Developing a Strategic Plan Essay

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Developing a Strategic Plan

I. LOOKING AHEAD: PREVIEWING THE CONCEPTS

The hard task of selecting an overall company strategy for long-run survival and growth is called strategic planning.

II. STRATEGIC PLANNING

Each company must find the game plan that makes the most sense given its specific situation, opportunities, objectives, and resources.

Strategic planning: The process of developing and maintaining a strategic fit between the organization’s goal and capabilities and its changing marketing opportunities. It involves defining a clear company mission, setting supporting objectives, designing a sound business portfolio, and coordinating functional strategies.

Strategic planning sets the stage for the rest of the planning in the
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(2) it must shape the future portfolio by developing strategies for growth and downsizing.

1. Analyze the current business portfolio

The major activity in strategic planning in business Portfolio analysis: A tool by which management identifies and evaluates the various businesses making up the company.

Management’s first step is to identify the key businesses making up the company. These can be called a Strategic business unit (SBU): A unit of the company that has a separate mission and objectives and that can be planned independently from other company businesses. The next step in business portfolio analysis calls for management to asses the attractiveness of its various SBU’s and decides how much support each deserves.

a. The Boston Consulting Group Approach

Growth-share matrix: A portfolio-planning method that evaluates a company’s strategic business units in terms of their market growth rate and relative market share. SBUs are classified as stars, cash cows, question marks, or dogs.

Stars: SBU's placed in this cell are highly attractive because the industry in which they are located is robust and the business has a strong competitive position in the industry. Stars generate large amounts of cash, but also require heavy investment to continue to grow and to maintain competitive positioning. Net cash flow is usually modest. Cash cows: These SBU's are the
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