1. Strategic planning

2. Objectives and Strategy
Corporate Objective
External
Constraints
PEST Factors
Competition Analysis
Internal
Constraints
Culture
Budgets
Ethics
Human Resources
Physical Resources
Corporate Strategy
Strategy Models
Porter’s Five Forces
Porter’s Value Chain Analysis
SWOT Analysis
And many more…

3. External Environment Assessment
What is going on in the external environment?
Information Gathering
How will these developments affect our company?
Information Assessment

5. Five Forces Analysis

6. Why do airlines make so little profit (and such big losses)?
Very intensive competitor rivalry – mainly on price
Low barriers to entry – lots of new airlines who want to set up
Suppliers of aircraft & equipment are powerful – can charge high margins
Customers have lots of substitute options – e.g. rail, car
High fixed costs – airline losses rise significantly if revenues fall only slightly since it costs roughly the same to fly half-empty planes as full ones

7. Why are profits so high in the soft drinks market?
Customers and suppliers have little power
There is high brand awareness & loyalty
High barriers to entry – how do you enter a market dominated by Coca-Cola and Pepsi?

8. Ikea – 5 Forces

9. Ikea – 5 Forces

10. So what do we know about Ikea from this information?
Ikea – 5 Forces
So what do we know about Ikea from this information?
Watch the video

11. Information Gathering
Asking industry experts to discuss industry trends and make projections for the future
Using historical industry trends to predict future developments
Asking knowledgeable managers to write scenarios describing what they foresee for the industry over the next 2/3 years
Using technology to simulate the industry environment and generate likely future developments.

13. Strategies and Tactics
Objectives Hierarchy
Aim
Mission
Corporate
Objective
Department
Strategies and Tactics

14. Common Objectives Profit Maximisation Growth Survival
Sales Maximisation
Increase Market Share
Maximise Shareholder Value

15. Reason for growth Survival To gain economies of scale
To make larger future profits
To increase market share
To reduce risk

16. Objectives Examples Marketing Production and distribution
Advertising
Researching
Joint Ventures
Production and distribution
Standardisation/differentiation of product
Production creation (Manufacturing)
Product Pricing
Distribution Channels/Transportation
Human resources
Advertising vacancies
Outsourcing
Induction training / cross cultural training

18. Value Chain Analysis

19. Value Chain Analysis
A value chain is the way in which primary and support activities are combined to provide goods and services and increase profit margins.
(1) Primary Activities - those that are directly concerned with creating and delivering a product (e.g. component assembly); and
(2) Support Activities, which whilst they are not directly involved in production, may increase effectiveness or efficiency (e.g. human resource management). It is rare for a business to undertake all primary and support activities.
Watch the video

20. Value Chain Analysis

21. Value Chain – Support Activities

22. Value Chain – Primary Activities

25. Activity In your groups
Produce a basic value chain analysis for your given organisation
For each of the primary & support activities state how they are implemented by your organisation
You can show these in any format you would like (e.g. written/diagram)