The strategic planning and analysistools

Anna Afonina, Ing.

Faculty of Business and Management, BrnoUniversity of Technology, Kolejní 2906/4, 61200 Brno,

CzechRepublic,

Abstract

At the present stage of economic transformations one of the major problems of organization an effective system managing subjects is the further development of the theory and practice of planning.

The economic science has a lot of different methodical approaches to planning and forecasting the basic financial and economic parameters of the enterprise which allow the expert to provide acceptance of strategic decisions on planning by the basis of a correct choice the method of forecasting and planning.

Key words

Strategic planning, matrixes, methods, strategic analysis.

Introduction and research objectives

The literature on strategic management proposes numerous methods of analysis and planning which can be used to solve more or less closely defined problems. To some extent different terms are in use for the same or similar methods. For example, strengths and weaknesses analysis and competitor analysis are very similar in practice: each of these methods focuses on a company's strengths and weaknessesrelative to those of its most dangerous competitors. These twomethods are also, to a certain extent, similar to benchmarking, in which company performance in a particular activity is compared with best practice. This may give a company clues as to where it can focus to improve weak points and to maintain company strengths.

Used methods and research results

In strategic planning and marketing many matrixes of this or that orientation are applied. There is a necessity of systemization of these matrixes, and also stape-by-stape implementation of the matrix approach at all stages of strategic planning.

Discussion

Strategic analysis is about looking at what is happening outside your organisation now and in the future. It asks two questions:

  • How might what's happening affect you?
  • What would be your response to likely changes?

It’s called strategic because it’s high level, about the longer term, and about your whole organisation.It’s called analysis because it’s about breaking something that’s big and complex down into more manageable chunks.

There are so many different methods of analysis and planning. Figure 1presents the methods of strategic analysis and planning which, in our experience, can be selected asbeing the most important if we look the results of 2000 Management Tools Survey (Darrell K. Rigby, 2001). This method can be considered as supporting tools which are used in strategic analysis and planning incombination with one of the methods listed in Figure 1.

Figure 1: The methods of strategic analysis and planning

  • Analysis of resources
  • Balanced scorecard
  • Boston Consulting Group portfolio method;
  • Market growth - market share portfolio method
  • Corporate options matrix
  • Defining of the strategic businesses;
  • Division of the company activities into strategic business fields
  • and strategic business units
  • General Electrics and McKinsey portfolio method;
  • Market attractiveness - competitive strengths portfolio method
  • Generic business strategies;
  • Generic competitive strategies
  • Global environmental analysis
  • Identifying strategic success factors;
  • Identifying criteria for customer choice
  • Industry segment analysis;
  • Customer segments and sub-markets analysis
  • Market system analysis
  • Network of success potentials;
  • Network of competitive advantages
  • Scenario analysis
  • Stakeholder value analysis
  • Strategic program planning;
  • Implementation program planning
  • Strengths and weaknesses analysis;
  • Competitor analysis;
  • Benchmarking
  • Structural analysis of an industry;
  • Five forces model
  • Structural analysis within an industry;
  • Strategic groups model
  • Value chain analysis

In the strategic analysis, we distinguish three fields: the global environment, the relevant industries and the company itself (fig.2).

Figure 2: Fields of strategic analysis

Matching the methods to the three fields is a straightforward matter:

• As well as global environmental analysis itself, the method of scenario analysis can be used to examine the environment, as it also deals with the prediction of developments and future events. Scenario analysis is more sophisticated and provides superior quality, but it is a much more expensive method, and is therefore used only where there is great uncertainty about developments in relevant parts of the environment.

• To examine the relevant industry, we can use all those methods which deal with the market and the relationships between competitors. Market system analysis and industry segment analysis provide a view of the structure of the market. The link between the market and the competitors is made with the identification of strategic success factors; these show the demands that customers have with regard to the market offer. Porter's structural analysis of an industryto explain competitive intensity in an industry. A more differentiated view of the competitive situation can be obtained by looking at strategic groups; this can be done with the help of Porter's structural analysis within an industry.

• The two portfolio methods each allow an analysis of the attractiveness of the industries in which the company competes and of the competitive strength of its various activities. On the basis of this work, the portfolio methods can be used to specify future target market positions for the businesses. With this combination of external and internal aspects, the portfolio methods are attributed to the relevant industries and the company itself.

• The remaining methods of analysis and planning belong in the third field: the company itself. Analysis of stakeholder values clarifies the overriding objectives the strategies must reach. The strength and weakness analysis shows where a basis for the future strategies can be found and what the gaps are which need to be filled or worked around. The definition of the strategic businesses provides a strategic view of a company with different activities and provides a future-oriented basis for strategic decisions at the corporate level. With the help of the corporate options matrix, the working group can develop strategic options for the future at the corporate level. Resource analysis identifies and evaluates the various physical, intangible, financial and organizational resources in a company and its different divisions. It highlights key resources which should be maintained or strengthened. Value chain analysis shows the links between the resources and the market offers. Generic business strategies and networks of success potentials are two tools which allow businesses to plan their future strategy. Finally, the strategic programs will define packages of implementation measures, while balanced scorecards ensure that the strategic goals are respected in daily business.Table 1shows the allocation of the nineteen methods to the three fields of analysis and to Steps One to Four of the strategic planning procedure.

Table 1: Matching the tools of strategic analysis and planning to analysis fields and planning steps

Fields of analysis
Step
in the
process / Global environment / Industries / Company
Step 1: Strategic analysis / Global environment analysis /
  • Market system analysis
  • Identifying of strategic success factors
/
  • Stakeholders value analysis
  • Strengths and weaknesses analysis

Step 2: Developing the corporate strategy / Scenario analysis /
  • structural analysis of an industry
  • structural analysis within an industry
/
  • defining strategic business
  • corporate options matrix

  • McKinsey portfolio method
  • Boston-consulting Group portfolio method

Step 3: Developing the business strategies / Industry segment analysis /
  • Value chain analysis
  • Resource analysis
  • Selecting a generic business strategy
  • Developing a network of success potentials

Step 4: Defining the implementation measures /
  • Developing a balanced scorecard
  • Strategic program planning

Global environmental analysis will throw light on the broad environment for the company's activities, while for each business a view of the market as a system is required.

The analysis of the market should be further specified by looking at customer demands and identifying strategic success factors. By means of strengths and weaknesses analysis, the company's competitive position can be compared with those of its chief competitors. Finally, the key stakeholder values for the company as a whole must be analyzed (RudolfGrünig and RichardKühn, 2006, Joseph Calandro Jr and Scott Lane, 2007).

To provide a firm basis for defining corporate strategy, it is sometimes necessary to look at future environmental developments in detail. Here scenario analyses can be carried out for the industry markets concerned. In addition, the competitive situation in the industry markets can be examined with structural analysis of industries.Where necessary structural analysis within industry can alsobe carried out. Following on from the definition of the strategicbusinesses, one of the two portfolio methods should be used to provide a portfolio analysis. The Boston Consulting Group growth-share matrix allows portfolios of products to be depicted in a 2x2 box, the axes of which are based on market growth rate an relative market share (David Jobber, 2007).

The portfolio methods can also be used to develop and assess options at the corporate level. Another approach to do this is the corporate options matrix.

For the development of business strategies in step three, an industry segment analysis is recommended for each industry market. For the businesses, value chain analysis and resource analysis should be undertaken. On the basis of these analyses, for each business the future generic business strategy and the future network of success potentials can be determined.

Definition and planning of the strategic programs and the specifications for balanced scorecards are tasks which can clearly be allocated to step four, in which the implementation measures are fixed.

In the offered scheme of strategic planning in each group of a matrix co-operate with each other, but it is impossible to baseon result or a conclusion of only one matrix - it is necessary to consider the conclusions received from each matrix in group.
Conclusions

This article introduced how you can allocate the tools of strategic planning and analysis of tree fields of strategic planning. As well as matching the tools of strategic analysis and planning to the correct steps. In the step of strategic analysis the principal task of the strategy development team is to put together a basic set of data. In second and third steps are uses methods wich diagnose opportunities and threats and identify strtegic options. The tools which are designed to support the implementation of strategies effectively and efficiently are used on step four.

Every year, companies invest enormous amounts of money and human energy in using management tools. They can bring structure and clarity to organizations grappling with a daunting array of chalanges. They can help companies improve perfomance in strategic areas. But the power to achieve results is not imbued in the tools themselves.It resides in users and their capacity for ingormed choices, discerning selection, and skillful implementation.Matrix methods play very important role in strategic planning and marketing. However use only matrix methods is not sufficient as matrixes allow to investigate strategic planning and marketing from the separate parties and do not show a full picture, but in connection with other methods the matrix approach gives the chance to see regularities in the processes occurring at the enterprise, and to draw a right conclusion.

References

Periodicals

[1] Darrell K. Rigby, 2001. Putting tools to the test: senior executives rate 25 top management tools. Strategy & Leadership, 1087 – 8572

[2] Joseph Calandro Jr and Scott Lane, vol. 35 № 2,2007, 30 – 38 pp. Winning in your industry: new tools and strategies. A new competitive analysis tool: the relative profitability and growth matrix. Strategy & Leadership

[3] Paulo Augusto Cauchick Miguel, vol. 25 №1, 2008, 10-23 pp. Portfolio management and new product development implementation. International Journal of Quality & Reliability Management

Books

[1] David Jobber, 2007. Principles and Practice of Marketing, 5th edition. McGraw-Hill Education, 385 – 405 pp.

[2] RudolfGrünig and RichardKühn, 2006. Process-based Strategic Planning, Fourth Edition. Springer Berlin Heidelberg, 75-81 pp.