Topi

c
1
-St
rat
egi
cpl
anni
ngmodelABCDEand

2-
Indus
tri
alor
ganizati
onalmodelofaboveaverager
etur
n(I
/Omodel
ofaboveaver
ager et
urn)wi
thexample

Submi
tt
edBy:
Nimr
aAbdul
Razzaq(
MBA5L-
21209)

Submi
tt
edTo:Ms.
Zul
aikhaMehmood

Depar
tmentofManagementSci
ences

Nat
ionalUni
ver
sit
yofModer
nLanguages

1
 St
rat
egi
cPl
anni
ngModelABCDE

Def
ini
ti
on:
"Strat
egicplanningi stheprocessofdefi
ningthekeydirect
ional
elementsofanor ganizati
on.Itist
hegeneralmapgivenbyt he
executivesthatallowst heentir
eorgani
zationtomaint
aintherightpat
h
inthei
rdai l
ydeci sions.
"

Exampl
e
Jolson&Bar nti
sayoungcompanyoper ati
nginretail
ingt hat
successfullygrew tor each12s toresineightyears.I
tisaf amil
y
businesswhos edecis ionsaremai nlytakenbyt hr
eebr otherswhohold
thetopl eadingpos i
tions.Inrecentyear s,middlemanagementf elt
confusedaboutt herightdi r
ectionwhendeci di
ngaboutpr oduct
portfoli
o,pricestrategyands torei mage.Themanager sdi dnot
perceivedcoher entgui deli
nesf rom theseniorexecuti
ves .

ABCDEModel
Manypeopl efindtheABCDEModel *tobeaver yus ef
ulmodelf
or
underst
andingtheflow ofs t
rategyfrom thebeginningtot
heendofa
cycleofstr
ategicplanning/executi
onact i
vit
ies
.Themodeli s
il
lust
ratedinthenearbygr aphicanddes cri
bedbel ow:

A–As
ses
smentofcur
rents
ituat
ion:
Thiselementi nvolvesscanningtheexternalenvir
onment,competit
ive
scanning,assessingthecurrentsi
tuati
on;andclarifyi
ngpercepti
onsof
problems ,needs,andopportunit
ies.Iprovi
dedt wousefulideasforthi
s
sensi
ngenvi ronmentalcontext.

B–Bas
eli
net
hegap:
Thi
selementi
nvol
vesi
dent
ifyi
ngper
for
mancegaps
,andeval
uat
ing
t
rends
.

2
C–Component
sofs
trat
egy.
Exampl
ecomponent
sofs
trat
egyi
ncl
udecommonconcept
sli
kecor
e

compet enci
es,values,missi
on,vi
sion,metri
cs,goalsandobjectives,
portf
ol i
os,andpr ocess
es.Visi
onist hemostimpor t
antofthe
component s(i
nf ormulati
ngandexecut ingas t
rategici
nit
iat
ive).This
descri
best hepointwher emanager swoulds el
ectandf undstrategi
c
ini
ti
ativesasa‘ C’component.

D–Del
iver
yofcomponent
:
Thisi
sthedeli
veryofthestrat
egicini
ti
ati
ve,aswellasot her
progr
ams,project
s,andoperat
ionalwork.Aspartofthis,execut
ives
willf
ormulat
eact i
onplans
;benefit
scapturepl
ans,t
ar gets,s
tandards,
andmetri
cs.

E–Eval
uat
ionofpr
ogr
ess
:
Thi
sincludesr
evi
ew ofprogres
s,r
epor
ting,t
weaki
ngofgoal
s,
cor
rect
iveacti
ons
,andlearni
ng.

Youcoul dthinkofABCast heprocessofstr

ategyfor
mul ati
onandthe
DEast hes t
rategyexecuti
onpiece.(Fortherecor
d,Ithi
nkitis
unhelpf
ult oseparat
es t
rategyformulati
onandexecut i
on;bothr
equi
re
st
rategi
ct hi
nking.
)

ForExampl
e:
Myor ganizationfoundi t
sfinancialperformances li
ppi ngver sus
expectati
ons,duet ochangesi ntheexternalenvironmentt hataf fect
theenti
reindus t
ry.Theor ganizationdevelopedas trategicintentthat
wentbeyonds urvi
val ,t
othriving.Thechangesi nvolvecr eati
nga
mor ecoherentvaluepr oposit
ionthatwillcaus eredesi
gnoft he
elementsoft hebusinessmodel .Accordingly,executi
veschar t
eredand

3
resourcedthisstr
ategicini
tiati
vetoclosetheperformancegap.Our
str
ategicinit
iat
ivewi l
lincrementall
ypr ovidebenefi
tsthats
uppor
tthe
balanceds corecardmet ri
cs .Weplantocompl etedeli
veryof
target
edbenef it
sin24mont hs,andclos
et heprogram.

St
rat
egy
"
Theartands cienceofpl anni
ngandmar s
hall
ingres
ourcesfort
hei
r
mos
teffi
cientandef fect
iveus e.Thet
ermisderi
vedfrom t
heGreek
wor
dforgener alshi
porl eadinganarmy."

TheI
/O ModelofAboveAver
ageRet
urn
Explainstheexternalenvir
onment’
sdomi nantinf
luenceonaf i
rm’
s
strat
egicacti
ons.Themodels peci
fiesthattheindustr
yi nwhi
cha
companychoos estocompet ehasas t
rongerinfluenceonperfor
mance
thanthechoicesmanager smakeins i
det heorganizat
ionsdo.

FOURBASI
CASSUMPTI
ONS:
1.
Theexternalenvi
ronmentisassumedtoimpos
epress
uresand
cons
trai
ntsthatdet
erminethes
trategi
est
hatwouldr
esulti
nabove
averageretur
ns.

2.Fir
mscompet i
ngwithinanindust
ryoracer tainsegmentofthat
i
ndus tryareas
sumedt ocont
rolsi
milarst
rategical
lyrelevant
resourcesandtopur
sues i
milarstr
ategi
esinlightofthoseres
ources
.

3.
Resour
cesusedtoimplements
trategiesar
eassumedtobehighl
y
mobil
eacrossfi
rms,sot
hatanyresourcedif
fer
encest
hatmight
devel
opbetweenfi
rmswi l
lbeshort-l
ived.

4.Or
ganizat
ionaldecisi
on-
makersareassumedtoberat
ionaland
commit
tedtoact i
nginthefir
m’s
bestint
eres
ts,ass
hownbyt hei
rprof
it-
maximi
zingbehavi or
s.

STEPSTAKENI
NTHEI
/O MODEL:

4
1
.St
udyt
heext
ernalenvi
ronment
,speci
fical
lyt
hei
ndus
tryenvi
ronment
.

a.Theext
ernalenvi
ronment
:gener
al,i
ndus
try,andcompet
it
or
envir
onment.

2.
Locat
eani
ndus
trywi
thhi
ghpot
ent
ialf
oraboveaver
ager
etur
ns.

a.Anatt
ract
ivei
ndustr
y:anindus
trywhos
est
ruct
uralchar
act
eri
sti
cs
sugges
taboveaverageret
urns
.

3.
Ident
ifyt
hestr
ategycal
ledf
orbyt
heat
tract
ivei
ndus
tryt
oear
n
aboveaverageret
urns
.

a.
Str
ategyf
ormulat
ion:s
electi
onofas t
rat
egyl
inkedwi
thabove
aver
ageret
urnsi
napar t
iculari
ndus
try.

4.
Devel
oporacqui
reas
set
sands
kil
lsneededt
oimpl
ementt
he
st
rat
egy.

a.
Asset
sands
kil
ls:as
set
sands
kil
lsr
equi
redt
oimpl
ementachos
en
st
rat
egy.

5.
Usethefi
rm’
sstrengt
hs(
devel
oped/acqui
redas
set
s/s
kil
ls)t
o
i
mplementt
hestr
ategy.

a.Str
ategyImplement
ati
on:s
elect
ionofst
rategi
cacti
onsli
nkedwi t
h
effecti
veimplement
ati
onoft
hechosenst
rategy–leadingt
os uper
ior
returns.

TheFi
veFor
cesModel
Thef i
vef or
cesmodelwasus edt oidentifytheat t
ract i
vei nt o
companyaceal sot ohelpfindthepos i
tioni nthemar ket.TheFi ve
forcesaresuppl i
er,buyers,compet it
iver ivalryamongf irmscur rentl
y
inthesamei ndustry,products ubsti
tutes,andpot entialentr antinthe
indust
ry.Theinteracti
onbetweent hosef i
vef orcesf unctiont oidenti
fy
theprofit
abili
tyoft heindustry.TheI/O modelexpl ainst hatwhen to
Firm doestocor r
ectinvesti
gat ionaboutt heext er
nalenvi ronmentace

5
t
hemainfocusforcreatingt
os tr
at egy,I
tem wil
lgiveabove-average
r
etur
ns.Meaningthatfir
mst hattendt oi
nvestmoreintheirst
rat
egies
f
ortheexter
nalenvironmentaremor epronetosuceedthatonefi
rm
t
hatdoesnot.

ForExampl
e:
Theai rli
nei ndustrycanbeanexampl eoft heI/OModel ,s i
ncef or
manyyear si twasheavi lyregul ated,whi chcaus edmanycompani esin
themar kett obevi rt
ual lySi mi l
ar y,evenaf terder egulat
ion.Many
mer gi
ngsoccur edover ti
me( Northwes tAi r
linesandDel t
a,Uni ted
andCont i
nent al
, US Ai r and Amer ican) due t o cons olidation.
The s ervices di d not di fferedsignifi
cant ly,buti mpr ovedi nstead
(On-Timef l
ights,l
es scar riagel oss,etc)pr ovi ngt hati
ts ti
llrepr esented
amaj orpar tforthei ndus t
r y.
Air l
ineslikeAmer icanandDel t
a
suffer
eds everalf all
- outswi thtime.Item wasi ncasesliket hoset hat
thedifferencebet weenai rlineswer es hown.Ont heotherhand,
compani eslikeSout hwes tdevel opedi tsresour cesandcapabi lit
ies,
allowingi t
em t oimpr ovei tss er
viceandper formance.