Process-based Strategic Planning Rudolf Grünig Richard Kühn ● Process-based Strategic Planning Translated from German by Anthony Clark Fifth Edition Univ.-Professor Dr. rer. pol. Rudolf Grünig Univ.-Professor Dr. rer. pol. Richard Kühn Chair of management University of Bern University of Fribourg Engelhaldenstraße 4 Boulevard de Pérolles 90 3012 Bern 1700 Fribourg Switzerland Switzerland [email protected] [email protected] ISBN 978-3-540-68579-1 e-ISBN 978-3-540-68583-8 Library of Congress Control Number: 2008927356 © 2008 Springer-Verlag Berlin Heidelberg This work is subject to copyright. All rights are reserved, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilm or in any other way, and storage in data banks. Duplication of this publication or parts thereof is permitted only under the provisions of the German Copyright Law of September 9, 1965, in its current version, and permissions for use must always be obtained from Springer-Verlag. Violations are liable for prosecution under the German Copyright Law. The use of general descriptive names, registered names, trademarks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. Cover design: WMXDesign GmbH, Heidelberg, Germany Printed on acid-free paper 9 8 7 6 5 4 3 2 1 springer.com Preface for the fifth edition In the fifth edition, a new chapter about revising or producing the mis- sion statement has been integrated. Furthermore, to increase the con- ciseness, Chapter 5 has been revised and shortened. The authors would like to express their thanks to Tu Le for her substan- tial work in preparing the manuscript for this edition. The authors would also like to thank Anthony Clark for translating the new chapter, Maude Montani for checking some sections and Esther Thahabi for updating the references and the bibliography. March 2008 Rudolf Grünig, Richard Kühn Preface for the fourth edition In the fourth edition, Chapter 12 has been revised and enlarged. With the corporate options matrix, a new approach for developing options at the corporate level is introduced. The authors would like to express their thanks to Tu Le for her substan- tial work in revising the manuscript and the figures for this edition. The authors would also like to thank Esther Thahabi for updating the refer- ences and the bibliography. April 2006 Rudolf Grünig, Richard Kühn Preface for the third edition In the third edition, Part II has been enlarged with a new chapter about the strategic analysis and planning toolbox. In addition, some revisions vi Preface have been made to the text and figures and the visibility of the text has been improved with a new font format. The authors would like to express their thanks to Tu Le for her substan- tial and excellent work in revising the manuscript and the figures for this third edition. October 2004 Rudolf Grünig, Richard Kühn Preface for the second edition As a result of valuable feedback on the first edition of this book, some revisions have been made to the text and the figures for this second edition. In addition, the section in Chapter 12 which deals with strategic options at the corporate level has been improved and new findings about diversification have been added. The authors would like to express their thanks to Wira Tandjung for his expert assistance with this second edition. March 2002 Rudolf Grünig, Richard Kühn Preface The strategies of a company define its future way of doing business: they determine for years to come the target markets and the competi- tive advantages it must construct and maintain. It is the development of successful strategies, an essential and a complex task, which forms the focus of this book. The book begins with a brief introduction to stra- tegic planning. This is followed by the presentation of a method for determining future strategies. Here seven stages in planning are pro- posed. They are afterwards described in detail and procedures are Preface vii provided for dealing with each stage. The recommended procedures are sometimes rather complex: we have done our best, while avoiding oversimplification, to make our methodological suggestions accessible by using clear terminology, charts where appropriate, and a large num- ber of examples and case studies as illustrations. The authors would like to express their gratitude to all those who have helped in the writing of this book. Many of the ideas and examples came from practice. We are therefore especially indebted to the many managers who have allowed us to share their strategic work. The au- thors would also like to thank all those former and present students, doctoral candidates and assistants, who contributed to the book. In addition we would like to address our special thanks to three people. This book could not have been produced without the considerable tal- ents of Anthony Clark who translated large sections of the book from German into English and improved the language of the parts we wrote in English. Kiruba Levi and Barbara Roos merit special thanks for their efficient and excellent work in typing the text, designing the figures and producing the lists, the index and the bibliography. March 2001 Rudolf Grünig, Richard Kühn Brief contents Preface..................................................................................................v Brief contents .......................................................................................ix Contents................................................................................................xi List of figures.......................................................................................xix List of insets.......................................................................................xxv Introduction............................................................................................1 Part I: Idea of strategic planning............................................................5 1 Strategies, strategic planning and success potentials....................7 2 Development of strategic planning...............................................13 3 Assessment of strategies.............................................................21 Part II: Process of strategic planning and resulting documents...........29 4 Strategic documents as the result of strategic planning...............31 5 Process of strategic planning.......................................................45 6 Strategic analysis and planning toolbox.......................................65 Part III: Project planning, analysis and mission statement revision...................................................................................73 7 Strategy project planning.............................................................75 8 Strategic analysis.........................................................................87 9 Revision or production of the mission statement .......................111 Part IV: Developing the corporate strategy .......................................119 10 Defining the strategic businesses...............................................123 11 Assessing relevant industries with the help of competitive intensity models.........................................................................141 12 Setting up and assessing the portfolio of businesses.................161 13 Corporate strategy development process..................................189 Part V: Developing the business strategies.......................................213 14 Generic business strategies.......................................................217 15 Specifying business strategies at the level of the offer...............243 x Brief contents 16 Specifying business strategies at the level of resources............263 17 Business strategy development process....................................279 Part VI: Implementing, assessing and approving the strategies..............................................................................299 18 Defining the implementation.......................................................301 19 Final assessment of strategies and implementation...................315 20 Formulating and approving the strategic documents..................333 Final remarks.....................................................................................339 Glossary............................................................................................341 Index.................................................................................................351 Bibliography.......................................................................................357 Contents Preface..................................................................................................v Brief contents .......................................................................................ix Contents................................................................................................xi List of figures.......................................................................................xix List of insets.......................................................................................xxv Introduction............................................................................................1 Part I: Idea of strategic planning............................................................5 1 Strategies, strategic planning and success potentials....................7 1.1 Strategies.............................................................................7 1.2 Strategic planning.................................................................8 1.3 Building success potentials as main purpose of strategic planning.................................................................8 2 Development of strategic planning...............................................13 2.1 Four phases in the development of strategic planning..............................................................................13 2.2 Role of strategic planning within strategic management......................................................................16 3 Assessment of strategies.............................................................21 3.1 Basic reflections on the assessment of strategies..............21 3.2 Model for the assessment of strategies..............................22 Part II: Process of strategic planning and resulting documents...........29 4 Strategic documents as the result of strategic planning...............31 4.1 Basic types of strategic document......................................31 4.2 Combinations of strategic documents for specific companies..........................................................................35 5 Process of strategic planning.......................................................45 5.1 Need for a systematic process of strategic planning..........45 5.2 Overview of the process of strategic planning....................46 5.3 Brief note on the steps of the process................................50 5.4 Strategic planning process of an electricity provider..........54 5.5 Adapting the process of strategic planning.........................60 6 Strategic analysis and planning toolbox.......................................65 6.1 Important tools of strategic analysis and planning..............65 xii Contents 6.2 Allocating the tools to three fields of analysis and to the steps in the planning process.......................................67 Part III: Project planning, analysis and mission statement revision...................................................................................73 7 Strategy project planning.............................................................75 7.1 Why strategic planning should be seen as a project..........75 7.2 Sub-tasks of strategy project planning................................76 7.2.1 Overview................................................................76 7.2.2 Determining the scope...........................................76 7.2.3 Determining the objectives and boundary conditions...............................................................77 7.2.4 Deciding whether to hire a consultant....................79 7.2.5 Fixing the project organization................................80 7.2.6 Fixing the process and the milestones...................82 7.2.7 Budgeting the cost..................................................83 8 Strategic analysis.........................................................................87 8.1 Need for analysis before strategies are developed............87 8.2 Content and conclusions of analysis..................................88 8.3 Description of the applied methods....................................91 8.3.1 Choice of the methods applied in analysis.............91 8.3.2 Global environmental analysis................................92 8.3.3 Description of the market system...........................93 8.3.4 Identification of success factors..............................94 8.3.5 Analysis of strengths and weaknesses...................98 8.3.6 Stakeholder value analysis ..................................102 8.4 Process of strategic analysis............................................104 8.4.1 Overview..............................................................104 8.4.2 Determining the preconditions for analysis...........105 8.4.3 Carrying out the analysis .....................................108 9 Revision or production of the mission statement .......................111 9.1 Nature, effects and contents of mission statements.........111 9.2 Process of revising or producing the mission statement .........................................................................114 9.2.1 Overview..............................................................114 9.2.2 Steps in revising or producing the mission statement..............................................................115