What exactly is strategic planning

1
Introduction

• What exactly is strategic planning?

2
Historical Progression of Business Planning

• 1900s, budgeting and controls focus was on
  deviation from the budget. It assumed that the
  past would repeat itself.
• 1950s, long-range planning it also assumed that
  the past would repea itself but the future could
  be forecasted based on an analysis of trends
• 1960s, strategic planning, assumed that simple
  trend analyses based on past occurances were
  inadequate. It considered forecasts of future
  changes in the marketing environment (customers
  and competitors). Its foundation is continuous
  scanning of the environment and internal
  abilities to develop quick responses to sudden
  changes.

3
What exactly is strategic planning?

• Strategic planning involves decisions that are
  made by the management of an organization as it
  pursue its mission and objectives. These
  decisions include the types of products to offer
  and in what markets to sell them, the allocation
  of resources to that end, the establishment of
  policies and procedures, and the appropriate
  distribution of employee responsibilities. This
  decision-making process is influenced by events
  occurring in the internal and external
  environments of the firm.

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• A strategic marketing plan is the joint
  preparation of a strategic (long-term) plan with
  supportive functional plans, to assure a
  compatible and continuous fit bewteen the
  organizations goals and capabilities and its
  competitive environment.
• It is a long-term plan to enchance the firms
  competitive position or a plan that encloses the
  firms primary strategies, especially those
  related to its product or services and market.

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• Important parts of the definition
• joint preparation of a strategic marketing plan
  with supportive functional plans the annual
  functional plans must flow directly from
  strategic plans. Strategic decisions provide
  general guidelines for the planning needs of the
  functional departments (marketing, management -
  operations, finance)
• assurance of a compatible and continuous fit
  long-term profit is determined by a series of
  short-term profits

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• compatible and continuous fit between the
  organizations goals and capabilities and its
  competitive environment strengths and weaknesses
  of the business, and the opportunities and
  threats in the environment should be analyzed.
  Strategic controls must go on about (1) changes
  in the capabilities of the business, (2) critical
  events taking place in the environment
  primarily the customers and competitors. Controls
  consist of determining whether the firm is
  achieving its objectives if not, why?

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Strategic Management

• The goal in strategic management is to match the
  resources of the firm to the threats and
  opportunities that exist in the environment in
  order to achieve long-term survival of the firm.

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Strategic Marketing Concept

• Marketing concept determining the needs of
  customers and then satisfying those needs better
  than competitors
• Strategic marketing concept focusing all
  planning and implementational activities on the
  primary goal of long-term customer satisfaction
  at a profit. Satisfaction of the customer over
  the long term requires continuous monitoring of
  the environment, incorporating findings into
  long- and short-term plans, achieving a
  sustainable competitive advantage, and enlisting
  the cooperation of employees to support the
  firms mission.

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• Central questions to be answered
• What is the firms current strategy and position
  in the market? How does the firms current
  abilities match up to future strategic
  requirements? Are there minor or major problems?
• What is happening in the environment now and how
  might that be expected to change in the future
  (primarily customers and competitors)?
• What should the firms short- and long-term
  strategy be in light of the analysis? Are radical
  or moderate changes in existing strategies
  required to meet current and future customer
  needs?

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Strategic Marketing Model

• Mission statement basically the firms overall
  purpose
• Internal analysis in-depth analysis of the
  performance of each key functional area of the
  company to expose the companys strengths and
  weaknesses
• Environmental analysis covers the analysis of
  (1) the remote environment PEST and (2) the
  operating environment PECCS. Together they are
  referred to as the situational analysis
• PEST political regulations, the economy,
  societal trends, and technology
• PECCS personnel, ecology, customers,
  competitors and suppliers

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• Strategic Marketing concerns the long-term or
  broad focus of the firm related to grand
  strategies, the chosen product and market
  segments (portfolio analysis, expansion
  strategies etc.)
• Long-term Objectives objectives for multiyear
  period three to five years.
• Annual Objectives objectives of the firm for the
  first year. They flow from the long-term
  objectives but they are more specific (daily,
  weekly, monthly, quarterly)

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• Functional Strategies express how the marketing
  mix variables will be used to achieve the firms
  grand strategies. Other strategies for the
  operations, human resources and finance
  departments should also be addressed. (what?)
• Action Plans and Policies they are temporary
  actions (referred to as tactics) necessary to
  carry out strategies. (how, when, by who, how
  much?)
• Controls consist of ongoing monitoring and
  measuring of the actual performance of the firm
  compared with its proposed objectives. General
  abilities of the firm and the environment must
  also be monitored.

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Key Terms

• Strategy refers to the plan for achieving a goal
  or objective. It reflects a pattern in a sream
  of conscious managerial decisions, aimed at
  ensuring organizational adaptation.
• Tactic a term closely related to strategy a
  specific action or means for accomplishing a
  strategy. The most common usage is for short-term
  actions of a firm. (Depending on the context,
  actions on the five-year plans may be referred as
  strategy, actions on yearly plans may be referred
  as tactics.)

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• Strategic in business, the term strategic
  generally refers something important and is
  utilized in many different contexts such as
  strategic marketing plan, strategic assets and
  resources, strategic issues or concerns,
  strategic thinking (seeing the big picture).

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Levels of Strategy Decisions

• There are three levels of organizational
  strategies (decisions) (1) corporate, (2)
  business, and (3) functional levels. Decisions
  made at each level vary in importance,
  specificity and degree of centralization.
• Corporate-level strategies are made by the top
  management of a company (by CEO, CFO). Such
  decisions are normally associated with
  multi-business corporations.

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• These decisions generally concern the
  corporations public and internal image, the
  degree of social responsibility desired, major
  resource allocations (invest, hold or milk,
  harvest, divest), with what businesses the
  corporation should be involved, financing of
  possible expansion internally through existing
  businesses or through dept or equity funding.
• Business-level strategies are concerned with how
  the business will compete in its particular
  industry. They focus on the firms product mix,
  customer and geographic markets served,
  exploitation of the firms specific competencies,
  and achievement of one or more sustainable
  competitive advantages. Business and
  corporate-level strategies are the long-term
  portion of the strategic marketing plan.

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• Functional-level strategies made by the managers
  and the employees of various functional
  departments. They are primarily concerned with
  the preparation and implementation of policies
  and action plans that support the objectives and
  strategies set by the corporate- and
  business-level managers. (bottom-up)

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• Strategy level Focus Those Time
  Frame Specificity
• responsible
• Level 1 What set of busi- Top 5-10
  years Broad
• Corporate nesses should management
• Strategy we be in?
• Level 2 How do we com- President of
  1-5 years Somewhat
• Business pete within this
  SBUs specific
• Strategy particular
• industry?
• Level 3 Details the cour- VP of
  Marketing Less than 1 year Detailed plan
• Functional ses of action in VP of Operations
  
• Strategy the functional
• areas of mana-
• gement

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Strategic Aggression

• There are five basic divisions of organizational
  characteristic or strategic aggression
• Proactive being a leader rather than the
  follower, constantly assess the environment -
  opportunities and threats
• Reactive having risk to be known as a copy-cat
  rather than innovative, mostly followed
• Passive focusing simply on what have been done,
  focused on standardization and cost minimization,
  does not monitor the environment

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• Adaptive being flexible to adopt to the
  relatively stable environment, the company wants
  to continue with its current highly or reasonable
  successful strategies, but remain open to changes
  if the right opportunity presents itself.
• Discordant poorly positioned firms, unsure about
  how to deal with its current position and the
  best opportunities. This strategy is not
  selected but acquired through poor performance.

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Time Horizon

• The strategic marketing plan has two time
  horizons one is the long-term or strategic
  portion, normally about three to five years for
  the hospitality industry the other is the
  short-term (one year or less) or functional
  portion. Although the strategic portion is for
  longer than one year, it is generally updated
  each year. The reason for the annual update is
  that internal and environmental factors change.