MGT 424 Saudi Electronic University Management Discussion

Chapter 5
Strategic Planning
Strategic Planning
Organizational Vision
According to the text:
• Organizational leaders are responsible for defining
the organization’s vision.
• Defining the vision requires developing a mental
image of the organization at a future time.
• The future organization will more closely
approximate the ideal organization, where “ideal” is
defined as that organization which completely
achieves the organization’s values.
Strategic Planning
Organizational Vision
Converting abstract visions into concrete ideas
includes:
• Living the vision
➢ Leaders lead by example
• Tell stories
Strategic Planning
Strategy Development
• The traditional strategy development analysis is the
comparison
➢ Strengths and Weaknesses to external Opportunities and
Threats (SWOT).
• “Outside opportunities are exploited by inside
strengths, while threats are avoided (or addressed)
and weaknesses circumvented (or addressed).”
• “Opportunities and threats are identified by
understanding customers and their markets. Internal
strengths and weaknesses are evaluated through
rigorous organizational assessments.”
Strategic Planning
Strategy Development
Strategic Planning
Strategy Styles
• Four categories of strategy style
➢ Classical
❖ Traditional approach to long-term planning
➢ Adaptive
❖ Flexible approach that allows experimentation
➢ Shaping
❖ Shape future markets
➢ Visionary
❖ Can both shape and predict future markets
Strategic Planning
Possibilities-Based Strategic Decisions
• Seven steps to strategy making
➢ Frame a choice
➢ Generate possibilities
➢ Specify conditions
➢ Identify barriers
➢ Design tests
➢ Conduct the tests
➢ Make the choice
Strategic Planning
Strategic Development Using Constraint Theory
• “Constraint management acknowledges that quality
is but one important element in the business
equation.”
• “Constraint management seeks to help managers at
all levels of an organization maintain proper focus on
the factors that are most critical to overall success:
system constraints.”
• “In some systems, these might be quality related.”
Strategic Planning
Strategic Development Using Constraint Theory*
• Different system constraints
➢ Systems approach
➢ Systems thinking
➢ System optimization versus Process
Improvement
➢ Systems as chains
Strategic Planning
Basic Constraint Management Principles and Concepts
• Theories are either descriptive or prescriptive.
➢ Descriptive theories tells things the way they are.
➢ Prescriptive theories describe and guides through
prescribed actions.
• Constraints are defined by the text as
➢ anything that limits a system (company or
agency) in reaching its goal (Goldratt, 1990, pp.
56–57)
Strategic Planning
Basic Constraint Management Principles and Concepts
• Types of constraints
➢ Market
➢ Resource
➢ Material
➢ Supplier/vendor
➢ Financial
➢ Knowledge/competence
➢ Policy
Strategic Planning
Basic Constraint Management Principles and Concepts
• According to the text, there are four underlying
assumptions:
➢ Every system has a goal and a finite set of necessary
conditions that must be satisfied to achieve that goal.
Effective effort to improve system performance is not
possible without a clear understanding and consensus
about what the goal and necessary conditions are.
➢ The sum of a system’s local optima does not equal the
global system optimum. In other words, the most effective
system does not come from maximizing the efficiency of
each system component individually, without regard to its
interaction with other components.
Strategic Planning
Goal and Necessary Conditions
Strategic Planning
Goal and Necessary Conditions
• Logical Thinking Process
➢ Components of this process include:
❖ The Current Reality Tree (CRT)
❖ The “Evaporating Cloud”
❖ The Future Reality Tree (FRT)
❖ The Negative Branch (NB)
❖ The Prerequisite Tree (PRT)
❖ The Transition Tree (TT)

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