Planning, business strategy
The long term success of an organization is based on two fundamental principles:
1. Ability to create a strategic direction and market position (strategic plan)
2. Ability to execute core tactical initiatives within plan
Strategic plans provide clarity, planning is critical. If there is no plan, it is hard to know who you are,
how resources should be allocated
Strategic planning process model
Mature firms will spend more time in analysis/ monitoring changes
Starting firms will spend more time planning
Best execution = best success
• Revisit our purpose: Who are we and where do we want to go?
• Undertake an I/E (internal/external) analysis to understand our environment: What changes or
shifts are occurring that threaten us or that provide us with opportunities?
• Assess our view of our world: Based on what we know, what are our choices?
• Choose a direction: Given our capabilities, competencies, competitive advantages, and
resources, which strategic choices should we pursue (where will we play)? What threats must
we respond to?
• Implement our strategy: How do we develop the strategic thrusts and tactics to achieve our
objectives and successfully execute the plan (how we will win)? Strategies
• Customized for each business given market conditions and desired goals
• Understanding what opportunities exist in market place and which to pursue
• “Where do we want to play?”
• “How do we plan to win?”
Core Elements For Assessing Strategy
Development of a business strategy means making decisions and determining direction in 6
Mission: organization’s purpose/reason for existence; company’s broad goals
Vision: a forward-thinking statement that defines what a company wants to become and
where it’s going
Markets the business sees itself competing in
Harvesting: a strategy that reflects a reduced commitmentto a particular marketgiven
its perceived weak future growth or profitability potential
Value proposition is different in different markets Value proposition is different in different markets
3. Products & Services
Review of current and potential new products/services
Allocation of a business’s resources in support of strategic decisions
5. Business System Configuration
Modifying infrastructure and system to ensure success of plan
6. Responsibility & Accountability
Identifying key objectives to be achieved and who’s responsible
Initiatives within a strategic plan are built around SMAC principles: specific, measurable,
actionable, and controllable (also SMART: specific, measurable, actionable, realistic, and
For businesses, a strategic plan is the road map to success. It defines a specific route the business
intends to undertake, provides benchmarks to measure its success along the way, and identifies
where and how the organization will interact with its customers as it seeks to meet its overall
mission and vision.
Five critical questions - helps identify strategic tensions
BB technology is an example - they cannot sustain their competitiveadvantage
• What do we need to do?
• What can we do?
○ What are we good at and not good at?
○ Money to facilitate the growth plan
• What do we want to do?'
○ What owners want to do?
• Goal is to align these objectives and reduce strategic tensions
○ Strategic tension - Three componentsmay not be harmonized. Managers want to stay in
Europe even if there is more expansion in US (which is what the market is telling them)
because brand name is more known there
• Effective strategy harmonized the three components ***important
Internal - External Analysis - this is to understand our environment/ as well as the business itself
• I/E Analysis is all about assessing business risk and change in 4 key areas:
i. Macro-economic: Use PESTEL Analysis
ii. Industry: Use Porter’s Five Forces
iii.Competitor: Use SWOT (Strengths, Weaknesses, Opportunities, Threats) Analysis
iv. Company: Use SWOT and 3C Analyses (competencies, capabilities, capacity)
• External Analysis focuses on understanding what is influencing markets today and what will
influence them going forward – it is an assessment of the magnitude of change in a market influence them going forward – it is an assessment of the magnitude of change in a market
arena and associated shifts in business risk
○ Use PESTEL, Porter’s five forces, competitor SWOT
○ Businesses need to anticipate and react to new initiatives and changes in strategy and
market positioning by their competitors
• Internal Analysis focuses on company competencies, resources, capacity and capabilities(3C
analysis) and should include a full internal audit