MANAGEMENT:
A GLOBAL AND ENTREPRENEURIAL PERSPECTIVE
by Weihrich, Cannice, and Koontz
Chapter
5
Strategies, Policies, and Planning Premises
© 2008 Weihrich and Cannice
Chapter 5. Strategies, Policies, and Planning Premises
1
KEY IDEAS AND CONCEPTS FOR REVIEW
•
•
•
•
Strategy
Policy
Tactics
Key elements in the
strategic planning
process
• TOWS Matrix by
Weihrich
• TOWS Merger Matrix
• Blue ocean strategy
© 2008 Weihrich and Cannice
• Portfolio matrix by the
Boston Consulting
Group
• Major kinds of
strategies
• Hierarchy of strategies
• Porter’s generic
strategies
• Planning premises
• Environmental
forecasting
• Delphi technique
Chapter 5. Strategies, Policies, and Planning Premises
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After studying this chapter, you should
understand:
1.
2.
3.
4.
5.
6.
The mission, strategies, and policies.
The strategic planning process.
The TOWS Matrix and the business portfolio
matrix.
Some major kinds of strategies/policies and the
hierarchy of strategies.
Porter's generic strategies.
The nature of premises and forecasts.
© 2008 Weihrich and Cannice
Chapter 5. Strategies, Policies, and Planning Premises
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Definition of Strategy and Policies
• Strategy is the determination of the mission
(or the fundamental purpose) and the basic
long-term objectives of an enterprise, and the
adoption of courses of action and allocation
of resources necessary to achieve these
aims.
• Policies are general statements or
understandings that guide managers' thinking
in decision making.
© 2008 Weihrich and Cannice
Chapter 5. Strategies, Policies, and Planning Premises
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Fig. 5-1 The Strategic Planning Process
© 2008 Weihrich and Cannice
Chapter 5. Strategies, Policies, and Planning Premises
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The Strategic Planning Process
(Figure 5-1)
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•
•
•
•
Inputs to the organization
Industry analysis
Enterprise profile
Orientation, values, and vision
Mission (purpose), major objectives, and
strategic intent
• Present and future external environment
• Internal environment
© 2008 Weihrich and Cannice
Chapter 5. Strategies, Policies, and Planning Premises
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The Strategic Planning Process –
cont.
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•
•
•
Development of alternative strategies
Evaluation and choice of strategies
Medium- and short-range planning
Implementation through reengineering,
staffing, leadership, and control
• Consistency testing and contingency
planning
© 2008 Weihrich and Cannice
Chapter 5. Strategies, Policies, and Planning Premises
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Mission, Objectives, and
Strategic Intent
• Mission relates to the kind of business.
• Objectives are the end points for
activities.
• Strategic intent is the commitment to
win in the competitive environment.
© 2008 Weihrich and Cannice
Chapter 5. Strategies, Policies, and Planning Premises
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Definition of the TOWS Matrix
• The TOWS Matrix is a conceptual
framework for a systematic analysis that
facilitates matching the external threats
and opportunities with the internal
weaknesses and strengths of the
organization.
© 2008 Weihrich and Cannice
Chapter 5. Strategies, Policies, and Planning Premises
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Fig. 5-2 TOWS Matrix for Strategy
Formulation
© 2008 Weihrich and Cannice
Chapter 5. Strategies, Policies, and Planning Premises
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TOWS Matrix: 4 Alternative Strategies
•
•
•
•
SO strategy:
WO strategy:
ST strategy:
WT strategy:
© 2008 Weihrich and Cannice
Maxi–Maxi
Mini–Maxi
Maxi–Mini
Mini–Mini
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Fig. 5-3 Dynamics of the TOWS Matrix
© 2008 Weihrich and Cannice
Chapter 5. Strategies, Policies, and Planning Premises
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Application of the TOWS Matrix for Mergers,
Acquisitions, Joint Ventures, and Alliances
• Develop a TOWS Matrix for both
companies before the merger, etc.
• Develop a TOWS Matrix of the joint
company after the merger, etc.
• See Illustration of DaimlerChrysler
merger in the closing section of Part 2
© 2008 Weihrich and Cannice
Chapter 5. Strategies, Policies, and Planning Premises
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Blue Ocean Strategy by Kim & Mauborgne
and TOWS Matrix by Weihrich
• Explore opportunities in uncontested markets
(Opportunities in the TOWS Matrix) Example:
Southwest Airline
• Be aware of competition in red ocean
markets (bloody competition). Example,
today’s personal computers
• Value innovation: total company commitment
to create value for the customer
• Blue ocean strategy and the TOWS Matrix
(SO or WO strategies in uncontested
markets)
© 2008 Weihrich and Cannice
Chapter 5. Strategies, Policies, and Planning Premises
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Fig. 5-4 Business Portfolio Matrix
© 2008 Weihrich and Cannice
Chapter 5. Strategies, Policies, and Planning Premises
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Business Portfolio Matrix
• Two dimensions
– Relative competitive position (market share)
– Business growth rate
• Four positions
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–
–
–
Question marks
Stars
Cash cows
Dogs
© 2008 Weihrich and Cannice
Chapter 5. Strategies, Policies, and Planning Premises
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Major Kinds of Strategies and Policies
• Products or Services
– What are some of the key questions to
ask?
• Marketing
– What are some of the key questions to
ask?
© 2008 Weihrich and Cannice
Chapter 5. Strategies, Policies, and Planning Premises
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Hierarchy of Company Strategies
• The corporate-level strategy. Executives craft
the overall strategy for a diversified company.
• Business strategies are developed usually by
the general manager of a business unit.
• Functional strategies. The aim is to support
the business and corporate strategies.
© 2008 Weihrich and Cannice
Chapter 5. Strategies, Policies, and Planning Premises
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Five Forces in Industry Analysis
(Porter)
• The competition among companies
• The threat of new companies entering
the market
• The possibility of using substitute
products or services
• The bargaining power of suppliers
• The bargaining power of the buyers or
customers
© 2008 Weihrich and Cannice
Chapter 5. Strategies, Policies, and Planning Premises
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Porter’s Generic Strategies
• Overall Cost Leadership Strategy
• Differentiation Strategy
• Focused Strategy (low cost or
differentiation)
© 2008 Weihrich and Cannice
Chapter 5. Strategies, Policies, and Planning Premises
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Premising and Forecasting
• Planning premises are the anticipated
environments in which plans are
expected to operate.
• Environmental Forecasting
– Values and areas of forecasting
– Forecasting with the Delphi technique
• What are the typical steps of the
technique?
© 2008 Weihrich and Cannice
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