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Startegic Planning A.Egros

Corporate and Personal Strategic Planning is a Process for Reaching Professional or Personal Goals. It can be used in coaching sessions for individuals, small businesses corporate teams or corportae planning to strategize action plans

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Startegic Planning A.Egros

  1. 1. Strategic Planning Insight into the Creation of Winning Business Ideas
  2. 2. Why Planning? <ul><li>“ If you fail to plan, you plan to fail and If you don’t know where your are going, any road will get you there” </li></ul><ul><li>Success is transient unless you take care to preserve competitive position </li></ul>
  3. 3. The Five Tasks of Strategic Planning <ul><li>Purpose: Developing a Vision, a Mission and a Strategy </li></ul><ul><li>Strategic Analysis: Internal and External Environment </li></ul><ul><li>Elaborating a Strategy, Setting Objectives, Deciding Course of Actions. </li></ul><ul><li>Implementing and Executing Strategy </li></ul><ul><li>Evaluating Performance, Reviewing the Situation and Initiating Corrective Action </li></ul>
  4. 4. Strategic Planning Process Setting Direction Vision/Mission Values Goals Creating Strategy determining the way forward Implementing Change making it happen Assessing Performance today and tomorrow Ongoing Process
  5. 5. Characteristics of Powerful Visions <ul><li>Legitimate and Shared </li></ul><ul><ul><li>must be accepted by individuals in the group </li></ul></ul><ul><ul><li>must be a true expression of values </li></ul></ul><ul><ul><li>aligns group members’ efforts </li></ul></ul><ul><ul><li>poses a challenge for the group </li></ul></ul><ul><li>Expresses highest aspirations </li></ul><ul><ul><li>describes how group will “make a difference” </li></ul></ul><ul><li>Stretch limits of current realities </li></ul><ul><ul><li>pushes against possibilities </li></ul></ul><ul><li>Achievable </li></ul><ul><ul><li>describes something that can happen </li></ul></ul>
  6. 6. Barriers to creating visions <ul><li>Lack of concern about the future of the program </li></ul><ul><li>Assumption that the past predicts the future for a program </li></ul><ul><li>Failure to think “out of the box” </li></ul>
  7. 7. What is a Mission ? <ul><li>Mission </li></ul><ul><li>A mission statement outlines what the company is now. It focuses on today; it identifies the customer(s); it identifies the critical process(es); and it states the level of performance. </li></ul>
  8. 8. What is a “Strategy ?” <ul><li>  Michael E. Porter- “What Is Strategy?” (Nov-Dec 1996). Harvard Business Review , pp. 61-78. </li></ul><ul><li>Michael Porter argues that operational effectiveness, although necessary to superior performance, is not sufficient, because its techniques are easy to imitate. </li></ul><ul><li>In contrast, the essence of strategy is choosing a unique and valuable position rooted in systems of activities that are much more difficult to match. </li></ul>.
  9. 9. Customers Competitive Strategy unarticulated articulated Needs <ul><li>Undiscovered New Way </li></ul><ul><li>Competition </li></ul><ul><li>Existing Imminent </li></ul><ul><li>Competition Competition </li></ul>served unserved New way to better meet existing customer needs Serving new customers who have clear needs Future: serving new customers who have new needs in a new way Meeting customer needs that they don’t know they have
  10. 10. Competitive Value Proposition Superior Value Inferior Value Equal Value Price features “ give more of what customers value and less of what they don’t”
  11. 11. The 3 Big Strategic Questions <ul><li>Where Are We Now? </li></ul><ul><li>Where Do we Want to Go? </li></ul><ul><li>How Will We Get There? </li></ul>
  12. 12. STRATEGIC ANALYSIS <ul><li>Internal Environment : </li></ul><ul><li>Corporate Appraisal </li></ul><ul><ul><li>Strengths </li></ul></ul><ul><ul><li>Weaknesses </li></ul></ul><ul><li>External Environment : </li></ul><ul><li>Market </li></ul><ul><li>Environment </li></ul><ul><li>Competition </li></ul><ul><ul><li>Opportunities </li></ul></ul><ul><ul><li>Threats </li></ul></ul>
  13. 13. Revenues Existing Customers Existing value proposition Satisfy customer needs New Services New customers Costs Production Knowledge acquisition (IMS, Professional associations etc) Global Key Account Management Marketing-Promotion Analysis Current Performance Key Performance Indicators: Net sales ? Growth rate ? Profitability (%) ? Benchmark? <ul><li>Set Stretch Goals </li></ul><ul><li>Plan Actions </li></ul><ul><li>Execute Plans </li></ul><ul><li>Evaluate/Learn </li></ul><ul><li>Feed-back/Reward </li></ul>Performance Analysis
  14. 14. Key External Environment Components <ul><li>Social, Cultural, Demographic, Consumerism Environmental </li></ul><ul><li>Economic, Globalization </li></ul><ul><li>Political, Legal, Governmental </li></ul><ul><li>Technology </li></ul><ul><li>Competitive environment </li></ul>
  15. 15. Market Analysis <ul><li>Provides information about the customer, assessing its needs and purchase decision process about products or services. </li></ul><ul><li>Who are the customers, Where, What, Why , WTP? Behavior?, Intentions? </li></ul><ul><li>Who are the non-customers, Why? </li></ul><ul><li>How is the market segmented ? </li></ul><ul><li>What are the driving forces ? </li></ul><ul><li>Sales and marketing forecast ? </li></ul>
  16. 16. Competitor Analysis Assumptions What assumptions do our competitors hold about the future of industry and themselves? Current Strategy Does our current strategy support changes in the competitive environment? Future Objectives How do our goals compare to our competitors’ goals? Capabilities How do our capabilities compare to our competitors? Response What will our competitors do in the future? Where do we have a competitive advantage? How will this change our relationship with our competition?
  17. 17. Opportunities <ul><li>An OPPORTUNITY is a chance for firm growth or progress due to a favorable juncture of circumstances in the business environment. </li></ul><ul><li>Possible Opportunities: </li></ul><ul><ul><li>Emerging customer needs </li></ul></ul><ul><ul><li>Quality Improvements </li></ul></ul><ul><ul><li>Expanding global markets </li></ul></ul><ul><ul><li>Vertical Integration </li></ul></ul>
  18. 18. Threats <ul><li>A THREAT is a factor in your company’s external environment that poses a danger to its well-being. </li></ul><ul><li>Possible Threats: </li></ul><ul><ul><li>New entry by competitors </li></ul></ul><ul><ul><li>Changing demographics/shifting demand </li></ul></ul><ul><ul><li>Emergence of cheaper technologies </li></ul></ul><ul><ul><li>Regulatory requirements </li></ul></ul>
  19. 19. 10 Questions for Building Sustainable Profitable Businesses <ul><li>1. How can we beat the competition? </li></ul><ul><li>2. Which customers should we target? </li></ul><ul><li>3. What products will our customers want to buy? </li></ul><ul><li>4. How should we distribute to and communicate with our customers? </li></ul><ul><li>5. Which things should our company do, and which should our partners and suppliers do? </li></ul><ul><li>6. How can we avoid commoditization? </li></ul><ul><li>7. Who should be on our management team? </li></ul><ul><li>8. What is the best organizational structure for this business? </li></ul><ul><li>9. How can we know when to change course? </li></ul><ul><li>10. Whose investment capital will help, and whose might hurt? </li></ul>Disruptive Innovation: Clayton M. Christensen-Harvard Business School, 2003
  20. 20. Crafting a Strategy <ul><li>HOW to outcompete rivals and win a competitive advantage . </li></ul><ul><li>HOW to respond to changing industry and competitive conditions </li></ul><ul><li>HOW to defend against threats to the company’s well-being </li></ul><ul><li>HOW to pursue attractive opportunities </li></ul>
  21. 21. Setting Goals and Objectives The difference between where we are (current status) and where we want to be (vision and goals) is what we do (Objectives, action) VISION GOALS Strategy Plans Objectives
  22. 22. The Difference between Goals and Objectives <ul><li>Goals are broad objectives are narrow. </li></ul><ul><li>Goals are general intentions; objectives are precise. </li></ul><ul><li>Goals are intangible; objectives are tangible. </li></ul><ul><li>Goals are abstract; objectives are concrete. </li></ul><ul><li>Goals can't be validated as is; objectives can be validated. </li></ul>
  23. 23. Setting Goals <ul><li>Increase revenues through new products and services </li></ul><ul><li>Increase revenues by selecting most desirable customers and adapting marketing strategies to key customers </li></ul><ul><li>Identify and eliminate projects, activities and processes that are not contributing to the strategy </li></ul><ul><li>Reduce costs by optimizing assets’ utilization in the region </li></ul><ul><li>Identify individual skills and information systems </li></ul><ul><li>Allocate resources and organize processes based on market needs and performance. </li></ul><ul><li>Set Individual targets and milestones in the alignment of business strategy </li></ul><ul><li>Review strategy and individual goals based on performance results, feedback from customers, strategic initiatives and increase of market knowledge within the organization </li></ul>
  24. 24. Two Types of Objectives <ul><li>FINANCIAL OBJECTIVES </li></ul><ul><li>NON FINANCIAL VALUE DRIVERS </li></ul><ul><ul><ul><li>Short-Run </li></ul></ul></ul><ul><ul><ul><li>Long-Run </li></ul></ul></ul>
  25. 25. Settings Objectives <ul><li>Objectives translate the mission into measurable performance targets </li></ul><ul><li>Individual objectives are related to the objectives of the whole organization </li></ul><ul><li>Balance short-term/long-term objectives on line with the vision </li></ul><ul><li>Objectives reflect key activities and actions and have an impact on performance </li></ul><ul><li>Objectives must be understood by employee </li></ul><ul><li>Objectives must be affected by action of employee and measurable </li></ul><ul><li>Used to evaluate and reward individual contribution </li></ul><ul><li>Used for personal improvement </li></ul>
  26. 26. How to Measure Profit ? ( * related MBA course: Financial Management ) <ul><li>Profit = Revenue – Cost </li></ul><ul><li>Return on Sales (ROS): Profits / Revenue </li></ul><ul><ul><li>quick, easy starting point – and often sufficient </li></ul></ul><ul><ul><li>doesn’t reflect use of capital </li></ul></ul><ul><li>Return on Equity (ROE): Profits / Equity </li></ul><ul><ul><li>return to owners’ investments </li></ul></ul><ul><ul><li>Shareholders' Equity :It is the amount of the company that is financed through common and preferred shares. </li></ul></ul><ul><li>Economic Value Added (EVA): </li></ul><ul><ul><li>Profit – (Capital employed x Cost of capital) </li></ul></ul>
  27. 27. Creating Value at the Focal Objective: Non Financial Value Drivers <ul><li>Customer Satisfaction </li></ul><ul><li>Innovation </li></ul><ul><li>Technology </li></ul><ul><li>Brand </li></ul><ul><li>Attract Talented Employees </li></ul><ul><li>Alliances </li></ul><ul><li>Quality of Products and Services </li></ul><ul><li>Impact on Environment </li></ul>
  28. 28. Business Strategy Development Understanding of Competitive Environment Appraisal of Resources Strategy = Choices Competitive Advantage Goals Sustained Superior Profitability Lower Cost per Unit of Quality Scarce Resources Organizational Capabilities Industry Structure Competitors Customers Where to Compete How to Compete How to Organize
  29. 29. Differentiation Strategy <ul><li>Brand </li></ul><ul><li>Services/Speed of Delivery </li></ul><ul><li>Reliability </li></ul><ul><li>Aesthetics </li></ul><ul><li>Technology </li></ul><ul><li>Customer service </li></ul><ul><li>Pricing/Low cost </li></ul><ul><li>Value chain configuration </li></ul>
  30. 30. Setting Measures and Targets <ul><li>“ If You Can't Measure it, You Can't Manage it” </li></ul><ul><li>Introducing the Balanced Scorecard </li></ul>The Balanced scorecard. R. Kaplan and D. Norton, Harvard Business School Press, 1996
  31. 31. Setting Measures and Targets The Balanced scorecard. R. Kaplan and D. Norton, Harvard Business School Press, 1996 <ul><li>4 Perspectives of the Balanced Scorecard: </li></ul><ul><li>Financial </li></ul><ul><li>Customer </li></ul><ul><li>Internal/Business Processes </li></ul><ul><li>Learning and growth </li></ul>
  32. 32. Questions to participants: <ul><ul><li>What is your Company’s Vision: What does it means to you ? </li></ul></ul><ul><ul><li>How effective is your Company’s Strategy? Indicate reasons ? </li></ul></ul><ul><ul><li>How is the vision/strategy communicated within your organization ? </li></ul></ul><ul><ul><li>What are the factors that are causing your company to change strategy ? </li></ul></ul><ul><ul><li>How profits are made in your industry? </li></ul></ul><ul><ul><li>How do your company construct superior value proposition? </li></ul></ul>
  33. 33. Thought Leaders Recommended Reading <ul><li>Steven R. Covey: The Seven Habits of Highly Effective People </li></ul><ul><li>J.Nicholas De Bonis: Value-Based Marketing for Bottom- Line success </li></ul><ul><li>Peter Drucker: Managing for Results </li></ul><ul><li>Robert Kaplan: Balanced Score Card </li></ul><ul><li>John P. Kotter: Leading Change </li></ul><ul><li>Philippe Haspelagh: Managing for Value </li></ul><ul><li>Michael E. Porter : Competitive Advantage </li></ul><ul><li>Jack Welch: King of Shareholder Value </li></ul>