Planning, Strategy, and Competitive Advantage
‘There is nothing more wasteful than becoming highly efficient at doing the wrong thing.’ Peter Drucker
Planning- Identifying and selecting appropriate goals and courses of action for an organization. Planning is necessary to give the organization a sense of direction and purpose. Can be used to coordinate and control the managers.
Strategy- decisions about what goals to pursue, what actions to take, and how to use resources to achieve goals
Mission Statement- declaration of an organization’s purpose that identifies the organization’s products and customers and distinguishes the organization from its competitors (usually very generally written, but with a clear purpose)
Steps of planning:
Determining the mission and goals
Formulating strategy
Implementing strategy –allocating resources and responsibilities
Mission Purpose, premises, values, directions
Strategic
Goals
Strategic
Plans
Tactical
Goals
Operational
Goals
Tactical
Plans
Operational
Plans
Strategy is the most general. Goal has to be evaluated – whether we are achieving it or not. It HAS to be concrete, measurable.
Purpose of plans goals:
-Plans and goals are neccesary for company to function OR
-Developing them is more important than plans and goals themselves
-they guide the organization
-you can’t plan without goals- good plan needs good goals
-is motivating
-good point of refference
Strategic goals- goals set by and for the top management.
STop establishes
Mission
Mission
Mission
TOP-DOWN
Bottom-up
Interactive
Strategic goals
Strategic goals
Strategic goals
Tactical goals
Tactical goals
Tactical goals
Operat. Goals
Operat. Goals
Operat. Goals
ETTING GOALS
TOP-DOWN – top management dictates what to do – strategy provides
BOTTOM-UP- strategy is being updated
INTERACTIVE- everyone is equal, common effort (THE BEST)
Strategic planing is a self-containing process (you also plan a strategy for planning a strategy)
STRATEGIC MANAGEMENT (!) – management adopting strategic decisions (long term, agressive resource usage)
EFFECTIVE strategies are strongly bound to nature of the environment and mean to improve the average: net profit, market share or management philosophy (planning efficiency)
COMPETITIVE ADVANTAGE
Distinctive competence- something you’re the best at
You CAN’T be the best in all aspects
Scope- range of competitive markets – sometimes it’s very difficult to find the real competition – products: how many? –geography- which markets to be present on?
Resource deployment- distribution of resources across the markets
IGOR ANSOFF-
MARKET PENETRATION- Introducing existing product to an existing market
MARKET DEVELOPMENT- introducing existing product to a new market
PRODUCT DEVELOPMENT- intr. new product to an existing market
INTEGRATION- intr. new product to a new market
Horizontal integration enables producing new products off same resources (bikes from BMW leftovers :D) or makes you less voulnerable to economic cycles (Chrystler- hamburgers)
Resource deployment- KNOWLEDGE- accummulate, but can’t ‘activate’ it, ACCESS to resources
Corporate strategy- choosing of markets we wanna compete on, product design
Business strategy- core product, target, ways of distribution
Functional strategy- HR, production, distribution.