Session 5

• Strategic planning is a systematic process of envisioning a desired future, and translating this vision into broadly defined goals or objectives and a sequence of steps to achieve them.
• At every stage of strategic planning the planner asks “What must be done at the previous (lower) stage to get here?”
• Strategic planning looks at the wider picture and is flexible in its selection of means
• The objective of strategic planning is to provide answer to the expectations of the different stakholders, acquire a competitive advantage and create value.
• In contrast to LT-planning, which begins with the current status and lays down a path to meet estimated future needs.

  Strategic planning begins with the desired-end and works backward to the current status.
• Strategy is the way to allocate resources for a LT perspective; 2 approaches:

  1. Adaption to the environment (reactive approach)
  2. Proactive approach based on the organization’s resources and competencies in order to create opportunities.
• Strategies are influenced by values, expectations and power of the stakeholders.

  3 levels:

  • Organizational level
  • Unit level
  • Operational level
• Dimensions of strategic management

  1. Strategic issues require top-management decisions.
  2. Strategic issues involve the allocation of large amount of organization resources
  3. Strategic issues are likely to have a significant impact on the LT prosperity of the organization
  4. Strategic issues are future oriented
  5. Strategic issues usually have major multifunctional or multibusiness consequences
  6. Strategic issues necessitate considering factors in the organization’s external environment
• Environmental analysis is a strategic tool. It is a process to identify all the external and internal elements which can affect the organization’s performance.
• Our market is changing every day. Many new things develop over time and the whole scenario can alter in only a few seconds.
• Businesses are greatly influenced by their environment. All the situational factors which determine day to day circumstances impact firms. So businesses must constantly analyze the trade environment and the market.
• The most used detailed analysis of the environment is the PESTEL analysis. Managers and strategy builders use this analysis to find where their market currently are.
• PESTEL - analysis

  • Political factors
  • Economic factors
  • Social factors
  • Technological factors
  • Legal factors
  • Environmental factors
• Decision making model

  1. Identify the decision to be made
  2. Gather information
  3. Identify the alternatives
  4. Weight the evidence
  5. Choose from alternatives
  6. Take action
  7. Review the decision
• In economics, is it thought that if humans are rational and free to make their own decisions, then they would behave according to rational choice theory
• Rational choice theory says that a person consistently makes choices that lead tot he best situations or himself or herself, taking into account all available considerations including costs and benefits; the rationality of these considerations is from the point of view of the person himself, so a decision is not irrational just because someone else finds it questionable.
• There are some factors that affect decision-making abilities and cause people to make irrational decisions.

  Ex. to make contradictory choices when faced with the same problem framed 2 different ways
• Objectives must first be established, classified and placed in order of importance
• Alternative actions must be developed
• The alternatives must be evaluated against all the objectives
• The alternative that is able to achieve all the objectives is the tentative decision
• The tentative decision is evaluated for more possible consequences
• The decisive actions are taken, and additional actions are taken to prevent any adverse consequences from becoming a problem
• There are steps that are generally followed that result in a decision model that can be used to determine an optimal production plan
• In situation featuring conflict, role-playing may be helpful for predicting decisions to be made by involved parties
• Primary activities : Logistic 


  Is generally the detailed organization and implentation of a complex operation. In general a business sense, logistics is the management of the flow of things between the point of origin and the point of consumption in order to meet requirements of customers or corporations.
• The resources managed in logistic can include physical items such a as food, materials, animals, equipement and liquids, as well as abstract items, such as time and information.
• The logistic of physical items usually involves the integration of information flow, material-handling, production, packaging, inventory, transportation, warehousing, and often security
• Logistic is the part of supply chain management that plans, implements, and controls the efficient, effective forward, and reverse flow and storage of goods, services, and related information between the point fo origin and the point of consumption in order to meet customer’s requirements.
• What is this?

  refers to everything involved in receiving, storing, and distributing the raw materials used in production process. Raw materials handling and warehousing.

  Inbound logistics
• Inbound logistic: 


  This refers to everything involved in receiving, storing, and distributing the raw materials used in the production process. Raw materials handling and warehousing.
• Outbound logistics 


  This concerns the distribution of the final product to consumers. Warehousing and distribution of finished products.
• What is this?

  Concerns the distribution of the final product to consumers. Warehousing and distribution of the finished products.

  Outbound logistics
• Primary activities: Production and operations


  Is chiefly concerned with planning, organising and supervising in the contexts of production, manufacturing or the provision of services. As such, it is delivery-focused, ensuring that an organisation successfully turns input to outputs in an efficient manner.
• Example of the types of duties or specialist production and operation encompasses:

  procurement (acquiring goods or services from external resources), managing relations with those involved in processes, and improving an organisation‘s sustainability with regard to its use of resource.
• What is operations management more precisely:

  Supply chain management and logistics.

  Operations managements has firm foundation in both ares.

  With logistics, the careful and considered use of resources, as well as cost-effectiveness, has become increasingly important in an area which resources can often be in short supply and customer expectations have skyrocketed.
• Primary activities : Marketing function


  A role that helps an organisation to identify and source potentially successful products for the marketplace and then promote them by differentiating them from similar products.
• A typical marketing function types within a larger business might include performing market research, producing a marketing plan, and product development, as well as strategically overseeing advertising, promotion, distribution for sale, customer service and public relation.
• Marketing and sales involves activities like advertising, promotion, sales force organisation, selecting distribution channels, pricing, and managing customer relationship of the final product to ensure it is targeted to the correct consumer group
• Seven marketing functions:

  • Marketing information management (MIS)
  • Distribution (Channel management )
  • Product (Service management)
  • Pricing
  • Promotion
  • Selling
  • Financing