GENERAL MANAGEMENT
CHECK POINT 8: STRATEGIC PLANNING
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GENERAL MANAGEMENT
CHECK POINT 8: STRATEGIC PLANNING
Please Select Any Topic In Check Point 8 Below And Click. |
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DO I NEED TO KNOW THIS CHECK POINT?
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WELCOME TO CHECK POINT 8 |
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HOW CAN YOU BENEFIT FROM CHECK POINT 8? |
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| The main purpose of this check point is to provide you and your management team with detailed information about Strategic Planning, and how to apply this information to maximize your company's performance. |
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| In this check point you will learn |
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• What is strategic planning?
• About the advantages of strategic planning.
• About the basic steps in the strategic planning process.
• About the guidelines for defining a successful company's mission.
• About various elements of a company's mission statement and objectives.
• About the classification of a company's short-, medium-, and long-term objectives.
• About two prime tasks of a company's situational analysis.
• How to conduct your company's environmental analysis.
• How to conduct your company's lean business analysis.
• How to develop, evaluate and select the best strategy for your business... and much more. |
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LEAN MANAGEMENT GUIDELINES FOR CHECK POINT 8 |
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| You and your management team should become familiar with the basic Lean Management principles, guidelines, and tools provided in this program and apply them appropriately to the content of this check point. |
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| You and your team should adhere to basic lean management guidelines on a continuous basis: |
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Treat your customers as the most important part of your business. |
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Provide your customers with the best possible value of products and services. |
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Meet your customers' requirements with a positive energy on a timely basis. |
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Provide your customers with consistent and reliable after-sales service. |
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Treat your customers, employees, suppliers, and business associates with genuine respect. |
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Identify your company's operational weaknesses, non-value-added activities, and waste. |
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Implement the process of continuous improvements on organization-wide basis. |
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Eliminate or minimize your company's non-value-added activities and waste. |
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Streamline your company's operational processes and maximize overall flow efficiency. |
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Reduce your company's operational costs in all areas of business activities. |
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Maximize the quality at the source of all operational processes and activities. |
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Ensure regular evaluation of your employees' performance and required level of knowledge.
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Implement fair compensation of your employees based on their overall performance.
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Motivate your partners and employees to adhere to high ethical standards of behavior. |
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Maximize safety for your customers, employees, suppliers, and business associates. |
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Provide opportunities for a continuous professional growth of partners and employees. |
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Pay attention to "how" positive results are achieved and constantly try to improve them. |
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Cultivate long-term relationships with your customers, suppliers, employees, and business associates. |
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1. WHAT IS STRATEGIC PLANNING? |
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WHAT IS A STRATEGY? |
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Business owners and managers must be fully familiar with effective strategic planning procedures which represent the key to success for every business organization.
The word "strategy" derives from the Greek word "strategos", which can be translated as "the art of the general". In business terms, Strategy represents a detailed, comprehensive, and integrated plan designed to assure that the mission and objectives are met. (16)
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WHAT IS STRATEGIC PLANNING? |
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Strategic Planning is designed to provide the overall long-term direction for your business. Strategic planning is the process of defining the organization's mission and objectives, examining the existing situation, identifying opportunities and threats, developing and selecting strategies, and establishing methods necessary to achieve specific objectives.
In simplified terms, strategic planning represents a Long-Term Planning Process which aims at defining and achieving organizational goals.
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STRATEGIC PLANNING IN A SMALL BUSINESS |
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The basic Principles Of Strategic Planning apply with the same degree of importance to large, medium-sized, and small organizations alike. This is similar to the need for a good compass on a large ocean liner or on a small speeding boat in the middle of the ocean.
Although managers in small organizations take a less formal approach and spend less time on the strategic planning activity, the basic issues remain the same. Some owners and managers of small organizations assume that strategic planning is an expensive and time-consuming exercise designed only for large organizations. Such assumptions, however, are incorrect.
Several studies conducted recently throughout the United States indicate that strategic planning helps many small and medium-sized organizations to attain a higher growth rate and improve profitability.
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HOW OFTEN SHOULD YOU DO STRATEGIC PLANNING? |
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As a business owner, you must formulate a Strategic Plan for your company at least once a year. Other members of your management team are also expected to participate in the strategic plan development by providing relevant information and by helping to select an appropriate course of action.
A strategic plan is designed to provide guidance to the management team for a long period and must remain clear and flexible at all times. Clarity and flexibility are particularly important since every organization operates in a competitive and constantly changing business and social environment.
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ADDITIONAL INFORMATION ONLINE |
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2. ADVANTAGES OF STRATEGIC PLANNING |
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THE ROLE OF STRATEGIC PLANNING |
Strategic Planning plays a critical role in successful organizational development and offers a number of important advantages outlined below. |
ADVANTAGES OF STRATEGIC PLANNING |
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It leads management toward understanding the company's mission. |
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It serves to formulate organizational objectives and create unity of purpose among employees. |
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It guides management in conducting a situational analysis and creates awareness of opportunities and threats in the marketplace. |
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It results in development of strategies, policies, rules, and regulations essential for achieving organizational objectives. |
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It provides a framework for effective decision making about various strategic and operational issues. |
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It reduces the risk of making incorrect managerial decisions, thus ensuring effective organizational performance and favorable results. |
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ADDITIONAL INFORMATION ONLINE |
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3. STEPS IN THE STRATEGIC PLANNING PROCESS |
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THE STRATEGIC MANAGEMENT PLANNING PROCESS |
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Your Strategic Management Plans should be developed in accordance with Lean Management principles, guidelines, and tools provided in this program. For this reason, you and your management team must become familiar with these guidelines and apply them accordingly to your business organization.
The Strategic Management Planning Process entails a number of steps which are outlined below. If you are a one-person business owner, or a small business owner with few employees, you may take a less formal approach in comparison with a larger company. However, keep in mind that each element of the strategic planning process must be implemented
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STEPS IN THE STRATEGIC MANAGEMENT PLANNING PROCESS |
Step 1: Define Your Company's Mission.
Step 2: Establish Your Company's Objectives.
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Step 3: Conduct Your Company's Situational Analysis.
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Conduct Environmental Analysis And
Identify Your Company's Opportunities And Threats |
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Conduct Lean Business Analysis And
Identify Your Company's Strengths
And Weaknesses |
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Step 4: Develop And Evaluate Alternative Strategies.
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Step 5: Select The Most Suitable Strategy.
Step 6: Develop Supporting Plans.
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Step 7: Implement Strategy And Supporting Plans.
Step 8: Evaluate Strategy And Supporting Plans.
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ADDITIONAL INFORMATION ONLINE |
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4. DEFINE YOUR COMPANY'S MISSION |
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STEP 1: DEFINE YOUR COMPANY'S MISSION |
Strategic Planning is a process of defining the organization's mission and objectives, examining the existing situation, identifying opportunities and threats, developing and selecting strategies, and establishing methods necessary to achieve specific objectives.
Many managers and entrepreneurs never really bother to define the Mission of their companies. They simply believe that their only mission is to make as much money as possible as quickly as possible. This kind of attitude is particularly popular among those individuals who are driven by greed and selfishness. It appears, however, from examples produced by many hundreds of thousands of failed businesses, that such an attitude is usually short-lived.
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WHAT SHOULD YOUR COMPANY'S MISSION BE? |
You should remember that, although making a profit is an integral part of internal objectives, your organization does not operate in isolation from the External Environment. In fact, no organization can survive alone.
As Peter F. Drucker suggests:
"There is only one valid definition of business purpose: to create a satisfied customer".
It is essential therefore that you turn your attention to your current and potential customers' needs and develop strong commitment to Lean Management culture, principles, and guidelines. According to these guidelines:
The customer is the most important part in the business process and all efforts should be made to ensure that every customer receives maximum value, based on best possible quality, reliability, and price.
Once you and your management team adopt lean management guidelines and develop a lean culture within your organization, your company's mission should be:
To provide our customers with the best possible value of products and services, based on quality, reliability, price, and after-sales service and, if applicable, to develop a long-term mutually beneficial business relationship.
To achieve this, you should take into consideration sound guidelines for a successful Company's Mission outlined below.
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GUIDELINES FOR A SUCCESSFUL COMPANY'S MISSION |
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Genuine Respect For Customers And Employees.
All customers, employees, suppliers, and business associates, should be treated with a genuine respect at all times. |
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Products And Services.
Products and services offered to customers should be of the best possible value based on quality, reliability and price. |
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Customers' Satisfaction.
Products, services, and after-sales services should be available in accordance with customers' needs on a continuous basis. |
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Working Standards.
Professional and ethical standards related to customers, employees, suppliers, and business associates should be maintained at a high level on a continuous basis. |
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Employee Safety And Satisfaction.
All employees should be provided with a safe working environment and receive fair treatment and compensation for their work. |
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Profitability And Return On Shareholders' Investment.
The business organization should achieve desired level of profitability and fair return on shareholders' investment. |
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WHAT MAY INFLUENCE YOUR COMPANY'S MISSION? |
The process of defining the organization's Mission is also influenced by the specific values, aspirations, education, experience, and socio-economic background of its top management. It is essential, therefore, to examine these factors and to ensure their positive effect on the Company's Mission Statement. Generally, such a statement should include a number of important elements outlined below. (18)
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ELEMENTS OF A COMPANY'S MISSION STATEMENT |
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Customers.
Who are our customers and what are their specific needs? |
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Products And Services.
What is the purpose of our company in terms of its basic products or services? |
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Markets.
What is the purpose of our company in terms of its primary markets? |
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Technology.
PWhat is the purpose of our company in terms of its major technologies? |
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Operating Philosophy.
What is the nature of the external environment that determines the operating philosophy of the company? |
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Corporate Culture.
What is our organizational culture? |
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Working Environment.
What type of working climate exists within our company? |
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Employees.
What type of people does this climate attract? |
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ADDITIONAL INFORMATION ONLINE |
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5. ESTABLISH YOUR COMPANY'S OBJECTIVES |
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STEP 2: ESTABLISH YOUR COMPANY'S OBJECTIVES |
Once the company's mission is defined, you can proceed with establishing your Company's Objectives. These objectives, also known as Corporate Objectives, or performance objectives, represent the end toward which various organizational activities are aimed.
Corporate objectives are essential in every area of your company's operations where performance and results directly affect the existence and success of your organization. Peter F. Drucker suggests that the company's corporate objectives should be set in the following areas outlined below. (19)
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ELEMENTS OF A COMPANY'S OBJECTIVES |
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Customer Satisfaction.
How should our company achieve maximum customer satisfaction on a continuous basis? |
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Market Standing.
What should our company achieve in the marketplace? |
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Innovation.
What should our company contribute to the marketplace? |
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Productivity.
What should our company's level of productivity be? |
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Physical And Financial Resources.
What should our company's level of physical and financial resources be? |
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Profitability.
What should our company's level of profitability be? |
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Managers' Performance And Development.
What should our managers' level of performance and development be? |
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Workers' Performance And Attitude.
What should our workers' level of performance and attitude be? |
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Social Responsibility.
What should our company's level of responsibility in the marketplace be? |
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EFFECTIVENESS OF A COMPANY'S OBJECTIVES |
You and management team must develop your company's objectives in accordance with Lean Management guidelines discussed in detail in this Tutorial. It may also be helpful to study and implement Hoshin Planning within your organization to maximize operational performance.
In order to remain effective, the company's Corporate Objectives should specify not only "what" management plans to accomplish, but also "when" the results should be attained. For this reason, all corporate objectives may be classified into three types of time-spans illustrated below.
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CLASSIFICATION OF A COMPANY'S OBJECTIVES |
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Short-Term
Objectives
(Up to one year) |
Medium-Term
Objectives
(One to five years) |
Long-Term
Objectives
(Five years or more) |
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SMART GOALS |
SMART Goals were introduced by George Doran , Arthur Miller, and James Cunningham in their article "There's A S.M.A.R.T. Way To Write Management's Goals And Objectives" published in November 1981 issue of Management Review.
According to authors, business owners and managers must define their goals and objectives based on the following S-M-A-R-T Goal acronym as outlined below. |
HOW TO SET SMART GOALS? |
S. |
Specific.
Goals and objectives must be clearly defined and specify the following:
• Who is involved?
• What needs to be accomplished?
• Where the work must be done?
• Why the work must be done?
• When the work must begin?
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Measurable.
Goals and objectives must be measurable to ensure that work progress can be evaluated.
• How much work must be done?
• How will the work be measured?
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Attainable
Goals and objectives must be realistic and attainable.
• Can this goal be met during a particular period of time?
• Does the person, responsible for this task, have the capacity to complete it?
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R. |
Relevant
Goals and objectives must be relevant to the overall strategy of the organization.
• How does this goal or objective relate to our overall business strategy?
• How does this goal or objective relate to our specific departmental objectives?
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Time Related
Goals and objectives must be time related to meet the overall organizational objectives.
• How does this goal or objective fit with our overall long-term objectives?
• How does this goal or objective fit with our overall short-term objectives?
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| © Doran, G. T. (1981). There's A S.M.A.R.T. Way To Write Management's Goals And Objectives. Management Review, Volume 70, Issue 11 (AMA FORUM), pp. 35–36. Adapted. All rights reserved. |
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IMPORTANT NOTE ABOUT SETTING OBJECTIVES |
You and your management team must develop SMART Goals And Objectives, taking into consideration specific resources available to your company at any particular point in time.
Realistic and attainable objectives are important motivators of people in organizations because, generally, people like to try to achieve the objectives set for the organization. Hence, if they are set beyond the company's means, corporate objectives can have disastrous consequences, can increase frustration, and can reduce motivation among employees. (20)
Company's corporate objectives represent not only the final destination of the planning process, but also the final phase in organizing, leading, and controlling activities. These objectives should always remain flexible, clear, and consistent to provide the organization with an attainable set of goals.
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ADDITIONAL INFORMATION ONLINE |
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6. CONDUCT YOUR COMPANY'S SITUATIONAL ANALYSIS |
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STEP 3: CONDUCT YOUR COMPANY'S SITUATIONAL ANALYSIS
Once the organization's mission is defined and corporate objectives are established, you and your management team can begin Situational Analysis of your company. Such analysis consists of two prime tasks and entails a number of questions illustrated below.
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TWO PRIME TASKS OF SITUATIONAL ANALYSIS |
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Environmental Analysis |
Lean Business Analysis |
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QUESTIONS RELATED TO SITUATIONAL ANALYSIS |
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Where is our company now? |
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Where do we want our company to be in the near and distant future? |
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What must we do to get our company from where it is now to where we want it to be? |
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SWOT ANALYSIS
SWOT Analysis, also known as SWOT Matrix, represents a structured method for evaluating four critical factors related to a particular business organization, or a specific business project, product, service, or person:
• Strengths.
• Weaknesses.
• Opportunities.
• Threats.
SWOT Analysis was developed in the U.S. in the 1960's by Albert S. Humphrey, who was a management consultant specializing in organizational management.
SWOT analysis represents a practical management tool which is often used by business owners and managers in any type of a small, medium-sized, or large business organization.
SWOT Analysis is discussed in detail in Tutorial 1.
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ADDITIONAL INFORMATION ONLINE |
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7. ENVIRONMENTAL ANALYSIS |
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WHAT IS ENVIRONMENTAL ANALYSIS?
Environmental Analysis can be defined as:
"The process of evaluating the influence of factors external to the organization in terms of opportunities and threats to the company."
While conducting environmental analysis, you and your management team need to consider prevailing conditions in:
• The Economic Environment.
• The Social Environment.
• The Technological Environment.
• The Competitive Environment.
• The Global Business Environment.
This may enhance your understanding about current and future opportunities and threats in the marketplace.
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FACTORS RELATED TO EXTERNAL BUSINESS ENVIRONMENT |
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Economic Environment:
• How does current economic environment affect our business?
• What changes are expected in the economic environment in the near future?
• What opportunities do we have based on the expected changes in the economic environment?
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Social Environment
• How does current social environment affect our business?
• What changes are expected in the social environment in the near future?
• What opportunities do we have based on the expected changes in the social environment?
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Technological Environment:
• How does current technological environment affect our business?
• What changes are expected in the technological environment in the near future?
• What opportunities do we have based on the expected changes in the technological environment?
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Competitive Environment:
• How does current competitive environment affect our business?
• What changes are expected in the competitive environment in the near future?
• What opportunities do we have based on the expected changes in the competitive environment?
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Global Business Environment:
• How does current global business environment affect our business?
• What changes are expected in the global business environment in the near future?
• What opportunities do we have based on the expected changes in the global business environment?
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You and your management team must also evaluate External Factors related to your company's activities summarized below.
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EXTERNAL FACTORS RELATED TO A COMPANY'S ACTIVITIES |
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Customers:
• Who are our customers?
• What kind of customers do we want to attract in the future?
• What opportunities can we expect from current and potential customers?
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Suppliers:
• Who are our current suppliers?
• Where should we look for new suppliers in the future?
• How can suppliers help us in taking advantage of the marketplace?
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Competitors:
• Who are our current competitors?
• What kind of threat is presented to us by our competitors?
• What can we do to overcome the competitors' threat?
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Banks And Financial Institutions:
• How effective is the service obtained from our current bank?
• Where should we look for additional sources of finance in the future?
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Labor Unions (Applicable To Larger Organizations):
• What effect does the labor union have on our company at present?
• How do our employees feel about the unionization?
• What should our policy be toward labor unions in the future?
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Government Agencies:
• What effect do government agencies have on our company at present?
• How can we minimize the effect of government agencies in the future?
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ADDITIONAL INFORMATION ONLINE |
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8. COMPLETE LEAN BUSINESS ANALYSIS |
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WHAT IS LEAN BUSINESS ANALYSIS?
The second part of the situational analysis includes Lean Business Analysis of your organization. Lean business analysis can be defined as:
A methodical evaluation of the organization's operational activities and financial performance, designed to identify its strengths, weaknesses, and potential. Traditional Western-type management guidelines and lean management guidelines are used as a benchmark for evaluating operational activities.
The prime elements of lean business analysis are outlined below.
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TWO ELEMENTS OF LEAN BUSINESS ANALYSIS |
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