Business Strategy 3

8/10/2019 Business Strategy 3

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Strategic Management Themes

Global considerations impact virtually all strategic decisions

Information technology has become a vital strategic management tool

Natural environment and business ethics have become important strategic

issues


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What is Strategic Management ?

Art and Science of formulating implementing and evaluating

cross

functional decisions that enable an organization to achieve

its objectives.

Strategic management focuses on integrating management

marketing finance / accounting production / operations research

and development and computer information system to achieve

organizational success.


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STAGES OF STRATEGIC MANAGEMENT

Strategy

Formulation

1. Developing Business Mission

2. SWOT Analysis

3. Long Term Objectives

4. Alternative Strategies

5. Choosing particular strategy

6. Deciding New businesses to

enter or abandon

7. How to allocate resources

8. Expand or Diversify

9. Joint Venture

10. Merger / Acquisition

Strategy

Implementation

1. Establish annual

objectives

2. Device policies

3. Motivate Employees

4. Allocate resources

5. Developing supportive

culture

6. Creating effective Org.

Structure

7. Redirecting marketing

efforts

8. Preparing budgets

9. Developing and utilizing

MIS

Strategy

Evaluation

1. Reviewing external and

internal factors

2. Measuring performance

3. Taking corrective actions


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Key terms in Strategic Management


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Strategists

Mission StatementOpportunities and Threats

Strengths and Weaknesses

Long Term Objectives

Strategies

Annual Objectives

Policies


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Strategists

Strategists are individuals who are most responsible for the success or

failures of an organisation.

Strategists have various job titles such as Chief executive officer

President Owner Chair of the Board Executive Director or Entreprenur


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Top Ten Personal Behaviour for the CEOs in 2010*

1.Conveys Strong Sense of Vision2.Links Compensation to Performance

3.Communicates Frequently with Employees

4.Emphasizes Ethics

5.Plans for Management Succession

6.Communicates Frequently with Customers

7.Reassigns or Terminates Unsatisfactory Employees8.Rewards Loyalty

9.Makes All Major Decisions

10.Behaves Conservatively

* Fortune Magazine Columbia University Survey of 1500 Senior Executives including 870 CEOs


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Top Ten Knowledge and Skills for CEOs in 2010

1.Strategy Formulation2.Human Resource Management

3.Marketing and Sales

4.Negotiation

5.Accounting and Finance6.International Economics and Politics

7.Science and Technology

8.Handling Media and Public Speaking

9.Production

10.Computer Literacy


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Mission Statement

Enduring statements of purpose that distinguishes one business

from other similar firms.

A mission statement identifies the scope of firms operations in

product and market terms.

It addresses the basic question that faces all strategists

What is

our Business

A clear mission statement describes the values and priorities of an

organisation.

A mission statement broadly charts the future direction of an

organisation.


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External Opportunities and Threats

This refers the economic social cultural demographic

environmental political legal governmental technological and

competitive trends and events that could significantly benefit or

harm an organisation in the future.

Opportunities and threats are largely beyond the control of a single

organisation.


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Strengths and weaknesses

Internal strengths and weaknesses are organisations controllable

activities that are performed especially well or poorly.

They arise in the management marketing finance production research

and development and computer information systems activities of a

business.

Strengths and weaknesses are determined relative to competitors.


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Long term objectives

Objectives can be defined as specific results that an organisation

seeks to achieve in pursuing its basic mission.

Long term means more than one year.

Objectives are essential for organisations success because they

state direction; create synergy; reveal priorities; focus coordination;

and provide a basis for effective planning organising motivating and

controlling activities.


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Strategies

Strategies are the means by which long term objectives will be achieved.

Business strategies may include geographic expansion diversification

acquisition product development market penetration retrenchment

liquidation and joint venture.


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Annual Objectives

1. Annual objectives are short term milestones that organisations

must achieve to reach long term objectives.

2. Annual objectives should be measurable quantitative

challenging realistic consistent and prioritised.

3. They should be established at the corporate divisional and

functional levels in a large organisation.

4. Annual objectives are specially important in strategy

implementation whereas long term objectives are particularly

important in strategy formulation.

5. Annual objectives represent the basis for allocating resources.


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Policies

Policies are the means by which annual objectives will be

achieved.

Policies include guidelines rules and procedures established to

support efforts to achieve stated objectives.

Policies are guides to decision-making and address repetitive or

recurring situations.


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Stages of Strategic Management

I. Strategy formulation

Developing a business mission

Identifying an organizations external opportunities and threats

Determining internal strengths and weaknesses

Establishing long term objectives

Generating alternative strategies

Choosing particular strategies to pursue


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Strategy formulation Issues:

What new businesses to enter

What businesses to abandon

How to allocate resources

Whether to expandoperations or diversify

Whether to enter international markets

Whether to mergeor form a joint venture

How to avoid a hostile takeover


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II. Strategy implementation

Establish annual objectives

Devise policies Motivateemployees

Developing a strategy supportive culture

Creating an effective organizational structure

Redirecting marketingefforts

Preparing budgets

Developing and utilizing information systems Linking employee compensationto organizational

performance

The challenge is to stimulate managers and employee through out

an organization to work with pride and enthusiasm toward

achieving stated objectives


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III. Strategy evaluation

Reviewing external and internal factors that are the bases

for current strategies

Measuring performance and

Taking corrective actions

Strategy evaluation is needed because success today is no

guarantee of success tomorrow! Successes always create new

and different problems; complacent organizations experiencedemise.


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Integrating intuition and analysis

Based on past experiences judgment and feelings intuition

is essential to making good strategic decisions

Intuition is particularly useful for making decisions in

situations of great uncertainty or little precedent.

Adapting to change

The strategic management process is based on the

belief that organizations should continually monitor

internal and external events and trends so that timely

changes can be made as needed.


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Develop

MissionStatement

Establish

Long- termObjectives

Generate,

Evaluate and

SelectStrategies

Perform

External

Audit

Perform

Internal

Audit

Establish

policies

AndAnnual

Objectives

Allocate

Resources

Measure

and

EvaluatePerformance

Strategy Formulation

Strategy Implementation

Strategy evaluation

A comprehensive Strategic -

Management Model

Feedback


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I. Organization

Small one plant companiesLarge companies

II. Management styles

Policy maker

Democratic

Authoritarian

Day-to-day-operational thinker

Intuitive thinker

Experienced in planning

Inexperienced in planning

Toward more formality

and more details

Toward less formality

and fewer details

Forces Influencing Design of StrategicManagement Systems


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III. Complexity of environmentStable environment

Turbulent environment

Little competition

Many markets and customersSingle market and customer

Competition severe

IV. Complexity of production processes

Long production lead time

Short production lead times

Capital intensive

Labour intensive

Integrated manufacturing processes

Simple manufacturing processes

High technology

Low technology

Market reaction time for new product is short

Toward more formality

and more detailsToward less formality

and fewer details


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Documents

Business Strategy 3