PLANNING AND THE
STRATEGIC PLAN
Presentation by:
Jennifer Freeman
&
Carlee Rosenblatt
Topics We Will Cover...
 Why use a Strategic Plan?
 Strategic Plan Overview
 Integrated Planning Structure
 Planning Cycle
 Planning Roles
 Business Mission
 Developing Long-Range Objectives
 Developing Long-Range Strategies
 Fourteen Steps to Useful Results and Performance
Why Use A Strategic Plan?
• To set company guidelines and policies that draw
attention to what we’re doing, how we’re doing it,
and for whom.
• Focuses on the needs, dangers, and opportunities
facing the company.
• Identifies key decisions that must be made and sets
guidelines and deadlines for making them.
Strategic Plan Overview
The plan must contain these six elements:
1.
2.
3.
4.
5.
6.
A statement of purpose
Actions to take
Resources to use
Goals to meet
Time schedules to follow
Assumptions made
Overview Continued
The strategic plan typically includes these areas when
communicated to the board:
 Comparison to the prior year plan
 The major planning assumptions
 The growth strategy
 Business goals
 Perceived strengths, weaknesses, opportunities, problems, and threats
 Profit plans for the existing business
 Programs and strategies for new business development
 Financial summaries of major factors, trends, and return on assets
Integrated Planning Structure
Strategic Plan
Development
Plan
Operations
Plan
Planning Cycle
• An important part of the planning cycle is the
environmental analysis. It is the foundation
of the company’s strategic direction.
• The company’s environment has two
aspects:
 The external environment
 The internal environment
EXTERNAL
INTERNAL
Consists of influences
outside the company that are
or will be dominant factors in
its activities.
Consists of those forces
inside the company that will
be significant forces in just
how it will function.
The factors can include:
The factors can include:




Economic
Technical
Political
Social
 Company strengths and
weaknesses
 The success factors
 Status of each product in
each market segment
(1)Life-cycle stage
(2)Boston Consulting Group
Matrix
Status of each product in each market segment (1)
• Understanding the life-cycle stage of each product
(embryonic or R&D, growth, maturity, decline)
Status of each product in each market segment (2)
• Understanding each business segment as to market share and growth
rate, according to the Boston Consulting Group matrix, as either:
 Star
 Cash Cow
 Question Mark
(Wild Cat)
 Dog
liquidate
Planning Roles
Who does the planning depends on:
The stage of evolution of planning in the company
 If planning is informal & sporadic  CEO is chief
planner, with limited assistance from others
The attitude of the CEO
The size of the company
 Larger companies are more likely to make formal
long-range plans
The nature of the company’s markets
Planning Roles Continued
The Controller’s Role in...
• ...the corporate mission is to disclose any
erroneous financial or economic assumptions and
provide alternatives.
• ...the corporate long-range objectives is to make
any analysis for long-range objectives on financial
facts or calculations
• ...developing strategies is to conduct the financial
analysis related to some of the strategies
Business Mission Statement
Video- Build a Mission Statement
Business Mission – Why does my
business exist?
Some subjects to consider when creating a mission
statement, the guideline for strategic planning:
• Product or product line
• Market and Market Share
• Profitability on sales, assets, and/or shareholders’
equity
• Research and development
• Company image
The Mission Statement
Should serve as a guide to policy decisions
Should be quite specific, not a lofty
statement of admirable purpose
Should include the scope of operations as to
delineate the market
Additional Note:
A realistic statement of purpose will probably
be influenced by these three factors:
1. The basic competence and characteristics of
the company
2. The expectations of those who have
something at stake in the firm
3. The expected future external environment
Examples of mission statements
1.
Our mission is to offer business
education for a diverse student
population by teaching a rigorous and
relevant business curriculum, supported
and strengthened by research and
community outreach. -FCBE
2.
To inspire and nurture the human
spirit— one person, one cup, and one
neighborhood at a time. -Starbucks
3.
To be the most successful computer
company in the world at delivering the
best customer experience in markets
we serve. -Dell
Developing Long-Range Objectives
Long-term objectives must be established once
a business mission is determined. Satisfactory
long-term objectives must be:
Suitable
Feasible
Compatible
Measurable
Flexible
Motivating
Exhibit 3.1 Sample Company Long-Term Objectives
Achieve by Year
Objective
20X0
20X5
Aggregate sales volume (millions)
$560
$1,200
Percent of non-U.S. sales
20%
25%
Percent of new products
15%
30%
Operating profit (% of sales)
17%
22%
On total assets
10%
12%
On net worth
19%
25%
Earnings per share
$2.50
$4.25
Price/earnings ratio
11x
15x
Labor content in products
25%
22%
Minorities as % of work force
10%
12%
Rate of return:
Useful Points of Reference
• Use past performance, with trend exploration.
• Adjust past performance for the impact of
expected forces.
• Analyze competitors.
• Employ environmental, situational, and
strategic analyses.
Developing Long-Range Strategies
• Here the word “strategy” means the way, or
means, by which the company deploys its
human and financial resources and its
physical assets to achieve the business
purpose.
Illustrations of strategies undertaken
Products
Change the style of packaging to appeal to middle-age customers.
Drop line Y, which provides no contribution margin.
Consider private brands in the Southeast.
Markets and Marketing
Enter the growing European market through a joint venture.
Change the prices to meet the competition of the R chain.
Increase local advertising to cover TV in markets W, X, and Y.
Operating Efficiency
Establish a warehouse in Denver.
Enforce terms of sale in order to increase receivables turnover.
Dispose of the Kansas City subsidiary because of losses and the lack of
growth prospects.
Handout:
“Fourteen
Steps to
Useful
Results and
Performance”
1. Decide to create a
better future
6. Prioritize and
Select Needs
11. Make, buy, or
obtain methodsmeans
2. Define partners
and stakeholders
7. Determine
change
requirements
12. Implement and
manage
3. Obtain
commitment
8. Determine likely
causes of needs
13. Determine
effectiveness and
efficiency
4. Commit to a Mega
(societal) focus
9. Indentify
alternative methodsmeans
14. Revise and
improve as required
5. Identify needs at
Mega, Macro, and
Micro
10. Select
appropriate methodsmeans
References
• Bragg, Steven M. and Roehl-Anderson, Janice M. The
Controller’s Function – The Work of the Managerial
Accountant, 3rd Edition, 2005. 63-75.
• Kaufman, Roger A. Strategic Planning for Success: Aligning
People, Performance, and Payoffs, 2003. 319-326.
• http://www.youtube.com/watch?v=CZFv82VsLxE
• http://www.memphis.edu/fcbe/mission_statement.php
• http://www.starbucks.com/mission/
• http://content.dell.com/us/en/corp/d/corp-comm/diversitfaqs.aspx#faq8