Strategic planning, concepts, operational planning

1. STRATEGIC PLANNING, CONCEPTS,
OPERATIONAL PLANNING ETC.

2. Introduction
What is PLANNING?
TYPES OF PLANNING
Advantages
Limitations

3. “PLANNING”
Planning is deciding in advance what is to be
done, when where, how and by whom it is to
be done.
Planning bridges the gap from where we are to
where we want to go.
It includes the selection of
objectives, policies, procedures and
programmes from among alternatives

4. TYPES OF PLANNING

5. ACTITVITY
COVERED
Corporate
Functional
PERIOD
Long
term
Short
term
APPROACH
PROACTIVE
FORMULATION
FORMAL INFORMAL
IMPORTANCE
REACTIVE STRATEGIC OPERATIONAL
PLANNING

6. ACTIVITY COVERED
Corporate Planning :
Determines long-term objectives of an organisation as
whole
Generates plans to achieve these objectives
Future orientated
Integrated
Functional planning :
Undertaken for sub functions witin each major functions
Derived from corporate planning.
Segmental

7. TIME-PERIOD
Depends on the type of the buisness and structure of
the organisation.
LONG TERM :
Strategic in nature.
Involves generally 3-5 years.
It relates to matters like new product ,product
diversification .

8. SHORT
TERM :
• Short term planning typically covers time
frames of less than one year in order to assist
the company in moving gradually toward its
longer term.
• Examples are the skills of the employees and
their attitudes. The condition of production
equipment or product quality problems are also
short-term concerns.

9. APPROACH
• PROACTIVE PLANNING :
 Designing suitable course of action in anticipation of
likely
• changes in relevant environment.
 To take decision in advance.
 Eg : Emergency organisations
• REACTIVE PLANNING :
 Reactive planning is the process whereby future action
is dictated as a response to whatever has already, or is
now occurring.
 Eg. Hotel Manager.

10. DEGREE OF FORMALISATION
FORMAL PLANNING :
 It is a structured plan.
 It has some procedure to follow.
 Written record is followed in formal plan.
 Eg. Five year plan of a country.
INFORMAL PLANNING
 It is unstructured plan.
 It does not have any procedure to follow.
 No record is maintained for future purpose.

11. IMPORTANCE OF CONTENTS
STRATEGIC :
It sets future directions of the
organization in which it wants to proceed in future.
It involves a time horizon of more than one year and for most
of the organization it ranges between 3 and 5 years.
 Strategic plans are generally developed by top level
management.
Eg. diversification of business into new lines, planned
grown rate in sales.

12. OPERATIONA
L
Operational plans are developed to determine
the steps necessary for achieving tactical goals..
They are used as a guide for day to day
operation by department managers.
These plans may cover a time frame of few
months, weeks or even a few days.

13. ADVANTAGES
Planning facilitates management by
objectives
Planning minimizes uncertainties
Planning facilitates co-ordination
Planning improves employee’s morale
Planning helps in achieving economies
Planning facilitates controlling
Planning provides competitive edge
Planning encourages innovations

14. Planning facilitates management by
objectives
Planning begins with determination of objectives.
It highlights the purposes for which various activities are
to be undertaken.
In fact, it makes objectives more clear and specific.
Planning helps in focusing the attention of employees on
the objectives or goals of enterprise.
Without planning an organization has no guide.
Planning compels manager to prepare a Blue-print of
the courses of action to be followed for accomplishment
of objectives.
Therefore, planning brings order and rationality into the
organization.

15. Planning minimize uncertainties
Business is full of uncertainties.
There are risks of various types due to uncertainties.
Planning helps in reducing uncertainties of future as it
involves anticipation of future events.
Although future cannot be predicted with cent percent
accuracy but planning helps management to anticipate
future and prepare for risks by necessary provisions to
meet unexpected turn of events.
Therefore with the help of planning, uncertainties can
be forecasted which helps in preparing standbys as a
result, uncertainties are minimized to a great extent.

16. Planning facilitates coordination
Planning revolves around organizational goals.
All activities are directed towards common goals.
There is an integrated effort throughout the
enterprise in various departments and groups.
It avoids duplication of efforts. In other words, it
leads to better co-ordination.
It helps in finding out problems of work
performance and aims at rectifying the same.

17. Planning improves employee’s
morale.
Planning creates an atmosphere of order
and discipline in organization.
Employees know in advance what is
expected of them and therefore conformity
can be achieved easily.
This encourages employees to show their
best and also earn reward for the same.
Planning creates a healthy attitude towards
work environment which helps in boosting
employees morale and efficiency

18. Planning helps in achieving
economies
Effective planning secures economy since it leads to
orderly allocation ofresources to various operations.
It also facilitates optimum utilization of resources which
brings economy in operations.
It also avoids wastage of resources by selecting most
appropriate use that will contribute to the objective of
enterprise. For example, raw materials can be purchased
in bulk and transportation cost can be minimized. At the
same time it ensures regular supply for the production
department, that is, overall efficiency

19. Planning facilitates controlling
Planning facilitates existence of certain planned
goals and standard of performance.
It provides basis of controlling.
We cannot think of an effective system of controlling
without existence of well thought out plans.
Planning provides pre-determined goals against
which actual performance is compared.
In fact, planning and controlling are the two sides of
a same coin. If planning is root, controlling is the fruit.

20. Planning provides competitive
edge.
Planning provides competitive edge to the enterprise over
the others which do not have effective planning. This is
because of the fact that planning may involve changing in
work methods, quality, quantity designs, extension of
work, redefining of goals, etc.
With the help of forecasting not only the enterprise
secures its future but at the same time it is able to
estimate the future motives of it’s competitor which helps
in facing future challenges.
Therefore, planning leads to best utilization of possible
resources, improves quality of production and thus the
competitive strength of the enterprise is improved

21. Planning encourages
innovations.
In the process of planning, managers have the
opportunities of suggesting ways and means of
improving performance.
Planning is basically a decision making function
which involves creative thinking and imagination
that ultimately leads to innovation of methods
and operations for growth and prosperity of the
enterprise

22. Limitations of
Planning

23. Costly process
 Planning involves too much expenditure. Money
and effort both are required in planning.
Planning includes collecting information, data
forecasting and evaluation of alternatives. It
requires salary and allowances to the experts in
the process of providing services.
So, planning has been accepted as costly
process by small and medium size organization

24. Time consuming
Planning is the time consuming process. It
delays the business activity to come in action.
In the process of planning following the
procedures of planning takes a lot of time which
may create problem to the organization where
immediate action has to be made. So in such
situation planning is not suitable.

25. False sense of
security
Planning encourages false sense of
security against future risk and uncertainty.
As future is uncertain, it is unpredictable.
Therefore, planning cannot give accurate
and reliable results.

26. RAPID CHANGE
Rapid changes in technology ,consumer
tastes and prefernces are further limitations
to planning.
Eg.: Planning in aircraft
,chemical,electronic and information
industries is specially complicated due to
acceptionally complex and rapidly changing
production technology.

27. PREMIUM ON PRESENT
Present is always more real than the future , and
present problems seem to be more urgent than
the future problems.
Many of us are inclined to take care of today
and hope that tomorrow will take care
of itself . This is normal human tendency but in
fact we have to take take care of today as well
as tommorow.

28. Advantages and
Disadvantages of
Strategic
Management

29. Strategic Management vs.
Strategic Planning
I have deliberately used the words strategic management and NOT strategic
planning. Webster's defines planning as "a proposed or intended course of
action, or a formulated scheme setting out stages of procedure". Oxford
defines planning as a "formulated or organized method by which a thing is to
be done". Yet, when we think of management we tend to think of a systems
approach to the optimization of the organization.
Strategic planning still has the connotation of a process that is discrete,
separate, and independent from the business of an organization. While
strategic management connotes the planning, implementation, evaluation, on-
going maintenance, and adjustment of the organization's strategy. Because I
believe that strategic management is an integral aspect of an organization's
business and not just a once per every three-year retreat, I have used the term
strategic management.

30. The Advantages of Strategic Management
Discharges Board Responsibility
The first reason that most organizations state for having a
strategic management process is that it discharges the
responsibility of the Board of Directors.
Forces An Objective Assessment
Strategic management provides a discipline that enables the
board and senior management to actually take a step back from
the day-to-day business to think about the future of the
organization. Without this discipline, the organization can
become solely consumed with working through the next issue or
problem without consideration of the larger picture.

31. The Advantages of Strategic Management
Provides a Framework For Decision-Making
Strategy provides a framework within which all staff can make day-to-day
operational decisions and understand that those decisions are all moving the
organization in a single direction. It is not possible (nor realistic or appropriate)
for the board to know all the decisions the executive director will have to
make, nor is it possible (nor realistic or practical) for the executive director to
know all the decisions the staff will make.
Strategy provides a vision of the future, confirms the purpose and values of an
organization, sets objectives, clarifies threats and opportunities, determines
methods to leverage strengths, and mitigate weaknesses (at a minimum). As
such, it sets a framework and clear boundaries within which decisions can be
made.
The cumulative effect of these decisions (which can add up to thousands over
the year) can have a significant impact on the success of the organization.
Providing a framework within which the executive director and staff can make
these decisions helps them better focus their efforts on those things that will
best support the organization's success.

32. The Advantages of Strategic Management
Supports Understanding & Buy-In
Allowing the board and staff participation in the strategic
discussion enables them to better understand the direction, why
that direction was chosen, and the associated benefits. For some
people simply knowing is enough; for many people, to gain their
full support requires them to understand.
Enables Measurement of Progress
A strategic management process forces an organization to set
objectives and measures of success. The setting of measures of
success requires that the organization first determine what is
critical to its ongoing success and then forces the establishment
of objectives and keeps these critical measures in front of the
board and senior management.

33. The Advantages of Strategic Management
Provides an Organizational Perspective
Addressing operational issues rarely looks at the whole
organization and the interrelatedness of its varying components.
Strategic management takes an organizational perspective and
looks at all the components and the interrelationship between
those components in order to develop a strategy that is optimal
for the whole organization and not a single component.

34. The Disadvantages of Strategic Management
The Future Doesn't Unfold As Anticipated
One of the major criticisms of strategic management is that it
requires the organization to anticipate the future environment in
order to develop plans, and as we all know, predicting the future
is not an easy undertaking. The belief being that if the future does
not unfold as anticipated then it may invalidate the strategy
taken.
Recent research conducted in the private sector has
demonstrated that organizations that use planning process
achieve better performance than those organizations who don't
plan - regardless of whether they actually achieved their intended
objective. In addition, there are a variety of approaches to
strategic planning that are not as dependent upon the prediction
of the future.

35. The Disadvantages of Strategic Management
It Can Be Expensive
There is no doubt that in the not-for-profit sector there are many
organizations that cannot afford to hire an external consultant to
help them develop their strategy. Today there are many
volunteers that can help smaller organizations and also funding
agencies that will support the cost of hiring external consultants
in developing a strategy.
Regardless, it is important to ensure that the implementation of a
strategic management process is consistent with the needs of the
organization, and that appropriate controls are implemented to
allow the cost/benefit discussion to be undertaken, prior to the
implementation of a strategic management process.

36. The Disadvantages of Strategic Management
Long Term Benefit vs. Immediate Results
Strategic management processes are designed to provide an
organization with long-term benefits. If you are looking at the
strategic management process to address an immediate crisis
within your organization, it won't. It always makes sense to
address the immediate crises prior to allocating resources (time,
money, people, opportunity, cost) to the strategic management
process.

37. The Disadvantages of Strategic Management
Impedes Flexibility
When you undertake a strategic management process, it will result in the
organization saying "no" to some of the opportunities that may be available. This
inability to choose all of the opportunities presented to an organization is
sometimes frustrating. In addition, some organizations develop a strategic
management process that become excessively formal. Processes that become this
"established" lack innovation and creativity and can stifle the ability of the
organization to develop creative strategies. In this scenario, the strategic
management process has become the very tool that now inhibits the organization's
ability to change and adapt.
A third way that flexibility can be impeded is through a well-executed alignment
and integration of the strategy within the organization. An organization that is well
aligned with its strategy has addressed its a structure, board, staffing, and
performance and reward systems. This alignment ensures that the whole
organization is pulling in the right direction, but can inhibit the organization's
adaptability. Again, there are a variety of newer approaches to strategy
development used in the private sector (they haven't been widely accepted in the
not-for-profit sector yet) that build strategy and address the issues of
organizational adaptability.

38. Strategic and Operational
Planning

39. XFL
A great idea does not guarantee success. In fact,
for every ten products introduced, eight fail. The
reason for this high rate of failure? Poor planning.
A prime example is the now-defunct XFL, which
was the World Wrestling Federation’s attempt at
developing a new professional football league.

40. In strategic planning, management develops a
mission and long-term objectives and determines
in advance how they will be accomplished.
In operational planning, management sets short-
term objectives and determines in advance how
they will be accomplished.
Strategic vs. Operational Planning

41. The Strategic Process
• Develop mission
• Analyze environment
• Set objectives
• Develop strategies
• Implement and control strategies

42. Three Levels of Strategies
• Corporate
• Business
• Functional

43. Situation Analysis
Draws out those features in a company’s
environment that most directly frame its strategic
window of options and opportunities.

44. Situation Analysis: Three Parts
• Analysis of the company’s industry and its
competition
• Analysis of the company’s particular situation
• Analysis of the company’s competitive advantage
(or lack thereof)

45. Five Competitive Forces
• Rivalry among competing firms
• Potential development of substitute products and
services
• Potential entry of new competitors
• Bargaining power of suppliers
• Bargaining power of consumers

46. • Step 1: Assess present strategy
• Step 2: Analyze SWOTs
• Step 3: Assess competitive strength
• Step 4: Make conclusions
• Step 5: Decide what issues to address
Company Analysis: Five Steps

47. Competitive Advantage
Specifies how the organization offers unique
customer value.
• What makes us different from our competition?
• Why should a person buy our product or service
over the competition’s?

48. • Goals state general targets to be accomplished.
• Objectives state what is to be accomplished in
specific and measurable terms by a certain target
date.
Goals and Objectives

49. Management by Objectives
MBO is the process by which managers and their
teams jointly set objectives, periodically evaluate
performance, and reward according to the results.

50. Grand Strategies
• Growth
• Stability
• Turnaround and Retrenchment
• Or a combination thereof

51. Corporate Growth Strategies
• Concentration
• Backward integration
• Forward integration
• Related and unrelated diversification
• Mergers
• Acquisitions

52. Business Portfolio Analysis
• Corporations determine which lines of business
they will be in and how they will allocate resources
among the different lines.
• A business line—also called a strategic business
unit (SBU)—is a distinct business with its own
customers that is managed reasonably and
independently of the corporation’s other
businesses.

53. BCG Growth-Share Matrix
• Cash cows
• Question marks
• Stars
• Dogs

54. Business-Level Strategy
• Adaptive Strategies: prospecting, defending, and
analyzing.
• Competitive Strategies: Michael Porter identifies
three effective business-level : differentiation, cost
leadership, and focus.

55. Product Life Cycle
• Introduction
• Growth
• Maturity
• Decline

56. Functional-Level Strategies
Operational strategies are used by every functional-
level department—marketing, operations, human
resources, finance—to achieve corporate- and
business-level objectives.