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Effective Planning Models

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Strategic Planning Models
Strategic Planning Models
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Effective Planning Models

  1. 1. MPA 208 PLANNING WORKSHOP 1ST SEMESTER 2019 Effective Strategic Planning Models
  2. 2. Effective Strategic Planning Models  Strategy Map  Balanced Scorecard  SWOT Analysis  PEST Mode  Gap Planning  Blue Ocean Strategy  Porter's Five Forces  VRIO Framework By:
  3. 3. Strategy Map  A strategy map is a diagram that shows your organization's strategy on a single page. It's great for quickly communicating big-picture objectives to everyone in the company. With a well-designed strategy map, every employee can know your overallstrategy and where they fit in.
  4. 4. Societal Goals/Outcomes 2040 – MATATAG, MAGINHAWA AT PANATAG NA BUHAY 2022 – FOUNDATION FOR INCLUSIVE GROWTH, A HIGH-TRUST SOCIETY AND A GLOBALLY COMPETITIVE KNOWLEDGE ECONOMY Sectoral Goals/Outcomes Organizational Outcomes Major Final Outputs (Citizen Focused & Product Results) Financial Stewardship Internal Process Leadership, Learning,& Growth Strategy MAP PPARC Priority Program Accountability Report Card MARC-I MFO Accountability Report Card MARC-II Mgt Accountability Report Card “PAGBABAGO” Reducing Inequality “PATULOY NA PAG- UNLAD” Increasing Growth Potential “MALASAKIT” Enhancing the Social Fabric Socio- Economic Report IMPROVED QUALITY OF CIVIL SERVANTS CSC shall be globally recognized as a center of excellence for strategic HR and OD
  5. 5. Strategy Map Benefits:  It provides a simple, clean, visual representation that is easily referred back to.  It unifies all goals into a single strategy.  It gives every employee a clear goal to keep in mind while accomplishing tasks and measures.  It helps identify your key goals.  It allows you to better understand which elements of your strategy need work.  It helps you see how your objectives affect the others.
  6. 6.  A strategy map is an amazing communication device that serves some excellent purposes. It allows your organization to provide focus internally and show your customers and investors where you’re on track. But it can be even more powerful when used as the first step toward a Balanced Scorecard (BSC).
  7. 7. Balanced Scorecard The Balanced Scorecard is a strategy management framework created by Drs. Robert Kaplan and David Norton. It takes into account your:  Objectives, which are high-level organizational goals.  Measures, which help you understand if you’re accomplishing your objective strategically.  Initiatives, which are key action programs that help you achieve your objectives.
  8. 8. Balanced Scorecard
  9. 9.  The first process—translating the vision—helps managers build a consensus concerning a company’s strategy and express it in terms that can guide action at the local level.  The second—communicating and linking—calls for communicating a strategy at all levels of the organization and linking it with unit and individual goals.
  10. 10.  The third—business planning—enables companies to integrate their business plans with their financial plans. The fourth— feedback and learning—gives companies the capacity for strategic learning, which consists of gathering feedback, testing the hypotheses on which a strategy is based, and making necessary adjustments.
  11. 11. Financial Perspective  Primary goal is to grow our profits. This is driven by two other goals: manage costs and grow revenue. Having three financial perspective goals is simple and fairly typical. Your organization may want to consider being more specific about your goals, like “double revenue in three years” or “manage overhead expenses.”
  12. 12. Customer Perspective  How must we look to our customers?” You may list things like “quality of product,” “knowledgeable service,” or “ease of use.” Try not to list everything—just the top three or four things.
  13. 13.  From there, consider your customer strategy. Are you trying to grow revenue from your current customers or grow the number of customers? You might say both, but it’s important to be very clear about your strategy here. Some organizations put their customer objectives in the voice of the customer, such as “X has the best service” or “we view X as a partner.” Other companies may also list the basic customer needs, like “competitive pricing,” “quality offering,” or “great warranty.” You may not measure these, but it is important to communicate them on the map. Customer Perspective
  14. 14. Internal Perspective These are the internal processes or things that your organization must do well in order to make your customers happy (and manage your expenses). Many organizations now use themes in order to better group their internal processes  Innovation—This could be product, process, or service innovation and is the lifeblood of your long-term company future So, what do you need to invest in to ensure long-term organizational success? How will you innovate? Put two or three objectives in this section.
  15. 15.  Customer Management—Think about the internal processes you have that will keep your customers happy. Perhaps this is how you support your customers or how you listen to them for feedback on the next generation of interaction. Maybe you’re migrating them from one platform to another (paper vs.. electronic, for example). all link to the customer perspective and outcomes. Internal Perspective
  16. 16.  Operational excellence—Think about managing your own business and becoming more cost effective. Are you reducing waste or improving output? Perhaps you’re ready to restructure your operations for efficiency’s sake. This theme may link directly to the financial goal of managing costs. Internal Perspective
  17. 17. Learning & Growth Look at things from a “people” perspective. Perhaps two of these goals might be to “build engineering talent” and “institute greater accountability” throughout the organization. consider what skills you need that are related to your strategy, what kind of culture you value, and whether there are any tools or resources you need for your staff.
  18. 18. Learning & Growth  Retirement – Apply succession planning and skills transfer to potential staff; IPCR/OPCR and monitor results
  19. 19. 2CG, a strategic execution consultancy firm, has been conducting yearly surveys about the Balanced Scorecard since 2009 in an effort to better understand why and how it’s used. (You can find results from all nine of 2CG’s studies here.) Of the organizations that participated in the survey:  77% report that their Balanced Scorecard is extremely or very useful.  75% use the Balanced Scorecard to influence business actions.  Of the 64% of organizations that have refreshed their Balanced Scorecard, the majority— 71%—did so during the previous 12 months.  The Balanced Scorecard is used by both small and large organizations: 61% of respondents had less than 500 employees, and 9% had over 10,000 employees.
  20. 20. Companies Using BSC
  21. 21. SWOT Analysis – Applicable to All Industries A SWOT analysis (or SWOT matrix) is a high-level model used at the beginning of an organization’s strategic Planning. It is an acronym for “strengths, weaknesses, opportunities, and threats.” Strengths and weaknesses are considered internal factors, and opportunities and threats are considered external factors.
  22. 22. Strengths  Able to respond very quickly as we have no red tape, and no need for higher management approval.  Able to give really good customer care, as the current small amount of work means we have plenty of time to devote to customers.  Our lead consultant has a strong reputation in the market.  We can change direction quickly if we find that our marketing is not working.  Low overheads, so we can offer good value to customers.
  23. 23. Strengths  Start by asking the question, “What are we good at?” This is a broad question, but in the beginning stages of your discussion, you should accept all answers.  Financial Strengths: What is your most reliable source of financial growth? Is it your current customers? A particular product? Your service fee structure?  Customer Strengths: Where is your customer growth coming from? Is this coming from referrals, or a particular industry segment like healthcare or retail? Is it mainly retail or commercial? Why are your customers choosing you over your competitors?  Internal Strengths: What do you do very well as an organization? Are you the first to innovate products in your industry? Do you have strong customer relationships or partnerships?  Learning & Growth Strengths: Where do you excel insofar as your employees are concerned? Is it your compensation model? Could it be your workforce development program? Your culture?
  24. 24. Weaknesses  Our company has little market presence or reputation.  We have a small staff, with a shallow skills base in many areas.  We are vulnerable to vital staff being sick or leaving.  Our cash flow will be unreliable in the early stages.
  25. 25. Weaknesses  Financial Weaknesses: What is your biggest financial weakness? Perhaps most of your customers are in a cyclical industry and subject to market whims, for example. Or maybe your most used product has the lowest profit margins.  Customer Weaknesses: Where do your customers think you need to improve? This could be your investment products, locations, loan origination, or competitive prices for interest rates.  Internal Weaknesses: What do you do poorly? Do you have opportunities to improve in project management for opening new branches? What about for one-touch call resolution for customer service?  Learning & Growth Weaknesses: What are your biggest challenges with employees? Do you have particularly high turnover in certain departments or a negative perception of the organizational culture?
  26. 26. Opportunities  Our business sector is expanding, with many future opportunities for success.  Local government wants to encourage local businesses.  Our competitors may be slow to adopt new technologies.
  27. 27. Opportunities  Financial Opportunities: What is your biggest opportunity to improve your finances? This might be starting a new product line, increasing customer retention, or going after a new geographical area.  Customer Opportunities: Where could you dramatically improve with your customers? Could you improve your online interface? What about cross-selling related products, or better understanding your customers’ purchasing habits?  Internal Opportunities: What processes will drive you well into the future if you could improve upon them? This may entail partnering with a mortgage origination company or developing neighborhood sponsorships.  Learning & Growth Opportunities: What opportunities do you have to leverage staff? For example, do you have cross-training opportunities? Could you make a few tweaks to improve your culture and thus your retention?
  28. 28. Threats  Developments in technology may change this market beyond our ability to adapt.  A small change in the focus of a large competitor might wipe out any market position we achieve. https://www.mindtools.com/pages/article/newTMC_05.htm
  29. 29. Threats  Financial Threats: What threats could seriously impact your financial health? This could be low-cost competitors, a partner entering the banking space, or an overseas banking product.  Customer Threats: What is your biggest concern about your customers? Does one of your competitors offer zero-fee checking that could steal some of your market share? How simple is your customers’ ease of departure?  Internal Threats: What current areas of your business might harm you later? Do you have a new product rollout soon that could potentially fail? Are you struggling through a merger or an office upgrade?  Learning & Growth Threats: What threatens the people within your organization? This could be anything from instability in your customer support department to staff member departures to a department-specific pushback against new technology.
  30. 30. Identify several strategic options to make strategic decisions and what direction to take? Tine Wade (2017)
  31. 31. Some reasons that a company might kick off a gap analysis include the following: •Benchmarking: Comparing results against external criteria. A computer company may want to see where they stand against industry performance criteria, or a candy company may want to compare their reputation with their competitors. •Portfolio Analysis: Examining their product portfolio to look for new sales opportunities, a company can use a gap analysis to identify new products to sell. In the opposite direction, they can also look for existing products that are not selling well, use a gap analysis to find out why, then promote them (e.g. feature them more promentilty in marketing or put them on sale), change them to better meet customer needs, or remove them from their portfolio. •Profits: If a forecast profit percentage isn’t reached, a company can use a gap analysis to determine what went wrong, and whether it was in planning or execution. Was the organization paying higher-than-expected expenses for materials, or having to lower prices due to unexpected competition? Gap Analysis
  32. 32. •Processes: A gap analysis can help reveal the shortcomings of processes, so that the real outcomes match the expected outcomes. A shipping firm could examine their AP process to see why so many of their are not getting paid on time, or examine their billing processes to see why many of their suppliers don’t get their invoices until after the due date. •Performance Indicators: A gap analysis can also be applied to key performance indicators like new customer acquisition, average order amount, or return on investment (ROI). A mobile carrier could look for reasons that caused them to miss their customer acquisition goal, or a seafood company could seek the reasons they didn’t process as much salmon as expected. •Usage Gaps: A usage gap is the difference between current market size for a product or service, and the potential market size. A gap analysis in this area can help an organization see why they are not reaching full potential. Is a company's reputation pushing down sales? Or did management misread the demand for product?
  33. 33. Gap Planning
  34. 34. Gap Planning Gap planning is also referred to as a “Need-Gap Analysis,” “Need Assessment,” or “the Strategic-Planning Gap.” It is used to compare where an organization is now, where it wants to be, and how to bridge the gap between. It is primarily used to identify specific internal deficiencies. Gap analysis: The right method for transitioning to ISO 9001:2015
  35. 35. Gap Planning  In your gap planning research, you may also hear about a “change agenda” or “shift chart.” These are similar to gap planning, as they both take into consideration the difference between where you are now and where you want to be along various axes. From there, your planning process is about how to ‘close the gap.’
  36. 36. https://expertprogrammanagement.com/2017/09/gap-analysis/
  37. 37. VRIO Framework The VRIO is an acronym for value, rarity, limitability, organization.” This framework relates more to your vision statement than your overall strategy. The ultimate goal in implementing the VRIO model is that it will result in a competitive advantage in the marketplace.
  38. 38.  Value: Are you able to exploit an opportunity or neutralize an outside threat using a particular resource?  Rarity: Is there a great deal of competition in your market, or do only a few companies control the resource referred to above?  Iimitability: Is your organization’s product or service easily imitated, or would it be difficult for another organization to do so?  Organization: Is your company organized enough to be able to exploit your product or resource?
  39. 39. Is one strategic planning model better than the others?  Some of these frameworks have been around longer than others, or been used in various case studies in different ways. And sometimes managers are more comfortable with one over another, for a any number of reasons.  We recommend determining which of these strategic planning models applies most to your organization’s way of thinking.
  40. 40.  For example, if you still need to work out your vision statement, it may be wise to begin with the VRIO framework and then move to something like the Balanced Scorecard to track and manage your ongoing strategy.  If you are set on pitching a particular strategic planning model to management, be prepared to give your boss or board of directors an example of another successful company that has utilized that particular model
  41. 41. A real-life VRIO framework example is Google. There’s no doubt that Google is one of the most powerful companies in the world, and its success arguably stems from a sustained competitive advantage in human capital management. If we were to break down Google’s VRIO framework from the HR perspective, it might look something like this: •Value: Use human capital management data to hire and retain innovative, productive employees. These employees consistently create some of the most popular consumer products and services in the world. •Rarity: No other companies are using data-based employee management so extensively. •Imitability: Data-based human capital management is both costly and difficult to imitate, at least for the near future. Companies have to build the software and invest in training their HR staff on the new and strategy. •Organization: Google is organized to capture value from this capability. The IT department has the skills to collect and maintain the data, while HR and team leaders are trained on how to use the data to hire, manage, and improve performance of employees.
  42. 42. PEST PESTLE Blue Ocean PORTER
  43. 43. PEST Mode  PEST is also an acronym—it stands for “political, economic, sociocultural, and technological.” Each of these factors is used to look at an industry or business environment, and determine what could affect an organization’s health. The PEST model is often used in conjunction with the external factors of a SWOT analysis.
  44. 44. Benefits of PEST Analysis Some benefits that we can gain from the findings of a PEST Analysis:  Provides an understanding of the wider business environment.  Encourages the development of strategic thinking.  Straightforward and only costs time to do.  May raise awareness of threats to a project.  Can help an organization to anticipate future difficulties and take action to avoid or minimize their effect.  Can help an organization to identify and exploit opportunities.
  45. 45. https://www.visual-paradigm.com/guide/strategic-analysis/what-is-pest-analysis/
  46. 46. Political Factors  These are all about how and to what degree a government intervenes in the economy. This can include - government policy, political stability or instability in overseas markets, foreign trade policy, tax policy, labor law, environmental law, trade restrictions and so on.  It is clear from the list above that political factors often have an impact on organizations and how they do business. Organizations need to be able to respond to the current and anticipated future legislation, and adjust their marketing policy accordingly.
  47. 47. Economic Factors  Economic factors have a significant impact on how an organization this include - economic growth, interest rates, exchange rates, inflation, disposable income of consumers , etc  Macro-economic factors deal with the management of demand in any given economy. Governments use interest rate control, taxation policy and government expenditure as their main mechanisms for managing macro- economic factors.  Micro-economic factors are all about the way people spend their incomes.
  48. 48. Social Factors  Social factors are the areas that involve the shared belief and attitudes of the population. These factors include - population growth, age distribution, health consciousness, career attitudes and so on. These factors are of particular interest as they have a direct effect on how marketers understand customers and what drives them.
  49. 49. Technological Factors Know how fast the technological landscape changes and how this impacts the way we market our products. Technological factors affect marketing and the management thereof in three distinct ways:  New ways of producing goods and services  New ways of distributing goods and services  New ways of communicating with target markets
  50. 50. Blue Ocean Strategy  Blue Ocean Strategy is a strategic planning model that emerged in a book by the same name in 2005. by W. Chan Kim and Renée Mauborgne, professors at the European Institute of Business Administration (INSEAD).  The idea behind Blue Ocean Strategy is for organizations to develop in “uncontested market space” (e.g. a blue ocean) instead of a market space that is either developed or saturated (e.g. a red ocean). If your organization is able to create a blue ocean, it can mean a massive value boost for your company, its buyers, and its employees.
  51. 51.  Red Ocean companies try to outperform their rivals to grab a greater share of existing demand. As the market space gets crowded, for profits and growth reduce. Products become commodities and throat competition turns the ocean bloody red.  Blue Ocean companies, in contrast, access untapped market space and create demand, and so they have the opportunity for highly profitable growth. In Blue Oceans, competition is irrelevant. Yes, imitators arise, but experience shows there is a wide window of opportunity to stay ahead of imitators. What characterizes Red Ocean Dwelling vs. Blue Ocean Creating Organizations?
  52. 52. https://www.slideshare.net/JosephWinthropGodoy1/blue-ocean-versus-red-ocean Blue Ocean Strategy VS. Red Ocean strategy
  53. 53.  What consistently separates winners from losers in creating Blue Oceans is their approach to strategy. Creators of blue oceans do not use the competition as their benchmark, but follow a different strategic logic that we call value innovation. Instead of focusing on beating the competition, Blue Ocean-creating organizations make them irrelevant, by simultaneously creating a leap in value for buyers, and their organization, thereby opening up new and uncontested market space.
  54. 54. Blue Ocean creating businesses follow a different strategic logic We Challenge Industry Conditions & Paradigms We Focus On Customers, Not Competitors We Don’t Segment Customers, We Aggregate Them Our Assets Capabilities Are Not Fixed, They Are Fluid We Solve Problems Across The Entire Supply Chain
  55. 55. Here are a few examples of blue ocean strategic moves from a variety of different industries and sectors
  56. 56. Porter's Five Forces  Porter’s Five Forces is an older strategy execution framework created by Michael Porter in 1979 built around the forces that impact the profitability of an industry or a market. The five forces it examines are:  The threat of entry. Could other companies enter the marketplace easily, or are there numerous entry barriers they would have to overcome?  The threat of substitute products or services. Can buyers easily replace your product with another?  The bargaining power of customers. Could individual buyers put pressure on your organization to, say, lower costs?  The bargaining power of suppliers. Could large retailers put pressure on your organization to drive down the cost?  The competitive rivalry among existing firms. Are your current competitors poised for major growth? If one launches a new product or files a new patent—could that impact your company?  The amount of pressure on each of these forces can help you determine how future events will impact the future of your company
  57. 57.  The threat of substitute products or services. Can buyers easily replace your product with another?  The bargaining power of customers. Could individual buyers put pressure on your organization to, say, lower costs?  The bargaining power of suppliers. Could large retailers put pressure on your organization to drive down the cost?  The competitive rivalry among existing firms. Are your current competitors poised for major growth? If one launches a new product or files a new patent—could that impact your company?  The amount of pressure on each of these forces can help you determine future events will impact the future
  58. 58. https://www.visual-paradigm.com/guide/strategic-analysis/what-is-five-forces-analysis/
  59. 59. Sources Avery Halewww.clearpointstrategy.com/strategic-planning-models/. Accessed Aug. 14, 2018 (2017) Strategic Planning Models To Consider https://www.mindtools.com/pages/article/newTMC_05.htm https://www.visual-paradigm.com/guide/strategic-analysis/what-is-five-forces-analysis/ https://expertprogrammanagement.com/2017/09/gap-analysis/ https://www.slideshare.net/JosephWinthropGodoy1/blue-ocean-versus-red-ocean https://www.youtube/TineWade2017/SWOT&TOWSAnIntroduction

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