Submitted by : Abdul rehman (MBA-5) (L-21196)

Submitted to : Ms. Zulaikha Mahmood

Assignment : 2

Department of Management Sciences

National University Of Modern Languages

 Strategic Planning Model
A Good Strategic Plan should
• Address critical performance issues

• Create the right balance between what the organization is capable of

doing vs. what the organization would like to do

• Cover a sufficient time period to close the performance gap

• Visionary – convey a desired future end state

• Flexible – allow and accommodate change

• Guide decision making at lower levels – operational,

tactical, individual

Strategic Planning Model ABCDE

Assessment

Internal Assessment: Organizational assets, resources, people, culture, systems, partnerships,

suppliers,
External Assessment: Marketplace, competitor’s, social trends, technology, regulator
environment, economic cycles.
SWOT analysis
 Baseline

Organizational Profile

1. Operating Environment
• Products and Services – Suppliers, Delivery Channels, Contracts, Arrangements,
• Organizational Culture – Barriers, Leadership, Communication, Cohesiveness.
• Workforce Productivity – Skill levels, diversity,contractor’s, aging workforce,
• Infrastructure – Systems, technology, facilities,
• Regulatory – Product / Service Regulation, ISO Quality Standards, Safety,
Environmental,
2. Business Relationships
• Organizational Structure – Business Units, Functions, Board, Management Layers,
• Customer Relationships – Requirements, Satisfaction, Loyalty, Expectations,
• Value Chain – Relationship between everyone in the value chain . . . .
• Partner Relationships – Alliances, long-term suppliers, customer partnerships,
3. Key Performance Categories
• Customer
• Products and Services
• Financial
• Human Capital
• Operational
• External (Regulatory Compliance, Social Responsibility,)
Gap Analysis
Gap = Basis for Long Term Strategic Plan
Components

Major Components of the Strategic Plan / Down to Action

1. Mission Statement
• Captures the essence of why the organization exists – Who we are, what we do
• Explains the basic needs that you fulfill
• Expresses the core values of the organization
• Should be brief and to the point
2. Vision
• How the organization wants to be perceived in the future – what success looks like
• An expression of the desired end state
 • Challenges everyone to reach for something significant – inspires a compelling future
Guiding Principles and Values
• Every organization should be guided by a set of values and beliefs
• Provides an underlying framework for making decisions – part of the organization’s
culture
• Values are often rooted in ethical themes, such as
3. Goals
• Describes a future end-state – desired outcome that is supportive of the mission and
vision.
• Shapes the way ahead in actionable terms.
• Best applied where there are clear choices about the future.
• Puts strategic focus into the organization – specific ownership of the goal should be
assigned to someone within the organization.
4. Objectives
• Relevant - directly supports the goal
• Compels the organization into action
• Specific enough so we can quantify and measure the results

Down to Specifics

What are Action Plans?

• The Action Plan identifies the specific steps that will be taken to achieve the initiatives
and strategic objectives – where the rubber meets the road
• Each Initiative has a supporting Action Plan(s) attached to it
• Like Initiatives, Action Plans require the monitoring of progress on Objectives, for
which measures are needed

Objectives Initiatives Action Plans

Good Measures
 Integrity – Complete; useful; inclusive of several types of measure.
 Designed to measure the most important activities of the organization Reliable.
 Consistent Accurate - Correct Timely – Available when needed.
 Designed to use and report data in a usable timeframe Confidential and Secure.
 Free from inappropriate release or attack
Targets
• For each measurement, you should have at least one target
• Targets should stretch the organization to higher levels of performance
• Incremental improvements over current performance can be used to establish your
targets
• Targets put focus on your strategy
• When you reach your targets, you have successfully executed your strategy
Sanity Check
Make sure everything is linked and connected for a tight end-to-end model for driving strategic
execution.

Evaluate

Continuous Feedback through the Balanced Scorecard

• Cascade and align from the top to create a Strategic Management System.
• Use the Balanced Scorecard framework to organize and report actionable components.
• Use the Scorecard for managing the execution of your strategy.

Performance Management
• Establish a regular review cycle using your balanced scorecard.
• Analyze and compare trends using graphs for rapid communication of performance.
• Don’t be afraid to change your metrics – life cycle (inputs to outputs to outcomes)

Link Budgets to Strategic Plan

The world’s best Strategic Plan will fail if it is not adequately resourced through the
budgeting process
• Strategic Plans cannot succeed without people, time, money, and other key resources

The I/O Model of Above - Average Returns

Explains the external environment’s dominant influence on a firm’s

strategic action . The model specifies that the industry in which a company
chooses to compete has a stronger influence on performance than the choices
managers make inside the organizations do.
FOUR BASIC ASSUMPTIONS:

1. The external environment is assumed to impose pressures and constraints

that determine the strategies that would result in above average returns.
2. F irms competing w ithin an indus try or a certain s egment of that
indus try are as s umed to control similar strategically relevant resources
and to pursue similar strategies in light of those resources.
3. Resources used to implement strategies are assumed to be highly mobile
across firms, so that any resource differences that might develop between
firms will be short-lived.
4. Organizational decision-makers are assumed to be rational and
committed to acting in the firm’s best interests, as shown by their profit-
maximizing behaviors.

The Five Forces Model of competition is an analytical tool used to help

firms find the industry that is the most attractive, as measured by its
profitability potential.

The Five Forces Model suggests that an industry’s profitability (i.e., its
rate of return on invested capital relative to its cost of capital) is a function
of interactions among the Five Forces: suppliers, buyers, rivalry, product
substitutes, and potential entrants to the industry.

FIRMS CAN EARN ABOVE-AVERAGE RETURNS:

● Cost Leadership Strategy – producing standardized goods or services at

costs below those of competitors

● Differentiation Strategy - producing differentiated goods or services for

which customers are willing to pay a price premium

The I/O model suggests that above-average returns are earned when firms
are able to effectively study the external environment as the foundation for
identifying an attractive industry and implementing the appropriate
strategy.
STEPS TAKEN IN THE I/O MODEL:

1. S tudy the external environment, s pecifically the indus try

environment . The external environment: general, industry, and
competitor environment.
2 . Locate an industry with high potential for above average returns. An
attractive industry: an industry whose structural characteristics suggest
above average r e t u r n s .
3 . Identify the s trategy called for by the attractive indus try to earn
above average returns . Strategy formulation: selection of a strategy
linked with above average returns in a particular i n d u s t r y .
4. Develop or acquire assets and skills needed to implement the strategy .
Assets and skills: assets and skills required to implement a chosen
strategy.
5. Use the firm’s strengths (developed/acquired assets/skills) to implement
the strategy. Strategy Implementation: selection of strategic actions
linked with effective implementation of the chosen strategy – leading
to superior returns.
The I/O Model of Above -
Average Returns.
In the mid-twentieth century the
ideal strategy for a company was
the industrial organization
model of above-average
returns. This model describes
the external environment as a
primary determinant for a strategy
of firms to use for successfulness.
The strategy was used
because the firms used to think that
the industry in which you compete
must be essential to
do a better work than change the
way of administration in the
company. Some examples of
external environment can be
economies of scale, barriers to
market entry, diversification,
product differentiation, the
degree of concentration of
firms in the industry, and
market
frictions.
The I/O Model of Above -
Average Returns.
In the mid-twentieth century the
ideal strategy for a company was
the industrial organization
model of above-average
returns. This model describes
the external environment as a
primary determinant for a strategy
of firms to use for successfulness.
The strategy was used
because the firms used to think that
the industry in which you compete
must be essential to
do a better work than change the
way of administration in the
company. Some examples of
external environment can be
economies of scale, barriers to
market entry, diversification,
product differentiation, the
degree of concentration of
firms in the industry, and
market
frictions.
In the mid-twentieth century the
ideal strategy for a company was
the industrial organization
model of above-average
returns. This model describes
the external environment as a
primary determinant for a strategy
of firms to use for successfulness.
The strategy was used
because the firms used to think that
the industry in which you compete
must be essential to
do a better work than change the
way of administration in the
company. Some examples of
external environment can be
economies of scale, barriers to
market entry, diversification,
product differentiation, the
degree of concentration of
firms in the industry, and
market
frictions.
In the mid-twentieth century the
ideal strategy for a company was
the industrial organization
model of above-average
returns. This model describes
the external environment as a
primary determinant for a strategy
of firms to use for successfulness.
The strategy was used
because the firms used to think that
the industry in which you compete
must be essential to
do a better work than change the
way of administration in the
company. Some examples of
external environment can be
economies of scale, barriers to
market entry, diversification,
product differentiation, the
degree of concentration of
firms in the industry, and
market
frictions.
In the mid-twentieth century the
ideal strategy for a company was
the industrial organization
model of above-average
returns. This model describes
the external environment as a
primary determinant for a strategy
of firms to use for successfulness.
The strategy was used
because the firms used to think that
the industry in which you compete
must be essential to
do a better work than change the
way of administration in the
company. Some examples of
external environment can be
economies of scale, barriers to
market entry, diversification,
product differentiation, the
degree of concentration of
firms in the industry, and
market
frictions
In the mid-twentieth century the
ideal strategy for a company was
the industrial organization
model of above-average
returns. This model describes
the external environment as a
primary determinant for a strategy
of firms to use for successfulness.
The strategy was used
because the firms used to think that
the industry in which you compete
must be essential to
do a better work than change the
way of administration in the
company. Some examples of
external environment can be
economies of scale, barriers to
market entry, diversification,
product differentiation, the
degree of concentration of
firms in the industry, and
market
frictions
In the mid-twentieth century the
ideal strategy for a company was
the industrial organization
model of above-average
returns. This model describes
the external environment as a
primary determinant for a strategy
of firms to use for successfulness.
The strategy was used
because the firms used to think that
the industry in which you compete
must be essential to
do a better work than change the
way of administration in the
company. Some examples of
external environment can be
economies of scale, barriers to
market entry, diversification,
product differentiation, the
degree of concentration of
firms in the industry, and
market
frictions.