Strategic
Planning and
Decision
Making
Chapter Five
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Learning Objectives
LO1 Summarize the basic steps in any planning process.
LO2 Discuss how strategic planning should be
integrated with tactical and operational planning.
LO3 describe the strategic management process and
the importance of SWOT analysis in strategy
formulation.
LO4 Analyze how companies can achieve competitive
advantage through business strategy.
5-2
Learning Objectives (cont.)
LO5 Identify the keys to effective strategy
implementation.
LO6 Explain how to make effective decisions as a
manager.
LO7 Give examples of some individual barriers that
affect rational decision making.
LO8 Summarize principles for group decision making.
5-3
Planning
Planning
 conscious, systematic process of making
decisions about goals and activities that an
individual, group, work unit, or organization will
pursue in the future.
 a purposeful effort that is directed and controlled
by managers and often draws on the knowledge
and experience of employees throughout the
organization.
5-4
Formal Planning Steps
Step 1 Situational Analysis
Step 2 Alternative Goals and Plans
Step 3 Goal and Plan Evaluation
Step 4 Goal and Plan Selection
Step 5 Implementation
Step 6 Monitor and Control
5-5
Evaluate Goals and Plans
Managers will evaluate the advantages,
disadvantages, and potential effects of each
alternative goal and plan.
Must prioritize those goals and even eliminate
some of them.
Managers must consider carefully the
implications of alternative plans for meeting high
priority goals.
5-6
Strategic Planning
Strategy
 A pattern of actions
and resource
allocations designed
to achieve the
organization’s goals
5-7
Hierarchy of Goals and Plans
Exhibit 5.2
5-8
Tactical and Operational Planning
Operational planning
 The process of identifying the specific procedures
and processes required at lower levels of the
organization.
5-9
The Strategic Management Process
Exhibit 5.3
5-10
Establish a Mission, Vision,
and Goals
Mission
 An organization’s basic
purpose and scope of
operations.
5-11
Analyze External
Opportunities and Threats
Stakeholders
 Groups and individuals
who affect and are
affected by the
achievement of the
organization’s mission,
goals, and strategies
5-12
Analyze Internal Strengths and
Weaknesses
Benchmarking
 process of assessing how well one company’s
basic functions and skills compare with those of
another company or set of companies.
 goal of benchmarking is to thoroughly
understand the “best practices” of other firms
and to undertake actions to achieve both better
performance and lower costs
5-13
BCG Matrix
Exhibit 5.5
5-14
Stages of Decision Making
Exhibit 5.6
5-15