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Strategic Orientation (SOR)


1. Introduction and concepts

Strategy development and planning are closely related. Both are concerned with thefuture activities of a project or organisation. Where planning is meant to identify concreteactivities, strategy development is more concerned with the future direction, rather thanwith concrete objectives and activities. A strategy is a translation of the organisationsmission into aims, and provides ideas how these aims could be pursued. As there may bevarious ways, depending on the environment, strategy development provides a choice

among alternatives. Planning is then the concrete translation of the chosen strategy intoconcrete objectives, activities and related means. Some key differences between planningand strategy development are given in table below:

Table 1. Some key differences between Planning and Strategy Development

Strategy development Planning

Searching direction Concrete (direction is given)

Innovation (search for new) Rearranging old ideas

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Innovation (search for new) Rearranging old ideas


Figure 1. Place of SWOT and Strategic Orientation in Strategic Planning

Mission/

Objectives

Environmental

Scan

Insitutional

Setting

Integrated

Organisation

Model

Opportunies

& Threats

Strengths &

Weaknesses

Alternative

Strategies

Strategic

Plan

(Action)

Planning

ImplementationMonitoring

In-depth analysis of

strategically importantstrengths/

weaknesses

Strategic

Orientation

SW

OT

Strategic Planning:

from SWOT to Action Plan

Identification

Formulation Appraisal

Financing

ImplementationEvaluation

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Opportunities for development organisations may exist or arise in the event of:

gaps in the service/product delivery to the target group (non-existence of certaingoods or services, or non-availability in certain locations);

favourable trends (increase in incomes, growth of urban population with specificneeds for more sophisticated products;

weaknesses shown by other development organisations (low quality, high costs); better access to new methodologies/technologies; potential for improved cooperation.

In relation to target group oriented opportunities the following table can be considered:

Table 2. Opportunities related to products/services and target groups

Present products/services New products/services

present target groups project intensification product/servicedevelopment

new target groups project replication project diversification

A threat can be defined as an external fact or development that has or can have a

substantial negative effect on an organisations performance

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Essential in whether or not to include a factor in the analysis is:

the relevance of the factor for the performance of the project the probability that the fact/development is or will become true the influence the project has to address the factor

2.2 Internal analysis

The internal situation is discussed on the basis of the existing situation and exploresexisting strengths and weaknesses and not future ones. An organisations strengths andweaknesses are an organisations internal critical factors that determine its performance.

A strength is therefore defined as an internal characteristic that contributes substantiallyto the realisation of the organisations mission. A strength is any existing internal asset(management, staff capacity/motivation, knowledge, resources, business links, etc.) which will

help to exploit opportunities (or to meet demands) and to fight off threats.

A weaknessis an internal characteristic that negatively and substantially influences thefunctioning of the organisation. Weaknesses are internal conditions that erode theorganisations position, hamper cooperation with others or obstruct the exploitation ofopportunities.

To identify strengths and weaknesses systematically, the following tools may be useful:

IOM (balance between the components (outputs inputs structure systems staff

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1. Define the entity or problem area

2. Identification of strengths, weaknesses, opportunities and threats

from internal analysis: strengths and weaknessesexternal analysis: opportunities and threatsbased on joint discussion or brainstorm

3. Developing strategic options

For each opportunity and each threat generate concrete strategic options (concreteobjectives/aims) that would make advantage of this opportunity or that would reducethe threat.

4. Select the 4-5 best options

Method 1: develop one or more criteria to select the best options and apply the

criteria to the options. Often criteria will follow from a basic question;Method 2: select the 5 best options using consensus or using voting by participants.

5. Matching the strategic options with strengths and weaknesses

Use the Strategic Orientation Matrix. Identify for each of the options which strengthscan be used and which weaknesses should be reduced to be able to realise thisoption.

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Annex 1: Example Strategic Orientation

ISPA

Institutional Strengthening of Private Agriculture - Romania

Step 1. Define Entity / Basic Question

Basic Question:How can ISPA develop into a financially sustainable farmers' organisation while deliveringsubstantial and relevant services to its members?

Step 2. Identification of major Strengths, Weaknesses, Opportunities and Threats

Strengths

Flexibility to start new (related) activities ISPA has good image

ISPA offers q alit

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Step 3+4. Develop Strategic Options + select the best options

Major opportunity/threat Major Strategic Options Effect onsustainability

High demand for input supplycentres

Increase sales Input supplycentres/establish new centres

High

New/other clients for potatoes andmilk

Increase purchase & sales ofpotatoes.

Increase milk collection

High

Access to cheese processingexpertise & funds.Monopoly position of LACTIS (dairycompany)

Establish own milk processing unit High

Non payment of clients Improve contracts + more strictfollow up

High

Still weak relations with farmers.

Farmers interest in ISPA activities

Increase membership promotion &

activities.

High

Uncertain access to financeextension activities

Survey on sources Medium

Resistance of elephants Use government relations Low

5. Matching Strategic Options with Strengths and Weaknesses

Strategic Strategic options

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6. Formulate Tentative Strategies

1. Increase Membership promotion

using quality related payment and unique service package while improving planning and monitoring

2. Expand Potato sales and milk collection

using ISPAs good image

and emphasising quality

while reducing operating costs and improving planning and monitoring

3. Expand Input supply centres

using the flexibility to start new activities and ISPA unique service package (to attract customers)

while reducing operating costs and improving planning and monitoring

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ref:12716.054 - Strategic Orientation (SOR) DI Page 9 (9)

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Step 7. Logical Framework for implementation

InterventionLogic

Indicators Sources of verification Assumptions

OverallObjective

Improved incomeagricultural producers

Difference between marketprice and ISPA price toAgr. Producers

ProjectPurpose

To improve support toagricultural producers

Purchases from Agr. Prod.

IntermediateResults

1. Input supply centresestablished

2. Potato marketing andmilk collection expanded

3. Financial positionstrengthened

4. Membership ofAgricultural Producersstrengthened

Indicators of results No of centres establishedNo of customers per centreSalesGross resultNet resultReturn on investment

No of centres establishedNo of customers per centreSalesGross resultNet resultReturn on investment(ROI)

Net resultNet result econ. activitiesLiquidityROI of economic activitiesExistence of relations withpotential donors.

No of members.No of locationsNo of members perlocationNumber of services usedby members

Source of verification

Activities 1.1 To analyse fin.feasibility input supplycentres

2.1. Establish new milkcollection centres (5)

3.1 Organise theaccounting system

4.1. Improve use ofpayment days forinformation and extension

1.2 To develop logisticsystem input supplycentres

2.2. Identify more reliablepartners

3.2 Improve regularfinancial analysis andplanning and improvemonitoring.

4.2 Improve information atinput supply centres

1.3. To develop administr.system input supply

2.3. Improve delivery andtransport planning

3.3 Assess reduction ofadministration costs and

review costs/hour

4.3 Improve extension andmobilisation capacity

1.4 2.4 Improve contracts andfollow up on contracts

3.4 Identify and assessnew economic activities

4.4 Re-define relationswith other extensionagencies

1.5 2.5 3.5. Identify financialsources for membersservices

4.5 Develop relation withcattle breedersorganisation

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