5-1. Describe how strategic planning differs from operational planning.
The primary differences concern the time frame and the level of management involved. Strategic planning involves developing a mission and long-range objectives and plans; operational planning involves short-range objectives and plans. Upper-level managers develop strategic plans, and middle- and lower-level managers develop operational plans. The strategic planning process incudes developing a mission, analyzing the environment, setting objectives, developing strategies (corporate, business, and functional levels), and implementing and controlling strategies.
5-2. Explain the reason for conducting an industry, competitive, and company situation analysis.
The industry and competitive situation analysis is used to determine the attractiveness of an industry. It is primarily used at the corporate level to make decisions regarding which lines of business to enter and exit and how to allocate resources among lines of business.
The company situation analysis is used at the business level to determine the issues and problems that need to be addressed through the strategic planning process.
5-3. List the parts of an effective written objective and its must and want criteria.
The parts of the objective are (1) to + (2) action verb + (3) singular, specific, and measurable result to be achieved + (4) target date. The must criteria need to be part of the objective and include being specific, measureable, and with a target date. The want criteria are desirable but not part of the objective and include being difficult but achievable, being participatively set, and having acceptance and commitment. When reading an objective, one can determine if the must criteria are met, but not if the want criteria are met.
5-4. Discuss the four corporate level grand strategies and the three growth strategies.
The four corporate-level strategies include growth, stability, turnaround, and retrenchment. With a growth strategy, the firm aggressively pursues increasing its size. With a stability strategy, the firm maintains the same size or grows slowly. With a turnaround strategy, the firm attempts a comeback; with retrenchment, it decreases in size. With a combination strategy, two or more of the three strategies are used for different lines of business.
The three growth strategies include concentration, integration, and diversification. With a con-centration strategy, the firm grows aggressively in its existing line(s) of business. With integration, the firm grows by entering forward or backward line(s) of business. With diversification, the firm grows by adding related or unrelated products and/or services.
5-5. Summarize the three business level adaptive and competitive strategies.
The three adaptive strategies are prospecting, defending, and analyzing. With the prospecting strategy, the firm aggressively offers new products or services and/or enters new markets. With the defending strategy, the firm stays with its product line and markets and aggressively tries to stop prospectors from taking its customers. With the analyzing strategy, the firm moves into new markets cautiously and/or offers a core product group and seeks new opportunities; analyzers commonly copy the successful strategies of prospectors. The three competitive strategies include differentiation, low cost, and focus. The differentiation strategy stresses developing a clear competitive advantage. The low-cost strategy stresses keeping prices low. The focus strategy targets a specific regional market, product line, or buyer group; it develops a niche to better meet the needs of its target customers than the mass marketers.
5-6. Identify the operational functional strategies, contrast standing plans and single-use plans, describe the value of a time log analysis, and explain how to effectively multitask.
The four major functional area strategies include marketing, operations, finance, and human resources. Standing plans are policies, procedures, and rules developed for handling repetitive situations, whereas single-use plans are programs and budgets developed for handling one time nonrepetitive situations. The value of a time log is that it allows one to determine how time is wasted so that it can be eliminated or decreased to improve productivity. To effectively multitask, use it only with noncomplex tasks that do not require thinking with undivided attention, and limit distractions and interruptions.
5-7. Explain the importance of implementing and controlling strategies.
Strategies are of no value to the company unless it has plans stating how the objectives will be achieved, and a plan that is not implemented is also of no value. The implementation of the strategic plan must also be controlled to measure and monitor the progress of achieving the objective. Based on control, management must also not give up too soon and lose the benefits or get caught in the escalation of commitment and throw good money after bad.