LESSON 2 GENERAL FRAMEWORK FOR PLANNING Prepared by: Prof Ayza M Valdez

STRATEGIC PLANNING A firms overall master plan that shapes its destiny

TACTICAL PLANNING Planning that translates a firms strategic plans into specific goals by organizational unit

OPERATIONAL PLANNING Planning that requires specific procedures and actions at lower levels in an organization

A FRAMEOWORK FOR PLANNING 1. Define the present situation 2. Establish goals and objectives 3.Analyze environment 4. Develop action plans to reach goals and objectives 5. Develop Budgets 6. Implement the plans 7. Control the plans

Define the Present Situation Measure the success and examine internal capabilities and external threats

Establish Goals and Objectives Establish goals that can continue to focus on what the business can do best

Analyze the Environment to Forecast Aids and Barriers to Goals and Objectives Predict which internal and external factors will foster or hinder attainment of desired goals

Develop Action Plans to Reach Goals and Objectives An action plan consists of the specific steps necessary to achieve a goal or objective

Develop Budgets Among the expenses would be larger advertising and promotion budgets

Implement Plans If the plans developed in the previous five steps are to benefit the firm, they must be put to use.

Control the Plans Make contingency plan as an alternative plan to be used if the original plan cannot be implemented or a crisis develops

THE NATURE OF BUSINESS STRATEGY

STRATEGY The organization’s plan, or comprehensive program, for achieving its vision, mission, and goals in its environment

Strategy Involves more than Operational Effectiveness Strategy Rests on Unique Activities A Sustainable Strategic position requires Trade-Offs Fit Drives both Competitive Advantage and Sustainability

THE DEVELOPMENT OF BUSINESS STRATEGY

VISSION An idealized picture of the future of an organization

MISSION The firms purpose and where it fits into the world

SWOT ANALYSIS A method of considering the strengths, weaknesses, opportunities, and threats in a given situation

CONDUCTING THE ANALYSIS

S-TRENGHT What are the good points about a particular alternative? Use your judgment and intuition.

W-EAKNESSES Consider the risk of pursuing a particular courses of action, such as getting into a business you do not understand.

O-PPORTUNITIES Think of the opportunities that welcome you if you choose a promising alternative. Use your imagination and visualize the opportunities

THREATS Every alternative has its own downside, so it is important to think ahead to allow for contingency planning. Ask people who have tried in the past what you are attempting now.

STRATEGY LEVELS FOR DIVERSIFIED AND SINGLE BUSINESS FIRMS

Diversified Business Single-business firms Corporate- Level Strategy What direction do we pursue for the total enterprise? What business should we enter? Corporate Level Strategy Which business should we be in? How do we compete within the market we have chosen? Business Level Strategy How do we compete within each other of the businesses we have chosen? Functional Level Strategy How can each function best support each of our business? Functional Level Strategy How can each function best support each of our business?

CORPORATE LEVEL STRATEGY Strategic alliances Diversification of goods and services Sticking to core competencies

BUSINESS LEVEL STRATEGY Product Differentiation Focus – organization concentrates on a specific regional or buyer market. Cost Leadership

FUNCTIONAL LEVEL STRATEGY Find and retain the best people High Speed

OPERATING PLANS, POLICIES, PROCEDURES AND RULES

OPERATING PLANS The means through which strategic plans alter the destiny of the firm.

POLICIES General guidelines to follow in making decisions and taking action

PROCEDURES A customary method for handling activity. It guides action rather than thinking

RULE A specific course of action or conduct that must be followed. It is a simplest type of plan

MANAGEMENT BY OBJECTIVES: A SYSTEM OF PLANNING AND REVIEW

MANAGEMENT BY OBJECTIVES (MBO) A systematic application of goal setting and planning to help individuals and firms be more productive

MBO STEPS Establishing Organizational goals Establishing unit objectives Reviewing group members proposal

4. Negotiating or Agreeing 5 4. Negotiating or Agreeing 5. Creating action plans to achieve objectives 6. Reviewing performance

GROUP ASSIGNMENT: Find three examples of business strategy by searching the internet. Choose several companies of interest to you and search for online news articles about their strategies posted within the last sixty days. Examples would include strategies for increasing sales, introducing a new product or combating the negative impact of a scandal or controversy.