1. The Strategic and Operational Planning Process
Chapter 5
The Strategic and Operational Planning Process
PowerPoint Presentation by Charlie Cook The University of West Alabama Copyright © 2006 Thomson Business and Economics. All rights reserved.

2. Planning Dimensions Planning Planning Dimensions:
Determining what you want to accomplish and developing approaches to achieving your objectives.
Planning Dimensions:
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Exhibit 5–1

3. Strategic and Operational Planning
Strategic Planning
The process of developing a mission and long-range objectives and determining in advance how they will be accomplished.
Operational Planning
The process of setting short-range objectives and determining in advance how they will be accomplished.
Strategy
A plan for pursuing the mission and achieving objectives.
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4. The Strategic Planning Process
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Exhibit 5–2

5. Strategic and Operational Levels
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Exhibit 5–3

6. Industry and Competitive Situation Analysis
Focuses on those features in a company’s environment that most directly affect its options and opportunities.
Five Competitive Forces (Porter)
Rivalry among competing sellers in the industry
Threat of substitute products and services
Potential new entrants
Power of suppliers
Power of buyers
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7. Porter’s 5 Forces Model Starbucks’s Example
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Exhibit 5–4

8. Parts of a Company Situation Analysis
1. Assessment of the present strategy based on performance.
2. Strengths, Weaknesses, Opportunities, and Threats (SWOT) analysis.
3. Assessment of competitive strength and identification of competitive advantage.
4. Conclusions concerning competitive position.
5. Determination of the strategic issues and problems that need to be addressed through the strategic planning process.
Exhibit 5–5
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9. SWOT Analysis for Starbucks Coffee
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Exhibit 5–6

10. Competitive Advantage
Core Competency
A functional capability (strength) that the firm does well and one that creates a competitive advantage for the firm.
Benchmarking
The process of comparing an organization’s products or services and processes with those of other companies.
Scanning the Environment
Searching the external environment for opportunities and threats.
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11. Writing Effective Objectives
Max E. Douglas’s model for writing effective objectives:
(1) the word to, followed by
(2) an action verb,
(3) a statement of the single, specific, and measurable result to be achieved, and
(4) a target date.
To achieve a 6% overall return on fourth quarter sales.
SMART Objectives
Specific
Measurable
Achievable
Realistic
Time
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12. Management by Objectives (MBO)
Step 1. Set individual objectives and plans.
Step 2. Give feedback and evaluate performance.
Step 3. Reward according to performance.
Sources of MBO Failures
Lack of top management commitment and follow-through on MBO.
Employees’ negative beliefs about management’s sincerity in its efforts to include them in the decision-making process.
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13. Corporate Grand and Growth Strategies
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Exhibit 5–9

14. Portfolio Analysis: BCG Matrix
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Exhibit 5–10

15. Competitive Strategies
Differentiation
Competing on the basis of features that distinguish one firm’s products or services from those of another.
Cost Leadership
The firm with the lowest total overall costs has a competitive advantage in price-sensitive markets.
Focus
Concentrating competitive efforts on a particular market segment, product line, or buyer group.
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16. Strategies for Starbucks over the Product Life Cycle
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Exhibit 5–13