Strategic planning is long-term, future-oriented process of assessment, goal-setting, and decision-making that maps an explicit path between the present and a vision of the future. It relies on careful consideration of an organization’s capabilities and environmental, and leads to priority-based resource allocations and other decisions.
The following are the strategic planning processes
Mission and Objectives
Environmental scanning
Strategy Formulation
Strategy Implementation
Evaluation and control
Mission is a company vision and an image to customers. It guides the company in pursuit of future opportunities. It is the reason for its being. The mission statement sets the mood that where the company should go. Objectives can be financial like sales target and earning growth. It may include company’s market share and reputation. These are measurable and can be monitored in terms of progress.
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Environmental scanning includes internal analysis of the firm which identifies firm’s strengths and weaknesses and external analysis reveals opportunities and threats. The profile of these analyses is generated by SWOT analysis. ES also includes an industry analysis which can be performed by using framework developed by Michael Porter knows as Porter Five Forces. This evaluates entry barriers, suppliers, customers, substitute products, and industry rivalry. It includes macro environment of the firm which can be known by the analysis called PEST analysis where it includes Political, economic, social and technological factors.
Strategic Formulation is to develop a competitive advantage over its rivals to attain superior profitability. Now it can be based on cost or differentiation. Michael Porter has identified cost leadership, differentiation, and focus as three generic strategies. Porter further advised that only one of the alternative strategies should by pursued.
For effective Strategic Implementation, it is necessary to translate strategies into detailed policies for the understanding of functional level workers of the organizations. Because those who implement the strategy likely will be different people from those who formulated it. In short, strategy should be clearly communicated with reasoning behind it.
For Evaluation and Control, the implementation of strategy must be monitored and adjustments made as needed. It consist of following steps
Define parameters to be measured
Define target values for those parameters
Perform measurements
Compare measured results to the pre-defined standard
Make necessary changes
Examples of strategies which are recently implemented by the organization which I know
I have studied Pizza Hut, a brand of yum. It has its branches almost all over the world. It has recently implemented new strategies which are as follows
It has launched the new ‘extreme pizza’ the new Yorker as a new product
It has launched a new branch PHQ i.e. pizza hut quick for the quick delivery of its products as compare to any other food outlet
£4 fixed price menu strategy to target new customers
It has created a new software to advertize at ATM machines which is a very unique advertising strategy
It has developed a localization strategy such as in India it advertize products through a popular Indian celebrities namely Masala Pizza, Tandoori Pizza which appeals the Indian market
Now it comes to the IPhone with a new Pizza Hut application. Now customers can order pizza through that software.
TASK-2
HOW DOES ONE INVOLVE STAKEHOLDERS IN THE STRATEGIC PLANNGING PROCESS AND GIVE EXAMPLES OF WHAT TOOLS YOU MIGHT USE TO REVIEW STRATEGIC OPTIONS?
Stakeholders are defined as ‘any group or individual who can affect or is affected by the achievement of organizations objectives’
To involve stakeholders in the strategic planning process following points have been written down by the writers
Identify stakeholders
Organize stakeholders groups
Create opportunities for involvement
Provide the most appropriate forum for input
Resolve conflict
According to Carol, customers, suppliers, and employees and their family, owners, bankers, trade union, employer associations, sponsors, local and national communities, pressure groups and tax collection authorities are the Stakeholders.
Following Stakeholders Groups can be organized for better strategic options
Advisory Committee
It is a representative group of stakeholders that meets regularly over a long period to discuss issues of common concern. It also provides a forum for hearing peoples ideas, helps to mold participants into working groups. Members may be appointed by staff or elected officials or may be selected by existed members of the committee, and membership often changes over time. Generally the committee elects its own leadership.
Task force
This is similar to advisory committees but with a specific charge and limited life span.
Policy board
Citizen Policy boards are standing committees of citizens appointed by government officials that are established by statute, regulation or administrative decision. While advisory committees simply provide advice and recommendations, policy boards have more authority, although it will depend on the power granted to them by the governmental body.
Study Circle
It is a group of typically 8 to 12 people who meet regularly over a period of weeks or months to address a critical public issue in a democratic, collaborative way. Participants examine the issue from many points of view and identify areas of common ground. They emerge with recommendations for action that will benefit the community. People find study circles valuable because the discussions begin with people talking about their own experiences.
Focus Group
It is a tool borrowed from the marketing and advertising industry. It is a way to identify the concerns, needs, wants, and expectations of a sample group of citizens, and can inform planners of the attitudes and values that citizens hold. It can help drive development of policies, programs, and services and the allocation of resources.
To Create Opportunities for Involvement of Stakeholders Meetings are the primary venues for public participation. Meetings can be used at different stages of the planning process, from early issue identification to final evaluation of options and designs, and should be inserted prior to key decision points. A meeting’s objectives (e.g., exchanging information, identifying issues, visioning, problem solving, and evaluating options) will determine its design, participants, format, location, and timing of the meetings. The meeting’s effectiveness will be determined by the level of interaction and the number and representativeness of participants.
Several specific types of meetings can be scheduled, as described below:
Public hearing
Workshop
Retreats
To provide the most appropriate forum of input Brainstorming, visioning and design are the important factors.
To resolve conflicts involvement should be by negotiation, mediation and arbitration.
TASK-3
PREPARE AN EXAMPLE SWOT ANALYSIS OF AN ORGANIZATION YOU KNOW OR HAVE STUDIED LISTING THE 4 KEY (SWOT) ELEMENTS IN A TABLE. EXPLAIN HOW A STRATEGIC PLANNER WILL USE THE ANALYSIS IN DEVELOPING THE STRATEGY USING SOME OF THE EXAMPLE ELEMENTS YOU HAVE LISTED
STRENGHTS WEAKNESSES
Part of the largest restaurant chain in the world
Over 20,000 franchises around the world
Brand leader in the UK
Innovative range of pizzas under one roof
Famous television advertising
Food attracts people of various ranges from young to old.
Sound financial situation and international turnover.
100% owned by yum!
Online orders service.
Full service restaurants as well as delivery services
Promotional deals offers large pizza at low cost
Side orders like Garlic bread, Nachos, BBQ wings, so much more
Introduction of pasta, drink and other special orders
New Pizzas with different crust sizes and flavours.
Different topping to suit all mankind tastes
It can increase its revenue by new innovative pizzas
It can increase brand loyalty with good customer service
Pizza Hut expands Indian market menu and looks to old favorite to bolster sales
Pizza Hut targets upscale products and a downscale consumer base
WEAKNESSES
Loyal customers are feeling that the satisfaction of the pizzas is declining.
While Novak said Pizza Hut’s expansion into China is going exceedingly well,
there is battling problems in New Zealand and
Australia.
There are complex computer systems and internal conflicts from franchisees.
There is a lack of an organic pizzas, which will limit the target market
Always shortage of till/cashbox at the closing time of every franchise PH
Pizzas prices are high as compared to other fast food or competitors
Rising cheese costs threaten margins
Threat from Dominos pizza, also from Mc Donald’s who have tried to introduce a new meal that is a Pizza called: McPizza.
It has higher overhead cost then its competitors due to restaurants
Rising competition undermines Pizza Hut as consumers go for greater Convenience
OPPORTUNITIES THREATS
Due to decrease in sales restaurants of pizza Hut, it has introduced a new marketing strategy which is unique and never been adopted by any other food industry. The effects are good for the pizza hut with the implementation of new advertizing strategy like I Phone app software. It has also introduced new products which appeal to customers and targeting new market.
TASK-4
EXPLAIN THE DIFFERENCES BETWEEN BALANCED SCORECARD, SCENARIO PLANNING, COST BENEFIT ANALYSIS AND SENSITIVITY ANALYSIS GIVING AT LEAST ONE EXAMPLE OF WHERE EACH TECHNIQUE WOULD BE MOST APPROPRIATELY APPLIED.
The Cost Benefit concept suggest that money value can be put on all the cost and benefits of the strategy including tangible and intangible returns to the people and organizations other than the one sponsoring the strategy or project. In many situations profit or tangible benefits are too low to be calculated. It happens in those circumstances where intangible considerations are present. It is usually the case with public infrastructure project such as sitting of an airport or a sewer construction project. The benefits after calculating the operating cost of sewerage construction project are multiplier or linkage benefits, flood prevention, reduced traffic disruption, amenity benefits, investment benefits, encouragement of visitors etc.
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Scenario Analysis is a process of thinking and communicating about the future. Though we cannot the predict the future but we can think what might happen. So we can think about future by knowing current trends and signals to future development. Scenario analysis is not forecasting technique. It is good to know the threats and opportunities available to the organizations. It can help the way out of any sudden change. It can help to meet out customer requirement change, emerging technology. It can help to evaluate alternative strategic options. For e.g. in 1984, Shell had a scenario in which oil was at $15 a barrel which most viewed as inconceivable at a time when an oil was at $28 a barrel. When the price of oil fell precipitously to $10 in 1986, Shell was able to adjust more easily than most oil majors because its managers had already considered their responses to dramatically lower prices.
Balance Scorecard is a performance measurement system that considers not only financial measures but also customer’s business processes and learning measures. The balance scorecard translate the organizations strategy into four prospective with the balance between the following
Between external and internal measures
Between objectives measures and subjective measures
Between performance results and drivers of future results
An example of balance scorecard for a small startup company supplying standard tools and light equipment to the Engineering industry. The owner-managers financial perspective was simply one of survival during this startup period, requiring a positive cash flow (after the initial investment in plant, stock and premises). The strategy was to compete on customer service for both initial delivery and maintenance back up. This required core competences in order processing and maintenance scheduling underpinned by the company’s IT system. These core competencies were open to imitations, so in turn, the ability to improve this service standard was critical to success.
Sensitivity analysis is sometimes referred to as what if? Analysis. It allows each of the important assumptions underline a particular strategy to be questioned and challenged. In particular, its seeks to test how sensitive the predictive performance or outcome (e.g. profit) is to each of these assumptions. It is a useful technique for assessing the extent to which the success of a preferred strategy is dependant on the key assumption which underline that strategy. For e.g. the key assumptions underlining a strategy might be that market demand will grow up by 5% per annum, or the company will strike free, or that the certain expensive machine will operate at 90% loading. Sensitivity analysis asks what would be the effect on performance (in this case profitability) if, for e.g. market demand grew at only 1%, or by as much as 10%? Would either of these extremes alter the decisions to pursue that particular strategy? A similar process might be repeated for other key assumptions. This can help to develop a clearer picture of the risk of making particular strategic decisions.
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