STRATEGIC PLANNING PROCESS DEVELOPING A STRATEGIC VISION AND BUSINESS MISSION

Bijay KC, Ph.D SAIM College STRATEGIC PLANNING WHAT IS IT? WHY DO YOU NEED IT? WHAT IS ITS PROCESS? Bijay KC, Ph.D SAIM College

STRUCTURE AND PROCESS OF PLANNING Expectations Of Outsiders Society Government Strategic Planning Tactical Planning Expectations Of Insiders Top Mgmt Staff The Plan To Master Strategy Mission Objectives Policies Medium Range Program -ming And Plans Short Range Planning And Plans Implemen -tation Of Plans Reviews And Evaluation Of Plans The Data base 1. Past Performance 2. Current Situation 3. Forecasts Evaluation Of Environment Opportunity Threat Organization Strength Weakness Decision and Evaluation Rules

DEVELOPING A STRATEGIC VISION What will the firm be in the future? It shows future direction Mission What is the firm’s business today? It deals more with what the firm is doing today than what it wants to be in the future Bijay KC, Ph.D SAIM College

Vision statement answers the question: “What do we want to become?” Bijay KC, Ph.D SAIM College

Mission statement answers the question: “What is our business?” Bijay KC, Ph.D SAIM College

Bijay KC, Ph.D SAIM College WHY STRATEGIC VISION To determine future direction of a firm To give special identity and business emphasis To provide meaningful guidance to the firm’s future Strategic visions are firm specific, not generic Strategic vision should not be too general Bijay KC, Ph.D SAIM College

ELEMENTS OF STRATEGIC VISION/MISSION Defining a firm’s present business Broad or narrow definition It should not be too broad that includes everything and gives no future direction to the firm’s business. It should not be too specific and narrow so that it limits the firm’s scope for business expansion Bijay KC, Ph.D SAIM College

Definition of firm’s present business should include: Customers need: what is being satisfied, not just product or service Customers’ group: who are being satisfied Geographic domain; national or international, Age, Income etc 3. Technology used: How are the customers needs being satisfied Bijay KC, Ph.D SAIM College

COMPONENTS OF A MISSION STATEMENT: Customers Who are the firm’s customers? "We believe our first responsibility is to the doctors, nurses, and patients, to mothers and all others who use our products and services." (Johnson & Johnson) Bijay KC, Ph.D SAIM College

Bijay KC, Ph.D SAIM College Products or services: What are the firm's major products or services? Standard Oil Company ( Indiana) is in business to find and produce crude oil, natural gas and natural gas liquids; to manufacture high-quality products useful to society from these raw materials; and to distribute and market those products and to provide dependable related services to the consuming public at reasonable prices. (Standard Oil Company) Bijay KC, Ph.D SAIM College

Bijay KC, Ph.D SAIM College Markets Geographically, where does the firm compete? "We are dedicated to the total success of Corning Glass Works as a worldwide competitor." (Corning Glass Works) Bijay KC, Ph.D SAIM College

Bijay KC, Ph.D SAIM College Technology Is the firm technologically current? "Control Data is in business of applying micro-electronics and computer technology in two general areas: computer-related hardware; and computing-enhancing services, which include computation, information, education, and finance." (Control Data) Bijay KC, Ph.D SAIM College

Concern for survival, growth, and profitability Is the firm committed to growth and financial soundness? "To serve the worldwide need for knowledge at a fair profit by adhering, evaluating, producing, and distributing valuable information in a way that benefits our customers, employees, other investors, and our society." (McGraw-Hill) Bijay KC, Ph.D SAIM College

Bijay KC, Ph.D SAIM College Philosophy What are the basic beliefs, values, aspirations, and ethical priorities of the firm? "It's all part of the Mary Kay philosophy – a philosophy based on the golden rule. A spirit of sharing and caring where people give cheerfully of their time, knowledge, and experience." (Mary Kay Cosmetics) Bijay KC, Ph.D SAIM College

Bijay KC, Ph.D SAIM College Self-concept What is the firms' distinctive competence or major competitive advantage? "Crown Zellerbach is committed to leapfrogging ongoing competition within 1,000 days by unleashing the constructive and creative abilities and energies of each of its employees." (Crown Zellerbach) Bijay KC, Ph.D SAIM College

Concern for public image Is the firm responsive to social, community, and environmental concerns? "To contribute to the economic strength of society and function as a good corporate citizen of a local, state, and national basis in all countries in which we do business." (Pfizer) Bijay KC, Ph.D SAIM College

Bijay KC, Ph.D SAIM College Concern for Employees Are employees a valuable assets of the firm? "To compensate its employees with remuneration and fringe benefits competitive with other employment opportunities in its geographical area and commensurate with their contributions toward efficient corporate operations." (Public Service Electric and Gas Company) Bijay KC, Ph.D SAIM College

An Evaluation Matrix of Mission Statements Organization Customers Products/Services Markets Concern for survival, growth, and profitability Technology Philosophy Self-concept Concern for Public Image Concern for Employees Bijay KC, Ph.D SAIM College

An Evaluation Matrix of Mission Statements Organization Customers Products/Services Markets Concern for survival, growth, and profitability Technology Philosophy Self-concept Concern for Public Image Concern for Employees Pepsi-Co Yes No PSI Genetech IEDI BATA Coca-cola India Bijay KC, Ph.D SAIM College

An Evaluation Matrix of Mission Statements Organization Customers Products/Services Markets Concern for survival, growth, and profitability Technology Philosophy Self-concept Concern for Public Image Concern for Employees Pepsi-Co Yes No PSI Genetech BATA Coca-cola India Bijay KC, Ph.D SAIM College

B. Deciding on the long-term strategic vision of the firm How long should the mission cover? Environmental Analysis and forecast is needed for this Identify and forecast the trends in the driving forces and possible changes in these forces Bijay KC, Ph.D SAIM College

C. Communicating the Strategic Vision Strategic vision should be communicated downward It should be simple and clear It should serve as a powerful tool for motivating people It should tell the staff where the firm is heading for and how they can contribute to it Bijay KC, Ph.D SAIM College

Bijay KC, Ph.D SAIM College LONG-TERM OBJECTIVES STRATEGIC VISION AND MISSION NEEDS TO BE BROKEN DOWN INTO SPECIFIC OBJECTIVES. Kinds of objectives: Objectives for financial performance Growth in Revenue, ROI etc Objectives for strategic performance: Market share, Quality, product line Bijay KC, Ph.D SAIM College

CRETIRIA FOR SETTING OBJECTIVES Suitable Measurable overtime Feasible Acceptable Flexible Motivating Understandable Commitment Participation Linkages Bijay KC, Ph.D SAIM College

Methods for setting objectives Based on past performance Trends adjusted for future Negotiations Top Management Iteration with the strategy Result of SWOT analysis Bijay KC, Ph.D SAIM College