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Task 2:
Diagnose
opportunities
and threats
Task 1:
Task 4: Task 5:
Develop vision,
Develop Prepare strategic
mission
strategies plan
and Goals
Task 3:
Diagnose strengths
and weakness
2
Types of Planning
Strategic Planning is the process of
1) diagnosing the organizations external
and internal environments,
2) deciding on a vision and mission, S
T
3) developing overall goals, R
A
4) creating and selecting general T
strategies to be pursued, and E
G
5) allocating resources to achieve the I
organizations goals. C
) Contingency planning
3
Types of Planning (cont.)
Tactical planning involves making
concrete decisions regarding what
to do, who will do it, and how to do
itwith a normal time horizon of a
year or less.
4
Degree of Diversification and
Planning
(adapted from Figure 7.1)
High
General
Strategic Planning
Electric
Complexity of
Johnson &
Johnson
CEMEX
Low
Single- Dominant- Related- Unrelated-
Low business High
business business business
firm firm firm firm
Degree of Diversification
5
Strategic Levels and
Planning
Corporate-level strategy focuses on the
types of businesses the firm wants to be in,
ways to acquire or divest businesses,
allocation of resources among the
businesses, and ways to develop learning
and synergy among those businesses.
Strategic business unit (SBU)
Growth Strategies
Forward integration
Backward integration
Horizontal integration
Concentric diversification
Conglomerate diversification
6
Strategic Levels and Planning
(cont.)
Business-level strategy refers to the
resources allocated and actions taken to
achieve desired goals in serving a specific
market with a highly interrelated set of
goods and/or services.
Three basic questions at the business level
are:
1.Who will we be served?
2.What customer needs will be satisfied?
3.How will customer's need be satisfied?
7
Strategic Levels and Planning
(cont.)
Functional-level strategy refers to the
actions and resource commitments
established for operations, marketing,
human resources, finance, legal
services, accounting, and the
organizations other functional areas.
Operations strategies
Marketing strategies
Finance strategies
8
General Electrics Strategy and Planning Levels
Four senior executive officers, 8 senior corporate officers,
Corporate And 33 corporate staff officers
Level
Focus: Assessing new businesses, allocating resources to business-
level companies, coordinating businesses, resolving legal
issues, assessing key executives, and other activities
Business
GE GE Plus 10 other
Level * Consumer
GE
Transportation primary
Plastics
Finance Systems business units
9
Decision making includes defining
problems,
gathering information,
generating alternatives,
and choosing a course of action.
13
Conditions Under Which Decisions are
Made
(adapted from Figure 8.1)
Certainty Uncertainty
Objective Subjective
probabilities Risk probabilities
14
Framework for Decision Making
(adapted from Figure 8.2)
Unusual and
Innovative Uncertainty
e
ambiguous Decisions
ad
m
e
ar
s
on
Adaptive
si
Problem Types
i
Decisions
ec
d
h
Risk
ic
h
w
Routine
er
Decisions
nd
u
sn
io
it
d
on
C
Certainty
16
Rational Decision-Making Model
(adapted from Figure 8.3)
Environmental forces
1 2 3
Define and Set Search for
diagnose goals alternative
problem solutions
4
Compare and
evaluate
alternative solutions
7 6 5
Follow-up Implement Choose among
and control the solution alternative
results selected solutions
Environmental forces
17
A Simple Hierarchy of Goals
(adapted from Figure 8.4)
19
Bounded Rationality Model
(adapted from Figure 8.5)
Decision Biases
Satisficing
20
Osborns Creativity Model
Osborns creativity model is a three-
phase decision-making process that
involves:
fact finding,
idea finding,
and solution finding
Brainstorming is an unrestrained flow
of ideas in a group with all critical
judgments suspended.
22
Balanced Scorecard Model
(adapted from Figure 9.4)
Outcomes Activities
Financial Internal
Perspective Perspective
Balance
Customer Innovation/Learni
Perspective ng
Perspective
Goals Measures Goals Measures
Copyright 2005 by
South-Western, a division
23
of Thomson Learning