

• Planning helps deliver strategic value by

concentrating organizational efforts

• Skilled managers realize the important of

alignment of goals and implementation of
those goals

• Planning is at the heart of these efforts

 Types of Plans
• Single-use plans
– Designed to achieve a set of goals that are not likely to
be repeated in the future, e.g. programs and projects
• Standing plans
– Focus on ongoing activities designed to achieve an
enduring set of goals, e.g. policies, rules, and
procedures
• Contingency plans
– Actions to be taken when a company’s initial plans
have not worked or require sudden change, i.e. plan B
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 Step 1: Situational Analysis
• Gather, interpret, and summarize all
information relevant to the planning issue in
question

• The outcome of this step is identification and

diagnosis of planning assumptions, issues, and
problems

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Step 2: Alternative Goals and Plans
• Generate alternative goals that may be used in
the future

• Once a range of alternative is generated,

alternatives can be evaluated

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 SMART Goals
The situational analysis generates alternative goals--targets or
ends the manager wants to reach and should be SMART
Specific
Measurable

Attainable (but challenging)

Relevant

Time-bound

Plans are the actions or means managers intend to use to

achieve organizational goals

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 Step 3: Goal and Plan Evaluation
• First, managers must evaluate the advantages,
disadvantages, and potential effects of each
goal and plan

• Second, managers must prioritize goals

• Third, managers must consider implications of

alternative plans for meeting high-priority
goals
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 Step 4: Goal and Plan Selection
• Managers select the most appropriate and
feasible goals and plans after assessing
alternatives

• Scenarios
– A narrative that describes a particular set of future
conditions

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 Step 5: Implementation
• The best plans are useless unless
implemented
• Successful implementation requires that plans
be linked to other systems, particularly budget
and reward systems
• Managers and employees must
– Understand the plan
– Have the resources to implement the plan
– Be motivated to implemented the plan
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 Step 6: Monitor and Control
• Monitoring allows managers to determine if
the plan is succeeding

• Controlling makes modifications as part of the

planning cycle

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 Mission
Mission is an organization’s basic purpose and scope of
operations.

McDonald’s “To be our customers’ favorite place and way

to eat”
Microsoft “We work to help people and businesses
throughout the world to realize their full
potential”
Allstate “To be the best...serving our customers by
providing peace of mind and enriching their
quality of life through our partnership in the
management of the risks they face”

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 Vision
The strategic vision describes the long-term direction and strategic intent
of the company

DuPont “To be the world’s most dynamic science company,

creating sustainable solutions essential to a better, safer
and healthier life for people everywhere”

City of “Together we create a community of good neighbors”

Redmond, WA

Great Lakes “To enhance and become an integral part of the training
Naval Museum mission of the Naval Service Training Command, Great
Lakes, by instilling in our newest sailors a strong sense
of tradition and heritage in the United States”

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 Goals
Strategic goals evolve from the mission and vision of the
organization.

Strategic goals for the City of Redmond, WA include:

“Enhance citizen engagement in city issues”

“Sustain the natural systems and beauty of the community”

“Sustain a safe community with a coherent, comprehensive,

cohesive approach to safety”

“Maintain economic vitality”

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 Step 2: Analysis of External Opportunities
and Threats
• An accurate evaluation of the competitive
environment and macroenvironment are key to
successful strategic management

• Stakeholders
– Groups and individuals who affect and are affected by the
achievement of the organization’s mission, goals, and
strategies

• The difference between an opportunity and a threat

depends on how the company positions itself
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 Step 3: Analysis of Internal Strengths and
Weaknesses
• Analysis of internal strengths and weaknesses provides an
inventory of existing functions, skills, resources, and overall
performance level
• Resources
– Inputs to a system that can enhance performance
• Resources are a source of competitive advantage only if they
create value, are rare, difficult to imitate, and are organized
• Core competence
– A unique skill and/or knowledge an organizational possesses that gives it
an edge over competitors
• Benchmarking
– The process of assessing how well one company’s basic functions and skills
compare with those of another company or set of companies
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Resources and Core Competencies

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 Step 4: SWOT Analysis and
Strategy Formulation
SWOT Examples
Analysis
Strengths Skilled management, positive cash flow,
brands
Weaknesses Lack of spare production capacity,
absence of reliable suppliers
Opportunities New technology that improves efficiency,
new market niche
Threats Competitors’ entrance into niche market
once the niche proves profitable

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 SWOT ANALYSIS
STRENTHS WEAKNESSES O-W

OPPORTUNITIES THREATS S-T

S-O W-T
 Corporate Strategy

Types of Corporate Strategies

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 Types of Corporate Strategies
Corporate strategy identifies a set of businesses, markets, or industries in which
an organization competes and the distribution of resources among those entities

Concentration Strategy employed for an organization that operates a

single business and competes in a single industry

Vertical integration Acquisition or development of new businesses that

produce parts or components of the organization’s product

Concentric Strategy used to add new businesses that produce related

diversification products or are involved in related markets and activities

Conglomerate Strategy used to add new businesses that produce

diversification unrelated products or are involved in unrelated markets
and activities

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BCG Matrix

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 Business Strategy
Business strategy describes the major actions by which a business
competes in a particular market

Low-cost A strategy an organization uses to build competitive

strategies advantage by being efficient and offering a standard,
no-frills product

Differentiation A strategy and organizations uses to build competitive

strategy advantage by being unique in its industry or market
segment along one or more dimensions

Functional Strategies implemented by each functional area of the

strategies organization to support the organization’s business
strategy

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Step 5: Strategy Implementation

1. Define strategic risks

2. Assess organization capabilities
3. Develop and implementation agenda
4. Create an implementation plan

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 Step 6: Strategic Control
• Strategic control system
– A system designed to support managers in
evaluating the organization's progress
regarding its strategy and, when
discrepancies exist, taking corrective
action

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 EXERCISE
• Choose one company you are interested in
• Understand their mission, vision and strategic
plans
• Analyze the external opportunities and threats
and internal strengths and weaknesses