Planning and Strategic

Management

Billy Lopez Ilagan

MBA Student
Batangas State University
Learning Objectives
• Summarize the planning process and describe organizational goals
• Discuss the components of strategy and the types of strategic
alternatives
• Describe how to use SWOT analysis in formulating strategy
• Identify and describe various alternative approaches to business-level
strategy formulation
• Identify and describe various alternative approaches to corporate-level
strategy formulation
• Discuss how tactical plans are developed and implemented
• Describe the basic types of operational plans used by organizations
Today’s Situation
Google’s Strategy for Dominance

“We don’t talk about our strategy ... because it’s strategic. I would rather
have people think we’re confused than let our competitors know what
we’re going to do.”

—Larry Page, Google Co-founder

 Organizational Goals
• Planning can be described as the
process of establishing goals as well
as outlining strategies to achieve
those goals.

• Experts have found that planning

contributes to increased effort,
persistence, and even serves to focus
energies on matters that are deemed
to be important to organizational
success.

Figure 1. General representation of the planning

process that many organizations attempt to follow
Planning and Organizational Goals
A case example of JFC – Jollibee Food Corporation.

Mission: “To serve great tasting food, bringing the joy of eating to
everyone”

Vision:

“We are the best tasting QSR” “The most endearing brand”
“that has ever been” “We will lead in product taste at all times”
“We will provide FSC excellence” “Happiness in every moment”
“By year 2020, with over 4000 stores worldwide”
“Jollibee is truly GLOBAL Brand. (and the Filipino will be admired
worldwide”
Organizational Goals
Purpose of Goals
• Provide guidance and a unified direction for people in organization. It
help everyone understands where organization is going and why getting
there is important. (e.g. JFC goal “to beat and compete with Mc Donald’s
fast food chain”)
• Goal setting practices strongly affect other aspects of planning. Effective
goal setting promotes good planning, and good planning facilitates
future goal setting
• Goal can serve as motivation for an organization’s employees.
• Goals provide effective mechanism for evaluation and control.
Organizational Goals
Kinds of Goals
• Strategic goals – set by and for organization’s top management.
• Tactical goals – set by and for the middle managers
• Operational goals – set by and for lower level managers
Kind of Plans
• Strategic plans – developed to achieved strategic goals. Set by board of directors and
top management.
• Tactical plans – aimed at achieving tactical goals. Typically involve upper and
middle management.
• Operational plans – carrying out tactical plans to achieve operational goals.
Developed by mid and lower level managers. Short term focus and relatively
narrow in scope.
Case Study of General Motors
• General Motors is over hundred years old brand and once dominated
the automobile manufacturer.
• Rising employee healthcare, new competitors, high wage contracts with
its unions weakened the company.
• In 2007 lost 38$ Billion and 32$ in 2008 and was forced to use Chapter 11
bankruptcy.
• Daniel Akerson was appointed as CEO, man with no automobile
industry experience, an electrical engineer in training, spent several
years as naval officer, had worked in telecommunications, technology,
and private investments industries.
• To some, he’s not fit to the job and he wasn’t a car guy
Case Study of General Motors
• He was quoted in saying that “A CEO’s role is to articulate [the] vision,
and a strategy, that you want to accomplish”.
• Following his appointment, GM emerged from Chapter 11 bankruptcy
in 2011, regained the lost market share, consistent upward trajectory,
launching successful new products and posting record profits of 25$
billion in 2012.
• He stepped down as CEO on 2013 and nominated the firm’s Executive
Vice President, Marry Barra, the first time a woman led a major U.S. auto
company, the best candidate for CEO to replace him.
• His style, Akerson, spent a lot of time out in GM factories talking to the
people who build the cars and in GM dealerships talking to the people
who buy cars.
Strategic Management
• Strategy is a comprehensive plan for accomplishing an organization’s
goals.
• Strategic Management is a way of approaching business opportunities
and challenges; It is a comprehensive and ongoing management process
aimed at formulating and implementing effective strategies.
• Effective strategies are those that promote a superior alignment between
the organization and its environment and the achievement of strategic
goals.
Components of Strategy
In general, a well-conceived strategy addresses three areas:
• Distinctive Competence – something the organization does exceptionally
well
• Scope – specifies the range of markets in which organization will
compete
• Resource deployment – how it will distribute its resources across the
areas in which it competes.
Types of Strategic Alternatives
• Business-level strategy – is the set of strategic alternatives from which an
organization chooses as its conducts business in a particular industry or
market.
• Corporate level strategy - is the set of strategic alternatives from which
an organization chooses as it manages its operations simultaneously
across several industries and several markets.
Strategy Formulation vs. Strategy
Implementation
Strategy formulation is the set of processes involved in creating or
determining the organization’s strategies.
Strategy implementation is the methods by which those strategies are
operationalized or executed

*The formulation stage determines what the strategy is, and the
implementation stage focuses on how the strategy is achieved.
USING SWOT ANALYSIS TO
FORMULATE STRATEGY
• SWOT analysis is a careful evaluation of
an organization’s internal strengths and
weaknesses as well as its environmental
opportunities and threats.
• SWOT analysis is one of the most
important steps in formulating strategy.
Using the organization’s mission as a
context, managers assess internal
strengths (distinctive competencies) and
weaknesses as well as external
opportunities and threats. The goal is
then to develop good strategies that
exploit opportunities and strengths,
neutralize threats, and avoid
weaknesses.
SWOT Analysis
• Organization Strength - A skill or capability that enables an organization
to create and implement its strategies.
• Organization Weaknesses - A skill or capability that does not enable an
organization to choose and implement strategies that support its mission
• Organizational Opportunity - An area in the environment that, if
exploited, may generate higher performance.
• Organizational Threat - An area that increases the difficulty of an
organization performing at a high level
Case Study: SWOT Analysis of JFC
Strengths
• THE LARGEST FOOD CHAIN IN THE PHILIPPINES – Jollibee has over
1,150 stores nationwide. There's almost no one in the Philippines who
hasn't yet heard of this fast-food chain unless you live in a cave or
something.
• WELL-TRAINED EMPLOYEES – Every Jollibee outlet welcomes
customers with friendly and efficient service; before being hired,
workers are trained before putting them on the job.
• MARKETING STRATEGIES – Jollibee knows its target audience well.
They are well-known for their commercials that show the importance of
family values and ads about love that target the younger audience.
Case Study: SWOT Analysis of JFC
Weaknesses
• SUPPLY DEMAND – There are lots of Jollibee stores nationwide, food
supply may lower because of the high demand. There are food items that
go out of stock due to demand.
• NOT ACCESSIBLE TO EVERYONE – There are areas in the Philippines
that don't have a Jollibee franchise. Some people still travel from long
distances to taste a 99-peso meal in Jollibee.
• NOT FAMOUS IN OTHER COUNTRIES – The standard menu for
Jollibee is catered to suit Filipinos' tastes; people from other countries
may not favor this kind of food, especially since everyone has different
food tastes.
Case Study: SWOT Analysis of JFC
Opportunities
• EMBARKED ON AN INTERNATIONAL EXPANSION PLAN – There
are many homesick OFWs in other countries that can introduce Jollibee
to other people.
• NEW MENU ITEMS – New menu items are being created to cater to
people from different countries' tastes.
• A WELL-KNOWN FOOD CHAIN IN THE PHILIPPINES – There's this
thing called brand loyalty. Even after years of operation, Jollibee is still
the no. 1 go-to place for Filipinos if they want to eat a quick snack or do
a small get-together with family and friends.
Case Study: SWOT Analysis of JFC
Threats
• OTHER FAST-FOOD CHAINS – There are still many food chains that
may steal customers away, especially globally known food chains like
MCDONALDS or KFC.
• UNHEALTHY FOOD ITEMS – Almost every menu item in Jollibee is
unhealthy, oily, and almost everything is meat. Fast-food is delicious but
unhealthy.
• LIMITED MENU – The menu of Jollibee is a bit dull and lacking;
people's tastes change over time. People will still get bored of the classic
chicken and spaghetti menu.
Business-Level Strategies Formulation
Porter’s Generic Strategies
• Differentiation strategies – Seeks to distinguish itself from competitors
through the quality of its products and services. (e.g. Rolex, Apple)
• Overall cost leadership strategy - attempts to gain a competitive
advantage by reducing its costs below the costs of competing firms. (e.g.
Timex, Hershey vs. Godiva).
• Focus strategy - concentrates on a specific regional market, product line,
or group of buyers.
Business-Level Strategies Formulation
Strategies based on Product life cycle

• The product life cycle is a model

that shows how sales volume
changes over life of products.
• Introduction, growth, maturity
and decline stage
• At Introduction stage, the demand
may be very high and outpaces the
firm’s ability to supply the
product.
Business-Level Strategies Formulation
• Growth stage – Begin producing the product and sales continue to grow.
Important management issues are ensuring quality and delivery and
beginning to differentiate an organization’s product from other
competitors.
• Maturity stage – overall demand growth to product begins to slow down
and number of firms producing the products begin to decline. Keeping
the cost low and beginning to search for new products or services are
also important strategic considerations.
• Decline stage – demand for product or technology decreases, the number
of organizations producing the products drops and the total sales drop.
Corporate-Level Strategies Formulation
Most large organizations are engaged in several business, industries and
markets. Each business or set of business within such organization is
referred as SBUs or Strategic Business Units.
The nature and extent of diversification is the most important strategic
issue at the corporate level concerns.
Diversification describes the number of different businesses that an
organization is engaged in and the extent to which these businesses are
related to one another. There are three types of diversification strategies:
* single-product strategy;
* related diversification;
* unrelated diversification.
Corporate-Level Strategies Formulation
Single product Strategy
Manufacture just one product or service and sells it in a single geographic
market.

-Concentrating all efforts so completely in one product/service for the

survival of the business.
Example: DOT’s OTOP, Crocs, Michelin.
Corporate-Level Strategies Formulation
Related Diversification
A strategy in which an organization operates in several businesses that are
somehow linked with one another.

Advantages:
-It reduces the dependence on any of one of its business activities and thus
reduces economic risks.
-Reduces the overhead cost associated in managing business any one
business (i.e. Legal and Accounting services)
-Allows an organization to exploits its strengths and capabilities in more
than one business. (i.e. Mc Donalds and Mc Cafee)
Corporate-Level Strategies Formulation
Unrelated Diversification
A strategy in which an organization operates multiple businesses that are
not logically associated with one another.
Advantages:
• The business is able to achieve stable performance over time
• Resource allocation advantage by evaluating the future of business to
place the resources where they have highest potential returns.
Disadvantage:
• Corporate level managers usually do not know about the unrelated
business to provide strategic guidance in capital allocation
Unrelated Diversification, a case of SMC:
San Miguel Corporation
• San Miguel Corporation was established on 1890 and touted as the
Southeast Asia’s first brewery “La Fabrica de Cerveza de San Miguel”.
The beer started to be exported in Shanghai, Hong kong and Guam in
1914.
• San Miguel held 88% of the industry.
• According to PSE, the SMC products portfolio are beer, spirits, non-
alcoholic beverages, poultry and animal feeds, flour, fresh and processed
meats, dairy products, coffee, various packaging products, range of
petroleum products, Public-Private partnership projects such as
expressways, airports, seaports and other government related
infrastructure projects.
• Company’s manufacturing operations are in PH, Hong Kong, mainland
China, Indonesia, Vietnam, Malaysia and Thailand.
Unrelated Diversification, a case of SMC:
San Miguel Corporation
• Currently owned more than 2,400 service stations retailing gasoline and
also supplies jet fuel at key airports to international and domestic
carriers
• The company was established and solely dedicated to beverages, food,
and packaging industry and now transformed the company into
diversified conglomerate with companies in fuel and oil, energy,
infrastructure and real estate industries.
Managing Diversification
Portfolio management techniques are methods that diversified
organizations use to determine in which businesses to engage and how to
manage these businesses to maximize corporate performance.
Two important portfolio management techniques are:

Boston Consulting Group (BCG) matrix provides a framework for

evaluating the relative performance of businesses in which a diversified
organization operates. It also prescribes the preferred distribution of cash
and other resources among these businesses. The BCG matrix uses two
factors to evaluate an organization’s set of businesses: the growth rate of a
particular market and the organization’s share of that market
The BCG Matrix
• Dogs are business that have very small
market share that it is not expected to
grow. These business must be sold or
liquidated as soon as possible.
• Cash cows are businesses that have a
large share of a market that is not
expected to grow substantially. Generate
high profits that the organization should
use to support question marks and stars .
• Question marks are businesses that have
only a small share of a quickly growing
market. The future performance of these
businesses is uncertain.
GE Business Screen
• GE Business Screen A method of
evaluating businesses along two
dimensions: (1) industry attractiveness
and (2) competitive position.
• In general, the more attractive the
industry and the more competitive the
position, the more an organization should
invest in a business.
• GE Business Screen can classify the
business as winners, question marks,
average business, losers or profit
producers.
Tactical Plans
A plan aimed at achieving tactical goals and developed to implement parts
of a strategic plan; an organized sequence of steps designed to execute
strategic plans.
• Developing Tactical Plans
- Managers need to recognize that tactical plan must address a
number of tactical goals derived from strategic goals. Most of the
time, it must be consistent with strategic plan.
-Strategies are often stated in general terms, tactical plans must
specify resources and time frame.
-Tactical planning required the use of human resources. Managers
must be in position to receive information from others and then
pass it to others who might use it.
Tactical Planning
Executing Tactical Plans
Regardless how tactical plan is formulated, its ultimate success depends
on the way it carried out.
Successful implementation means astute use of resources, effective
decision making, and insightful steps to ensure that right things are done
at the right time and at the right ways.
Operational Plans
• Operational plans are
derived from tactical plans
and are aiming to achieve
operational goals.
• Tends to be narrowly
focused, have relatively
short time horizons, and
involve lower-level
managers.
Thank you!