The Practice of General Management
The Strategic Process
Module 2a:
The Strategic Planning Process, Part I
© 2007 Captus Press Inc. and Randy Hoffman
Strategic Planning Model
Economic
Values
Normative
Corporate Strategy
Envir
O+T
Mission
Resources
S+W
Goals
Policies
Implementation
Targets +
Work
Procedures
Individual
Job
Descriptions
The Environment
• Starting point: knowledge of the
environment
Environment
Identifying
opportunities
and constraints
• The independent variable
© 2007 Captus Press Inc. and Randy Hoffman
1
The Practice of General Management
Opportunities
• SWOT analysis
– Opportunities and threats
OR
– Opportunities and constraints
• Opportunity:
– External situation that organization can
take advantage of
• But no opportunity is unlimited
Constraints
• Must be taken into account
• Some are threats….
– Competitors
• Others are not….
– Market size
Strategic Planning Model
Values
Economic
Normative
Corporate Strategy
Envir
O+T
Mission
Resources
S+W
Goals
Policies
Implementation
Targets +
Work
Procedures
Individual
Job
Descriptions
© 2007 Captus Press Inc. and Randy Hoffman
2
The Practice of General Management
Resource Assessment
• Inventory
Resource Assessment
Resources
Assessing strengths
and weaknesses
Resource Assessment
• Assess strengths and weaknesses
– Relate to what resources can or cannot do
• Strengths: actual or
potential synergy
• Weaknesses: inabilities
or dysynergy
© 2007 Captus Press Inc. and Randy Hoffman
3
The Practice of General Management
Resource Assessment
• Not entirely independent of
environmental analysis
– Value of resources may vary depending on
environment
Values
Values
Establishing economic
and normative values
Economic Values
• Directly impact selection of
environmental opportunity, i.e.
– Risk tolerance
– Willingness to invest a certain amount
– Type of industry
© 2007 Captus Press Inc. and Randy Hoffman
4
The Practice of General Management
Normative Values
• Societal or stakeholder issues, i.e.
– Quality of work life
– Ecological issues
– Environmental issues
– Philanthropy
Values
• Select whatever values one chooses
But
• Need to be feasible with respect to
environment and resources
Determinants of Strategy
• They are:
– Environmental analysis
– Resource assessment
– Setting of values
• Set the strategic direction
• Next step: mission statement
© 2007 Captus Press Inc. and Randy Hoffman
5
The Practice of General Management
Mission Statement
Mission
Statement
• Nature of business
• How business will be
carried out
• May contain vision of
the organization
Mission Statement
• Typically short
• Purpose:
• To make mission part of the corporate
culture
• What is corporate culture?
• Shared values that influence employees
Mission Statement
• Purpose # 1: When part of the corporate
culture…
– Will influence non-routine decisions
• Purpose # 2:
– Short mission easily understood by
external stakeholders and environment
• Purpose #3:
– Role in forming rest of strategic plan
© 2007 Captus Press Inc. and Randy Hoffman
6
The Practice of General Management
The Strategic Process
Module 2b:
The Strategic Planning Process, Part II
© 2007 Captus Press Inc. and Randy Hoffman
Strategic Planning Model
Values
Economic
Normative
Corporate Strategy
Envir
O+T
Mission
Resources
S+W
Goals
Policies
Implementation
Targets +
Work
Procedures
Individual
Job
Descriptions
Goals
GOALS
Qualitative goals
Quantitative
goals
OBJECTIVES
© 2007 Captus Press Inc. and Randy Hoffman
7
The Practice of General Management
Goals
• If they are qualitative
– Hard to measure
Qualitative Goals
• Establish subsidiary
objectives that indirectly
indicate whether goals
are being met
– Return business shows
customer satisfaction
Strategic Planning Model
Values
Economic
Normative
Corporate Strategy
Envir
O+T
Mission
Resources
S+W
Goals
Policies
Implementation
Targets +
Work
Procedures
Individual
Job
Descriptions
© 2007 Captus Press Inc. and Randy Hoffman
8
The Practice of General Management
Goals vs Policies
• Goals:
– Things we want to get
done
• Policies:
– The way resources are
used to accomplish the
goals
Goals vs Policies
• “Six months from now, we will set up a
marketing research department”
Goal or Policy
Policy!
Goals vs Policies
• It is a policy because:
– Establishing a department does not
accomplish a performance result
– Way to use resources to accomplish goals
© 2007 Captus Press Inc. and Randy Hoffman
9
The Practice of General Management
Goals vs Policies
• Goals can never be directly
accomplished like this
Goals vs Policies
• Policies can be directly accomplished in
one or more direct steps
• Goals vs policies =
Reason for doing something
vs
Means of doing something
Strategic Planning Model
Values
Economic
Normative
Corporate Strategy
Envir
O+T
Mission
Resources
S+W
Goals
Policies
Implementation
Targets +
Work
Procedures
Individual
Job
Descriptions
© 2007 Captus Press Inc. and Randy Hoffman
10
The Practice of General Management
Environmental
Change
Values
Economic
Normative
Corporate Strategy
Envir
O+T
Mission
Resources
S+W
Goals
Policies
Implementation
Targets +
Work
Procedures
Individual
Job
Descriptions
Performance Results
• Altering resources due to results and
other changes may change perception
of strengths and weaknesses
→
better strategic planning
Environmental
Change
Values
Economic
Normative
Corporate Strategy
Envir
O+T
Mission
Resources
S+W
Goals
Policies
Implementation
Targets +
Work
Procedures
Individual
Job
Descriptions
© 2007 Captus Press Inc. and Randy Hoffman
11
The Practice of General Management
Performance Results
• May change values that are in effect
– Good performance → more risk-taking
– Poor performance → less risk-taking
Performance Results
• May change
normative values
– Good results may
allow resource
diversion to societal
obligations
Performance Results
• … but poor results may cancel any
diversion of resources
© 2007 Captus Press Inc. and Randy Hoffman
12
The Practice of General Management
Environmental
Change
Economic
Values
Normative
Corporate Strategy
Envir
O+T
Mission
Resources
S+W
Goals
Policies
Implementation
Targets +
Work
Procedures
Individual
Job
Descriptions
Conclusion
• Strategic plan translates:
Environment
Values
Resources
… into mission, which translates into
– Goals, then into
• Policies, and finally into
– implementation
© 2007 Captus Press Inc. and Randy Hoffman
13