1. Strategic Planning

2. What is a Planning?
Planning (also called forethought)
is the process of thinking about
and organizing the activities
required to achieve a desired goal.
Dr. Subhodip Mitra

3. What is a strategy?
“The continuous process of making
entrepreneurial (risk-taking) decisions
systematically and with greatest knowledge of
their futurity, organizing systematically the
efforts needed to carry out these
decisions, and measuring the result of these
decisions against the expectations through
organized systemic feedback”
- Peter Druker
Dr. Subhodip Mitra

4. What is strategic planning?
It is the process of deciding on
objectives of the organization, on
changes on these objectives, on the
resources used to attain these
objectives, and on the policies that
are to govern the acquisition, use
and disposition of these resources
Dr. Subhodip Mitra

5. Three important features
1. A shift in orientation from producing
services
2. A statement of purpose is not the
starting point of planning
3. Understanding that planning and
management are concurrent
Dr. Subhodip Mitra

6. Strategic Planning Approach
1) Internal environment
2) External environment
3) Industry analysis
4) Enterprise profile
5) Orientation, values & vision of execution
6) Mission, major objectives and strategic intent
7) Development of alternative strategies
8) Evaluation of choice of strategies
9) Medium and short range planning
10)Consistency testing and contingency planning
Dr. Subhodip Mitra

7. Strategic Planning Approach
1. Internal Environment
 Resources and Weaknesses
 Strengths in
R&D, production, operation, procurement, m
arketing, products and services
 Human and financial resources
 Company image, organization structure and
climate
 Planning and control systems
 Relations with customers
Dr. Subhodip Mitra

8. Strategic Planning Approach
2. External Environment
Threats and opportunities
 Evaluation of competitive situation
Economic, social, political, legal, demographic
and geographic factors
Technological developments and for products
and services in the market
Dr. Subhodip Mitra

9. Strategic Planning Approach
3. Industry Analysis
Evaluate the attractiveness of the industry
Focus on :
Kind of competition in the industry, possibility
of new firms in the market, availability of
substitute products or services and bargaining
positions of suppliers as well as the buyers or
customers
Dr. Subhodip Mitra

10. Strategic Planning Approach
4. Enterprise Profile
It is the starting point of for determining
where the company is and where it should go
Determine the mission of the enterprise
Clarify it’s geographic orientation
Assess the competitive position of their firm
Dr. Subhodip Mitra

11. Strategic Planning Approach
5. Orientation, values and visions of executives
Enterprise profile is shaped by people
 They set the organizational climate and
determine the direction of firm
Carefully examine their values, preferences
and their attitude towards risks
Dr. Subhodip Mitra

12. Strategic Planning Approach
6. Mission, Major objectives and strategic
intent
 Major objectives are the end points towards which
the activities of the organization are directed
 Strategic intent is the commitment to win in the
competitive environment
 Prof Gary Hamel and Prof C.K Prahlad analysed
companies that achieved global leadership
 Intent statement is stable over time and focuses on
the essence of winning
Dr. Subhodip Mitra

13. Strategic Planning Approach
7. Development of Alternative Strategies
Specialize or concentrate
Diversify
International Expansion
Joint ventures and strategic alliances
Liquidation
Retrenchment
Dr. Subhodip Mitra

14. Strategic Planning Approach
8. Evaluation of choice of strategies
 Choices must be considered in light of risks
involved and failure may result in bankruptcy
Timing of the strategy must be chosen
carefully
 Intercommunication of strategies
Dr. Subhodip Mitra

15. Strategic Planning Approach
9. Consistency testing and contingency planning
 Last key aspect of the strategic planning
process and essential during all phases
Contingency plans must be prepared as future
cannot be predicted with high degree of
certainty
Dr. Subhodip Mitra

16. Strategic Planning Approach
10. Medium and Short-Range planning
 Not a part of strategic planning process but
must be implemented during all phases of the
process
Implementation may require organizing or
reengineering the organization, staffing
Providing leadership thorough effective
communication
Install controls to monitor performance
Dr. Subhodip Mitra

17. Tools for Strategic Planning
I. TOWS Matrix
II. B.C.G. Matrix
III. Porter’s analysis
IV. SERVO analysis
Dr. Subhodip Mitra

18. I. TOWS Matrix
• The TOWS matrix is a conceptual framework
for a systemic analysis that facilitates
matching of the external threats and
opportunities with the internal weakness and
strengths of the organization.
• Introduced for analyzing the competitive
situation of the company or even of a nation
that leads to the development of four distinct
sets of strategic alternatives.
Dr. Subhodip Mitra

19. What does TOWS stand for?
• T : Threats
• O : Opportunity
• W: Weakness
• S : Strength
Dr. Subhodip Mitra

20. Dr. Subhodip Mitra

21. WT Strategy (Min-Min)
• Aims to minimize both weaknesses and threats and
called min-min (minimize-minimize)
• Ex: May require the company to liquidate or it
retrenches
Dr. Subhodip Mitra

22. WO Strategy (Min-Max)
• Minimises the weakness and maximises the
opportunities
• A company with a weakness in a certain area may
develop those areas or acquire needed competencies
to strengthen it
Dr. Subhodip Mitra

23. ST Strategy (Max-Min)
• Organization uses it’s strengths to deal with threats
in the environment
• Use of technological, financial, managerial or
marketing strengths to cope with threat
Dr. Subhodip Mitra

24. SO Strategy (Max-Max)
• Most desirable, capitalizes on company’s strengths to
take advantage of opportunities
• Aim of all enterprises would be to move from other
positions in the matrix to this one
Dr. Subhodip Mitra

25. Disadvantages of TOWS matrix
• Certain combinations like SW or OT are not
considered
• It only gives the possible strategies that can be
implemented, not the best strategy to use
• Does not show interrelationship between the
external and the internal factors
Dr. Subhodip Mitra

26. II. B.C.G. Matrix
• Also called as Boston consultancy group
matrix, growth share matrix or product
portfolio
• Developed in the early 70’s by the Boston
Consultancy Group
• It is the most well known portfolio
management tool
• Based on product life cycle theory
Dr. Subhodip Mitra

27. Relevance of the BCG Matrix
The BCG matrix has two
dimensions:
i. Relative position (market
share)
ii. Business (or market) growth
rate
Dr. Subhodip Mitra

28. What is the basic idea of the BCG
Matrix?
If a product has a bigger
market share or if the
product’s market grows
faster, it is better for the
company
Dr. Subhodip Mitra

29. BCG Matrix contents?
1) Question Mark
2)Star
3)Cash Cow
4)Dog
Dr. Subhodip Mitra

30. Dr. Subhodip Mitra

31. Disadvantages of BCG matrix
i. Critics contend that it is too simplistic
ii. Growth rate criterion has been considered
insufficient for the evaluation of an
industry’s attractiveness
iii. The market share as a yardstick for
estimating the competitive position may be
inadequate
Dr. Subhodip Mitra

32. III. Porter’s Analysis
• Introduced by Prof. Michael Porter
• He suggested four “generic” business strategies
that could be followed in order to gain
competitive advantage
• The i)Differentiation leadership and ii)Cost
Leadership strategies seek competitive
advantage in a broad range of market
• iii)Differentiation focus and iv)Cost Focus
strategies are best used in a narrow market or
industry
Dr. Subhodip Mitra

33. Dr. Subhodip Mitra

34. i) Cost Leadership
• Lowest-cost producer in the industry
• Production on a large scale which enables the
targets a boarder market
• The firm can compete on the price with every
other industries and earn higher unit profits
• Successful if the firm is the cost leader and is
unchallenged in this position
• Beneficial when customers are price sensitive
Dr. Subhodip Mitra

35. ii) Differentiation Leadership
• The business targets much larger markets and
aims to achieve competitive advantage across
the whole of the industry
• Involves selecting one or more criteria by
buyers and positioning the business uniquely
to meet those criteria
• It is about giving customers clear reasons to
choose their product over others
Dr. Subhodip Mitra

36. Ways to achieve differentiation
leadership?
1. Superior product quality
2. Branding
3. Industry-wide distribution across major
channels
4. Consistent promotional support
Dr. Subhodip Mitra

37. iii) Cost Focus
• Here a firm seeks a lower-cost advantage in
just one or small number of market segments
• These firms often enjoys a high degree of
customer loyalty and this entrenched loyalty
often discourages other firms from competing
directly
• They may charge higher cost to their
customers since close substitute products do
not exist
Dr. Subhodip Mitra

38. iv) Differentiation Focus
• A firm aims to differentiate within just one or
a small number of target market segments
• Market segmentation clearly identifies
customer needs and wants and it meets the
need of the segment
• It provides the highest quality product with
specialist expertise
• It maintains exclusiveness of the product
Dr. Subhodip Mitra

39. IV. SERVO Analysis
• The SERVO
(Strategy, Environment, Resources, Values,
Organization) analysis framework model is a
diagnostic management tool used to build and
test a firm’s strategic decisions and initiatives.
• The interactions and relationships among
these five elements are examined
• Helps in strategy formulation and
implementation
Dr. Subhodip Mitra

40. Contd.....
• SERVO allows for broad, integrative, in-depth
analysis
• Emphasizes the relationships among actions
or decisions.
• Balance between both internal and external
dimensions impacting strategy.
• ‘Fit’ is critical in the application of this model.
Better
• “fit“ leads to better performance
Dr. Subhodip Mitra

41. Illustration of the ‘fit’ concept
Resources and
Capabilities
Strategy
Environment
The reality of most organizational situations is
that some inconsistencies will exist between
the elements over time
Dr. Subhodip Mitra

42. Dr. Subhodip Mitra

43. Strategy
• Strategy is the set of competitive decisions and actions made
in response to the firm’s environment.
• Should identify the firm’s goals and objectives, the
product/service and market, the business activities, the value
it will offer to customers, and how it will provide superior
offerings.
• Strategy within the SERVO model is composed of four
elements:
–Goals
–Scope
–Competitive basis/premise
–Business Model
Dr. Subhodip Mitra

44. Environment
– External includes things ‘outside’ the legal boundaries of
the firm.
– Internal environment includes stakeholders, forces and
conditions ‘inside’ the firm.
• Environment can also be segmented into components in
proximity to the business.
–Internal
–Task
–Industry
–Macro-environment
Dr. Subhodip Mitra

45. Resources
• Resources:
– Assets and capabilities used to generate
outputs.
• Includes:
– Financial
– Human
– Physical
– Intangible
Dr. Subhodip Mitra

46. Values
– Analyst must capture the human & social sides of the firm’s
leading decision makers.
– Values are reflected in the posture and managerial style of
the decision maker.
– Shared values represent the collective value system that
drives a firm’s organizational culture.
• Go beyond the firm’s mission statement by encompassing
strategic intent, beliefs, mental mindsets, and future
direction.
• Can be the fundamental building block of an organization
Dr. Subhodip Mitra

47. Organization
– Culture : beliefs, history, modus
operandi, stories, traditions, and values.
– Leadership: actions & behaviours of top
decision makers.
– Staffing :
attraction, development, motivation, retention, a
nd training of individuals.
–Structure : allocation of responsibilities &
reporting relationships within a firm.
–Systems: flow of primary and secondary
activities that are important for daily functioning.
Dr. Subhodip Mitra

48. Strength of fit:
1. Tight (T) – Highest level of performance
2. Loose (L) – Lowest level of performance
3. Medium (M) – Some decisions in elements support each other, some do not
Temporal fit:
1. Early (e) - Firm has a new pattern of it between it’s SERVO elements
2. Delayed (d) – Firm is slow competitor
3. Normal (n) – Changes at the same time as a “typical” firm
Dr. Subhodip Mitra

49. Interpretation
 The SERVO model is an analytical framework that
addresses what is important to strategic thinking.
• The analyst will need to consider the key factors
associated with the firm, its strategy, and the
environment in terms of the five elements.
• A strategic problem is present when the fit among
the elements is loose, fragile, or broken.
• The analyst’s objective is to generate
recommendations to decision making clients that
will tighten the fit among the loose relating
elements.
Dr. Subhodip Mitra

50. Advantages
– Balances between internal and external factors.
– Model departs from ‘structure follows strategy’
and broadens scope.
– Recognizes that change requires management
of the relationships among ALL five elements of
strategic fit.
– Inclusive and holistic.
Dr. Subhodip Mitra

51. Disadvantages
• Model is abstract, not precise.
• Can assist with both formulation &
implementation tasks, but does not provide
guidance for either.
• Model is difficult to apply.
– Inter-relationships between elements are
hard to discern.
• Model tends to be static.
Dr. Subhodip Mitra

52. Applicability of Strategic
Planning?
Strategic planning appears to
be most effective in panning
for growth and for
diversification
Dr. Subhodip Mitra

53. Growth
Extending the area of service by creating or
adding a new facility
Provide a new service in the hospital which
expands the role of the hospital
Create community awareness by publicizing
special services, hoping it will increase the use
of hospital facilities
Dr. Subhodip Mitra

54. Diversification
• May become necessary for:
i. Generating capital from non-operating sources of
revenue for financing replacement, expansion or
enhancement of technology
ii. Surviving competition
iii. Improving hospital’s long term ability to survive
Dr. Subhodip Mitra

55. Areas of diversification
 Related Diversification : Increasing services or
enlarging product line. e.g., Outpatient
surgery unit, birth centres, commercial
lab, emergency centre, ambulance
service, hospice day care, sports
medicine, etc,.
Unrelated diversification : Investment of finds
and capital management of land and property.
Dr. Subhodip Mitra

56. References
Dr. Subhodip Mitra

57. Dr. Subhodip Mitra