UNIT SIX: STRATEGIC PLANNING TOOLS | Quizlet

Strategic Planning

The process of setting goals, determining actions to achieve those goals, and outlining how to allocate resources effectively.

Strategic Planning Tools (5)

1. Canvas Business Model 2. BCG Matrix 3. SWOT 4. PESTEL Analysis 5. Porter's Five Forces

Canvas Business Model

A strategic management framework that describes how a business creates, delivers, and captures value. It has nine building blocks grouped into Core Components, Operational Aspects, and Revenue and Resources.

Value Proposition (Canvas)

Defines the unique value your business offers to its customers — the reason they choose you over competitors.

Channels (Canvas)

Determines how your business reaches and communicates with its customers.

Customer Relationship (Canvas)

Establishes the type of relationship your business maintains with its customers.

Customer Segments (Canvas)

Identifies and understands the different groups of customers your business serves.

Key Activities (Canvas)

Outlines the critical activities your business must perform to deliver its value proposition.

Key Partners (Canvas)

Identifies the partners your business relies on to help deliver its value proposition.

Key Resources (Canvas)

Determines the essential resources (physical, human, financial, intellectual) your business requires to operate effectively.

Revenue Streams (Canvas)

The ways your business generates revenue from each customer segment.

Cost Structure (Canvas)

Analyzes the costs your business incurs to operate and deliver its value proposition.

Three Layers of the Business Model Canvas

1. Economic Layer — financial viability. 2. Environmental Layer — incorporates a lifecycle perspective. 3. Social Layer — stakeholder perspective.

BCG Matrix (Boston Consulting Group Matrix)

A portfolio management framework that helps companies prioritize their businesses and allocate resources effectively. Plots products/business units on a 2×2 grid based on Market Growth (y-axis) and Relative Market Share (x-axis).

BCG Matrix — Stars (High Growth, High Market Share)

Products with high market share in a high-growth market. Require significant investment but generate strong returns. Goal: invest heavily to maintain their position.

BCG Matrix — Question Marks (High Growth, Low Market Share)

Products in a high-growth market but with low market share. Investment should be made depending on their chances of becoming Stars. High potential but uncertain future.

BCG Matrix — Cash Cows (Low Growth, High Market Share)

Products with high market share in a low-growth market. Generate steady cash flows with little investment needed. Should be "milked" so profits can be reinvested in Stars and Question Marks.

BCG Matrix — Dogs (Low Growth, Low Market Share)

Products with low market share in a low-growth market. Businesses should consider liquidating, divesting, or repositioning these products.

SWOT Analysis

A powerful strategic planning technique that helps organizations identify internal and external factors affecting their strategy. Stands for: Strengths, Weaknesses, Opportunities, and Threats.

SWOT — Strengths

Internal positive attributes that give the company a competitive advantage.

SWOT — Weaknesses

Internal factors that place the company at a disadvantage relative to competitors.

SWOT — Opportunities

External factors the company could exploit to its advantage.

SWOT — Threats

External factors that could cause trouble for the business.

PESTEL Analysis

A tool to examine macro-environmental factors that influence organizations and industries. Stands for: Political, Economic, Social, Technological, Environmental, and Legal factors.

PESTEL — Political

Government stability, policies, trade regulations, and political programmes that affect the business environment.

PESTEL — Economic

GDP, inflation, interest rates, unemployment, and other macroeconomic indicators.

PESTEL — Social

Demographics, cultural trends, education levels, and societal values that shape consumer behavior.

PESTEL — Technological

State of technological innovation, digital transformation, and public adaptation to new technologies.

PESTEL — Environmental

Ecological factors, climate change, sustainability requirements, and environmental regulations.

PESTEL — Legal

Specific legislation, employment law, intellectual property rules, and regulatory frameworks.

Porter's Five Forces

A framework for analyzing the key sources of competitive pressure within an industry, used to understand market dynamics and strategic positioning.

Porter's Five Forces — Threat of New Entrants

The risk that new competitors will enter the market. Barriers include: high capital costs, complex networks, economies of scale, government regulation, and experience/know-how that incumbents have built over time.

Porter's Five Forces — Threat of Substitutes

The risk that customers will switch to alternative solutions. Influenced by: availability of alternatives, ease of switching, and new technologies that can replace existing products or services.

Porter's Five Forces — Bargaining Power of Buyers

The degree to which customers can influence pricing and terms. Increased when: many alternative suppliers exist, switching is easy, and buyers are price-sensitive.

Porter's Five Forces — Bargaining Power of Suppliers

The degree to which suppliers can influence pricing and supply. Increased when: there are limited supplier options, suppliers have high power, and switching costs are high.

Porter's Five Forces — Competitive Rivalry

The intensity of competition among existing players. High rivalry leads to price cuts and aggressive marketing; low rivalry results in greater market power and healthier profits.