Mata kuliah : A0012 – Manajemen Umum Tahun : 2010 Session 4 PLANNING

Learning Objectives After studying Planning, you will know: how to proceed through the basic steps in any planning process how strategic planning differs from tactical and operational planning why it is important to analyze both the external environment and internal resources of the firm before formulating a strategy the choices available for corporate strategy how companies can achieve competitive advantage through business strategy 4-2

Outline Materi An Overview of Planning Fundamentals Levels of Planning Strategic Planning: Yesterday and Today Bina Nusantara

An Overview Of Planning Fundamentals the conscious, systematic process of making decisions about goals and activities to be pursued in the future importance of formal planning has grown dramatically Basic planning process Step one: situational analysis 4-4

An Overview Of Planning Fundamentals (cont.) Basic planning process (cont.) Step two: alternative goals and plans generate alternative future goals and plans to achieve them goals - targets or ends the manager wants to reach should be specific, challenging, and realistic plans - the actions or means intended to achieve goals identify alternative actions, needed resources, and potential obstacles single use plans - designed to achieve goals that are unlikely to be repeated in the future standing plans - designed to achieve an enduring set of goals contingency plans - actions to be taken when initial plans fail 4-5

An Overview Of Planning Fundamentals (cont.) Basic planning process (cont.) Step three: goal and plan evaluation evaluate the advantages, disadvantages, and potential effects of each alternative goal and plan prioritize those goals consider the implications of alternative plans Step four: goal and plan selection identify the priorities and trade-offs among goals and plans leads to a written set of goals and plans that are appropriate and feasible within a predicted set of circumstances 4-6

An Overview Of Planning Fundamentals (cont.) Basic planning process (cont.) Step five: implementation plans are useless unless they are implemented properly managers must understand the plan, have the necessary resources, and be motivated to implement it Step six: monitor and control must continually monitor the actual performance in relation to the goals and plans develop control systems to take corrective action 4-7

Decision-Making Stages And Formal Planning Steps Identifying and diagnosing the problem Generating alternative solutions Evaluating alternatives Making the choice Implementing Evaluation Situational analysis Alternative goals and plans Goal and plan evaluation plan selection Implementation Monitor and control General decision- making stages planning steps Specific formal 4-8

Levels Of Planning Strategic planning decisions of senior executives about the organization’s long-term goals and strategies has an external orientation covers major portions of the organization strategic goals - major targets that relate to the long-term survival, value, and growth of the organization strategy - pattern of actions and resource allocations designed to achieve the goals of the organization matches the skills and resources of the organization to the opportunities found in the external environment 4-9

Levels Of Planning (cont.) Tactical planning translates broad strategic goals and plans into specific goals and plans that are relevant to a definite portion of the organization focuses on the major actions that a unit must take to fulfill its part of the strategic plan Operational planning identifies the specific procedures and processes required at lower levels of the organization plans intended for short periods of time and focus on routine tasks Strategic, tactical, and operational plans must be consistent and mutually supportive 4-10

The Strategic Management Process Analysis of external opportunities and threats internal strengths and weaknesses SWOT analysis and strategy formulation Establishment of mission, vision, and goals Strategy implementation Strategic control 4-11

Strategic Management Process Step 1: establishment of mission, vision, and goals mission - basic purpose and values of the organization defines the scope of operations states the organization’s reason to exist written in terms of the general clients served by the organization strategic vision - provides a perspective on where the company is headed and what the organization can become moves beyond the mission statement strategic goals - evolve from the mission and vision of the organization need to be communicated to everyone who has contact with the organization 4-12

Strategic Management Process (cont.) Step 2: analysis of external opportunities and threats successful strategic management depends on an accurate and thorough evaluation of the environment stakeholders - groups and individuals who affect and are affected by the achievement of the organization’s mission, goals, and strategies forecasting future trends is critical must develop a clear sense of market opportunities identify potential threats as well difference between an opportunity and threat may depend on how a company positions itself strategically 4-13

Elements Of Environmental Analysis Industry and market analysis Technological analysis Competitor analysis Environmental Analysis Macroeconomic analysis Political and regulatory analysis Human resources analysis Social analysis 4-14

Strategic Management Process (cont.) Step 3: analysis of internal strengths and weaknesses Resources - inputs to production that can be accumulated over time to enhance the performance of the firm may be tangible or intangible assets provide a competitive advantage if: the resource is instrumental in creating customer value the resource is rare and not equally available from other sources resource is difficult to imitate resource is well organized Core competence - something a company does especially well relative to its competitors usually a set of skills or expertise in some activity 4-15

Internal Resource Analysis Financial analysis Other internal resource analysis Human resource assessment Internal Resource Analysis Operations analysis Marketing audit 4-16

Strategic Management Process (cont.) Step 3: internal strengths and weaknesses (cont.) Benchmarking - process of assessing how well one company’s basic functions and skills compare to those of other companies goal is to thoroughly understand the “best practices” of other firms only permits imitating rather than surpassing competitors 4-17

Strategic Management Process (cont.) Step 4: SWOT analysis and strategy formulation SWOT analysis - comparison of strengths, weaknesses, opportunities, and threats helps summarize the major facts and forecasts derived from external and internal analyses used as the basis for identifying primary and secondary strategic issues confronting the organization 4-18

Strategic Management Process (cont.) Step 4: strategy formulation (cont.) Corporate strategy - identifies the set of businesses, markets, or industries in which the organization competes and the distribution of resources among those businesses concentration strategy - focuses on a single business competing in a single industry vertical integration - expands the domain of the organization into supply channels or to distributors concentric diversification - moving into businesses that are related to the company’s original core business conglomerate diversification - expands into unrelated businesses 4-19

Strategic Management Process (cont.) Step 4: strategy formulation (cont.) BCG matrix - used to analyze and communicate corporate strategy each business in the corporation is plotted on the growth rate of its market and the relative strength of its competitive position in that market (market share) question marks - require substantial investment to improve their position otherwise divestiture is recommended stars - require heavy investment, but generate needed revenues cash cows - generate revenues in excess of their investment needs used to fund other businesses dogs - remaining revenues are realized, and then firms are divested 4-20

The BCG Matrix Market growth Relative competitive position Question Stars Question Marks Market growth High Low Cash Cows Dogs Relative competitive position Strong Weak 4-21

Strategic Management Process (cont.) Step 4: strategy formulation (cont.) Trends in corporate strategy wave of mergers and acquisitions either by concentrating in one industry or by portfolio diversification implementing a diversified strategy depends on individual circumstances unrelated diversification may hurt a corporation diversification may help competing in a slow-growth, mature, or threatened industry organizations tend to perform better if they implement a more concentric diversification strategy 4-22

Strategic Management Process (cont.) Step 4: strategy formulation (cont.) Business strategy - defines the major actions used to build and strengthen competitive position low-cost strategy - attempt to be efficient and offer a standard product useful for companies that are large and take advantage of economies of scale in production or distribution organization must be the cost leader in its industry must offer a product that is acceptable to customers differentiation strategy - attempt to be unique in its industry or market segment along some dimensions that customers value position based on high product quality, excellent marketing and distribution, or superior service 4-23

Strategic Management Process (cont.) Step 4: strategy formulation (cont.) Functional strategy - implemented by each functional area of the organization to support the business strategy ensures that departments operate in a manner that is consistent with business strategies Step 5: strategy implementation organizations adopting a comprehensive view of implementation organizations applying a participative strategic management process to implementation 4-24

Strategic Management Process (cont.) Step 6: strategic control designed to support managers in evaluating the organization’s progress with its strategy when discrepancies are identified, corrective action is taken encourage efficient operations that are consistent with the plan typically involve budgets to monitor and control financial expenditures strategic budget - used to create and maintain long-term effectiveness operational budget - tightly monitored to achieve short-term efficiency 4-25