Chapter 4

Strategic and Operational Planning

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XFL
A great idea does not guarantee success. In
fact, for every ten products introduced, eight fail.
The reason for this high rate of failure? Poor
planning. A prime example is the now-defunct
XFL, which was the World Wrestling
Federations attempt at developing a new
professional football league.
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Strategic vs. Operational Planning

In strategic planning, management develops a
mission and long-term objectives and
determines in advance how they will be
accomplished. In operational planning,
management sets short-term objectives and
determines in advance how they will be
accomplished.
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The Strategic Process

Develop mission
Analyze environment
Set objectives
Develop strategies
Implement and control strategies

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Three Levels of Strategies

Corporate
Business
Functional

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Situation Analysis
Draws out those features in a companys
environment that most directly frame its strategic
window of options and opportunities.

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Situation Analysis: Three Parts

Analysis of the companys industry and its
competition
Analysis of the companys particular situation
Analysis of the companys competitive
advantage (or lack thereof)

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Five Competitive Forces

Rivalry among competing firms
Potential development of substitute products and
services
Potential entry of new competitors
Bargaining power of suppliers
Bargaining power of consumers
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Company Analysis: Five Steps

Step 1: Assess present strategy

Step 2: Analyze SWOTs
Step 3: Assess competitive strength
Step 4: Make conclusions
Step 5: Decide what issues to address

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Competitive Advantage
Specifies how the organization offers unique
customer value.
What makes us different from our competition?
Why should a person buy our product or service
over the competitions?
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Goals and Objectives

Goals state general targets to be accomplished.
Objectives state what is to be accomplished in
specific and measurable terms by a certain
target date.

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Management by Objectives
MBO is the process by which managers and
their teams jointly set objectives, periodically
evaluate performance, and reward according to
the results.

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Grand Strategies
Growth
Stability
Turnaround and Retrenchment
Or a combination thereof

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Corporate Growth Strategies

Concentration
Backward integration
Forward integration
Related and unrelated diversification
Mergers
Acquisitions
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Business Portfolio Analysis

Corporations determine which lines of business
they will be in and how they will allocate
resources among the different lines.
A business linealso called a strategic business
unit (SBU)is a distinct business with its own
customers that is managed reasonably and
independently of the corporations other
businesses.
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BCG Growth-Share Matrix

Cash cows
Question marks
Stars
Dogs

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Business-Level Strategy
Adaptive Strategies: prospecting, defending, and
analyzing.
Competitive Strategies: Michael Porter identifies
three effective business-level : differentiation,
cost leadership, and focus.

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Product Life Cycle

Introduction
Growth
Maturity
Decline

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Functional-Level Strategies
Operational strategies are used by every functionallevel departmentmarketing, operations, human
resources, financeto achieve corporate- and
business-level objectives.

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