Presentation by:

   Jennifer Freeman
   Carlee Rosenblatt
Topics We Will Cover...
 Why use a Strategic Plan?
 Strategic Plan Overview
 Integrated Planning Structure
 Planning Cycle
 Planning Roles
 Business Mission
 Developing Long-Range Objectives
 Developing Long-Range Strategies
 Fourteen Steps to Useful Results and Performance
Why Use A Strategic Plan?
• To set company guidelines and policies that draw
  attention to what we’re doing, how we’re doing it,
  and for whom.

• Focuses on the needs, dangers, and opportunities
  facing the company.

• Identifies key decisions that must be made and sets
  guidelines and deadlines for making them.
Strategic Plan Overview
The plan must contain these six elements:
  1.   A statement of purpose
  2.   Actions to take
  3.   Resources to use
  4.   Goals to meet
  5.   Time schedules to follow
  6.   Assumptions made
Overview Continued
The strategic plan typically includes these areas when
  communicated to the board:
    Comparison to the prior year plan
    The major planning assumptions
    The growth strategy
    Business goals
    Perceived strengths, weaknesses, opportunities, problems, and threats
    Profit plans for the existing business
    Programs and strategies for new business development
    Financial summaries of major factors, trends, and return on assets
Integrated Planning Structure

           Strategic Plan

   Development        Operations
      Plan              Plan
Planning Cycle
• An important part of the planning cycle is the
  environmental analysis. It is the foundation
  of the company’s strategic direction.
• The company’s environment has two
   The external environment
   The internal environment
         EXTERNAL                         INTERNAL

Consists of influences           Consists of those forces
outside the company that are     inside the company that will
or will be dominant factors in   be significant forces in just
its activities.                  how it will function.

The factors can include:         The factors can include:
      Economic                      Company strengths and
      Technical                      weaknesses
      Political                     The success factors
      Social                        Status of each product in
                                      each market segment
                                       (1)Life-cycle stage
                                       (2)Boston Consulting Group
Status of each product in each market segment (1)
• Understanding the life-cycle stage of each product
  (embryonic or R&D, growth, maturity, decline)
Status of each product in each market segment (2)
• Understanding each business segment as to market share and growth
  rate, according to the Boston Consulting Group matrix, as either:

    Star
    Cash Cow
    Question Mark
     (Wild Cat)
    Dog

Planning Roles
Who does the planning depends on:
The stage of evolution of planning in the company
     If planning is informal & sporadic  CEO is chief
      planner, with limited assistance from others
The attitude of the CEO
The size of the company
     Larger companies are more likely to make formal
      long-range plans
The nature of the company’s markets
Planning Roles Continued
The Controller’s Role in...
• ...the corporate mission is to disclose any
  erroneous financial or economic assumptions and
  provide alternatives.
• ...the corporate long-range objectives is to make
  any analysis for long-range objectives on financial
  facts or calculations
• ...developing strategies is to conduct the financial
  analysis related to some of the strategies
Business Mission Statement

Video- Build a Mission Statement
Business Mission – Why does my
business exist?
Some subjects to consider when creating a mission
  statement, the guideline for strategic planning:
• Product or product line
• Market and Market Share
• Profitability on sales, assets, and/or shareholders’
• Research and development
• Company image
The Mission Statement
Should serve as a guide to policy decisions
Should be quite specific, not a lofty
 statement of admirable purpose
Should include the scope of operations as to
 delineate the market
Additional Note:
A realistic statement of purpose will probably
   be influenced by these three factors:
1. The basic competence and characteristics of
   the company
2. The expectations of those who have
   something at stake in the firm
3. The expected future external environment
Examples of mission statements
1.   Our mission is to offer business
     education for a diverse student
     population by teaching a rigorous and
     relevant business curriculum, supported
     and strengthened by research and
     community outreach. -FCBE

2.   To inspire and nurture the human
     spirit— one person, one cup, and one
     neighborhood at a time. -Starbucks

3.   To be the most successful computer
     company in the world at delivering the
     best customer experience in markets
     we serve. -Dell
Developing Long-Range Objectives
Long-term objectives must be established once
a business mission is determined. Satisfactory
long-term objectives must be:
       Suitable                Feasible
     Compatible               Measurable
       Flexible               Motivating
Exhibit 3.1 Sample Company Long-Term Objectives   Achieve by Year

Objective                                         20X0      20X5

Aggregate sales volume (millions)                 $560     $1,200
Percent of non-U.S. sales                         20%       25%
Percent of new products                           15%       30%
Operating profit (% of sales)                     17%       22%
Rate of return:
     On total assets                              10%       12%
     On net worth                                 19%       25%
Earnings per share                                $2.50     $4.25
Price/earnings ratio                              11x        15x
Labor content in products                         25%       22%
Minorities as % of work force                     10%       12%
Useful Points of Reference
• Use past performance, with trend exploration.
• Adjust past performance for the impact of
  expected forces.
• Analyze competitors.
• Employ environmental, situational, and
  strategic analyses.
Developing Long-Range Strategies
• Here the word “strategy” means the way, or
  means, by which the company deploys its
  human and financial resources and its
  physical assets to achieve the business
 Illustrations of strategies undertaken
Change the style of packaging to appeal to middle-age customers.
Drop line Y, which provides no contribution margin.
Consider private brands in the Southeast.

               Markets and Marketing
               Enter the growing European market through a joint venture.
               Change the prices to meet the competition of the R chain.
               Increase local advertising to cover TV in markets W, X, and Y.

Operating Efficiency
Establish a warehouse in Denver.
Enforce terms of sale in order to increase receivables turnover.
Dispose of the Kansas City subsidiary because of losses and the lack of
 growth prospects.
Handout:       1. Decide to create a     6. Prioritize and
                                                               11. Make, buy, or
                                                               obtain methods-
                   better future          Select Needs

                                          7. Determine
Steps to        2. Define partners
                and stakeholders
                                                              12. Implement and
Results and         3. Obtain           8. Determine likely
                                                                 13. Determine
                                                               effectiveness and
                   commitment            causes of needs

                                            9. Indentify
               4. Commit to a Mega                              14. Revise and
                                       alternative methods-
                  (societal) focus                            improve as required

               5. Identify needs at         10. Select
               Mega, Macro, and        appropriate methods-
                      Micro                  means
• Bragg, Steven M. and Roehl-Anderson, Janice M. The
  Controller’s Function – The Work of the Managerial
  Accountant, 3rd Edition, 2005. 63-75.
• Kaufman, Roger A. Strategic Planning for Success: Aligning
  People, Performance, and Payoffs, 2003. 319-326.

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