Strategic and Operative Planning & Control

• Strategic planning and control is a key aspect of management
• Operative planning and control is also a key aspect of management

Strategic Planning and Control

• Strategic planning answers:
  • Which business to engage in
  • How to compete
  • what the long-term competences are
• Strategy: An elusive concept
  • It establishes the firm's activity field or domains
  • It's competition-related
  • It considers environmental situations
  • It considers internal resources
  • It reflects central attitudes, wishes, and values
  • It is directed at the whole business
  • It has a high importance for the asset and earnings situation
  • It is future- oriented
  • It can be the result of a systematic planning process
• Businesses typically follow a general strategy for all divisions
• Functional strategy differentiates from overall strategy
• The SWOT analysis is based upon
  • Environment (opportunities and risks)
  • Strategic options
  • Strategic choices
  • Strategic programs
  • Realization
  • Strengths/weaknesses of company
  • Strategic control

Macro Environment Analysis

• The entirety of a business's environment can be separated to identify factors and trends
• The macro environment consists of
  • Political-juridical environment
  • Economic environment
  • Ecological environment
  • Social environment
  • Technological environment
  • Customers
  • Competitors
• Relevant factors can not be determined generally
• An analysis of the macro environment is needed
• Dynamics in the social environment can influence industry dynamics

Environmental impacts

• A company in the global environment is subject to technological developments
• Industries are in different developmental stages

Industry Analysis

• Porter showed that average return is dependent on the industry

Porter's 5 Forces

• The closer economic environment can be analyzed with the 5 forces
  • Threat of new competitors
  • Bargaining power of suppliers
  • Bargaining power of customers
  • Threat of substitute products
  • Rivalry among existing competitors
• High supplier power negatively affects attractiveness of business if:
  • Only a few suppliers make up the market
  • product is differentiated
  • no alternative substitutes are available
  • customer bears the cost of switching supplier
  • customer acquires a potential supplier
• High customer power negatively affects attractiveness of business if:
  • customer market is concentrated
  • product is not differentiated
  • customer has high volumes
  • low or no switching costs
  • customer has low margins
  • supplier acquires customer
• Substitute products lower attractiveness if
  • low switching costs
  • low costs
  • higher quality
  • equal functionality
• New entrants reduce the attractiveness of a business. if low market entry barriers
  • scaling effects
  • high capital demands
  • no access to sales channels
  • strong differentiated products
  • industry legally regulated
  • knowledge / skills are hard to obtain
• Rivalry among competitors increases competitiveness if
  • lots of competitors exist
  • overcapacity
  • products are not differentiated
  • high market exit barriers
• Porter's model aids in pharma industry analysis
• High market share leads to highest profitability
• Scoring models can be used to systematically make a selection between different business areas along criteria
  • systematic procedure, high transparency, possibility of objectification , Basis for communication
  • Danger of fake accuracy, danger of misuse through randomness, complex process
• Key is recognizing company competences
  • outside-in perspective
  • customer orientation
  • value- creation focus
  • internal and external prospective
• The value chain principle delivers a systematic overview of business - infrastructure, HR, Tech development , procurement, inbound logistics, Ops, marketing and sales, Outbound logistics, service

Approaches to competitive strategies

• The VRIN/VRIO catalogue helps identify strategic resources for competitive advantage
  • valuable
  • rare
  • imperfectly imitable
  • non-substitutable
  • organisation
• Differentiation and cost-leadership are key alternatives for strategy creation
• Porter recommended a focus on being either cost leader or Differentiation
• Diversification- Product Matrix after Ansoff is used for the strategy decision

Mintzberg classification

• Intended strategy is "Deliberate" + "Unrealized" strategies
• Realized strategy is "Deliberate" + "Emergent"Strategies
• Feasibility + Acceptance lead to desired Outcome

Dynamic approach to strategy

• In dynamic observation, intended strategies become emergent and visa versa

Pims project (Project on Impact of Market Strategies)

Is a research project with the Key goals:

• The empirical Detection of successful strategies of a company
• Data generation of 600 strategic business units in the USA:
• With important results that Market Volume is a Central Driver (return on invest) and Quality combined with Capital intensity

Three Control Types

• Differentiation in strategic monitoring, implementation control and premise control

Strategic Control

• Different Organizational structures for Control are - Staff department - Decentralization

Operative Planning and Control

• Operative planning characterized by
  • Decisions in functions in order to pursue Strategy goal
  • Time span between 1 & 2 years Operative planning has a scope, determined by:
  • strategic planning Operative planning should incorporate a level of flexibility The "real valued added" plan looks at (Buying, Production and Sales)

Plan Creation

Key planning elements

• Sales
• Research& Development
• Production:
• Investments
• HR
• Administration In the core, operative planning approaches to the handling of optimization models under constrains
• The plan creation process is dependent on the "valued added chain"*. In Detail consist of Cash Planning, Balancesheet and Profit Planning Key is the Balance of all partial planings