KIN 464 1st Edition Lecture 6 Outline of Current Lecture I Strategic Management II Long Term Planning III Objectives of Strategic Planning IV The Strategic Planning Process Current Lecture V Strategic Management a Most important for senior managers b The process of managerial decision making and implementation of plans that directly affect the quality of performance and survival of an organization in the long term i What are issues in the environment that threaten what we do ii EX Blockbuster video did not adapt to current trends so Netflix took over c Strategic Management consists of i Long Term Planning ii Strategy Formulation iii Strategy Implementation iv Managerial Decision Making v Monitoring and Controlling Implemented Plans VI Long Term Planning a Also called long range planning or strategic planning b Focuses on achieving goals objectives for 3 20 years c Directly affects survival of an organization d Coming up with a plan or strategy long term i Forethought and vision e Strategic planning involves an organization s most basic and important choices choice of its i Mission ii Objectives iii Strategy iv Polices v Programs vi Goals These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute vii Major Resource Allocations f Three different definitions i Strategic planning comprises the process of setting common purposes goals and objectives for the enterprise breaking them up into specific plans and policies for the operating level and securing the necessary resources to put them into action ii Strategic planning is the management of change It is a decision making process based on empirical evidence and analytical studies that provides the basic direction and focus of the enterprise iii The process of determining an organization s long term goals and objectives in compliance with it s mission and formulating the proper plan of action strategy policies to insure sound decisions for using internal resources and environmental factors that affects all effort to achieve the desired end results in the long run VII Objectives of Strategic Planning a Increase the odds for a firm s long term survival b Increase the probability that the firm will more nearly reach its stated objectives c Increase the possibility of operating more efficiently and effectively d Provide a plan for harmonizing the activities of all elements within the organization toward fulfilling its stated mission e Provide a long run planning framework within which short run plans fit and can be used to move the plan toward realization f Coordinate short and long term plans to achieve final goal g Become the model for continued organizational growth and expansion VIII The Strategic Planning Process a Define the goals and mission of the organization i Goals provide sense of direction what do we want to achieve ii Goals should be based on mission and uniqueness edge of the organization iii Examining what you are in your mission b Identify the long term objectives i Purpose of strategic planning is to identify and formulate long term objectives ii Major influence is organization s mission iii More specific than goals and more easily quantified c Review the existing strategy to achieve these goals i Answer the questions 1 What are the current objectives 2 What plans have been implemented to achieve these objectives d e f g h i j k 3 Is the current strategy compatible with existing resources environmental factors and current objectives 4 Do the end results meet the original objectives Evaluate current environmental factors i Evaluate external factors that can affect management s plans Environmental Analysis ii Managers must be aware of changes in political social technological and economic areas to form sound strategy iii Smell the Cheese Who Moved my Cheese 1 You must be willing to adapt to change quickly iv What are the Opportunities v What are the Threats Inventory the organization s resources i People 1 skills abilities ii Space land locked or room for growth 1 Facilities plant equipment iii Finance iv Technology technical knowhow v You need to asses resources in order to adapt to change Identify strategic strengths and weaknesses of the organization through SWOT analysis i Evaluate 1 internal Strengths Weaknesses 2 external Opportunities Threats ii SWOT Analysis iii What are our strengths competitive advantages 1 From Good to Great Hedgehog Concept a Three interlocking circles b What could we be the best in the world at c What economic denominators best drive our economic engine Where to we get revenues come from d What are we deeply passionate about iv What are our weaknesses competitive disadvantages v Strengths should be used to develop future strategy Internal strengths Internal weaknesses External opportunities External threats Compare current strategy with current information i Indicates whether strategy is adequate or needs modification gap analysis ii Answers questions 1 Are the objectives still the same 2 Is there new information available 3 Are we well informed about the competitors strategies 4 Is current performance leading to desired results l Formulate new strategy if needed i If a new strategy is needed review alternatives and set new strategy 1 Maximize organization s strengths 2 Minimize organization s weaknesses 3 New strategy should include 4 Internal consistency a Compatible with polices and goals 5 Consistency with environment a Social culture legal political 6 Appropriateness in light of available resources a Do we have the right and enough resources 7 Satisfactory degree of risk a Is the strategy too risky 8 Appropriate time horizon 9 Workability ii m Develop policies procedures and programs to accompany new strategy i A Program is a statement of activities that need to be implemented to accomplish a plan the action oriented part of strategy ii Procedures are a series of steps or tasks in a logical order which detail how specific results are to be obtained parts of a program iii Policies are general guidelines to influence the behavior of all personnel leaving room for flexibility and interpretation by management n Implement and control the strategy i Control function of measuring actual performance against the expected results or the desired standard ii evaluation iii Is the new strategic plan working