class lecture 1 ppt

8/6/2019 Class Lecture 1 Ppt

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Benefits of Strategic Thinking and a

Strategic Approach to Managing

Guides entire firm regarding what it is we are trying to do andto achieve

Makes managers more alert towinds of change, new opportunities,and threatening developments

Unifies numerous strategy-relateddecisions and organizational efforts

Creates a proactive atmosphere

Promotes development of an evolving business modelfocused on bottom-line success

Provides basis for competing and achieving competitiveadvantage

HELPS A COMPANY PREPARE FOR THEFUTURE!


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Figure 1-1: The Five Tasks

of Strategic Management

Formulate

Strategy

to Achieve

Goals &Objectives

Set

Goals &

Objectives

Develop

Vision

andMission

Implement

and

ExecuteStrategy

Improve/

Change

Revise as

Needed

Revise as

Needed

Improve/

Change

Recycle

as Needed

Task 1 Task 2 Task 3 Task 4 Task 5

Monitor,

Evaluate,

and Take

Corrective

Action


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Who Performs the Five

Strategic Management Tasks? Senior Corporate

Executives

Managers ofSubsidiaryBusiness Units

Functional AreaManagers

Operating

Managers


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Strategic Role of a Board of

Directors Critically appraise and ultimately approve

strategic action plans

Evaluate strategic leadership skills of theCEO and candidates to succeed the CEO


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Why is a Strategic Vision

Important? A managerial imperative exists to lookbeyond

today and thinkstrategically about

Impact of new technologies How customer needs and expectations are changing

What it will take to outrun competitors

Which promising market opportunities ought to be

aggressively pursued

External and internal factors driving what a companyneeds to do to prepare for the future


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VISIONSTATEMENT ABOUT A COMPANYS

LONG-TERM DIRECTION


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MISSION

DEFINES COMPANYS BUSINESS

1. PRODUCT / MARKET

2. TERRITORY / GEOGRAPHY


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Missions vs. Strategic Visions

A mission statementfocuses on current

business activities --

who we are and

what we do Current product and

service offerings

Customer needs

being served Technological and

business capabilities

A strategic visionconcerns a firms future

business path --

where we are going

Markets to bepursued

Future technology-product-customer

focus Kind of company that

management istrying to create


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Example of Vision & Mission

Ourvision: Getting to a billion connected computers

worldwide, millions of servers, and trillions of dollars of

e-commerce. Intels core mission is being the building

block supplier to the Internet economy and spurring

efforts to make the Internet more useful. Being

connected is now at the center of peoples computing

experience. We are helping to expand the capabilities

of the PC platform and the Internet.

Intel


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Wit Capital(an Internet startup company)

Ourmission is to be the premier Internetinvestment banking firm focused on the offering

and selling of securities to a community of online

individual investors.

We are in the picture business.

Eastman Kodak

Simple Mission Statements


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Examples of Mission Statements

Otis Elevator

Ourmission is to provide any customer a means ofmoving people and things up, down, and sideways

over short distances with higher reliability thanany similar enterprise in the world.

Ourbusiness is renting cars. Ourmission is total

customer satisfaction.

Avis Rent-a-Car


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Example of Mission Statement

Ourmission:

To give our customers the bestfood and beverage values that they can find

anywhere and to provide them with the

information required for informed buying

decisions. We provide these with a dedication tothe highest quality of customer satisfaction

delivered with a sense of warmth, friendliness,

fun, individual pride, and company spirit.

(a unique grocery store chain)


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Example of Mission Statement

The Ritz-Carlton Hotel is a place where the genuine

care and comfort of our guests is our highest mission.

We pledge to provide the finest personal service and

facilities for our guests who will always enjoy a warm,

relaxed yet refined ambiance.

The Ritz-Carlton experiences enlivens the senses,

instills well-being, and fulfills even the unexpressed

wishes and needs of our guests.

Ritz-Carlton Hotels


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Setting Goals & Objectives

Converts strategic visionand mission into specificperformance targets

Creates yardsticks to trackperformance

Pushes firm to be inventiveand focused on results

Helps prevent complacency

and coasting

Second Task of Strategic Management


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GOALS

BROAD TARGETS

OBJECTIVES

QUANTIFIED & TIME-BASED


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Financial Goals & Objectives

Strive for stock price appreciationequal to or above the S&P 500 average

Maintain a positive cash flow every year

Achieve and maintain a AA bond rating

Grow earnings per share 15% annually

Boost annual return on investment (or EVA)

from 15% to 20% within three years

Increase annual dividends per share

to stockholders by 5% each year


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Strategic Goals

Increase firms market share Overtake key rivals on quality or

customer service or product performance

Attain lower overall costs than rivals

Boost firms reputation with customers

Attain stronger foothold in internationalmarkets

Achieve technological superiority

Become leader in new product introductions

Capture attractive growth opportunities


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What is Strategy?

A companys strategy consists of the set ofcompetitive moves and business approaches that

management is employing to run the company

Strategy is managements

gam

e plan

to Attract and please customers

Stake out a market position

Conduct operations

Compete successfully

Achieve organizational objectives


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Without a strategy theWithout a strategy the

organization is like a shiporganization is like a ship

without a rudder, goingwithout a rudder, going

around in circles.around in circles.

Quote


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Thinking Strategically:The Three Big Strategic

Questions1.Where are we now?

2.Where do we want to go?

Business(es) to be in and market positions tostake out?

Buyer needs and groups to serve?

Outcomes to achieve?

3. How do we get there?


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The Hows That

Define a Firm's Strategy

How to grow the business

How to please customers

How

to outcompete rivals Howto respond to changing

market conditions

How to manage each functional piece of thebusiness and develop needed organizationalcapabilities

How to achieve goals & objectives

Strategyis HOWto . . .


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Figure 1-2: A Companys Strategy is

Partly PlannedPlanned andand Partly ReactiveReactive

Actual

Compan

y

Strategy

Company

Experiences,

Know-how,Resource

Strengths and

Weaknesses,

andCompetitive

Capabilities


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What is a Strategic Plan?

Where firm is headed --Strategic vision and

business mission

Action approaches to achievetargeted results -- Acomprehensive strategy

Short and long term performance

targets -- Strategic & financial

goals & objectives


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Corporate

Strategy

Business Strategies

Functional Strategies

Operating Strategies

Two-Way Influence

Two-Way Influence

Two-Way Influence

Corporate-Level

Managers

Business-Level

Managers

Opera-

tingManagers

Function-

alManagers

Figure 2.1: Levels of Strategy-Making in

a Diversified Company


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Figure 2-1: Levels of Strategy-Making in

a Single-Business Company

Business

Strategy

Two-Way Influence

Two-Way Influence

Functional Strategies

Operating Strategies

Executive-Level

Managers

Operating

Managers

Functional

Managers


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Figure 2.4: Networking of Missions,

Goals/Objectives, and Strategies

Level 1

Level 2

Business-LevelManagers

Level 3Functional

Managers

Level 4Plant Managers,

Lower-Level

Supervisors

CorporateLevel

Objectives

Corporate-wideStrategic

Vision

CorporateLevel

Strategy

Business

Level

Objectives

Business

Level Strategic

Vision

Business

Level

Strategies

Functional

Objectives

Functional

Missions

Functional

Strategies

Operating

Objectives

Operating

Missions

Operating

Strategies

Two-Way Influence Two-Way Influence Two-Way Influence



Corporate-

Level

Managers


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Figure 2.5: Factors Shaping the

Choice of Company Strategy

Companys Strategic SituationCraft

the

strategy

External Factors

Internal Factors

Social,political,

regulatory

and

community

factors

Competitive

conditions

and industry

attractiveness

Company

opportunities

and threats to

companys

well-being

Resource

strengths,

capabilities,

and

weaknesses

Influences of

key

executives

Shared values

and company

culture

Identify

and

evaluate

alternatives

Determinerelevance

of internal

and

external

factors


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Table 4.1: SWOT Analysis -

What to Look For

Potential ResourceStrengths Potential ResourceWeaknesses Potential CompanyOpportunities Potential ExternalThreats

Powerful strategy

Strong financialcondition

Strong brand nameimage/reputation

Widely recognizedmarket leader

Proprietarytechnology

Cost advantages

Strong advertising

Product innovationskills

Good customerservice

Better productquality

Alliances or JVs

No clear strategicdirection

Obsolete facilities

Weak balancesheet; excess debt

Higher overallcosts than rivals

Missing some keyskills/competencies

Subpar profits

Internal operatingproblems . . .

Falling behind inR&D

Too narrowproduct line

Weak marketingskills

Serving additionalcustomer groups

Expanding to newgeographic areas

Expanding product

line

Transferring skillsto new products

Vertical integration

Take market sharefrom rivals

Acquisition of

rivals

Alliances or JVs toexpand coverage

Openings to exploitnew technologies

Openings to extendbrand name/image

Entry of potent newcompetitors

Loss of sales tosubstitutes

Slowing market

growth Adverse shifts in

exchange rates &trade policies

Costly newregulations

Vulnerability tobusiness cycle

Growing leverageof customers orsuppliers

Reduced buyerneeds for product

Demographicchanges


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Figure 1-3: Companys Strategy --

What to Look For

Patternof Actions

That Define

Strategy

Actions to strengthen

resources &

capabilities

Actions to diversify Actions to outcompete rivals

Responses to

changing external

circumstances

Actions to alter

geographic

coverage

Actions to form strategic

alliances and collaborative

partnerships

How functional

activities are

managed

Efforts to pursue

new opportunities or

defend against threats

Actions to merge oracquire rival companies

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