- 1. StrategicManagementAn Introduction to Strategy
2. Learning Outline What is strategic management? Why is
strategic managementimportant? Who is involved with
strategicmanagement? Strategic management today2 3. A definition of
strategy Goal-directed decisions and actions inwhich capabilities
and resources arematched with the opportunities andthreats in the
environment.3 4. Military influences in strategy Strategos referred
to a general incommand of an army The art of the general By 450
B.C. it came to mean managerial skill By 330 B.C. it referred to
the skill of employing forcesto overcome positions to create a
system of globalgovernance Carl von Clausewitz tactics(involve)
theuse of armed forces in the engagement,strategy (is) the use of
engagements for theobject of war 1838 On War4 5. Academic
influences in strategy 1911 Scientific management (Taylor) Still in
placetoday (UPS), some consider it micromanaging HBS requires a
class in Business Policy in 1912 Adam Smiths invisible hand (the
market) gives way toAlfred Sloan (GM CEO from 1923-1946) concept of
thevisible handmiddle manager Chester Bernard influential book The
Executive arguesthat managers should pay attention to strategic
factors Ronald Coases 1937 article why firms exist (NobelPrize in
economics) and Joseph Schumpters concept ofdisruptive technologies
written in 1942 bring inorganizational economics Max Weber warns
against bureaucratic organizations butsees a shift toward this way
of organizing5 6. Recent influences in strategy 1960s (Strategy and
structure; CorporateStrategy) 1963 Harvard business conference
leads to SWOT analysis BCG founded in 1963 strategy boutique
Created the portfolio analysis Stars, dogs, cash cows, question
marks 1980s (Porters 5 forces) 1990s (Resource based view of the
firm)6 7. Why is strategic managementimportant? Gives everyone a
role Makes a difference in performance levels Provides systematic
approach touncertainties Coordinates and focuses employees7 8. Why
Strategy? To change, an organization needs Burning Platform Vision
Leadership Strategic Management Political Management8 9. Strategy
vs. StrategicManagement Strategy StrategicA series of goal-
management Analyze currentdirected decisionsand actionssituation
Developmatching anorganizations appropriate strategiesskills and
Put strategies intoresources with the actionopportunities and
Evaluate, modify,threats in its or changeenvironmentstrategy9 10.
Strategy vs. Strategic Management Strategy involves Strategic
Organizations managementgoals Planning Goal-oriented
Organizingaction Related decisions Implementingand actions
Controlling Internal strengths Externalopportunities andthreats 10
11. Basics of StrategicManagementFour aspects that set strategic
management apart Interdisciplinary Capstone of the Business degree
External focus Competition Internalfocus Future direction11 12.
Strategic ManagementProcessAnalyzingDecidingPuttingEvaluating and
Currenton Strategies ChangingSituationStrategies in Action
StrategiesSituation StrategyStrategy StrategyAnalysis Formulation
Implementation EvaluationExternalAnalysis Chapter 2 Chapter 3
Functional Competitive Chapter 5Chapter 6InternalAnalysis Corporate
Chapter 4 Chapter 712 13. Strategic ManagementProcessSituation
Analysis Scanning& evaluating context Internal and External
environmentsStrategy formulation Functional Competitive
Corporatestrategies13 14. Levels of strategy CorporateWhat
direction are we going and what business(es) are we in or do we
want to be in? Competitive: How are we going to compete in our
chosen business(es)? FunctionalWhat resources and capabilities do
we have to support the corporate and competitive strategies?14 15.
Strategic ManagementProcessStrategy implementation Process of
putting strategies into action Consider implementation at each
levelStrategy evaluation Wasthe strategy effective? Close the
loop15 16. Who does strategy? The Role of the Board of Directors
Elected representatives of the companys stockholders Legally
obligated to represent and protect stockholders The Role of Top
Management Responsible for decisions and action of every employee
Providing effective leadership Other Organizational Employees
Implement put the strategies into action and monitorperformance
Evaluatedo the actual evaluations and take necessaryactions16 17.
The Role of the Board ofDirectorsReview and approve strategic goals
and plansReview and approve organizations financial standards and
policiesApprove an organizational philosophyMonitor organizational
performance and regularly review performance resultsSelect,
evaluate, and compensate top-level managersDevelop management
succession plansMonitor relations with shareholders and other key
stakeholders17 18. Who is on the board ofdirectors?Chairman of the
board Chief Executive officer (CEO)President Chief Operating
officer (COO)Other Cs Chief Financial officer Chief Information
officerInside board membersOutside board members18 19. The Role of
Top ManagementDetermining OrganizationalPurpose or
VisionEstablishing Exploiting andAppropriately MaintainingBalanced
ControlsCore Competencies Effective StrategicLeadership
DevelopingEmphasizing Human CapitalEthical Decisionsand Practices
Creating andSustaining StrongOrganizational Culture 19 20.
Strategic ManagementPrincipleEffective strategy-making begins with
a vision of wherethe organization needs tohead!20 21. Elements of a
Strategic Vision Use the mission statement as astarting point
Develop a strategic vision that spells out a course to pursue
Communicate the vision in aclear and exciting manner21 22.
Characteristics of aMission Statement Defines current business
activities Highlights boundaries of currentbusiness ConveysWho we
are,What we do, andWhere we are now22 23. Characteristics of
aMission Statement Company specific, not generic soas to give a
company its own identity A companys mission is not tomake a profit
! The real mission is alwaysWhatwill we do to make a profit?23 24.
Examples of Missions Microsoft CorporationEmpower people through
great software anytime, anyplace, and on any device.24 25. Examples
of MissionsOtis Elevator Our mission is to provide any customer a
means of moving peopleand things up, down, and sidewaysover short
distances with higherreliability than any similar enterprise in the
world. 25 26. Examples of Mission American Red CrossThe mission of
the American Red Cross isto improve the quality of human life; to
enhance self-reliance and concern for others; and to help people
avoid, preparefor, and cope with emergencies.26 27. Ritz-Carlton
Hotels The Ritz-Carlton Hotel is a place where thegenuine care and
comfort of our guests is ourhighest mission. We pledge to provide
the finest personal service and facilities for our guests who will
always enjoy a warm, relaxed yet refinedambiance. The Ritz-Carlton
experience enlivensthe senses, instills well-being, and fulfills
eventhe unexpressed wishes and needs of ourguests (vision) 27 28.
Characteristics of a Strategic Vision Charts a companys
futurestrategic course Defines the business makeup for 5years (or
more) Specifies future technology-product-customer focus 28 29.
Communicating the Vision An exciting, inspirational vision
Challenges and motivates workforce Arouses strong sense of
organizationalpurpose Induces employee buy-in Galvanizes people to
live the business29 30. Value of a Well-ConceivedStrategic Vision
and MissionCrystallizes long-term directionReduces risk of
rudderlessdecision-makingConveys organizational purpose and
identityKeeps direction-related actions of lower- level managers on
common pathHelps organization prepare for the future30 31. Concept
of Strategic Intent A company exhibits strategicintent when it
relentlessly pursues an ambitious strategic objective and
concentrates itscompetitive actions and energieson achieving that
objective!31 32. Lessons about change: Builtto lastUnderstand why
superior companies are better than peer companies which are better
than most companies $1invested in stock market in 1926 yields $420
in all other companies $960 in peer companies $6360 in superior
(visionary) companies32 33. Who are these companiesVisionary Peer
companies 3M Norton Boeing McDonnell Douglass GE Westinghouse IBM
Burroughs Zenith Motorola Melville Nordstrom Colgate P&G
Kenwood Sony Ames Wal-mart33 34. So what did they find? Great
companies had BHAG Big Hairy Audacious Goals What ever your values
are stick withit Deal with the AND, not the OR Seek Alignment
(internally)34 35. Characteristics of Strategic Intent Indicates
firms intent to stake out aparticular position over the long-term
Involves establishing a BHAG - big, hairy,audacious goal Signals
relentless commitment to winning35 36. Example of BHAG General
Electric All businesses are held to a standard of being #1 or #2 in
their industries as well as achieving good business results John F.
Kennedy Put a man on the moon and return safely by the end of the
decade36 37. Crafting a Strategy An organizations strategy deals
with How to make the strategic vision a reality and achieve target
objectives The game plan for Pleasing customers Conducting
operations Building a sustainable competitive advantage 37 38. Take
Aways Strategy has become more important Information, technology,
globalization Key ideas in the strategy making process Mission(who
are we) Vision (where do we want to go) Strategic intent / BHAG
(major goal) Strategy (specific plan at different levels) Ethics
(code of conduct or values) Linkage & communication are
important Avoid mission creep!38 39. Take Aways Where strategy came
from Strategic Management Process Who does strategy Next week
ReadAirline Simulation Book (1-35) Bring Laptop39
