STRATEGIC PLANNING

INTRODUCTION
ANDREW MSAMI 1
CONTENTS
ANDREW MSAMI
2
1. STRATEGIC MANAGEMENT
2. KEY WORDS IN STRATEGIC
MANAGEMENT
3. STRATEGY FORMULATION
STRATEGIC MANAGEMENT
ANDREW MSAMI
3
A process with full set of
commitments, decisions, and
actions required for a firm to
achieve strategic competitiveness
and earn above average returns.
STRATEGIC INPUTS
ANDREW MSAMI
4
Necessary ingredients for formulation of a
strategy and its implementation
Strategic Inputs are derived from organizations
internal and external environment analyses
Sources of Strategic Inputs:
Resources: Land, Labour, Capital and
Entrepreneurship
Capabilities
Core competencies
Policies and Laws
Markets
STRATEGIC ACTIONS
ANDREW MSAMI
5
A pre requisite for achievement of desired
outcomes
Strategic Actions include
Development of focused Vision
Take advantage of and generate new
opportunities
Use existing strengths to clear the path
towards achievement of set goals
Manage Challenges and Risks effectively

STRATEGIC MANAGEMENT
CONCEPTS
ANDREW MSAMI
6
1. DECISION
2. STRATEGY
3. COMPETITIVENSS
4. ENVIORNMENT
5. GOALS AND OBJECTIVES

DECISION
ANDREW MSAMI
7
A choice made from available alternatives
making a choice is a major part of the
decision-making process, but it is only a
part
Decision-making: a process of
identification of problems and
opportunities, resolving and taking
advantage of them.
STRATEGY
ANDREW MSAMI
8
An integrated and
coordinated set of
commitment and actions
designed to exploit core
competencies and gain a
competitive advantages
STRATEGY
ANDREW MSAMI
9
The plan of action that prescribes
resources allocation and other
activities for dealing with the
environment achieving
competitive advantage and
attaining organization goals.
STRATEGY
ANDREW MSAMI
10
According to Jack Welch-strategy
is a living, breathing, totally
dynamic game in real life
strategy is very straight forward.
This means do not make strategic
planning too complex.
COMPETITIVENESS
ANDREW MSAMI
11
Rivalry
Finding as much as a possible
about your rival
Good and Services development
Strategic trust of their business
Levels of profitability

ENVIRONMENT
ANDREW MSAMI
12
Conditions: these are qualification
that an organization needs to
produce results
Context: represent the frame
under which the organization
operates.
GOAL AND OBJECTIVE
ANDREW MSAMI
13
GOAL
A desired future state that the organization
attempt to realize
OBJECTIVE
Derived from what the business is, will be and
should be
Action commitment
Performance measurement
Fundamental strategy of a business

CHARACTERISTICS OF
OBJECTIVE
ANDREW MSAMI
14
1. Operational
2. Concentration of resources and
efforts in relation to business
goals
3. Multiple in nature: balance a
variety of needs
4. Survival of the business
depends; they are factors of
success
STRATEGY
STRATEGY FORMULATION
ANDREW MSAMI 15
CONTENTS
1. PLANNING
2. ARTICULATION OF A VISION
3. CORE VALUES
4. CORE PURPOSE
5. DESIRED FUTURE (MISSION)
6. VISION


16
ANDREW MSAMI
PLANNING
ANDREW MSAMI
17
The act of determining
organization goals and the
means for achieving them.
General Colin Powell: no battle
plan survive contact with the
enemy
ARTICULATION OF A VISION
ANDREW MSAMI
18
VISION
An attractive ideal future that is credible yet not
readily attainable
Mental image
Desirable organization state
Dream
ARTICULATION OF VISION
ANDREW MSAMI
19
Vision is long term- a sense of direction
Organizations without a vision survive only in
the short run
Vision link value, purpose and Mission
Below a description of steps to articulate a
vision are given.
STEP1: GET A VISION IN
CONTEXT
ANDREW MSAMI
20
Leaders of Visionary organizations
make sure that people not only see the vision
but also live and breathe it
Make a vision come alive: clear, consistent, no
jargons, vivid and target not blurry
Show people the money if you want them to
live and breathe the vision
Communicate the vision and reinforce it with
rewards

STEP2: UNDERSTAND THE
CONTIBUTING FACTORS
ANDREW MSAMI
21
Visionary organization elements
of success:
Core Values
Core Purpose
A desired Future (Mission)
STEP3: CORE VALUES-
MEANING
ANDREW MSAMI
22
Definition of what you stand
for
Meaningful
Inspiration
Behaviors
The how of the mission
Means to the end
STEP3: CORE VALUES:
PARTICIPATION
ANDREW MSAMI
23
Process for construction of values
Participatory in nature: easy for small
organizations but tough for large organizations
Iterative process: the executive initiate,
employees poke and probe
Make Values:
A reality-majority participation
Excellence-create and reinforce desired behaviors
Ownership-let everyone be part of the
development and practice
STEP3: CORE:
CONSTRUCTION
ANDREW MSAMI
24
Questions for construction of core values:
1. If you were to start a new organization in a
different line of work what core values would
you build into the business?
2. If you won a lottery and decide to retire what
core values held in your organizations would
you continue to live by?
3. What core values would you tell your children
that you held at work and that you hope they
will hold when they are working adults?

STEP3: CORE VALUES:
EXAMPLES
ANDREW MSAMI
25
1. Act in a boundaryless fashion;
always search for and apply the
best ideas regardless of the
source
2. Be intolerant of bureaucracy
3. See change for the growth
opportunities it brings

STEP3: CORE VALUES:
EXAMPLES
ANDREW MSAMI
26
Values must be interpreted:
We treat customers the way we would want to
be treated
Interpretation
Never let profit centre conflict get in the way of
doing what is right for the customer
Give customers a good fair deal, great
customers relationship take time. Do not try to
maximize short term profit at the expense of
building enduring relationships
STEP3: CORE VALUES
EXAMPLES
ANDREW MSAMI
27
Interpretation continued:
Communicate daily with your customers, if
they are talking to you they cant be talking to
a competitor
Do not forget to say thank you
Note:
there is power in details make your values
detailed and powerful to communicate
behaviors you want to reinforce

STEP3: CORE VALUES AND
MISSION DISCONNECT
ANDREW MSAMI
28
Make sure there is no disconnect between
mission and core values otherwise collapsing
is inevitable
Examples:
Arthur Andersen: Audit and Consultancy
Functions
Enron: Energy Distribution and Trading
Functions
There will be painful times when you have
to say good by to people you really like
who just do not get the mission or live its
values
STEP4:CORE PURPOSE-
MEANING
ANDREW MSAMI
29
Intentions
Persistence
Perseverance
Determination
Rationale
Reasons for existence
The soul of the organization
Purpose does not change it inspire change

STEP4: CORE PURPOSE-
MEANING
ANDREW MSAMI
30
Definition of business purpose is customer
focused
It is the customer who defines the business
Look at your business from the outside
Who is the customer?
Where is the customer?
What does the customer buy?
Crucial questions in defining business purpose
must focus at who, where, what of the goods
or services offered?
STEP4: CORE PURPOSE-
IDENTIFICATION
ANDREW MSAMI
31
The following questions leads to identification of
purpose:
What activities are you engaged in? the response
from this question followed by asking 5 whys?
The 5 Whys approach is likely to get one closer to
the core purpose.
Successful business must ask this question:
What is our business?
Note: success always obsolete the very behaviors
that create it
STEP4: CORE PURPOSE-
EXAMPLES
ANDREW MSAMI
32
Walt Disney
To make people happy
3M
To solve unsolved problems innovatively
Purpose will never be totally fulfilled
STEP5: MISSION: MEANING
ANDREW MSAMI
33
A desired future
A unifying focal point of efforts
A catalyst for team spirit
Inspiration and relevancy to stakeholders
The mission communicates
Unrealized dreams
Hopes
Aspirations
Encourage forward momentum
STEP5: MISSION LINK TO
VALUES
ANDREW MSAMI
34
The mission describe where
you are going and values
describe behaviors that will
get you there.
STEP5: MISSION FOCUS ON
WINNING
ANDREW MSAMI
35
How Do we Intend to Win in this Business?
Answer the questions in terms of choices:
Business Environment
People fit with the business
Investment
Other Resources
Effective Mission balances the possible and
the impossible
Link mission to every decision to be made
STEP5: MISSION- EXTERNAL
AND INTERNAL AUDIENCES
ANDREW MSAMI
36
A mission symbolizes legitimacy to external
audience:
Investors
Customers
Suppliers

STEP5: MISSION- EXTERNAL
AND INTERNAL AUDIENCES
ANDREW MSAMI
37
A mission enhances employees commitment
to the organization
Source of motivation and commitment
Resources allocation
Guide to actions
Rationale for decisions
Standard of performance

STEP6: ARTICULATION OF THE
VISION
ANDREW MSAMI
38
Vision the bigger picture, vibrant and
energizing capable arousing passion and
emotions
A combination of thoughts from core values,
core purpose and mission.
Everything that is worthwhile starting with is a
vision of achievable future
STEP6: THE VISION
ANDREW MSAMI
39
Wish List
Generate wishes
Imagine an ideal situation
Explore possibilities
What will it take to make the wish come true
STEP6: VISION EXAMPLES
ANDREW MSAMI
40
1950S SONY VISION
Fifty years from now our brand name
will be as well known as any in the
world. and will signify innovation
and quality that rivals the most
innovative companies
anywhere.made in Japan will mean
something fine, not something
shoddy
SITUATION ANALYSIS
STRENGTH, WEAKNESS, OPPORTUNITIES
AND THREATS
ANDREW MSAMI 41
SWOT ANALYSIS
ANDREW MSAMI
42
A management tool to isolate key issues
Sources of Strengths and Weaknesses
Budgets
Financial ratios
Profit and Loss Statements
Surveys of employees attitudes and
satisfaction
SWOT ANALYSIS
ANDREW MSAMI
43
Sources of Opportunities and Threats
Customers
Government
Professional journals
Suppliers
Bankers
Friends
Consulatants
STRENGTHS AND
WEAKNESSES
ANDREW MSAMI
44
STRENGTHS
Positive internal characteristics that the
organization can exploit.
WEAKNESSES
Internal characteristics that might inhibit the
organization performance
ORGANIZATION ASSESSMENT
FOR STRENGTHS AND
WEAKNESS
ANDREW MSAMI
45
1. Management and Organization
2. Marketing
3. Human Resources
4. Finance
5. Production
6. Research and Development
MANAGEMENT AND
ORGANIZATION
ANDREW MSAMI
46
Parameters for the Assessment of Strengths and
Weaknesses
Management Quality
Staff Quality
Degree of centralization
Organization Structure
Planning, information, Control systems
MARKETING
ANDREW MSAMI
47
Parameters for the Assessment of Strengths and
Weaknesses
Distribution Channels
Market Share
Advertising Efficiency
Customer Satisfaction
Product or Service Quality
Sale Force Turnover

HUMAN RESOURCES
ANDREW MSAMI
48
Parameters for the Assessment of Strengths and
Weaknesses
Employees Experience, Education
Union Status
Turnover, Absenteeism
Work Satisfaction
Grievance management
FINANCE
ANDREW MSAMI
49
Parameters for the Assessment of Strengths and
Weaknesses
Profit Margins
Debt Equity Ratio
Inventory Ratio
Return on Investment
Credit Rating
PRODUCTION
ANDREW MSAMI
50
Parameters for the Assessment of Strengths and
Weaknesses
Plant Location
Machinery Obsolescence
Purchasing System
Quality Control
Productivity Efficiency

RESEARCH AND
DEVELOPMENT
ANDREW MSAMI
51
Parameters for the Assessment of Strengths and
Weaknesses
Basic Applied Research
Laboratory Capabilities
Research Programmes
New Products Innovation
Technology Innovation

OPPORTUNITIES AND
THREATS
ANDREW MSAMI
52
OPPORTUNITIES
Characteristics of an external environment that
have potential to help the organization achieve
or exceed its goals
THREATS
Characteristics of an external environment that
prevent the organization from achieving its
goals

ORGANIZATION ASSESSMENT
FOR OPPORTUNITIES AND
THREATS
ANDREW MSAMI
53
1. Political
2. Economic
3. Social-Cultural
4. Technological

POLITICAL
ANDREW MSAMI
54
Parameters for the Assessment of Opportunities and
Threats
Government type and stability
The rule of law
Regulatory Trends
Tax and Trade policies
Environmental and Consumer protection laws
ECONOMIC
ANDREW MSAMI
55
Parameters for the Assessment of Opportunities and
Threats
Economic Growth
Inflation Rate
Interest Rates
Labor supply and Demand
Per Capita Income (Disposable Income)
Resources
Competition
SOCIAL CULTURAL
ANDREW MSAMI
56
Parameters for the Assessment of Opportunities and
Threats
Attitude to Work
Population Growth and Age profile
Population Health
Education
Taboos
TECHNOLOGY
ANDREW MSAMI
57
Parameters for the Assessment of Opportunities and
Threats
Attitude towards technology
Research and Development Activities
Technology Transfer
Innovation in new technology
SWOT ANALYSIS
HOW TO CONDUCT SWOT ANALYSIS
ANDREW MSAMI 58
STEPS
ANDREW MSAMI
59
1. Preparation
2. Process and Ground Rules
3. Brainstorming: Strength, Weaknesses,
Opportunity and Threats
4. Establish and Prioritize Critical Strategic
Issues
5. Convert Critical Strategic Issues Into
Questions
6. Develop Goals and Objectives

STEP1: PREPARATION
ANDREW MSAMI
60
Prepare and develop the ideas for critical
issues identification
Invite members of the SWOT analysis
workshop
Provide them with draft ideas for critical issues
identification
STEP2: PROCESS AND
GROUND RULES
ANDREW MSAMI
61
Assemble the Group
Clarify the process
Establishment of Ground rules
Respect for all ideas
Team responsibility and focus is idea generation not
evaluation
Commitment to completion
Engage into critical issues Brainstorming
Document results of the brainstorming session

STEP: 3 BRAINSTORMING
SESSIONS
ANDREW MSAMI
62
Form Groups of 2s to work on earlier on
developed parameters for SWOT analysis
Allow each group of 2s to brainstorm on
strengths, weaknesses, opportunities and
Threats
Combine Groups of 2s to form groups of 4s
and 6s up to a point where a single team to
brainstorm to come up with a single list for
each of the strengths, weaknesses,
opportunities and threats
STEP4: ESTABLISH AND PRIORITIZE CRITICAL
STRATEGIC ISSUES
ANDREW MSAMI
63
Display the list of critical strategic issues
presented on
Strengths
Weaknesses
Opportunities
Threats
STEP4: ESTABLISH AND PRIORITIZE CRITICAL
STRATEGIC ISSUES
ANDREW MSAMI
64
Assign each participant with 8 votes
Invite each participant to choose 8 critical
strategic issues from the lists assigning each
of the selection one vote
Repeat the process for all participants
Record the votes assigned to each critical
strategic issues
Develop a fresh list of critical strategic issues
with the highest votes
STEP5:CONVERT CRITICAL ISSUES STATEMENTS INTO
QUESTIONS
ANDREW MSAMI
65
Ask SWOT analysis participants to convert
critical each of the critical strategic issues into
questions
Generate answers for each critical strategic
issue
Refine answers to formulate strategies
STRATEGIC PLANNING
RESULT MATRIX
ANDREW MSAMI 66
RESULT MATRIX-LOGICAL
FRAMEWORK MATRIX
ANDREW MSAMI
67
Logical Framework Matrix is a practical
management tool that helps to plan and
execute strategic initiatives
Align Goals and Objectives into measurable
and testable hypothesis.

RESULTS MATRIX-LOGICAL FRAMEWORK
MATRIX
ANDREW MSAMI
68
Logical Framework Matrix help to answer the
following Critical Strategic Questions:
1. What are we trying to accomplish?
2. How will we measure success?
3. What other conditions must exist?
4. How do we get there?
RESULTS MATRIX
ANDREW MSAMI
69
SAMPLE
OBJECTIVES SUCCES
MEASUREMENT
VERIFICATION ASSUMPTIONS
VISION
PURPOSE/MISSION
OUTCOMES
OUTPUTS
ACTIVITIES
INPUTS
EXAMPLE OF RESULT MATRIX-LOGFRAME
MATRIX
ANDREW MSAMI
70
PEMO CONSULT LIMITED RESULTS MATRIX
ANDREW MSAMI
71



THE END
REFERENCES
1. Drucker P.F (2008), Management Revised
Edition Collin Business New York
2. Draft R.L (2006), New Era of Management,
Thomson, New Delhi
3. Hitt M.A (2005) Strategic Management 6
th

Edition, Thomson, New Delhi
4. Harvard Business School (2003), Managing
Creativity and Innovation (practical Strategy
to encourage creativity) Harvard Business
Press, Boston
ANDREW MSAMI
72
REFERENCE
5. Jack Welch (2005), Winning Harper Collins,
New York
ANDREW MSAMI
73