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Entrepreneurs and business managers are often so preoccupied with immediate issues that they lose sight of their ultimate objectives. Thats why a business review or preparation of a strategic plan is a virtual necessity. This may not be a recipe for success, but without it a business is much more likely to fail. A sound plan should:
Serve as a framework for decisions or for securing support/approval.
Provide a basis for more detailed planning.
Explain the business to others in order to inform, motivate & involve.
Assist benchmarking & performance monitoring.
Stimulate change and become building block for next plan
A strategic plan is not the same thing as an operational plan. The former should be visionary, conceptual and directional in contrast to an operational plan which is likely to be shorter term, tactical, focused, implementable and measurable. As an example, compare the process of planning a vacation (where, when, duration, budget, who goes, how travel are all strategic issues) with the final preparations (tasks, deadlines, funding, weather, packing, transport and so on are all operational matters).
1.1 Basic Approach to Strategic Planning
A critical review of past performance by the owners and management of a business and the preparation of a plan beyond normal budgetary horizons require a certain attitude of mind and predisposition. Some essential points which should to be observed during the review and planning process include the following:
Relate to the medium term i.e. 2/4 years
Be undertaken by owners/directors
Focus on matters of strategic importance
Be separated from day-to-day work
Be realistic, detached and critical
Distinguish between cause and effect
Be reviewed periodically
Be written down.
As the precursor to developing a strategic plan, it is desirable to clearly identify the current status, objectives and strategies of an existing business or the latest thinking in respect of a new venture. Correctly defined, these can be used as the basis for a critical examination to probe existing or perceived Strengths, Weaknesses, Threats and Opportunities. This then leads to strategy development covering the following issues discussed in more detail below:
1.2 Key information surrounding strategic business issues
The Issues will divide between leading and managing, between imperatives and strategy. The key issue to the business/technology dialogue is at the imperatives stage. Identifying the imperatives depends on knowledge anchors (a mix of assumptions, facts, axioms, and opportunities) and on vision and strategic intent, a clear and focused commitment to a long-term direction of effort, with opportunistic and situational responses that help the firm plan when it cannot predict. There are several Key Issues surrounding Strategic Business Issue.
Include technology as part of the knowledge anchors
Most of the problems senior business executives and IS managers report in building an effective dialogue come from technology not being included at the start. Aligning the IT strategy with the business strategy is then too late.
Lack of attention to knowledge anchors is so often why the 50% of firms that disappear when business networking changes the basics of competition includes several of the previous leaders. It is very hard for any firm to challenge the assumptions and principles that made it successful.
Identify business imperatives
Identify business imperatives (concrete targets for action) that implicitly or explicitly begin "Regardless of how we do it, it is absolutely vital those we...."These imperatives are closely linked to the firm's vision and strategic intent.
Link these business imperatives to technological imperatives
If these are our 'must dos' for the business, then to achieve them it is absolutely vital that our IT resource...
Review the technological imperatives
If they have common dimensions of reach and range (Fig. 6.2), they establish the business requirements for the firm's IT platform. This process defines architecture, integration, infrastructure, and standards inductively from business-first principles in business language. The logic here is: "These are our business imperatives. Here are the corresponding technical imperatives. We see the link and also see that they share the common requirement of reach-who can we connect our own processes to-and range-what information can we directly and automatically share across processes? Obviously, then, we must have a coordinated IT platform as a business priority." It is the inductive process that leads business executives to add the "obviously."
Define the organizational policies
Define the organizational policies needed to ensure appropriate coordination and appropriate Revolution. The lever here is to establish a small set of big rules, each of which must have a sound business reason. These provide the basis for selecting technical standards that have the force of organization allow. For instance, a big rule for one electrical utility is "All departmental systems must be able to connect to the firm's corporate telecommunications network." The business reason is the economies of cost, expertise, and capacity this ensures.
Make the business case for the platform and key applications
Make the business case for the platform and key applications that use it in terms of quality profit engineering. The quality profit engineering framework provides a convincing economic framework that senior managers will recognize and appreciate
Establish oversight mechanisms
Establish oversight mechanisms for managing IT and get out of the way. This removes any need for computer literacy among managers; they need instead to be fluent in setting the criteria for IT investments. The strategy process can then be left to professionals. Increasingly, strategy for IT mainly addresses multisourcing (of which outsourcing is a sub option) and alliances.
Constant rechecking of knowledge anchors
Make sure there is a constant rechecking of knowledge anchors. That change is now the norm is a cliché of business life. It means that today's assumptions that have led to success may be invalid for tomorrow.
Concepts and models
Development of an optimization model can be divided into five major phases.
Problem definition and formulation
Model validation and evaluation of performance
Model application and interpretation
Data collection may be time consuming but is the fundamental basis of the model-building process. The availability and accuracy of data can have considerable effect on the accuracy of the model and on the ability to evaluate the model.
The problem definition and formulation includes the steps: identification of the decision variables; formulation of the model objective(s) and the formulation of the model constraints. In performing these steps the following are to be considered.
Identify the important elements that the problem consists of.
Determine the number of independent variables, the number of equations required to describe the system, and the number of unknown parameters.
Evaluate the structure and complexity of the model
Select the degree of accuracy required of the model
Model development includes the mathematical description, parameter estimation, input development, and software development. The model development phase is an iterative process that may require returning to the model definition and formulation phase.
The model validation and evaluation phase is checking the performance of the model as a whole. Model validation consists of validation of the assumptions and parameters of the model. The performance of the model is to be evaluated using standard performance measures such as Root mean squared error and R2 value. A sensitivity analysis should be performed to test the model inputs and parameters. This phase also is an iterative process and may require returning to the model definition and formulation phase. One important aspect of this process is that in most cases data used in the formulation process should be different from that used in validation. Another point to keep in mind is that no single validation process is appropriate for all models.
Model application and implementation include the use of the model in the particular area of the solution and the translation of the results into operating instructions issued in understandable form to the individuals who will administer the recommended system.
Different modeling techniques are developed to meet the requirements of different types of optimization problems. Major categories of modeling approaches are: classical optimization techniques, linear programming, nonlinear programming, geometric programming, dynamic programming, integer programming, stochastic programming, evolutionary algorithms, etc.
SWOTs - Keys to Business Strategies
Having built up a picture of the company's past aims and achievements, the all-important SWOT (strengths, weaknesses, opportunities and threats) analysis can commence.
3.1 Strengths & Weaknesses
Strengths and weaknesses are essentially internal to the organization and relate to matters concerning resources, programs and organization in key areas. These include:
Sales - marketing - distribution - promotion - support
Marketing and Sales Executive Survey shows that while sales productivity remains one of the biggest challenges for 80 percent of small and medium-sized businesses (SMBs), the average "face-to-face selling" time for sales representatives was 47.2 percent; at 9 percent, it is still lower in software and consulting services. The majority of an average sales professional's time is consumed by lower-value back-end activities, such as identifying prospects, cold calling/scheduling meetings, preparing collateral, writing proposals, updating CRM systems and churning out reports.
Management - systems - expertise - resources
Operations - efficiency - capacity - processes;
Products - services - quality - pricing - features - range - competitiveness;
Finances - resources - performance;
R&D - effort - direction - resources;
Costs - productivity - purchasing;
Systems - organization - structures.
If a startup is being planned, the strengths and weaknesses are related mainly to the promoter(s) - their experience, expertise and management abilities - rather than to the project.
3.2 Thorough review of Unilever's resources and capabilities
Unilever has approximately 174,000 employees in nearly 100 countries and generated annual sales of over â‚¬40 billion in last year. Unilever Safe Harbor Statement- This project may contain forward-looking statements of the United States Private Securities Litigation Reform Act of 1995. Words like 'expects', 'anticipates', 'intends' or the negative of these terms and other similar expressions of future performance or results based on current expectations and assumptions regarding anticipated developments and other factors affecting the Group. The competitive pricing and activities, consumption levels, costs, the ability to maintain and manage key customer relationships and supply chain sources, currency values, interest rates, the ability to integrate acquisitions and complete planned divestitures, physical risks, environmental risks, the ability to manage regulatory, tax and legal matters and resolve pending matters within current estimates, legislative, fiscal and regulatory developments in the geographic markets where the Group operates and new or changed priorities of the Boards. Further details of potential risks and uncertainties affecting the Group are described in the Group's filings with the London Stock Exchange, Euro next Amsterdam and the US Securities and Exchange Commission, including the Annual Report & Accounts on Form 20-F. The Group expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Group's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.
Impacts by brands / products
Influences on brands / products
3.3 Environmental and Vitality
Unilever depends on the environmental for supplies of raw materials and water. Sustainability of environment is a business issue. Over two thirds of Uniliver's raw materials come from agriculture. Changing weather patterns, water scarcity and unsustainable farming practices threaten the long-term viability of agricultural production. Packaging depends on supplies of paper and other materials. Water is essential for consumers when using many of our brands. For more than a decade we have been working to reduce the environmental impact of our own operations. Now we are going further to look at indirect impacts, encompassing suppliers and consumers where possible. In 2008 we piloted a way to measure our product categories against four indicators covering water, waste, sustainable sourcing and greenhouse gas emissions. This data will inform future development and innovation across our categories.
A significant shortfall of material and in its cash flow could undermine the credit rating, impair investor confidence and hinder the ability to raise funds, whether through access to credit markets, commercial paper programmes, long-term bond issuances or otherwise. During 2008, Unilever benefited from its strong single-A Balance sheet 'active financial management', and the coming year will see the continuation of the same policy. Maintaining our strong single-A rating will remain a key priority.
The pension investment policies are well diversified, and the failure of any single investment would not have a material impact on the overall level of assets. The plans seek to invest the largest proportion of the assets in equities, which the Group believes offer the best returns over the long term commensurate with an acceptable level of risk. The pension funds also have a proportion of assets invested in property, bonds, hedge funds and cash. The majority of assets are managed by a number of external fund managers, with a small proportion managed in-house. Unilever has a pooled investment vehicle (Univest) which offers pension plans around the world a simplified, externally managed investment vehicle to implement their strategic asset allocation models currently for equities and hedge funds.
Attracting and retaining talented employees is essential to the successful delivery of strategy and success in the marketplace. Shortfalls in recruitment or retention could adversely affect an ability to operate successfully, grow our business and win against competition.
To counter the risk, we believe in providing an environment where individuals can achieve their goals, both professionally and personally, and by seeking to ensure that Unilever has the right resources and capabilities to compete effectively. We have fully integrated processes of appraisal against skill profiles, capabilities, and achievement of business objectives, and we also make investments in training and development which are aimed at equipping our people for the challenges in their roles. We constantly review external candidates to ensure we enrich and augment our home-grown talent.
The economic slowdown and turmoil in the global economy has adversely impacted consumer markets, including those in which Unilever operates. Unilever's business is dependent on continued consumer demand for the products, and reduced consumer wealth may result consumers unwillingness to purchase the products, with clear implications for turnover and profitability.
Unilever's strategy is aimed towards delivering superior quality value products to consumers, through strong brands, supported by differentiated innovation and continued product improvement, and driven to market through excellent execution. Uniliver's has significant number of global brands and any adverse event affecting consumer confidence or continuity of supply of such a brand could have an adverse impact on many of the markets, or in some cases affect intangible asset values. Unilever brands and their growth through compelling and competitive levels of investment in advertising and promotions. The breadth of both portfolio and geographic reach also help us to mitigate general economic risks. The measures are aimed at extending the consumer offerings, reducing the impact of falling consumer demand or of consumers switching to alternative products, and thus allowing us to compete effectively in our key categories and countries.
3.7 Market Forces
We'd like to believe that the values embraced here are invulnerable to the onslaught of market forces. But we don't. Each brand effort is tailored to reflect the unique interests and needs of its audience." In other words, Unilever itself pays more attention to its sales than its values or the impression its advertising makes on people. I suppose that's a lesson little girls need to learn from a very young age.
Developing a marketing strategy involves researching and analyzing external factors including competition, opportunities, threats, trends and strategic uncertainties. Identification of customers in segments identified by characteristics including benefits sought, loyalty, application and motivation can prove beneficial in creating a solid marketing strategy. Identification of who the competitors are and who possible potential competitors could be is also a necessary step of building a solid marketing strategy. Dimensions of size, growth, profitability, image, objectives, business strategies, culture, cost structure, strengths and weaknesses could also categorize competitors. In doing so, potential strengths and weaknesses can be identified in order to develop a strategy for creating customer brand loyalty and a more competitive marketing strategy. This coupled with identifying who the customers are their needs, likes and dislikes could be the difference in creating marketing strategies that succeed or fail in the long-run. Big-picture analyses of both are truly the keys.
Path to Growth
4. Path to Growth
4.1 Elements of Growth Strategy
The consumer products includes Flora Margarine, Dove Bath Soaps and Ben & Jerry's ice cream, revealed continued progress at its "Path to Growth" strategy yesterday with a 12 per cent increase in underlying profits for the full year. Niall FitzGerald, the chairman, said slower trading in North America where its prestige fragrance business had been hit by a sharp dip in the duty free sales. But the nature of Unilever's brands meant it was relatively protected from the economic slowdown. "People still have to eat and wash themselves. Even in Japan the business has been growing at 10 per cent over the last three to four years despite economic problems there."
The company has been concentrating its marketing firepower on a smaller number of brands as it seeks to turn names such as Dove and Suave toiletries into global powerhouses. The past few years has seen Unilever sell 50 businesses, close 59 factories and cut its number of staff by 23,100. Underlying sales growth in the leading brands was 5.3 per cent in the year compared with 4 per cent overall.
The group has also been extending brands to cover a wider product area. Bertolli, originally an olive oil, has been extended to sauces and spreads, Dove now has products in shampoo and moisturizers as well as soaps, Slim Fast, the healthy food product group bought for $2.3bn (£1.6bn) in 2000, has seen sales grow by 23 per cent helped by product diversification. "It started as a diet drink for fat people. Now it is a well-being range to make people feel healthy," Unilever has its Best foods acquisition been successfully integrated, though sales growth slowed to just 2 per cent as management concentrated on the reorganization rather than growth.
4.2 SWOT analysis method and path to Growth Strategy
The SWOT analysis is an useful tool for analyzing and decision-making for all sorts of situations in business and industries. Information about the origins and inventors of SWOT analysis is as follows. The SWOT analysis headings provide a good framework for reviewing strategy, position and direction of a company or business proposition, or any other idea. Completing a SWOT analysis is very easy, and is a good subject for workshop sessions. SWOT analysis also works well in brainstorming meetings. Use SWOT analysis for business planning, strategic planning, competitor evaluation, marketing, business and product development and research reports. You can also use SWOT analysis exercises for team building games. The PEST (Political, Economic, Social and Technological) analysis, which measures a business's market and potential according to external factors; Political, Economic, Social and Technological. It is often helpful to complete a PEST analysis prior to a SWOT analysis. See also Porter's Five Forces model, which is used to analyse competitive position.
A SWOT analysis measures a business unit, a proposition or idea; a PEST analysis measures a market. A SWOT analysis is a subjective assessment of data which is organized by the SWOT format into a logical order that helps understanding, presentation, discussion and decision-making. The four dimensions are a useful extension of a basic two heading list of pro's and con's SWOT analysis can be used for all sorts of decision-making, and the SWOT template enables proactive thinking, rather than relying on habitual or instinctive reactions.
The SWOT analysis template is normally presented as a grid, comprising four sections, one for each of the SWOT headings: Strengths, Weaknesses, Opportunities, and Threats. The free SWOT template below includes sample questions, whose answers are inserted into the relevant section of the SWOT grid. The questions are examples, or discussion points, and obviously can be altered depending on the subject of the SWOT analysis. Note that many of the SWOT questions are also talking points for other headings - use them as you find most helpful, and make up your own to suit the issue being analysed. It is important to clearly identify the subject of a SWOT analysis, because a SWOT analysis is a perspective of one thing, be it a company, a product, a proposition, and idea, a method, or option, etc
Here are some examples of what a SWOT analysis can be used to assess:
a company (its position in the market, commercial viability, etc)
a method of sales distribution
a product or brand
a business idea
a strategic option, such as entering a new market or launching a new product
a opportunity to make an acquisition
a potential partnership
changing a supplier
outsourcing a service, activity or resource
an investment opportunity
Be sure to describe the subject for the SWOT analysis clearly so that people contributing to the analysis, and those seeing the finished SWOT analysis, properly understand the purpose of the SWOT assessment and implications.
4.3 SWOT Analysis Template
Has strengths, weaknesses, opportunities and threats questionnaires and answers to be filled and they are followed up to ensure quality. The template is presented below for reference
Competitor intentions - various?
New technologies, services, ideas?
Vital contracts and partners?
Sustaining internal capabilities?
Loss of key staff?
Sustainable financial backing?
Economy - home, abroad?
Seasonality, weather effects?
SWOT Analysis Template
State what you are assessing here ________________________________________________________________________________________________________
(This particular example is for a new business opportunity. Many criteria can apply to more than one quadrant. Identify criteria appropriate to your own SWOT situation.)
Industry or lifestyle trends?
Technology development and innovation?
New markets, vertical, horizontal?
Niche target markets?
Geographical, export, import?
Tactics: eg, surprise, major contracts?
Business and product development?
Information and research?
Partnerships, agencies, distribution?
Volumes, production, economies?
Seasonal, weather, fashion influences?
Advantages of proposition?
USP's (unique selling points)?
Resources, Assets, People?
Experience, knowledge, data?
Financial reserves, likely returns?
Marketing - reach, distribution, awareness?
Location and geographical?
Price, value, quality?
Accreditations, qualifications, certifications?
Processes, systems, IT, communications?
Cultural, attitudinal, behavioural?
Management cover, succession?
Philosophy and values?
Disadvantages of proposition?
Gaps in capabilities?
Lack of competitive strength?
Reputation, presence and reach?
Own known vulnerabilities?
Timescales, deadlines and pressures?
Cashflow, start-up cash-drain?
Continuity, supply chain robustness?
Effects on core activities, distraction?
Reliability of data, plan predictability?
Morale, commitment, leadership?
Processes and systems, etc?
Management cover, succession?
5. Unilever's strategy
5.1 Unilever's current strategy and level of performance
Due to the power of being such a large multinational, Unilever, one of the world's largest consumer goods companies, with ranges of foods, household and personal care products, has a lot of pressure to perform business in a socially responsible manner. Perhaps due to this, Unilever widely promotes their strong focus on sustainability. They have also established a mission to attain sustainable growth in order to achieve better results for their stakeholders, as declared in the company's statement:
As a multi-local multinational we aim to play our part in addressing global environmental and social concerns through our own actions, and working in partnership with stakeholders at local, national and international levels.
In 2001, Unilever spent 57million Euros on community projects. These efforts towards sustainability have seen their food production businesses at the top of the Dow Jones Sustainability Index (DJSI), and also being ranked third in the 100 top companies that count for corporate responsibility. These measures, as well as Unilever's own voluntary measurements should ensure, that 'progress is actually being made rather than just being talked about', as well as helping create a very positive company image.
These actions taken by Unilever appear to show their great concern in the sustainable development of their business. There are however many other possibilities to explain their reasoning behind the extent of their action. One possibility is the increased public concern for the environment, which has led to the recent concept of green marketing, which could explain Unilever's motives. Unilever uses this idea to help establish superior customer value, as they are seen as having the highest standards of responsible and sustainable behavior. However critics believe that these reports and projects embarked on by companies are only greenwash, in order to improve their public image. therefore outlining one of Unilever's motives for acting in a sustainable manner, in order to avoid any bad press which could lead to the boycott of their products. Furthermore, Unilever's sustainability strategy benefits the company, as being the leader of the industry on the DJSI has led to an increase in investments.
5.2 Reflect and report on the views of business analysts and other commentators
Almost all commentators expressed the view that report should have the flexibility to define disaster scenarios based on local risk profiles. A few of the scenarios which could be considered to have a general impact on the financial stability. The relevant scenarios should be identified by individual analysts. A few other commentators suggested that the Unilever should identify in the paper as many causes of disruption and exposure to threats as possible. The report provides a number of plausible scenarios, but the list is not comprehensive. The operators may identify other scenarios on the basis of specific requirements laid down by national authorities or local situations.
Several commentators expressed the need to give more consideration to oversight expectations for dealing with Material Risks. The report covers such risks where reference is made to external threats. However, there are no specific expectations for the physical security/protection of the premises where a system is located, as such issues should be part of a system's general business continuity framework. It was also stated that slowly developing threats should be covered and that its scope should not be limited to Adverse Shock. Although some of the expectations address such a threat indirectly, explicit reference to this scenario has not been considered necessary because the main purpose of the paper is to address specific threats and not all types of threats which should be covered by regular business continuity arrangements.
Some of the commentators were of the view that it is unnecessary for all participants to implement specific operational models such as the resilience model based on a primary operating site with a corresponding secondary site. The location of the sites and the technology used to share data between them could be decided by system operators on the basis of the risk profiles of the two sites, taking into consideration the geographical concentration of similar critical systems in the same region.
5.3 Comment on the current strategic priorities
Comments on the benchmarks established in the previous strategy
This would include issues concerning
The legal environment (the implementation and enforcement of laws);
The regulatory environment for enterprises (such as issues related to establishing new businesses, taxation, trade protection, tariff and price-setting mechanisms, etc.); and
The functioning and efficiency of public administration. We seek your views on how serious these issues are for businesses
Comments on social, political and environmental issues
Most of the comments received raise similar issues - the Country's compliance with Article1 of the Agreement Establishing the Bank, human rights conditions, the Bank's reaction to events and curtailment of the Bank's activities based on human rights and democracy concerns. In order to avoid repetitions, one Staff Response to all those related issues was prepared and is presented below. Other issues are addressed individually in response to specific comments.
Comments on the financial system
This would include issues concerning:
the development of the banking sector;
the availability of funds;
the development of the non-banking financial sector (pension funds, insurance, leasing companies, mortgage lenders); and
The development of the capital markets.
Issues related to infrastructure needs and development
This would include development needs in
Power and energy;
Municipal and environmental infrastructure;
Energy efficiency; and
Transport; with particular attention given to issues relating to regulatory environment, restructuring, corporatization, tariff reform, public-private partnerships and environmental improvements.
5.4 Company has experienced growth
Overview of several quarters of falling sales. The start of the year that it aimed to restore volume growth without hitting margins, the markets of Asia and Africa, volume growth was 3.3pc, in the Americas it was 1.6pc and in Western Europe it was 1pc - giving a group total of 2pc, compared with a fall of 1.8pc in the second quarter. Like-for-like sales rose 4.1pc, so 2.1 percentage points of this gain was made up by pricing in the rest of the world.
Prices were reduced in Europe as costs fell, but this was expected after price rises last year. The company has not achieved sales growth by slashing prices, its advertising spend has risen by 50 basis points, which contributed to a 60 basis point fall in the operating margin. Net debt rose to â‚¬8.8bn (£7.5bn) from â‚¬8bn, this was mostly due to changes in currency markets as the group has dollar-denominated debt.
There was no dividend announced at the half-way stage, as is usual with Unilever. The company declares its interim dividend payment with its third-quarter results and its final payment with its fourth-quarter numbers. However, next year the company will move to a quarterly payment schedule, smoothing out payments over the full year. The shares are currently yielding 4.2pc. They are trading on a December 2009 earnings multiple of 12.5 times, falling to 13.5 next year. This is a premium to US peer Procter & Gamble, which is trading on a June 2010 multiple of 14.4, but this looks deserved, after the US group tabled a less-impressive set of numbers earlier this week.
Unilever's new management - Paul Polman, chief executive, and Jim Lawrence, chief financial officer - appear to have heralded a more competitive and aggressive era than their predecessors. This bodes well. Targeted advertising and product innovation have been a significant part of the group's success. The shares are up 10pc since their recommendation in November. Taking a long-term view, the stance remains buy.
The company's balance sheet is strong: it has cash of $118m and no debt. Although Gem Diamonds is likely to be loss-making in 2009 and the outlook for the rest of the year is far from certain, it appears that the market really has now bottomed out. Most of its Ellendale mine is on care and maintenance, but the real reason to own the shares is Letseng. The shares are now just 13pc below their initial recommendation price and improving prospects means the shares are now a buy, up from hold.
6. Strategic alternatives
6.1 Main strategic alternatives, emphasizing how each one might change a company's competitive capabilities
Strategic planning is the management task concerned with growth and future of a business enterprise. It ensures that the organization keeps moving in the right direction. It was fast changes in environment since 1950s that compelled organizations to approach the management task with strategic perspective, as the future was no more a measured extension of the past or the present. Instead of making extrapolated estimates about future, it was essential to endow the enterprise with certain fundamental competencies / distinctive strengths which could take care of eventualities resulting from unexpected environmental changes. Environmental changes which forced the firms to adopt a strategic perspective:
Fast changing technologies
Proliferation of new products
Faster commercialization of new product ideas and patents
Socio political changes
Emergence of global markets
Consequent to the changes in environment an enterprise had:
To be strategically alert
To be future oriented
To develop the competence for assimilating changes faster
To grow big by generating sufficient resources and
To gain expertise in technology, marketing and decision support systems
6.2 Unilever's actual strategies since 2000
trategic planning offers a methodology by which, firm could anticipate and project the future, and be internally equipped to face it.
Nature and scope of strategic planning
Serves as a route map for the corporation
Lends a frame work for systematic handling of corporate decisions
Lays down growth objectives of the firm and also provides methodology needed for achieving them
Ensures that opportunities are chosen widely
Ensure best utilization of resources
Serves as a hedge against uncertainty as it enables to understand trends in advance and provides the benefit of a lead time for taking crucial decisions
Helps build competitive advantages and core competencies
Strategic planning is basically concerned with:
Future (long term dynamics not day to day tasks)
Growth (direction, extent, pace and timing)
Environment (fit between business and environment)
Portfolios of business (product-market scope and postures)
Strategic decisions differ from other functions of management as strategic decisions deal with growth of an organization (long range focus). Whereas, operational decisions are routine ones pertaining to day to day activities and administrative decisions are by and large patterned after existing practices in the corporation. In short, strategic planning provides the company with an easily discernible, clear cut, objective-strategy design which in turn takes the company in the required direction.
Strategic planning is however not a single task, it is an integrated package of several tasks that are distinct, yet inter-related
Clarifying vision / mission
Defining the business
Surveying the environment
Internal appraisal of the firm
Setting the corporate objectives
Formulating the corporate / business strategy
Monitoring the strategy
6.3 Theory is supported by practice
Clarifying the vision of the corporation is the first task in strategic planning process. In fact, strategic planning originates at the point of articulation of its vision / mission. It is the expression of corporate intent.
Defining the business correctly is a pre-requisite for selecting the right opportunities and steering the firm on correct path. Very genesis of strategic planning can be traced to environmental turbulence, so it is only obligatory for an organization to survey the environment to compile an opportunities threat profile (OTP). Internal appraisal is a process of assessing corporation's capabilities and resources, strengths and weaknesses, core competencies and competitive advantages. The firms compare themselves against competitors and develop competitive advantage profile (CAP) and ward off threats to zero on the environmental opportunities.
Objectives are a statement of results the corporation seeks in given area, in a specific time frame. Clarity in objectives is of utmost importance, it facilitates the corporate to march along the direction of vision with minimum errors and diffusion of efforts with maximum utilization of resources. In addition to growth, objectives are set towards profitability, productivity, technology, competitive position, human resources, social responsibility and corporate image. Objectives emphasize where the organization wants to go, and strategies provide the design for getting there. Objectives and strategies together describe an organizations' concept of business. Time to time, strategies are monitored for compatibility with external environment and re-worked based on internal realities. In fact it is not a one shot affair - it is a continuous process.