Strategic Planning (Research Paper Sample)

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TABLE OF CONTENT
1.0 Introduction
2.0 Understanding the process of strategic planning
2.1 Essence of strategic planning
2.2 The strategic planning questions
2.3 Components of strategic planning
2.4 Core competencies of the company
2.5 Strategic thinking
2.6 The Ansoff growth Matrix
2.7 Approaches to planning
2.8 The Directional policy matrix
2.9 The Boston matrix
3.0 Formulating a New Strategy
3.1 The SWOT analysis
3.2 Pest Analysis
3.3 The industry analysis: Porter's five forces
4.0 Approaches to Strategy Evaluation and Selection
4.1 Market entry strategies
4.2 The main strategic alternatives
4.2.1 Limited growth strategy
4.2.2Substantive growth strategies
4.2.3 Disinvestment strategies
4.3 Strategy selection process
5.0 Implementation of the Chosen Strategy
5.1 Review and evaluation
6.0 References
1.0 Introduction
Strategic planning refers to the processes of defining a company's future direction as well as making decisions on allocation of the available resources as the company tries to pursue its strategy (Thompson & Martin 2005). The process of strategic planning requires the management to first analyze the current position of the company as well as the available options that the company can use to undertake a particular course of action. This assignment aims at understanding the strategic planning process of British American Tobacco (BAT) by examine the key components of strategic planning such as the company's mission, vision and value strategies. The assignment would also establish how the company is able to formulate a new strategy. Additionally, the assignment would look at the various approaches to strategy evaluation and selection as well as the implementation of the strategies.
2.0 Understanding the process of strategic planning
2.1 Essence of strategic planning
The business environment today highly competitive rendering focus based planning and budget oriented planning methods insufficient for an international company like BAT to survive and expand its operations. This hence implies that the company has to engage in strategic planning that would involve defining the mission, values, visions and objectives as well as performing an environmental scanning to formulate the strategy, oversee the implementation process, evaluate the implemented strategy and put in place a correction mechanism so that the company remains on track.
2.2 The strategic planning questions
Strategic planning is concerned with answering any of the following questions
* What does the company do?
* Whom is done for?
* How is the company able to excel in what it does?
Strategic planning to most organization involves determining what should be done over periods not less than 3 years to five or 20 years.
2.3 Components of strategic planning
Strategic planning involves understanding the firms' vision, values, mission and strategies.
The vision statement
The vision statement states what the company would like to be in the future or how the environment it operates in should be. It is often a future objective and can be a source of inspiration to the management and stakeholders of thee organization. The vision statement for British American Tobacco is to achieve leadership of the global tobacco industry.
The mission statement
The mission statement defines the purpose for existence of the organization. The mission statement outlines the actions that the company intends to pursue to achieve its vision.
Values
These are the beliefs that determine the organizational culture of a company. They are the qualities that all stakeholders share concerning the firm. BAT emphasizes on a number of values that help it achieve its goals and objectives.
* Customer needs are first
The company's operations are customer oriented. This implies that the client's needs are at the centre of all decisions being made by the company.
* Quality
BAT believes that the clients should always enjoy the best products in the markets. Additionally, the customer service services have been enhanced to ensure that quality services are provided.
* Variety
The company manufactures a variety of tobacco products to match the different tastes and preferences of their clients.
* Responsibility
The company is socially responsible to all its stakeholders and the measures that would ensure that all the activities of the company are in line with the stakeholders' expectations. For instance, the company advises its clients that excessive use of tobacco is harmful to the user's health. It recommends that consumers should smoke tobacco responsibly.
* Honesty
The company emphasizes on being transparent in it dealings with stakeholders and considering their interests seriously. This has been achieved through corporate governance and the company's board where the various stakeholders have been represented.
The vision, mission and values of the company are important tools in strategic planning as they can help the management to establish measurable strategic and financial objectives. British American Tobacco has been able to use the tools in setting financial objectives such as earnings growth or profitability and sales targets. The strategic objectives are in line with the company's business position and may include the reputation and the market share of the company.
2.4 Core competencies of the company
The main competency of British American Tobacco has been that the company has been able to incorporate the entire supply chain from the farmer to the consumer. The company has been able to coordinate all its operations efficiently by engaging the services of the best available talent in return for better terms of services than those offered by the competitors. The presence of the company in most parts of the world has helped the company improve its revenues significantly as compared to the competitors because of the economies of scale. Market penetration has also been easy due to the availability of the huge amounts of capital required. The company also focuses on enhancing the knowhow of the trained and skilled professionals by offering an opportunity to its employees to further their education hence having an upper hand as compared to the competitors.
2.5 Strategic thinking
This refers to the ability of developing a plan that could be effective in helping the organization achieve its objectives. It includes examining the future scenarios and using them in making decisions today. Increased competition has forced companies to think innovatively in order to gain a competitive edge. The success of BAT can be attributed to the strategic thinking that the management has incorporated. The company is able to study future trends and needs of their customers and use the predictions in putting in place measures that would ensure that the company remains profitable and relevant in its operations. Strategic thinking involves coming up with innovative ideas that would lead to development of new products that are technologically driven. BAT has embraced technology by computerizing its operations such as stoke recording, authentication procedures for security and in manufacturing.
2.6 The Ansoff growth Matrix
This is a planning tool that can be used by an organization determine its market growth strategy and product. The product/ market growth mix explains that an organization's attempt to expand will depend on whether the company is introducing new products or existing products or the markets are new or already existing. The output in the matrix is the various strategies that an organization can pursue to achieve the desired results.
Market penetration
A company is concerned with selling existing products in the existing markets in this growth strategy. In this case, BAT focuses on selling the existing tobacco products in the markets that its competitors are already present. In this regard the company aims in achieving certain objectives which include dominating the existing market by attracting a larger client base or maintaining the existing clients, driving out competitors through making the market unprofitable for the competitors to operate in through adopting appropriate pricing strategies and marketing campaigns. The strategy does not require investment of large capital in research since the clients are already aware of the products.
Market development
Market development is a growth strategy where an organization markets its existing products to new markets. This strategy can be approached by considering new product dimensions, distribution channels and new geographical markets.
Product development
An organization introduces new products to the existing market in this growth strategy. The products are made in such a manner that they look differentiated from the other products in the market. The products have to look appealing to the clients for them to be purchased. Under this strategy, the emphasis is on innovation, research and development.
Diversification
New products are introduced in new markets in this strategy. For instance, BAT may choose to manufacture a new product and choose to sell it in a new market that did not exist before. This strategy is risky since the manufacturer is not sure on how the clients would receive the new product. It hence requires intensive research on the new market before the strategy is adopted.
2.7 Approaches to planning
There are a number of approaches that can be used in formulating strategies. These include informal planning, top down planning, behavioral approaches, extended budgeting, and bottom up planning, strategic analysis and strategic review. They are explained as follows,
Informal planning - this invol...