Strategic Planning Processes

Strategy Definitions

• Strategy is the determination of long-run goals and objectives for an enterprise, and the adoption of courses of action necessary to achieve these goals. This involves allocating resources.

Why Strategy?

• Strategy provides direction and drives decision-making.
• It actively shapes, guides and motivates organizational action.

Traditional/Classic Strategic Planning

• Identify current mission, goals, and strategies.
• Conduct SWOT analysis (internal and external).
• Formulate specific strategies.
• Implement Strategies
• Evaluate Results

Realised Strategies

• Intended Strategies – as planned
• Emergent Strategy - patterns that develop from decisions over time
• Realised Strategy – the actual strategy implemented
• Unrealised Strategy – intended strategies that were not put into practice
• Emergent Strategies – retrospective incorporation into the intended strategy.

Top-Down/Bottom-Up (or Hybrid) Planning

• Traditional top-down approaches are supplemented by bottom-up feedback to increase flexibility and employee motivation.

Traditional Planning vs Agile Strategic Planning

• Traditional planning is rigid, top-down, and formal with intermittent approval/decisions, a slow/layered approach and formal documentation. Communication is cascading.
• Agile planning is informal, leverages agile methods, uses a continuous approach with empowered decision making, bite-sized communication and less documentation but more interaction and dialogue.

The Exploring Strategy Model

• Three interlinked circles: Strategic Position, Strategic Choices, Strategy in Action.
• Strategic Position: what a company can do and what it seeks to do - considering the organization's environment, capabilities, culture and purpose.
• Strategic Choices: available options that need to be evaluated.
• Strategy in Action: the choices made and how they are implemented.

PESTEL Analysis

• Political: Government policies, political stability, trade agreements.
• Economic: Growth rate, inflation, unemployment.
• Social: Demographics, cultural trends, health consciousness.
• Technological: Innovation, automation, R&D.
• Environmental: Sustainability, climate change, resource availability.
• Legal: Regulations, employment laws.

Porter's Five Forces

• Threat of new entrants: Includes barriers to entry, economies of scale, and access to distribution channels.
• Bargaining power of suppliers: Number of suppliers, uniqueness of products, switching costs.
• Bargaining power of buyers: Number of buyers, standardized product differentiation, price sensitivity.
• Threat of substitute products or services: Availability of substitutes, switching costs, price-performance trade-offs.
• Industry rivalry: Number of competitors, industry growth, product differentiation.

Industry Life Cycle

• Market Size, Development, Growth Stages

Capability (linked to strategic position)

• Resources and capabilities that produce diverse outcomes and performance within different firms. This is due to the distinctiveness of resources and capabilities.

Competitive Advantage(VRIO Model)

• The VRIO model helps to identify valuable, rare, inimitable and organized resources and creates a sustainable competitive advantage.

Purpose (linked to strategic position)

• Organizational purpose is defined by values, vision, and mission, with these factors underpinning vision and mission statements.

Culture (linked to strategic position)

• May differ from stated organizational values

Business Strategies (Analysis of Generic Business Choices and Strategic Options)

• Cost leadership
• Cost focus
• Differentiation

Innovation

• Developing new and unique products with premium pricing

Market Penetration

• Increase market share with existing markets and existing products.
• Attract competitors' customers.
• Improve existing products or services.
• Increase use of existing products.

Market Development

• Entering new markets with existing products.
• Target new segments.
• Employ new distribution channels.

Product Development

• Create new products for existing markets
• Enhance existing products
• Create product line extensions

Diversification

• Entering new markets with new products to spread risk, and increase financial stability.
• Include related and unrelated diversification.

Internalisation, Acquisitions and Alliances

• Drivers of internalisation, including government, market, cost and competitive drivers.
• Characteristics of internal development, including organic, growth, control, pace, investment, and risk.
• Joint ventures.

Strategy in Action: Strategy Development Approaches

• Top-down planning
• Iterative and incremental approaches

Evaluating (linked to Strategy in Action)

• Suitability - is the strategy appropriate for the organization's goals and the environment?
• Acceptability - what are the expected outcomes?
• Feasibility - are the resources and capabilities sufficient for implementation?
• Safety Framework

Changing and Organising (linked to Strategy in Action)

• Management of strategic change - nature of change influences the approach, including incremental and big-bang (realignment/transformation).
• McKinsey 7S Framework highlights the importance of all elements in achieving a shared vision.
• Identifying strategic objectives, including financial, customer, internal, operational, environmental, CSR, learning, and growth.

Summary

• Strategy is about making the right choices to win in business.
• Strategy occurs at different levels.
• Includes analytical and creative strategy processes.
• Strong analysis is necessary.
• Strategic alternatives must be developed.
• Strategic capabilities are crucial in the development process.
• Key elements such as technology, R&D, and operations contribute to competitive advantage.