MGT492: Managing People & Organizations

Lecture 11:Chapter 5: : The Strategic and The Strategic and Operational Planning ProcessOperational Planning ProcessInstructor: Dr. Aisha AzharCOMSATS Virtual Campus

Last lecture overview

• Planning Dimensions• Types of plans– Standing versus single use plans

• Contingency plans• Strategic and Operational Planning• Industry and Competitive Situation Analysis

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Industry and Competitive Situation Analysis

• Situation Analysis– Draws out those features in a company’s

environment that most directly frame its strategic window of options and opportunities.

• Five Competitive Forces (Porter)– Rivalry among competing sellers in the industry– Threat of substitute products and services– Potential new entrants– Power of suppliers– Power of buyers 3

Starbuck’s Five-Force Competitive Analysis

Exhibit –54

Company Situation Analysis Steps

Exhibit 5–6

1. Assessment of the present strategy based on performance.

1. Assessment of the present strategy based on performance.

2. SWOT analysis.2. SWOT analysis.

3. Competitive Strength Assessment (competitive advantage).

3. Competitive Strength Assessment (competitive advantage).

4. Conclusions concerning competitive position.

4. Conclusions concerning competitive position.

5. Determination of the strategic issues and problems that need to be addressed through strategic processes.

5. Determination of the strategic issues and problems that need to be addressed through strategic processes.

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SWOT Analysis for Starbucks Coffee

Exhibit 5–76

Competitive Strength Assessment for Starbucks Coffee

Exhibit 5–87

Competitive Advantage• Core Competency– A functional capability (strength) that the firm does

well and one that creates a competitive advantage for the firm.

• Benchmarking– The process of comparing an organization’s

products or services and processes with those of other companies.

• Environmental Scanning– Searching the external environment for

opportunities and threats.8

Setting Objectives

• Objectives– State what is to be accomplished in singular,

specific, and measurable terms with a target date.

• Goals– Are general targets to be accomplished that are

translated into actionable objectives.

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Writing Objective Model

Model 5–110

Criteria That Objectives Should Meet

Exhibit 5–911

Management by Objective (MBO)• Management by Objectives

Step 1. Set individual objectives with plansjointly with employees.

Step 2. Give feedback and evaluate.Step 3. Reward performance according to results.

• Sources of MBO Failures– Lack of top management commitment and

follow-through on MBO.– Employees’ negative beliefs about

management’s sincerity in its efforts to include them in the decision-making process. 12

Corporate-Level Strategy

• Grand Strategies– Growth– Stability– Turnaround and

retrenchment– Combination

• Growth Strategies– Concentration– Backward and forward

integration– Related and Unrelated

diversification

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