4.10-4.11.5 Strategic planning Flashcards
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Define strategic planning
the formal process of stepping back from the day-to-day business operations and aligning the business’ direction with its overall priorities.
what is the purpose of Strategic planning ?
to set business’s goals and objectives to achieve the business’ priorities.
all in all SP will allign business resources and goalsd to achieve the overarching mission
what is the intent of strategic planning?
to develop a plan that aims to help accomplish the goals and objectives to achieve business success.
why use strategic planning?
1.Highlight business directions/priorities.
2.Analyse the environment to identify opportunities and threats (manage risks)
3.Realign employees to the overall company mission and vision.
4.Create competitive advantage.
5.Focus resources towards business objectives.
ultimately ,investment in strategic planning boils down to:
1.Mitigating Risk:Risks are reduced when businesses make informed decisions about important business operation matters and overall direction.
2.Increasing the likelihood of successs:Business who set clear strategic plans and align their resources to achieve their objectives are more likely to achieve success in both domestic and foreign market
Key features of strategic Plans
1.mission and objectives
2.environmental scan, including:
* PEST
* Porter’s Five Forces
* Strengths, Weaknesses,
* Opportunities, Threats (SWOT) strategies
3.strategic formulation
4.**strategic implementation **
5.**evaluation and control **
what is an environmental scan?
A tool used to research and analyse a business’s environment to identify and anticipate factors that will affect business growth and success
how does environmental scanning help business ?
helps them to take a proactive approach as they adapt to meet market changes and new customer expectations
Three models of environmental scan
1.PEST
2.PORTER’S FORCES
3.SWOT Strategies
what does PEST analysis stand for
Political ,economic ,social and Technological factors impacting a business.
It helps a business assess the feasibility or viability of the new existing project.It analyses the macro business environment of a particular organisation,with references to PEST factors
why would a business regularly conduct a PEST analysis
So that changes in the environment can be identified and used to define planning and decision making
key Benefits of PEST
✅ Identifies and helps insulate against constraints, threats, and limitations on growth.
✅ It helps assess the feasibility or viability of new or existing projects.
✅ It helps to identify any areas where firms can capitalise upon opportunities or gain a competitive advantage
✅ Promotes proactive and forward-thinking, where businesses can foresee the opportunities and threats of pursuing a new initiative
Porter’s Five Forces
It was developed by Michael Prter and considers Factors that affect particular market in which the business operates and how profitable the business can become in this context
why use PORTER’S FIVE FORCES
To examine the nature and level of competition between companies in an industry .It analyses the MICROENVIRONMENT
PORTER’S FORCES LIST
1.Threat of new entrants in the market
2.Threat of substitutes
3.Bargaining powe of buyers
4.Barganing power of supplier
5.Competitve rivalry within the industry
The Top Business Brilliance Center(TTBBC)
Benefits of Porters Five Forces
✅ Assists management with evaluating the viability of entering a new market or expanding into an existing one
✅ Determines the competitive intensity and, therefore, the attractiveness of an industry. The strength of forces determines how easy it is to compete in a market:
Weak forces mean there is an opportunity to raise prices and enhance profits = More attractive expansion option.
Strong forces mean limited opportunity to raise prices and attain high profit = Less attractive expansion option.
✅ To see whether a firm yields a competitive advantage by pursuing a new initiative
✅ Assess the viability of a new project - determine whether it is worth pursuing
✅ The business may be able to influence competition over time
✅ It gives strategists an idea of the ease with which a market can be entered and the security of the firm’s market share.
SWOT STRATEGIES
A SWOT Analysis is a tool that examines a particular organisation’s internal and external business environment under categories of Strengths ,Weaknesses ,Opportuinities and Threats .(Providing a Snapshot of a business environment
Key Features of SWOT analysis
Strength: Internal characteristics and capabilities that are helpful to business success
Weakness: Internal characteristics and weaknesses that are harmful to business success
Opportunity: External conditions, events and changes that could create opportunities and are therefore helpful for business success.
Threat: External conditions, events and changes that could harm a business and its operations.
A SWOT analysis allows business to identify
Opportunities they should exploit
Strengths they should maximise
Weaknesses they should minimise
Threats they should eliminate
overall message for environmental scanning
Environmental scans involve the business considering how it is affected by its external environment .Businesses can use **SWOT ANALYSIS ,PORTER’S FIVE FORCES and PEST **analysis to conduct a comprehensive scan of the environment and identify risks and opportunities available to the business in their current market at the current time.If business fail to consider **E Scan factors there can be at greater risk of failure and loss of opportunities of success. **
Strategic formulation
The process of (planning)/choosing the most appropriate courses of action to achieve the business goals
strategic formulation must align with ?
An organisation’s mission and objectives.Given the information from the environmental scan ,The business shoul match its strenghts to market opportunities whilst addressing its weaknesses and external threats .
what does Strategic fomulation involves ?
A framework for the actions that will lead to desired results .
focusing time and resources on improving business perfomance and profits which help business gain competitive advantage
Steps in formulating a strategy
1.**Analyse the business and business environment: **
2.Use PEST, SWOT and / or Porter’s 5 Forces, identify trends and anticipate changes.
3.Set a clear strategic direction:
Identify a mission, goals and measurable targets; employees will have a common understanding of what is expected and what they are working towards.
4.Develop projects or initiatives:
Outline projects or initiatives at the strategic (long-term) and tactical (medium-term) levels. Successful projects in the short and medium term will contribute to the achievement of long-term goals.
Establish action plans:
These plans are aimed at the team and individual levels (short-term). Successful action plans mean projects are completed, leading to the achievement of strategic goals.
overall strategic formulations relates…..
to the plan of action that a business intends to take to achieve its overall objectives .This plan takes take into consideration the organisation’s mission and objectives as key insights from the Env scan.The goal of strategic formulation is to effectively allocate resources towards achieving short and medium term goals
Strategic implementation
**Enacting the strategic plans to being to achieve organisational goals **
what does Strategic implementation refere to?
The decisons made and the actions taken to excute a **new strategy or reinforce an existing one **
The operational planning and action in strategic implementation(there are 5)
- Allocate responsibilities
- Produce detailed action plans
- Determine Timelines
- Allocate resources
- Monitor accountability
The contrast between Strategic formulation and implemantation
The implementation stage is about how a business will achieve the strategy -** figuring out the means to get the organisation to its desired state** of business performance. This is because **decisions made in the prior strategic formulation stage are broad and need to be translated into practical steps and actionable outcomes. **
Overall message on strategic implentation
It sees the company acting its strategic plans to achieve it organisational objectives.** This process involves an acting the key decisions that were made during strategic formulation**.
It refers to the action that businesses takes to fulfil its strategic plan
Evaluation and control
This refers to the process of asseing a business’s perfomance in terms of the implemantation of the strategic plan .(the results of it operation or actions)
Evaluation and control involves ….
The regulation of activities so that perfomance conforms to organisationla goals and standards.It builds on the planning function by allowing perfomance monitoring and adjustment so plans can be reached .
control
measuring activities, timelines and resource consumption; analysing deviations and correcting processes/outcomes.
Measuring and analysing
evaluation
assessing the performance and feeding information into decision-making for the next strategic planning cycle. It involves scrutinising whether the policies and targets are delivering desired outcomes.
Using insights to make judgements about progress / make improvements in implementation
control steps
1.Determine areas to control
2.Establish standards /parameters
3.Measure performance by target values for those standards.
4.Compare performance against standards — This holds employees and management accountable for their performance and proves that the business is working towards objectives.
5.Take corrective action (if performance does not meet standards)
6.Recognise and reward
ways to evaluate progress
KPIs: Quantifiable measurements that reflect the critical success factors of an organisation. E.g. reducing the rate of staff turnover (goal), measured by the HR Department by listing the reason and date of separation for each employee. Reduce the rate of staff turnover by 5% (target).
Benchmarking: The process of making meaningful comparisons between the performance of a company and the performance of identified best practices amongst the industry or within the organisation itself
External performance consultant: Using consultants such as McKinsey to offer external input as to whether the plan is being upheld. They will provide recommendations to drive operational improvement.
overall message of evaluation and control
It is critical in assessing the businesses success in implementing its strategic plan and progress towards organisational objectives. In this stage the business both collects and analyses data to determine overall progress, as well as taking corrective action where required. The implementation of a strategic plan is greatly enhanced by this ongoing process by which businesses control and evaluate their performance.
