STRATEGIC PLANNING

A strategy may be defined as a special type of plan prepared for meeting the challenges posed by the activities of competitors and other environmental forces Strategic planning is the process of determining the mission and basic objectives of an enterprise and policies and strategies relating to acquiring, using and disposing of resources.

Characteristics of a strategy
A strategy is a contingent plan as it is designed to meet the demands of particular situation Strategy provides the direction in which human and physical resources will be deployed for achieving organizational goals. Strategy relates an organization to its external environment Strategy is an interpretative plan formulated to interpret and give meaning to other plans in the light of specific situations Strategy is forward looking It is formulated at the top level of management It is long term in nature. It is flexible and dynamic

Strategic planning process

Mission and objectives- The basic purpose for which the organization has been established should be clearly defined. The business mission should be formulated in terms of social impact of the organization. Environmental analysis- The external environment of the organization is analyzed to identify opportunities and threats Self appraisal- The strength and weakness of the organization (SWOT) are analyzed to know its capabilities. The organization can exploit external opportunities by concentrating on its internal competence Strategic decision making- Strategic alternatives are generated and evaluated. The organization must select the alternative that is best suited to its capabilities and that offers a distinctive edge over its rivals Strategic implementation and control- Implementation involves translating the strategy into tactical and operational plans. Short term operational plans are prepared to utilize the resource. Control guides should be developed to evaluate performance as the strategy is put to use.

 BCG MATRIX

BCG MATRIX

The Boston Consulting Group(BCG)Growth share matrix deals with the process of evaluating the growth rate of the industry and the relative market share of the firm as against the main competitor. It classifies the business firm into four categories. STARS-Star symbolizes a situation of high growth rate and a possible market share domination It needs a continuous inflow of cash to maintain its growth rate and protect its market share Question marks- A question mark is called a question mark because its final direction is not yet clear in a high growth market. It is yet to command a large share in the market and its profit potential therefore remains unproven. Either it will become a star or a dog and the management will have to decide as to how long to continue to finance for its growth DOGS-Dogs describe weak business. Either it is on the way out of market or has very recently entered. However in both the cases its market share position and growth rate are below average or even negative. They typically generate low profits/losses

CASH COW -Cash cow is a business unit that enjoys a commanding market share position in a low growth market. Due to its high sales and comparatively low unit cost, it provides a steady and more dependable flow of cash. It generates more cash than it needs to support itself. That means much of this surplus can be invested in other business units or in research and development.

 Stars and question marks are the companys business that operate in high growth industries while Cash cows and Dogs operate in low growth industries. Star is the market leader in high growth industry while a question mark is a follower in terms of market share. Similarly a cash cow is a market leader and a dog is a poor follower in terms of market share.

PLANNING
Planning is selecting and relating of facts and the making and using of assumptions regarding the future in the visualization and formulation of proposed activity believed necessary to achieve desired results. (GEORGE TERRY) Planning is the selection from among the alternatives for future courses of action for the enterprise as a whole and each department with it(KOONTZ ODONNEL)

NATURE OF PLANNING
Planning is an intellectual- process The process determines the future course of action. It is also a continuous process. Planning is all pervasive. Planning is the function of each and every manager irrespective of the level and area of his operation. However the scope extent and nature of planning tend to decrease as it moves towards to the lower levels of management. Planning is forward looking Planning involves anticipating the future course of action. No plan can be prepared without knowledge of the future. Planning is an attempt to see through the future.

 Planning is a primary function Planning is a primary function of the management process. All other functions of management are designed to attain the goals set under planning. Planning involves choice Planning assumes the existence of alternatives. There is no need of planning if there is only one way of doing something. Planning is an integrated process Planning is a structured process in which plans prepared by different levels are integrated.