Strategic_Planning_Notes - Page 1 of 9 MGT 3200 STRATEGIC...

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Page 1 of 9 MGT 3200 STRATEGIC PLANNING I. Focus of Strategic Planning Strategic planning is an organization’s way of maintaining a positive relationship with its external environment. Specifically, it focuses on an organization’s long-term relationship to its environment. Strategic planning, according to Richard Daft, is probably the single most important responsibility of top managers. Top management is primarily responsible for developing a strategic plan, or grand strategy that serves to define the organization’s character, mission, and direction. In other words, it defines the major objectives of the organization and defines the ways or means that an organization will use to achieve those objectives. II. The Components of Strategy A well—thought out strategy deals with four basic areas of concern: scope, resource deployment, distinctive competence, and synergy. Scope of the strategy specifies the range of markets in which the organization will compete. It deals with the organization’s domain. For example, Hershey has limited scope because it has restricted itself to the confectionery business whereas Mars has a much broader scope. Mars competes in the pet-food industry, the electronics industry, etc. A strategy should also outline the organization’s Resource Deployment-how it will distribute its resources among various areas of the business. For example, a company may decide to use the profits from its bread and butter areas to finance new ventures. A strategy should specify the Distinctive Competence the organization has relative to its competitors. A distinctive competence is something an organization does well that sets them apart from other organizations. For example, The Limited stresses its distinctive competence of speed. It tracks consumer preferences daily with point-of-sale computers, uses faxes to transmit orders to its suppliers in Hong Kong, charters 747s to fly products to the USA and has products in the store some 48 hours later. A strategy should specify the synergy to be achieved between the various decisions about scope, resource deployment, and distinctive competence. Synergy refers to how the different areas of the business enhance or compliment one another. For example, Disney achieves synergy among its various operations. Disney makes movies, which make money at the box office, and these movies then spur the sales of videotapes. Its network television program results in vacations to Disneyland and Disney World and these vacations lead to the purchases of licensed souvenirs and greater interest in movies. Finally, the Disney cable channel helps promote the entire empire.
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Page 2 of 9 III. The Levels of Strategy There are two basic levels of strategy that we are going to be most concerned with: corporate strategy and business-level strategy. Corporate strategy focuses on what businesses do we want to be in.
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This note was uploaded on 11/10/2011 for the course MGMT 3200 taught by Professor Sauley during the Fall '10 term at LSU.

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Strategic_Planning_Notes - Page 1 of 9 MGT 3200 STRATEGIC...

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