CSC350: Learning Management Systems

COMSATS Institute of Information Technology (Virtual Campus)

Lecture # 7

Strategic Planning: Strategies, Tactics, & Competitive Dynamics

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Review of the Previous Lecture

1. Understanding the term

decision

2. Understanding rational decision-making process 3. Role of intuition in decision making 4. Various tools used to make decisions 5. Understanding how groups make decisions 3

Topics of Discussion

1. Definitions of strategic planning 2. Main aspects of the strategic management process 3. Key components of environmental analysis 4. Role of organizational direction in strategic management 5. Primary aspects of strategy formulation 6. Importance of strategic control 7. Coordination of tactical planning & strategic planning 8. Competitive dynamics & organization’s financial performance

STRATEGIC PLANNING & STRATEGY • • Long-range planning focused on the organization as a whole Management’s focus is on the organization's strategic goal and determining what must be done to attain organizational goals over the long term – Defined in terms of 3-5 years

Strategy

• • • • • Broad, general plan for long-term objectives Focused on many different organizational areas Offers broad direction to the organization End result of strategic planning Consistent with organization’s purpose and firm’s organizational objectives

Sample Strategies

STRATEGIC MANAGEMENT PROCESS • Process of ensuring the organization possesses and benefits from the use of an appropriate organizational strategy • Appropriate strategy is the one best suited to the needs of the organization at a particular time

Strategic Management Process

ENVIRONMENTAL ANALYSIS

• Study of organization’s environment in an effort to pinpoint environmental factors having a significant influence on how the organization operates • Helps to better understand what is happening both internally and externally as firm works toward identifying appropriate strategy

Managerial Environment

General Environment

• • • • • • Economic Component Social Component Political Component Legal Component Technology Component International Component

Industry Environment Porter’s Five Forces Model

Porter’s Five Forces Model

• • • • •

Threat of New Entrants

– Ability of new firms to enter an industry

Buyer Power

– Power customers have over firms in the industry

Supplier Power

– Power suppliers have over firms in the industry

Threat of Substitute Products

– Extent customers can use products/services from another industry

Intensity of Rivalry

– Intensity of competition among organizations in the industry

Internal Environment

• • • • Exists inside the organization Has an immediate and specific implication for managing the organization Includes marketing, finance, accounting Includes planning, organizing, influencing, and controlling the organization

ESTABLISHING ORGANIZATIONAL DIRECTION •

Determining Organizational Mission

– Purpose and reason the organization exists – Reflects type of products and services of the organization – Broad statement of organizational direction

ESTABLISHING ORGANIZATIONAL DIRECTION •

Developing a Mission Statement

– Written document describing and explaining the organization’s mission – Written by management with input from managers and employees – Needs to be communicated to and understood by all so internal organization knows exactly what the organization is trying to accomplish

ESTABLISHING ORGANIZATIONAL DIRECTION •

Importance of Organizational Mission

– Increases probability organization will succeed – Directs efforts of individuals – Explicit targets and goals – Keeps management focused – Offers sound rationale for allocating resources – Defines work areas and jobs

ESTABLISHING ORGANIZATIONAL DIRECTION •

Relationship Between Mission & Objectives

– Objectives and goals should flow naturally from mission – Mission should flow naturally from information obtained in environmental analysis

STRATEGY FORMULATION: TOOLS •

Strategy Formulation

– Determining appropriate courses of action for achieving objectives –

Strategic Tools:

• Critical Question Analysis • • SWOT Analysis Business Portfolio Analysis

Critical Question Analysis

• What are the purposes and objectives of the organization?

• • Where is the organization presently going?

In what kind of environment does the organization now exist?

• What can be done to better achieve organizational objectives in the future?

SWOT Analysis

Matches internal organizational strengths & • • weaknesses with external opportunities & threats

Internal Environment

– Strengths – Weaknesses

External Environment

– Opportunities – Threats

Business Portfolio Analysis

• Graphic framework for analyzing relationship among businesses of an organization and provides useful strategy recommendations •

BCG Growth-Share Matrix

•

GE Multifactor Portfolio Matrix

BCG Growth-Share Matrix

GE Multifactor Portfolio Matrix

Strategy Formulation Types

• • •

Differentiation

– Making organization more competitive by developing products different from competitors

Cost Leadership

– Making organization more competitive by producing products more cheaply than competitors

Focus

– Making organization more competitive by targeting a particular customer

Sample Organization Strategies

• • • •

Growth

– Aim is to increase amount of business

Stability

– Maintain or slightly improve amount of business

Retrenchment

– Strengthen or protect amount of business

Divestiture

– Eliminate unit not generating satisfactory amount of business

STRATEGY IMPLEMENTATION

• Successful implementation requires four basic skills: –

Interacting Skill

–

Allocating Skill

–

Monitoring Skill

–

Organizing Skill

STRATEGIC CONTROLS

• • Monitoring and evaluating strategic management process as a whole • Checking to see if all steps are appropriate, compatible, and functioning properly Focuses on environmental analysis, organizational direction, strategy formulation, strategy implementation, and strategic control

TACTICAL PLANNING

• • • Short-range planning emphasizing current operations of various parts of an organization Indicates what various parts of the organization must do for the organization to be successful one year or less into the future Usually developed for production, marketing, personnel, finance, and facilities

Strategic vs. Tactical Planning

COMPETITIVE DYNAMICS

•

Attacker

– First firm to make strategic or tactical action •

Defender

– Second firm which must choose whether or not to respond to the attacker

Competitive Dynamics

• •

Competitor Awareness

– How mindful a company is to competitor’s actions •

Competitor Motivation

– Incentives organization has to take action

Competitor Capability

– Firm’s ability to take an action

Competitive Dynamics

Thank You

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