Strategic Planning Process

External Environmental Analysis

P - Political factors
E - Economic factors
S - Socio-culture factors
T - Technology factors
E - Ecological factors
L - Legal factors

Factors in the Industry Environment
1. Threat of New Entrants
2. Bargaining Power of Suppliers
3. Bargaining Power of Buyers
4. Substitute Products
5. Rivalry among Competitors

Internal Environmental Analysis

Functional areas:
- Management
- Marketing
- Finance
- Operation/production

Management
- five basic functions,

• planning
• organizing
• motivating
• staffing
• controlling

Marketing

-It refers to the exchange of products or services from the producer to the user. It begins with determining what users want and need or what services could be provided to create satisfaction.

• Price - The price of a product will effect the company's sales and total revenue.
• Place - Involves the business activities concerned with storing and transporting raw materials or finished products to consumers when needed
• Promotion - to bring about mutually satisfying exchange with the target market

Financial

5 major financial ratio

1. Liquidity ratio- current ratio, quick ratio
2. Leverage ratio - debt-to-asset-ratio, long-term-debt-to-equity-ratio
3. Activity ratio- inventory turnover. fixed asset turnover
4. Profitability ratio- gross profit margin, return on total asset
5. Growth ratio - sales, net income

Operation

- The process of transforming input/resources into products/output