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Strategic Planning Part 2
Strategic Planning Part 2
by Anjan Mohapatro
If you dont invest for the long term ,there is no short term
Examples of Strengths
Distribution channels
Research and
development
Experienced management
Experienced
skills
talent
sales force
Organizational weaknesses are skills and capabilities that prevent an organization to choose and implement strategies that support its mission.
Evaluating
Organisational
Weakness
Weaknesses can be overcome by: making investments to obtain the strengths needed. modifying the organizations mission so it can be accomplished with the current Workforce
Competitive disadvantage is a situation in which an organization fails to implement strategies being implemented by competitors
Examples of Weaknesses
High debt
Examples of Opportunities
Demographic Trends
Organizational opportunities are areas in the organizations environment that may generate high performance.
Organizational threats are areas in the organizations environment that make it difficult for the organization to achieve high performance
Levels of Strategy
Corporate level
IT
Financial Services
Construction
Manufacturing
Shipping
Finance
Marketing
R&D
Levels of Strategy
Corporate level
Business Level
Functional Level
The level of strategy concerned with the question, What business are we in?. Pertains to the organization as a whole and the combination of business units and product lines that make it up.
The level of strategy concerned with the question, How do we compete?. Pertains to each business unit or product line within the organization
The level of strategy concerned with the question, How do we support the business-level strategy?. Pertains to all of the organizations major departments
Strategic Business Unit (SBU) A division of the organization that has a unique business mission, product line, competitors, and markets relative to other SBUs in the same corporation.
SBU
Each business or group of businesses within an organization engaged in serving the same markets, customers, or products
Diversification
The number of businesses an organization is engaged in and the extent to which these businesses are related to one another
Intensive Growth
Strategy
Integrative
Growth
Diversificati on Growth
Develop new market for new customer to Increase sales/Profit Geographical/Demogr aphical Pakistan state oil to Afghanistan Chinese Products
Intensive Growth
Develop New Products
Gramophone to CDS,Google Chrome, diet coke)
Backward Integration
If a company acquires its intermediaries such as wholesale and retailers, when a farmer sells his crop at the local market instead of distributor
Forward Integration
Integrative Growth
If a company operating in music systems takes over the manufacturing business of its plastic material supplier
Horizontal Integration
Planned with New Products that have technological or marketing synergies with existing business to cater for a different group of customers
Concentric
Diversification Growth
Horizontal
Conglomerate
Company may choose new business that have nothing to do with the current technology, products or markets
Present
Market
New
Diversification
Present
Product
New
Related Diversification
A strategy in which an organization operates in several different businesses, industries, or markets that are somehow linked.
Reduces organizations dependence on any one of its business activities and thus reduces economic risk. Reduces overhead costs associated with managing any one business through economies of scale and economies of scope. Allows an organization to exploit its strengths and capabilities in more than one business. Synergy exists among a set of businesses when the businesses value together is greater than their economic value separately.
UNRELATED DIVERSIFICATION
A strategy in which an organization operates multiple businesses that are not logically associated with one another. Advantages
Stable corporate-level performance over time due to business cycle differences among the multiple businesses. Resources can be allocated to areas with the highest return potentials to maximize corporate performance.
Disadvantages
The strategy does not usually lead to high performance due to the complexity of managing a diversity of businesses. Firms with unrelated strategies fail to exploit important synergies, putting them at a competitive disadvantage to firms with related diversification strategies.