Strategic Planning

Strategic Planning

STRATEGIC PLANNING Objectives and Strategy Corporate Objective External Constraint s PEST

Factors Competition Analysis Corporate Strategy Strategy Models Porters Five

Forces Porters Value Chain Analysis SWOT Analysis And many more Internal Constraints

Culture Budgets Ethics Human Resources Physical Resources

External Environment Assessment What is going on in Information the external

Gathering environment? How will these Information developments affect Assessment our company? Five Forces Analysis

Why do airlines make so little profit (and such big losses)? Very intensive competitor rivalry mainly on price Low barriers to entry lots of new airlines who want to set up Suppliers of aircraft & equipment are powerful can charge high margins Customers have lots of substitute options e.g. rail, car High fixed costs airline losses rise significantly if revenues fall only slightly

since it costs roughly the same to fly half-empty planes as full ones Why are profits so high in the soft drinks market? Customers and suppliers have little power There is high brand awareness & loyalty

High barriers to entry how do you enter a market dominated by Coca-Cola and Pepsi? Ikea 5 Forces Ikea 5 Forces

Ikea 5 Forces So what do we know about Ikea from this information? Watch the video Information Gathering

Asking industry experts to discuss industry trends and make projections for the future Using historical industry trends to predict future developments Asking knowledgeable managers to write scenarios describing what they foresee for the industry over the next 2/3 years Using technology to simulate the industry environment and

generate likely future developments. Objectives Hierarchy Ai m Mission Corporate Objective

Department Objective Strategies and Tactics Common Objectives

Profit Maximisation Growth Survival Sales Maximisation

Increase Market Share Maximise Shareholder Value Reason for growth

Survival To gain economies of scale To make larger future profits To increase market share To reduce risk

Objectives Examples Marketing Production and distribution Advertising Researching

Joint Ventures Standardisation/ differentiation of product Production creation (Manufacturing) Product Pricing Distribution

Channels/Transportation Human resources Advertising vacancies Outsourcing Induction training / cross cultural training VALUE CHAIN ANALYSIS

Value Chain Analysis A value chain is the way in which primary and support activities are combined to provide goods and services and increase profit margins. (1) Primary Activities - those that are directly concerned with creating and delivering a product (e.g. component assembly); and (2) Support Activities, which whilst they are not directly involved in production, may increase

effectiveness or efficiency (e.g. human resource management). It is rare for a business to undertake all primary and support activities. Watch the video Value Chain Analysis Value Chain Support Activities

Value Chain Primary Activities Activity In your groups Produce a basic value chain analysis for your given organisation For each of the primary & support activities state how they

are implemented by your organisation You can show these in any format you would like (e.g. written/diagram)

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