Chapter 1.2.

A Model for Strategic Planning, Analyzing Cases and Decision Making

Strategic Creative Analysis (SCAN) is a process for strategic planning, decision making
and analyzing case studies. SCAN is also useful for marketing planning and personal career
planning
1. Find and List Actual Objectives and Strategies
To start SCANning an actual situation or a case study, find, list and number the objectives
and strategies of the organization or individual, as you find them. Objectives and strategies
are statements that start with the word "To," followed by a verb in the infinitive, stating
results someone is trying to achieve, such as:

Examples of Organization Objectives Examples of Individual Objectives

1. To increase sales revenues. 1. To get a raise in pay.

2. To increase market share. 2. To get a new job.
3. To reduce costs. 3. To make a career change.
4. To reduce expenses. 4. To start a new business.
5. To improve company image. 5. To get a promotion.
6. To market a new product. 6. To get a transfer.

Note A: You are discovering the objectives being pursued. Do not prescribe objectives or
strategies at this point in the analysis. You will do that later.

2. Rank the Objectives and Strategies

A SCAN analysis, or SCANalysis, depends on the objective selected. Therefore, it is

extremely important for you to select this objective carefully, to avoid having to repeat the
analysis because you discover later that you were pursuing the wrong objective.
To discover the Top Rank Objective (TRO) of the person or organization, select an
objective from the list you prepared in Step 1, that appears to be the ultimate goal of all
their efforts. Draw a box and write in the objective you have chosen. Then ask: "Why are
they pursuing this objective?" Look for an answer to this question only in the list you
prepared for Step 1. If you find an answer to the question, draw another box above the first
box and write in the higher ranking objective. Connect the boxes with a vertical line. Ask
"Why are they pursuing this objective?" about the new top objective and repeat the same
steps. Keep asking "Why" and drawing and filling in boxes until you cannot find an answer
to the "Why" question. The objective in the top box at this point is the Top Rank Objective,
or TRO.
Ask: "How are they pursuing this objective?" to rank the objectives and strategies
remaining on the list. See Example, "Forest and Forest" case study, Exhibit 2.
The conclusion is that by repeatedly asking "Why are you (they) pursuing this objective?"
we get to the Top Rank Objective, and that is exactly what SCAN requires because it would
be regrettable to do a lengthy analysis and then find out that we were not pursuing the top
rank objective that applied to the given situation.
You may encounter a case study that does not present a clearly stated top rank objective.
Then, you should infer a TRO, based on strategies described in the case. See the Forest and
Forest case study for an application of the SCAN process.

Note B: If you can't fit all the objectives and strategies into one logical structure, you may
be looking at a situation where a company or an individual is pursuing conflicting
objectives. Develop two analyses and select one of the TRO's for your analysis.

3. Select An Objective, usually the TRO

Usually, you will work with the Top Rank Objective. Two exceptions are possible: (1) In a
case study, work with a lower ranking objective, if that objective is the focus of the
information presented. (2) In a real situation, work with a lower level objective, if that is the
objective of greatest importance to the decision-maker at the time.

4. Discover SWOTs with Respect to the Selected Objective

Strengths = attributes of the organization that help to achieve the objective.
Weaknesses = attributes of the organization that impede achieving the objective.
Opportunities = outside conditions that help to achieve the objective.
Threats = outside conditions that impede achieving the objective.

In identifying SWOTs, always think of the selected objective. A particular factor is relevant
only with reference to a specific objective. For example, a large cash balance is a strength if
the objective is expansion. If the objective is to discourage a hostile take-over, a large cash
balance is a weakness. If I am very tall, that's a strength if my objective is to be a
basketball star. Great height is a weakness if my objective is to be a jockey in horse-racing.

Note C: If you find that key information is missing, specify the questions you want
answered. Get the answers or make explicit assumptions.

5. Is the Selected Objective Attainable, in view of the SWOTs?

Ask this question: "In view of the SWOTs, can the organization achieve the selected
objective?" If the Strengths and Opportunities are greater than the Weaknesses and the
Threats, continue to Step 6. If the Weaknesses and the Threats are greater, return to Step 3
and select another objective and conduct a new SWOT discovery (Exhibit 1). If you were
working with two or more objectives (Note B, above), decide now which objective should be
pursued.

6. Creative Step: Derive Many Strategies from the SWOTs (10 Minimum)
Create many strategies, so that you may have a chance of finding some really good ones.
Focus on strategies aimed at achieving the selected objective by deriving your strategies
from the SWOTs, which originated from the selected objective. Ask these 4 questions,
repeatedly: "How can we . . .
a. Use the Strengths?
b. Stop the Weaknesses?
c. Exploit the Opportunities?
d. Defend against the Threats?"
Emphasize the Strengths and Opportunities. Focus on the Strengths that differentiate this
organization from its competitors. Do not overlook the Weaknesses and Threats that might
threaten the survival of the organization.

Note D: To maximize the quality of your created strategies, use outside sources of
information. Look up relevant books, journals, newspapers and other printed resources.
Contact knowledgeable people and seek their advice. Keep track of the sources of outside
information as this may be crucial in persuading other people to accept your conclusions.

Note E: Deriving strategies from SWOTs is structured brainstorming. Therefore, observe

brainstorming customs to encourage creativity. "Piggybacking" on other people's ideas is
invited. Save criticisms for a later phase of the analysis.

6a. Second Creative Step (Optional): Draw a HOST Diagram

(HOST = Hierarchy of Objectives Strategies and Tactics)
At this point you have an excellent understanding of the case. You may use this knowledge
to expand the creative phase. The method is to draw a diagram similar in structure to the
one shown below in the Forest and Forest case analysis in the section on Ranking Objectives
and Strategies. See Ch 1 Exh 2.

In ranking objectives and strategies, you work upward and downward in seeking the Top
Rank Objective. In the HOST Diagram, you start at the top because you have already
determined the Top Rank Objective. You work downward and sideways by asking How? and
How Else? to develop new strategies for achieving the TRO.

7. Develop Action Programs (3 Minimum)

Develop Action Programs for the more attractive strategies, covering:
1. Name of the strategy.
2. Benefits to be expected from implementing this program.
3. Actions: What will be done?
4. Responsible persons: Who will be in charge of the program?
5. Timing: When will the program start? When will it be completed?
6. Location(s): Where will the program be implemented?
7. Resources: What will be needed: people, money, information, other resources?
8. Control System: How will progress be measured and reported?
9. Rewards for performance, if any.
10. Contingency plans: What will be done if results fall short?

8. Evaluate Programs and Select the Best Ones

Ask the following questions about each program and recommend the most effective
programs for achieving the selected objective:
a) Are the required resources available?
b) What risks or bad side effects are involved?
c) Is there a better way of achieving the selected objective?
d) Do the Action Programs help each other?
e) Should this Action Program be implemented? If yes, when?

9. Monitoring Implementation
In real life uses of SCAN, you should monitor implementation in three ways: SWOTs,
results and the SCAN process. Monitor SWOTs because attributes of the organization and
outside conditions change over time. If the SWOTs have changed enough, the SCAN process
should be repeated to see whether current programs are still the best available.
Monitor results through the organization's control systems: revenues, market share, costs,
expenses, etc. Some programs may require additional monitoring systems. Compare actual
results to planned results and implement contingency plans, if required.
You should also monitor the SCAN process. As you use it, you may find ways to improve it.

Forest & Forest Case SCANalysis

I. List of Actual Objectives and Strategies
A. To hire an Operations Vice-President
B. To have Steven Michaels improve his performance
C. To double the business in the next three years
D. To perform Marketing functions
E. To generate a more professional environment
F. To capture sales lost to competing suppliers of motor controls
G. To diversify into production and marketing of Polaris
H. To sell the 5,000 units of Polaris coming in
I. To reduce interest payments of $4,000 a month.
1. To reduce bank loan from the $500,000 level
J. To focus David Forest more on decision making and less on doing
K. To set up a simpler, more motivating and more economical sales compensation
plan
L. To cut the price of Polaris (Steven)
M. To prepare a marketing plan (Laura).
N. To allocate a large part of ad budget to Polaris.
O. To have the sales force push Polaris
 P. To avoid price cut on Polaris (Laura)

II. Ranked List of Objectives and Strategies, outline format and "boxes and lines" format.
A. To double the business in the next three years.
1. To generate a more professional environment.
a) To hire an Operations Vice-President.
b) To perform Marketing functions (advertising, marketing research, marketing
planning).
c) To have Steven Michaels improve his performance.
d) To focus David Forest more on decision making and less on doing.
e) To prepare a marketing plan (Laura).
2. To capture sales lost to competing suppliers of motor controls.
a) To diversify into production and marketing of Polaris.
3. To set up a simpler, more motivating and economical sales compensation plan.
4. To reduce interest payments of $4,000 a month.
a) To reduce bank loan from the $500,000 level.
5. To sell the 5,000 units of Polaris coming in.
a) To cut the price of Polaris (Steven).
b) To have the sales force push Polaris.
c) To allocate a large part of ad budget to Polaris.
d) To avoid price cut on Polaris (Laura).

III. Selecting An Objective. The Top Rank Objective, "To double the business in the next
three years," will be used for the next step of this SCANalysis.

IV. SWOTs with Respect to: "To double the business in the next three years."
A. Strengths.
1. In business since 1928
2. David Forest has 28 years of experience as head of the company
3. Sales and profits have grown steadily
4. Sales and profits were $16 million and $700,000 in 1990
5. David Forest responds personally to all customer complaints
6. David Forest wants to get involved in marketing
7. "We run a tight ship," David Forest
8. "We have an excellent reputation for quality," David Forest
9. "Manufactured Products," "Modifications" and "Repairs" have Gross Profit
margins greater than 50%
B. Weaknesses.
1. Steven Michaels has no experience or education for his position of Sales
Manager
2. Laura Marden is short on marketing experience
3. David Forest says that he is not a good executive
4. Employees feel free to complain directly to David Forest
5. David Forest can't find a good Operations Vice President at the salary he wants
to pay
6. Company is having trouble selling Polaris
7. David Forest is worried about converting 5,000 Polaris into cash
8. Inventories increased too much during the business recession with resulting
interest cost of $4,000 a month
9. David Forest can't break the habit of getting involved in everything
10. The sales compensation system . . .
a) Pays out too much money
b) Is too complicated
c) Does not motivate sales reps to sell Polaris
11. Sales reps do not present Polaris because they do not know it well
 12. Polaris is priced higher than competing products
13. The company does not appear to have historical trend data
14. They spent $192,000 advertising Polaris and they have trouble selling it
15. There is a conflict between Steven and Laura regarding pricing policy on Polaris
C. Opportunities.
1. "The opportunities (for growth) are there," David Forest
2. Professional help is available for designing new products
3. Reliable manufacturers are available for producing new products
4. There is a market for 1500 Polaris at $45 a unit
D. Threats.
1. Many of their motor customers are going elsewhere for the controls
2. The $50,000 Polaris designer did not do a good job
3. There was a business recession

V. Is the Selected Objective Attainable?

Since historical and trend data are not given, it is difficult to judge whether the
business can be doubled as that would require an annual growth rate of 26 per cent per
year. Therefore, the objective is restated as: "To increase the business over the next three
years." The same SWOTs apply.

VI. Creating MANY Strategies. SWOTs in ( )s. Text references in italics.

A. Replace Steven Michaels with a qualified Sales Manager
B. Direct Steven Michaels to attend Sales Management Seminars.
C. Direct Steven Michaels to join a professional Sales Management organization and to
exchange information with member
D. Hire a Sales Management consultant.
E. Replace Laura Marden with an experienced Marketing Manager.
F. Direct Laura Marden to attend Marketing Management Seminars.
G. Direct Laura Marden to join a professional Marketing Management organization and
to exchange information with members.
H. Replace the Marketing Manager with a Sales Trainer.
Benefits of sales training are very substantial. It is not clear that the Marketing
Manager has the potential to make a comparable contribution.
I. Encourage David Forest to attend Executive Development seminars.
J. Encourage David Forest to discuss Operations VP salaries with head-hunters and
other company presidents.
K. Cut Polaris price as recommended by Steven Michaels.
L. Evaluate opportunities for selling Polaris at higher and lower prices and various
quantity discount structures
M. Seek out additional vendors of controls
N. Train sales reps on selling Polaris
O. Implement a less costly sales compensation plan
P. Implement a less complicated sales compensation plan
Q. Implement a sales compensation plan that motivates sales reps to sell Polaris
R. Develop historical trend data to discover the faster growing and more profitable
segments of the business
S. Cut advertising expenditures on Polaris
T. Define precisely the opportunities for growth
U. Find competent product designers
V. Develop new products and services well suited to marketing during a recession, such
as repairs and reconditioned motors and controls
VII. Developing Action Programs.
A. Program for increasing Polaris profitability.
1. Name: "The Polaris Program."
2. Benefits to the Company: Make a success of the Polaris project: increase
market share, profits and cash flow.
3. Actions:
a) Cut the ad budget.
b) Motivate and train the sales force.
(1) Provide a $5 bonus for every Polaris sold.
(2) Develop training materials and conduct training.
(a) Document benefits that Polaris provides.
(b) Relate benefits to unique features of Polaris.
(c) Discover questions asked by customers.
(d) Discover objections raised by customers.
(e) Develop persuasive answers to questions and objections.
(f) Develop brochures for sales representatives.
(g) Run training seminars with role playing.
c) Evaluate pricing. Obtain reliable estimates of sales at various price levels,
taking into account the effect of the bonus and training.
4. Responsible persons: Steven Michaels and Laura Marden.
5. Timing: Start now. Complete within six to eight weeks.
6. Locations: Company headquarters and the field.
7. Resources: Michaels and Marden, outside consulting help, printing of brochures
and other materials. Estimated total expense $10,000.
8. Control System: Monitor sales of Polaris. Set a goal of making all the sales that
are currently going to competition within one year.
9. Rewards: Offer $5,000 bonuses to Steven and Laura if they succeed.
10. Contingency Plan: If the Polaris still proves to be unmarketable, determine the
reasons why and evaluate probability of success with continuing this program. Then try
cutting the price. If nothing works, scrap Polaris.
B. Program for creating new, high ROI product/service ventures.
1. Name: "New Ventures."
2. Benefits: Identify worthwhile business ventures and plan for realizing them in
an orderly and profitable fashion.
3. Actions:
a) Study historical trends.
b) Study market, including the West Coast and overseas markets.
c) Find products and services with ready markets in business recessions.
d) Discover new sources of products to distribute.
e) Project into the future: investment required, sales revenues and expenses.
f) Calculate Return on Investment for each opportunity and select the best
ones.
4. Responsible Persons: Laura Marden.
5. Timing: Start after completing the Polaris Plan. This will be an on-going
responsibility for Laura Marden, as a permanent part of her job.
6. Locations: Company headquarters and in the field.
7. Resources: Travel expense.
8. Control System: This work should result in a stream of new opportunities for the
company to increase profitable business.
9. Rewards: Offer Laura a 0.5% bonus of new product or service sales that may be
attributed to the opportunities she discovers.
10. Contingency Plan: With her MBA, Laura Marden should be able to carry out this
action program successfully. If she has difficulties, she should take additional training by
participating in public seminars.

C. Program for increasing managerial professionalism at Forest & Forest.

1. Name: "The Executive Development Program."
2. Benefits to the Company: Increase management effectiveness.
3. Actions:
 a) Identify useful professional organizations and public seminars.
b) Attend professional meetings and network.
c) Attend seminars and learn and network.
4. Responsible persons: David, Steven and Laura.
5. Timing: Start now. Continue indefinitely.
6. Locations: New York Metropolitan area - mostly Manhattan.
7. Resources: Annual budget of $10,000.
8. Control system: Self-evaluation and peer evaluation.
9. Rewards: Learning and contacts will provide substantial rewards.
10. Contingency Plan: None needed. No possibility of failure.

D. David Forest should not get more involved in marketing at this time. He employs a
Sales Manager and a Marketing Manager and he should allow them to do their jobs. He
should give them more work to do, as outlined above in Action Programs A and B. It is not
necessary to hire an Operations Vice President because David is doing that job already and
he is not inclined to spend enough money to hire a competent person. Forest's tendency to
read the mail and to respond to customer complaints personally is not a weakness, even
though he sees it that way. Customers probably appreciate the personal attention of the
company's president and David is always informed of problems in the company-customer
relationship. This motivates employees to prevent problems and enables Forest to direct
corrective actions.

VIII. Evaluating Programs and Selecting the Best Ones

A. Evaluation of the "Polaris Program."
1. The required resources are available.
2. This approach is the most direct way of achieving long term success for he
Polaris motor control. The price cut approach suggested by Steven Michaels will provide
some quick sales but no continuing effort to insure success of the product.
3. If this approach works, it may also be tried with other products to help reduce
the excess inventory and the accompanying interest expense.
4. The recommended action programs are not directly related.
5. This Action Program should be implemented as soon as possible.

B. Evaluation of the "New Ventures Program."

1. The required resources will become available after Program "A" is implemented.
2. This approach is less risky than the method the company used for developing
the Polaris motor control.
3. This method will help to achieve the top rank objective.
4. The recommended action programs require the same resources.
5. This Action Program should be implemented after Plan "A".

C. Evaluation of the "Executive Development Program."

1. The required resources are available.
2. There are no risk or bad side effects associated with this program.
3. This program will be very helpful to achieving the selected objective.
4. This Action Program will help all other Action Programs.
5. This Action Program should be implemented as soon as possible.

D. Program D simply requires David Forest to delay indefinitely his search for an
Operations Vice-President and to permit Steven and Laura to perform their duties. The plan
requires no new resources nor does it impact any other programs. It should be implemented
immediately.