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Strategic Management Strategic Planning& Competitiveness

Strategic Management Strategic Planning& Competitiveness

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Page 1: Strategic Management Strategic Planning& Competitiveness

Strategic Management

Strategic Planning& Competitiveness

Page 2: Strategic Management Strategic Planning& Competitiveness

Art & science of formulating, implementing, and evaluating, cross-functional decisions that enable an organization to achieve its objectives.

Strategic Management – Defined

Page 3: Strategic Management Strategic Planning& Competitiveness

• What kind of business should we become?

• Are we in the right fields• Are there new competitors• What strategies should we

pursue?• How are our customers

changing?

Adapting to Change – Key Strategic Management

Questions

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Mission Statement –What is our business?

Vision Statement –What do we want to become?

Key Terms

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Mission Statements: Examples

To Make People Happy

To Explore the Universe and Search for Life and to Inspire the

Next Generation of Explorers

NASA

Walt Disney

Does a good job of expressing the core values of the organization. Also conveys unique

qualities about the organization.

Too vague and and unclear. Need more descriptive information about what makes the

organization special.

Page 6: Strategic Management Strategic Planning& Competitiveness

Matt H. Evans, [email protected]

Vision

• How the organization wants to be perceived in theHow the organization wants to be perceived in the future – what success looks like future – what success looks like

• An expression of the desired end state An expression of the desired end state • Challenges everyone to reach for somethingChallenges everyone to reach for something

significant – inspires a compelling futuresignificant – inspires a compelling future• Provides a long-term focus for the entireProvides a long-term focus for the entire

organization organization

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Opportunities & Threats (External)

Key Terms

Analysis of Trends:

• Economic

• Social

• Cultural

• Demographic/Environmental

• Political, Legal, Governmental

• Technological

• Competitors

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Strengths & Weaknesses (Internal)

Key Terms

Typically located in functional areas of the firm

• Management

• Marketing

• Finance/Accounting

• Production/Operations

• Research & Development

• Computer Information Systems

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Means by which long-term objectives are achieved

Key Terms

Strategies

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What is Strategy?

• An integrated and coordinated set of commitments & actions designed to exploit core competencies and gains and gain a

competitive advantage.

• A series of goal direceted decisions & actions

• Strategies is use of engagements for the object.

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© 2006 by Nelson, a division of Thomson Canada Limited.

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What is Strategy in different literature?

“A unified, comprehensive, and integrated plan designed to ensure that the basic objectives of the enterprise are achieved.” (Glueck, 1980:9)

“The pattern or plan that integrates an organization’s major goals, policies, and action sequences into a cohesive whole.” (Quinn, 1980)

“A good strategy… neutralizes threats and exploits opportunities while capitalizing on strengths and avoiding or fixing weaknesses.” (Barney, 1997:17)

“A pattern of resource allocation that enables firms to maintain or improve their performance.

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• All successful strategies are based on understanding of the organization’s competitive environment.

• The competitive environment is complex, and includes anything that can affect the organization’s position relative to that of its competitors.

• Competitive enviroment is related with organizations’ products, services and organizational resources.

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Why Strategy is important?

• To change on organizations needs

• Burning platform

• Mission

• Vision

• Leadership

• Strategic management

• Political management

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Mission & Vision

Strategy Formulation

External Opportunities & Threats

Internal Strengths & Weaknesses

Long-Term Objectives

Alternative Strategies

Strategy Selection

Page 15: Strategic Management Strategic Planning& Competitiveness

Matt H. Evans, [email protected]

Assessment Model:S W O T

Assessment

External Assessment: Marketplace, competitor’s, social trends, technology,

regulatory environment, economic cycles .

External Assessment: Marketplace, competitor’s, social trends, technology,

regulatory environment, economic cycles .

Internal Assessment: Organizational assets, resources, people, culture, systems,

partnerships, suppliers, . . .

Internal Assessment: Organizational assets, resources, people, culture, systems,

partnerships, suppliers, . . .

• Easy to Understand• Apply at any

organizational level

• Needs to be Analytical and Specific

• Be honest about your weaknesses

Good Points Possible Pitfalls

SWOT SWOT

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Strategic Manegement

involves;

• Organization goals

• Goal- oriened action

• Related decision and actions

• Internal strengts

• External oppotunities and threats

© 2006 by Nelson, a division of Thomson Canada Limited.

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Strategic manegement

Makes;

• Planning

• Organization

• Implementing

• Controlling

© 2006 by Nelson, a division of Thomson Canada Limited.

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Why is SM important?

• Given everyone a role

• Makes a difference in performance levels

• Provides systematic approach to uncertainities

• Coordinates & focuses employess

© 2006 by Nelson, a division of Thomson Canada Limited.

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Basic of Strategic ManegementThere are four aspects are too important;• Interdisciplinary• External focus competition• Internal factors• Future direction

And make: Situation analysis (analsis current situation)

Formulation of strategies (decision strategies)

Implementation of Strategies (putting strategies in action)

Evaluation of strategies( evaluating & changing)

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Page 20: Strategic Management Strategic Planning& Competitiveness

ExternalAudit

InternalAudit

Long-TermObjectives

Generate,Evaluate,

SelectStrategies

ImplementStrategies:

Mgmt Issues

ImplementStrategies:Marketing,Fin/Acct,R&D, CIS

Measure &Evaluate

Performance

Mission&

Vision

Comprehensive strategic management model

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© 2006 by Nelson, a division of Thomson Canada Limited.

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The Strategic Management Process

The full set of commitments, decisions, The full set of commitments, decisions, and actions required for a firm to and actions required for a firm to

achieve strategic competitiveness and achieve strategic competitiveness and earn above-average returns.earn above-average returns.

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© 2006 by Nelson, a division of Thomson Canada Limited.

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Strategic Management and Strategic Competitiveness

Knowledge objectives1. Define strategic competitiveness, competitive

advantage and above average returns.

2. Describe the 21st century competitive landscape and explain how globalization and technological changes shape it.

3. Use the industrial organization (I/O) model to explain how firms can earn above average returns.

4. Use the resource-based model to explain how firms can earn above-average returns.

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© 2006 by Nelson, a division of Thomson Canada Limited.

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Strategic Management and Strategic Competitiveness

Knowledge objectives – continued…

5. Describe strategic intent and strategic mission and discuss their value.

6. Define stakeholders and describe their ability to influence organizations.

7. Describe strategists’ work.

8. Explain the strategic management process.

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1. Adapting to change in external trends, internal capabilities and resources

Achieving Sustained Competitive Advantage

2. Effectively formulating, implementing & evaluating strategies

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Strategy Implementation

Annual Objectives

Policies

Employee Motivation

Resource Allocation

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Strategy Evaluation

Internal Review

External Review

Performance Metrics

Corrective Actions

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© 2006 by Nelson, a division of Thomson Canada Limited.

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Desired Strategic Outcomes

Strategic CompetitivenessAchieved when a firm successfully formulates and implements a value-creating strategy.

Occurs when a firm develops a strategy that competitors are not simultaneously implementing.

Sustained Competitive Advantage

Above-Average ReturnsReturns in excess of what an investor expects to earn from other investments with similar risk.

Provides benefits which current and potential competitors are unable to duplicate.

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Important definitions

RiskAn investor’s uncertainty about the economic gains or losses resulting from a particular investment.

Returns equal to what an investor expects from other investments with similar amount of risk.

Average returns

Strategic management processThe full set of committee's decisions and actions required for a firm to achieve strategic competitiveness and earn above average returns.

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© 2006 by Nelson, a division of Thomson Canada Limited.

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Intended, Emergent and Realized Strategies

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© 2006 by Nelson, a division of Thomson Canada Limited.

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Alternative Models of Superior Returns

Industrial Organization Model

The External Environment

An Attractive Industry

Strategy Formulation

Assets and Skills

Strategy Implementation

Superior Returns

Resource-BasedModel

Resources

Capabilities

Competitive Advantage

An Attractive Industry

Strategy Implementation

Superior Returns

OIOI

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© 2006 by Nelson, a division of Thomson Canada Limited.

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Four Attributes of Resources and Capabilities (Competitive Advantage)

The firm is organized appropriately to The firm is organized appropriately to obtain the full benefits of the resources in obtain the full benefits of the resources in order to realize a competitive advantage. order to realize a competitive advantage.

ValuableValuable Allow the firm to exploit opportunities or Allow the firm to exploit opportunities or neutralize threats in its external neutralize threats in its external environment.environment.

RareRare Possessed by few, if any, current and Possessed by few, if any, current and potential competitors.potential competitors.

Costly to imitateCostly to imitate When other firms cannot obtain them or When other firms cannot obtain them or must obtain them at a much higher cost.must obtain them at a much higher cost.

Organized to be Organized to be exploited exploited

Res

ourc

es a

nd

Res

ourc

es a

nd

Cap

abil

itie

sC

apab

ilit

ies

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© 2006 by Nelson, a division of Thomson Canada Limited.

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Core CompetenciesCore Competencies

Resources and capabilities that meet these four criteria become a source

of:

ValuableValuable

RareRare

Costly to imitateCostly to imitate

Organized to be Organized to be exploitedexploited

Core CompetenciesCore Competencies

Res

ourc

es a

nd C

apab

ilit

ies

Res

ourc

es a

nd C

apab

ilit

ies

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Core Competencies are the basis for a firm’s

Competitive Competitive advantageadvantage

Strategic Strategic competitivenesscompetitiveness

Ability to earn Ability to earn above-average above-average

returnsreturns

Core CompetenciesCore Competencies

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CEO’s ranking of business importance

1. A strong & well thought out strategy

2. Maximizing customer satisfaction & loyalty

3. Business leadership, quality products & services

4. Concern for consistent profits

5. Strong & consistent profits

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21st Century Values

• Flexibility

• Speed to market

• Innovation

• Integration

• Handling challenges from constantly changing conditions

• Hypercompetition

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The Global Economy

One in which goods, services, people, skills, and ideas move freely across geographic

borders

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World competitiveness ratings

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Technology and Technological Change

• Increasing rate of technological change and diffusion

Perpetual innovation

• The information agePersonal computers, cellular phones, artificial

intelligence, virtual reality, massive databases, electronic networks, e-business

• Increasing knowledge intensityInformation, intelligence, expertise, strategic

flexibility.

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Internally focused, it is the leveraging of a firms resources, capabilities, and

core competencies to establish the firms goals in the competitive

environment.

Strategic Intent

Together, strategic intent and strategic mission yield the insights required to formulate and implement strategies. Externally focused, it is a statement of a

firms unique purpose and the scope of it’s operations in product and market

terms.

Strategic Mission

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Stakeholders

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Organizational strategists

Top level managers, executives, top management team, or general managers

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Organizational culture

A complex set of ideologies, symbols and core values that influence how the firm conducts it’s business.

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Copyright 2007 Prentice Hall Ch 1 -45

If we want to talk about Strategic Management and

strategic plan:

We can say;In essence, the strategic plan is a company’s game plan and strategic manegement is related with these game plan .

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(c) Macmillan & Tampoe

2001

46

Figure 1The Four Elements of Strategic Management

Strategic

Thinking

The

Strategy

Formulation

Process

StrategicAction

TheStrategyImplementationProcess

StrategyContent

CONTEXT

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(c) Macmillan & Tampoe

2001

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Figure 2 - The Strategy Formulation Process

StrategicAssessment

StrategicIntent

StrategicChoice

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(c) Macmillan & Tampoe

2001

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Programme& Project

Management

ChangeLeadership

Culture Change

Process Change

Structure ChangeTransformed

Enterprise

Figure 3 - The Strategy Implementation Process

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(c) Macmillan & Tampoe

2001

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Figure 4 - Our complete model

StrategyContent

CONTEXT StrategicAction

Strategic

Thinking

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Predicting Outcomes of Strategic Decisions

1. Define the profit pool’s boundaries.2. Estimate the pool’s overall size.3. Estimate the size of the value chain.4. Reconcile the calculations.

The strategic management process calls for disciplined approaches to the development of competitive advantage.

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Copyright 2007 Prentice Hall Ch 1 -51

Strategic Management achieves a firm’s success

through integration ––

Management

MIS

Production/OperationsFinance/Accounting

Marketing

Research & Development

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Thanks…

22.02.2011

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