Strgt Mgt Chapt 1 to 4

8/2/2019 Strgt Mgt Chapt 1 to 4

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Strategic Management ?Strategic management is an ongoing process thatevaluates and controls the business and the industries inwhich the company is involvedAssesses its competitors and sets goals and strategies tomeet all existing and potential competitors;Reassesses each strategy annually or quarterly [i.e.regularly] to determine how it has been implementedand whether it has succeeded or needs replacement by a

new strategy to meet changed circumstances, newtechnology, new competitors, a new economicenvironment., or a new social, financial, or politicalenvironment.


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Popular Definitions of Strategic Planning

Alfred Chandler: It is concerned with the determination of the basiclong term goals and objectives of an enterprise, and the adoption of

courses of action and allocation of resources necessary for carrying outthese goals.

William Glueck: It is a stream of decisions and actions which leads tothe deployment of and effective strategy or strategies to help achieve

corporate objectives --- decisions and actions, which determine whether anenterprise excels, survives or dies.

Hayes and Wheelwright: Strategic planning is planning that is longterm, wide ranging and critical to organizational success, in terms of thecosts of the resources it affects and the outcomes it envisions.

Harvey: Strategic planning is long-range planning that focuses on theorganization as a whole. Managers consider the organization as a total unitand ask themselves what must be done in the long run to attainorganizational goals. The most successful managers are those who are able


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Birth of strategic management

Strategic management as a discipline originated in the 1950s

and 60s. Although there were numerous early contributors to theliterature, the most influential pioneers were Alfred D. Chandler,Philip Selznick, Igor Ansoff, and Peter Drucker.

Alfred D. Chandler recognized the importance ofcoordinating the various aspects of management under one all-encompassing strategy.

Philip Selznick introduced the idea of matching theorganization's internal factors with external environmentalcircumstances. This core idea was developed into what we nowcall SWOT ANALYSIS


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Igor Ansoff built on Chandler's work by adding a range ofstrategic concepts and inventing a whole new vocabulary. Hedeveloped a strategy grid that compared market penetrationstrategies, product development strategies, market developmentstrategies

Peter Drucker was a prolific strategy theorist, author of

dozens of management books, with a career spanning fivedecades. His contributions to strategic management were manybut two are most important. Firstly, he stressed the importanceof objectives. An organization without clear objectives is like aship without a rudder. As early as 1954 he was developing atheory of management based on objectives. This evolved intohis theory of management by objectives (MBO)


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The Japanese challenge

By the late 70s, Americans had started to notice how successful Japaneseindustry had become. In industry after industry, including steel, watches,ship building, cameras, autos, and electronics, the Japanese were surpassing

American and European companies. Westerners wanted to know why.Numerous theories purported to explain the Japanese success including:

Higher employee morale, dedication, and loyalty;Lower cost structure, including wages;Effective government industrial policy;Modernization after WWII leading to high capital intensity andproductivity;

Economies of scale associated with increased exporting;Relatively low value of the Yen leading to low interest rates and capitalcosts, low dividend expectations, and inexpensive exports;Superior quality control techniques such as Total Quality Management and

other systems introduced byW. Edwards Demingin the 1950s and 60s.
http://en.wikipedia.org/wiki/W._Edwards_Deminghttp://en.wikipedia.org/wiki/W._Edwards_Deminghttp://en.wikipedia.org/wiki/W._Edwards_Deminghttp://en.wikipedia.org/wiki/W._Edwards_Deminghttp://en.wikipedia.org/wiki/W._Edwards_Deminghttp://en.wikipedia.org/wiki/W._Edwards_Deminghttp://en.wikipedia.org/wiki/W._Edwards_Deming


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A study was released in response to Japanese challenge which indicated thatthere were 8 keys to excellence that were shared by 43 firms.

A bias for action Do it. Try it. Dont waste time studying it withmultiple reports and committees.Customer focusGet close to the customer. Know your customer.Entrepreneurship Even big companies act and think small by giving

people the authority to take initiatives.Productivity through peopleTreat your people with respect and theywill reward you with productivity.Value-oriented CEOs The CEO should actively propagate corporate

values throughout the organization.

Stick to the knittingDo what you know well.Keep things simple and lean Complexity encourages waste andconfusion.Simultaneously centralized and decentralized Have tight centralized

control while also allowing maximum individual autonomy.
http://en.wikipedia.org/wiki/Know_your_customerhttp://en.wikipedia.org/wiki/Know_your_customerhttp://en.wikipedia.org/wiki/Know_your_customerhttp://en.wikipedia.org/wiki/Know_your_customerhttp://en.wikipedia.org/wiki/Know_your_customerhttp://en.wikipedia.org/wiki/Know_your_customer


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STAGE -1

Strategy formulationDeveloping a vision and missionIdentifying an organizations external

opportunities and threatsDetermining internal strengths and

weaknesses

Establishing long term objectivesGenerating alternative strategiesChoosing particular strategies to pursue


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The issues at strategy formulation stage

Deciding what new business to enter

Deciding business to abandon

Deciding how to allocate resourcesDeciding whether to expand operations or

diversify

Deciding whether to enter international marketDeciding whether to merge or form a joint

venture


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STAGE -2

Strategy Implementation

Establish annual objectivesDevise policiesMotivate employees

Allocate resourcesDeveloping a strategy supportive cultureCreating an effective organizational structureRedirecting marketing efforts

Preparing budgetsDeveloping and utilizing information systemLinking employee compensation to organizational

performance


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STAGE3

Strategy Evaluation

Reviewing external and internal factors thatare bases for current strategies

Measuring performanceTaking corrective actions


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Thinking Strategically:

Three big Strategic Questions

Where are we now?

Where do we want to go?

How will we get there?


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Profit/ (Loss) after Taxation - HBL


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Why did Traditional

Strategic Planning Failed


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Traditional strategic planning models were heavily orientedto quantitative analysis. It did not include in the planning process those who hadto implement the strategic plan.Planning was often used to exercise blatant control over

people Traditional strategic planning was often based oninappropriately aggregated data, data that was no longercurrent

It did not take into account the actual business challengesthe managers faced on a day-to-day basis.Traditional strategic planning was based on the assumptionthat one could measure all of the variables.


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The best strategies experience unforeseen

economic, industry, social, and market shifts.

The strategies could not deliver what theypromised: predictable success.The star department attracts the best and the

brightest managers away from other departments,so that the organization has an imbalance of

managerial talent throughout the organization.

The "star" departments have more power, andpeople in these departments are able to use their

power to play politics and gain even more

resources and success.


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Integrating intuition and Analysis --

Decision Making

Meaning of intuition (Vision, insight, perception Pre-analytical cognitive act that supplies raw materials for theanalytical effort).

Based on past experience, judgment and feelings most people

recognize that intuition is essential for making good strategicdecisions

Intuition is particularly useful for making decisions insituations of great uncertainty or little precedent.

Managers at all levels in an organization inject their intuitionand judgment into strategic management analysis.

Analytical thinking and intuitive thinking complement each

other


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Why some firms do no

strategic planning

Poor reward structure

Fire fighting

Waste of time Too expensive

Laziness

Contents with success Fear of failure


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Why some firms do no

strategic planning

Overconfidence

Prior bad experience

Self interest

Fear of the unknown

Honest difference of opinion

Suspicion


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Benefits of strategic management

It allows for identification, prioritization, and exploitation ofopportunities

It provides an objective view of management problems

It represents a framework for improved coordination andcontrol of activities

It minimizes the effects of adverse conditions and changes

It allows major decisions to better support established

objectives It allows more effective allocation of time and resources to

identified opportunities

It allows fewer resources and less time to be devoted to

correcting erroneous or ad hoc decisions


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Benefits of strategic management

It creates a framework for internal communication

among personnel It helps integrate the behaviour of individual into a

total effort

It provides a basis for clarifying individualresponsibilities

It encourages forward thinking

It provides a cooperative, integrated and enthusiasticapproach to tackle problems and opportunities

It encourages a favourable attitude towards change

It gives a degree of discipline and formality to themanagement of a business.


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VISION AND MISSIONSTATEMENTS

VisionARY

MissionARY

A visionary is someone who sees what is

possible, who sees the potential. Amissionary is someone who carries out thatwork.


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"Vision without action is a

daydream. Action without vision is

a nightmare."

Japanese proverb


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CONCEPT OF VISION AND MISSION - 1

Vision and Mission are statements ofwhat we want to be and how we see

ourselves fulfilling our ideas ofwhat wewant to be.


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CONCEPT OF VISION AND MISSION - 2

The vision statement will usually containmore general and motherhoodsounding statement than the mission.

The mission statement should containcommitments on (a) organization

purpose (b) Distinctive characteristics (cShareholder promises (d) organizationalvalues and beliefs.


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Your mission statement should

Express your organizations purpose in a waythat inspires support and ongoingcommitment

Motivate those who are connected to theorganization.

Be articulated in a way that is convincing andeasy to graspUse practical verbs to describe what you do


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SOME EXAMPLES OF VISION ANDMISSION STATEMENTS

HOUSE BUILDING


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HOUSE BUILDINGFINANCE CORPORATION

Vision statementHBFC to be the prime housing finance institution of thecountry providing affordable housing solutions to low andmiddle income groups of population by encouraging newconstruction in Small and Medium housing (SMH) sector.

Mission statementHBFC to be a socially responsible and commercial

sustainable housing finance institution.

Target Market Low and middle income groups of

populationTarget Areas No negative list, all legalized residentiallocations

Responding to housing needs of low income groups is asocial responsibility beyond that every thing has to be

100% commercially sustainable.

VISION STATEMENT


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VISION STATEMENT

INSTITUTE OF BANKERS IN PAKISTAN

Vision statement

To be the premier financial sector knowledge

institute of international standard and repute.Mission statement

To train and develop a sound human resourcebase for the financial sector and to work forcontinuous learning, adaptation andapplication of knowledge.

PepsiCo


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PepsiCo

Vision

"PepsiCo's responsibility is to continually improve all aspects of the world

in which we operate - environment, social, economic - creating a bettertomorrow than today."Our vision is put into action through programs and a focus onenvironmental stewardship, activities to benefit society, and a commitment

to build shareholder value by making PepsiCo a truly sustainable company.

Mission

Our mission is to be the world's premier consumer products company

focused on convenient foods and beverages. We seek to produce financialrewards to investors as we provide opportunities for growth andenrichment to our employees, our business partners and the communities in

which we operate. And in everything we do, we strive for honesty, fairness

and integrity


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IBM

Vision Statement - Solutions for a small planet

Mission Statement - At IBM, we strive to lead in the invention,development and manufacture of the industry's most advanced

information technologies, including computer systems, software,storage systems and microelectronics.

We translate these advanced technologies into value for our

customers through our professional solutions, services andconsulting businesses worldwide.


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Vision and Mission StatementsSAM Division, HBFC

VISION

HBFCL to be an NPL free Housing Institution.

MISSION

To make the existing NPL default portfolio to zero andto design and implement an effective strategy tocontrol, monitor, follow up and ensure that cases donot move upward in classified category.

Process of developing Mission


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Process of developing MissionStatements

A widely used approach is given as under:

Select several articles about missionstatements and ask all managers to readthese background information.

Then ask managers themselves to preparea mission statement for the organization.

A facilitator, or committee of top managers,

should them merge these statements into asingle documents and distribute this draftmission statement to all managers.

Continued --


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A request for modification, additions, anddeletions is needed next alongwith a meeting

to revise the documents.

To the extent that all managers have inputinto and support the final mission statementdocuments, organizations can more easilyobtain managers support for other strategyformulation.

O h h d


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Other method:

Use discussion groups of managers to

develop and modify the mission statement.

Hire an outside consultant of facilitator tomanage the process and help draft

language.

Sometimes an outside person with expertise

in developing mission statements, who hasunbiased views, can manage the processmore effectively than internal group orcommittee of the managers.

Why organization carefully develop a


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Why organization carefully develop awritten mission statement

To ensure unanimity of purpose with theorganizationTo provide a basis, or standard, forallocating organizational resourcesTo establish a general tone ororganizational climateTo serve a focal point for individual to

identify with the organizations purposeTo facilitate the translation of objectivesTo specify organizational purpose

Characteristics of Mission Statement


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Characteristics of Mission Statement

A declaration of attitudeA customer orientation

A declaration of social policyComponents of Mission Statement

Customers

Products or servicesMarketsTechnology

Concern for survival, growth or profitabilityPhilosophySelf conceptConcern for public image

Concern for employee


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Components of Mission Statement

Customers

Products or services

Markets

Technology

Concern for survival, growth or profitability

Philosophy

Self concept Concern for public image

Concern for employee


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THE EXTERNAL ASSESSMENT


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EXTERNAL AUDIT -- Tools and conceptsneeded to conduct an external strategicmanagement audit (sometimes called

environmental scanning or industry analysis)


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The nature of external audit:

The purpose of an external audit is to develop afinite (exhaustive list of every possible factors

that could influence the business) set of a finallist of opportunities that could benefit a firmand threats that should be avoided.

E i l S i


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Environmental Scanning

Brown and Weiner (1985) define environmentalscanning as "a kind of radar to scan the worldsystematically and signal the new, the unexpected, themajor and the minor". Aguilar (1967), in his studyof the information gathering practices ofmanagers, defined scanning as the systematiccollection of external information in order to (1) lessen therandomness of information flowing into the organizationand (2) provide early warnings for managers of changing

external conditions.


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Process of performing an external audit

To perform an external audit, a company first

must gather competitive intelligence andinformation about economic forces, social,demographic, and environmental forces,

political, governmental and legal forces,technological forces, and competitive forces.


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Key External forces:

Economic forces Social, demographic, and environmental forces

Political, governmental, and legal forces

Technological forces Competitive forces


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1. Economic factors:

Import and export factors Price fluctuations

Monetary policies

Fiscal policiesTax rates


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2. Social, demographic, and environmental

forces:

Number of birth rates Number of deaths

Immigration rates

Life expectancy rates

Attitude towards business

Attitude towards work

Attitude towards saving

Attitude towards careers

Regional changes in taste and preferences

3 P liti l t l d l l f


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3. Political, governmental, and legal forces:

Government regulations or deregulations

Government fiscal and monetary policies

Political action committee

Changes in patent laws

Political conditions in foreign countries

World oil, currency, and labour market Local, state, and national elections

Importexport regulations

Lobbying activities

When industries depend heavily on government contracts orsubsidy, political forecasts can be the most important part of anexternal audit.

4 T h l i l f


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4. Technological forces

Revolutionary technological changes and

discoveries are having a dramatic impact onorganizations.

The Internet alone is acting as a national and

even global economic engine that is spurringactivity, a critical factor in a countrys ability toimprove living standards, and it is savingcompanies billions of dollars in distribution andtransaction costs from direct sale to self-servicesystem.

Continued ---

T h l i l d d i ll


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Technological advancement can dramaticallyaffect organizations products, services, markets,

suppliers, distributors, competitors, customers,manufacturing process, marketing practices andcompetitive position.

No company or industry today is insulatedagainst emerging technological developments. Inhigh-tech industries, identification andevaluation of key technological opportunities

and threats can be most important part of theexternal strategic management audit.


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5. Competitive forces

An important part of an external audit is identifyingrival firms and determining their strengths, weaknesses,capabilities, opportunities, threats, objectives, andstrategies.

Competition in virtually all industries can be describedas intenseand sometimes cut throat.

Collecting and evaluating information on competitors isessential for successful strategy formulation. Identifyingmajor competitors is not always easy because manyfirms have divisions that compete in differentindustries. Most multidivisional firms generally do notprovide sales and profit information on a divisionalbasis for competitive reasons.

Key questions about competitors


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Key questions about competitors

What are the major competitors strengths?

What are the major competitors weaknesses?

What are the major competitors objectives and strengths? How will the major competitors likely respond to current

economic, social, cultural, demographic, environmental, political,governmental, legal, technological, and competitive trendsaffecting our industry?

How vulnerable are the major competitors to our alternativecompany strategies?

How are our products or services positioned relative to majorcompetitors?

To what extent are new firms entering and old firms leaving thisindustry?

To what extent could substitute products or services be a threatto competitors in this industry?

C titi A l i


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Competitive Analysis

Porters Five-Force Model

(Michael E. Porter of Harvard Business School)

Rivalry among competing firms: rivalry amongcompeting firms is usually the most powerful of thefive competitive forces. Changes in strategy by one firmmay met with retaliatory countermoves such lowering

prices, enhancing quality, adding features, providingservices etc. Potential entry of new competitors: whenever new

firms can easily enter particular industry, the intensityof competitiveness among firm increases. Profitable

markets that yield high returns will draw firms. Thisresults in many new entrants, which will effectivelydecrease profitability.

Potential development of substitute products: Firms are in


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Potential development of substitute products: Firms are inclose competition with producers of substitute products of otherindustries. The existence of close substitute products increasesthe propensity of customers to switch to alternatives in response

to price increases Bargaining power of suppliers: Suppliers of raw materials,

components, labor, and services (such as expertise) to the firmcan be a source of power over the firm. Suppliers may refuse to

work with the firm, or e.g. charge excessively high prices for

unique resources. The bargaining power of suppliers affects theintensity of competition in an industry, especially when there islarge number of suppliers, when there are only a few goodsubstitute raw materials, or when the cost of switching raw

material is especially costly. Bargaining power of consumers: When customers are

concentrated or large, or buy in volume, their bargaining powerrepresents a major force affecting the intensity of competition inan industry.


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Identify & Evaluate factors beyond the

control of a single firm Increased foreign competition

Population shifts

Information technology

External StrategicManagement Audit


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CompetitorsSuppliers

DistributorsCreditors

Customers

EmployeesCommunities

ManagersStockholdersLabor Unions

Special Interest GroupsProductsServices

Key

ExternalForces

Opportunities

&Threats

Key External Forces & the Organization


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Performing External Audit

ExternalFactors

Measurable

Long-term orientation

Applicable tocompeting firms

Hierarchical


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Economies of Scale

Industry Properties

Barriers to market entry

Product differentiation

Level ofcompetitiveness

I/O Perspective Firm Performance


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Social, Cultural, Demographic& Environmental Forces

Aging population

Less Caucasian

Widening gap between rich & poor

2025 = 18.5% population >65 years

2075 = no ethnic or racial majority

Key Social Cultural Demographic &


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Key Social, Cultural, Demographic &Environmental Variables

Number of marriages & divorces

Number of special interest groups

Number of births & deaths

Immigration & emigration rates

Childbearingrates


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Political, Government & LegalForces

Worldwide trend toward similar

consumption patterns

Global buyers and sellers

E-commerce

Technology for instant currency transfers

Globalization of Industry


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Competitive Forces

Strengths

Weaknesses

Capabilities

Opportunities

Threats

Objectives

Strategies

Identifying Rival Firms


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Competitive Forces

5. People make a difference

6. Acquisition is essential to growth

7. No substitute for quality

7 Characteristics of mostCompetitive U.S. Firms:

Th Fi F M d l f C i i


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The Five-Forces Model of Competition

Potential development

of substitute products

Rivalry amongcompetingfirms

Bargaining powerof suppliers

Potential entry of newcompetitors

Bargaining powerof consumers


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The Global Challenge

Gain & maintain exports to other

nationsDefend domestic markets againstimported goods

I d t A l i Th E t l F t


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Industry Analysis: The External FactorEvaluation (EFE) Matrix

CompetitivePoliticalCultural

TechnologicalEnvironmentalSocial

GovernmentalDemographicEconomic

Summarize & Evaluate


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EFEGateway Computers (2003)

Key External Factors Weight RatingWtd

Score

Opportunities

1. Global PC market expected to grow 20%

in 2004

0.10 3 0.30

2. Cost of PC component parts expected todecrease 10% - 2004

0.10 3 0.30

3. Internet use growing rapidly 0.05 2 0.10

4. China entered WTO; lowered taxes forimporting PCs

0.10 1 0.10

5. The average income for PC worker has

declined from $40K/yr to $30k/yr0.05 3 0.15


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EFEGateway Computers (2003) (contd)


Score

Opportunities (contd)

6. Modernization of business firms and

government agencies

0.05 2 0.10

7. U.S. (& world) economies recovering 0.05 3 0.15

8. 30% of Chinese population can afford a

PC; only 10% of homes have a PC0.05 1 0.05

Threats 0.10 1 0.10

1. Intense rivalry in industry 0.10 1 0.05


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EFEGateway Computers (2003) (contd)


Score

Threats (contd)

2. Severe price cutting in PC industry 0.10 2 0.20

3. Different countries have different regs and

infrastructure for PCs0.05 1 0.05

4. Palm & PDA becoming substitutes 0.05 3 0.15

5. Demand exceeds supply of experiencedPC workers 0.05 4 0.20

6. Birth rate in U.S. declining annually 0.05 3 0.15


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EFEGateway Computers (2003) (contd)Key External Factors Weight Rating

Wtd

Score

Threats (contd)

7. U.s. consumers and businesses delaying

purchase of PCs0.05 2 0.10

8. PC firms diversifying into consumer

electronics0.05 3 0.15

Total 1.00 2.40

I d A l i EFE


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Total weighted score of 4.0 Organization response is outstanding to threats andweaknesses

Industry Analysis EFE

Total weighted score of 1.0

Firms strategies not capitalizing on opportunities oravoiding threats

Industry Analysis: Competitive Profile


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Industry Analysis: Competitive ProfileMatrix (CPM)

Identifies firms major competitors and

their strengths & weaknesses in relationto a sample firms strategic positions


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Gateway Apple Dell

CriticalSuccess

Factors

Wt Rating WtdScore

Rating WtdScore

Rating WtdScore

Market share 0.15 3 0.45 2 0.30 4 0.60

Inventory sys 0.08 2 0.16 2 0.16 4 0.32Fin position 0.10 2 0.20 3 0.30 3 0.30

Prod. Quality 0.08 3 0.24 4 0.32 3 0.24

Cons. Loyalty 0.02 3 0.06 3 0.06 4 0.08

Sales Distr 0.10 3 0.30 2 0.20 3 0.30

Global Exp. 0.15 3 0.45 2 0.30 4 0.60

Org. Structure 0.05 3 0.15 3 0.15 3 0.15


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Gateway Apple Dell

CSFs (contd) Wt Rating WtdScore Rating WtdScore Rating WtdScore

Prod. Capacity 0.04 3 0.12 3 0.12 3 0.12

E-commerce 0.10 3 0.30 3 0.30 3 0.30

Customer Serv 0.10 3 0.30 2 0.20 4 0.40Price

competitive0.02 4 0.08 1 0.02 3 0.06

Mgt. experience 0.01 2 0.02 4 0.04 2 0.02

Total 1.00 2.83 2.47 3.49


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THE INTERNAL ASSESSMENT

It covers typical functional areas in manufacturing organizationsd f id tif i d l ti fir tr th d


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and focuses on identifying and evaluating a firms strengths and

weaknesses in the functional areas of business including:

Management

Marketing

Finance/Accounting

Production/Operations

Research & Development

Management Information System

Functional areas in other types of organizations may differ e.g.hospital, universities, government, etc. have different

organizational structure


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Distinctive Competencies :

Firms strength that can not be easily matched orimitated by competitors.

Building competitive advantage involves takingadvantage of distinctive competencies.

Strengths and weaknesses


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Strengths and weaknesses

All organizations have strengths and weaknesses in thefunctional areas of business.No enterprise is equally strong or weak in all areas.One company is known for excellent production and

design, whereas another company is known for superbmarketing.Internal strengths/weaknesses, coupled with external

opportunities/threats and a clear statement of mission,provide the basis for establishing objectives andstrategies.

Resource Based View (RBV):


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Approach to competitive advantage

Competitive advantage of an organization lies in itsresources, strengths and competencies.

Internal resources are more important than externalfactors because:

Physical Resources: Rare

Human Resources: Hard to imitate

Organizational Resources: Not easily substitutable


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Organization Culture:

Pattern of behavior developed by an organization as it

learns to cope with its problem of external adaptation

and internal integration. It is considered valid and taught

to new members.

Integrating Culture With Your Strategy


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Culture is one of the most powerful - and

most often neglected - elements of theprofit equation. There are few other

aspects of your business that have the

inherent capacity to increase employee

productivity, streamline your work

processes, and grow revenues in waysthat are as powerful and predictable as

your corporate culture.

Corporate culture is simple: its the way


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we work together, the ways in which our

organizational structures supportbusiness strategy, and the ways we attract

and retain excellent employees andcustomers. Basically, corporate culture

provides the frame-work to implement

and operationalize your strategy.

B h d k i h b i l i i


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But how do you work with your own business culture to maximize yourprofits and to realize your strategy? The answer begins with analyzing just

what type of corporate culture you want to have. For example, many

companies have a strategic objective to obtain - and then retain - a certainpercentage of market share. If you have a strategic goal similar to this, howdo you structure the work that your employees do in order to realize thatgoal?Are your employees free to offer their ideas and experiences, so

that you reap the benefit of as many sources of new and creative ideas aspossible? Do you encourage free and open discussion, and do you tryto allow this to happen outside of the normal work day? We often find that

while many companies say they encourage new and innovative ideas fromtheir employees, few actually build this process into their work day. Someof our clients, in seeking to link their culture to their strategy in this area,have developed both formal and informal processes that encourageemployees to offer their ideas in safe and open environments, and havebuilt in a reward process to honor those ideas that are adopted or

implemented by the company.

Finally, perhaps the most obvious and important element ofyour corporate culture is your leadership There is no single


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your corporate culture is your leadership. There is no singlefactor more important in the success of your company than yourability to steer your organization and your employees into theincreasingly complex marketplace of tomorrow. Corporateculture is all about how you do that. Do you communicate yourstrategy clearly and often? Do you help your employees learn

from their mistakes as well as their successes?Do you take thetime to celebrate accomplishments?Can your employees dependon you for consistent and predictable behavior?Do you modelthe very behaviors and actions that you expect in your

employees? While there may be no secret to effectiveleadership, there is also no substitute for it. An effectivecorporate culture that is designed to increase revenues dependson consistent and highly visible leadership.

Management


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Management

Planning

Stage When Most

ImportantFunction

Strategy Formulation

Organizing Strategy Implementation

Motivating Strategy Implementation

Staffing

Controlling

Strategy Implementation

Strategy Evaluation

A typical management audit checklist


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Does the firm use strategic managementconcepts?

Are company objectives and goals measurableand well communicated?

Do managers delegate well?

Is the organizations structure appropriate?

Are job descriptions clear?

Are job specifications clear?

Is employee morale high?

Are employee turnover and absenteeism low?

Are organizational reward and control

mechanisms effective

Marketing opportunity analysis


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g pp y y

Are markets segmented effectively?

Is the organization positioned well among competitors?

Has the firms market share been increasing?

Are the distribution channels reliable & cost effective?

Is the sales force effective? Does the firm conduct marketresearch?

Are product quality & customer service good? Are the firms products/services priced appropriately?

Does the firm have effective promotion, advertising, &publicity strategies?

Are the marketing planning & budgeting effective?

Do the firms marketing managers have adequateexperience and training?

A typical finance/accounting audit


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yp g

Where is the firm strong/weak as indicated by financial

ratio analysis? Can the firm raise short-term capital as needed?

Can the firm raise long-term capital as needed through

debt and/or equity? Does the firm have sufficient working capital?

Are capital budgeting procedures effective?

Are dividend payout policies reasonable? Are the firms financial managers experienced & well

trained?

Fi /A ti A dit


92/100

92

Finance/Accounting Audit

Effective Financial Analysis Requires:

Analysis of how the ratios have changed overtime

How the ratios compare to industry norms

How the ratios compare with key competitors

A typical production/operations audit


93/100

93

Are quality-control policies & procedures effective?

Are facilities, resources, and markets strategically

located? Does the firm have technological competencies?

Development of new products before competitors?

Improving product quality? Improving manufacturing processes to reduce costs?

Are suppliers of materials, parts, etc. reliable andreasonable?

Are facilities, equipment & machinery in goodcondition?

Are inventory-control policies and procedureseffective?

A t i l h & d l t dit


94/100

94

A typical research & development audit

Are the R&D facilities adequate?

If R&D is outsourced, is it cost effective?

Are the R&D personnel well qualified?

Are R&D resources allocated effectively? Are MIS and computer systems adequate?

Is communication between R&D & other

organizational units effective? Are present products technologically competitive?

A typical MIS audit


95/100

95

Do managers use the information system to make decisions? Is there a CIO or Director of Information Systems position in

the firm? Is data updated regularly?

Do managers from all functional areas contribute input to theinformation system?

Are there effective passwords for entry into the firmsinformation system?

Are strategists of the firm familiar with the information systemsof rival firms?

Do all users understand the competitive advantages thatinformation can provide?

Are computer training workshops provided for users? Is the information system user-friendly?

Is the firms system being improved?

IFE Matrix for XYZ Computers

Key Internal Factors


96/100

96

Key Internal Factors

Strengths Weight RatingWeighted

Score

1 Several new senior executive with world classskills and leadership experience

0.05 4 0.4

2Continuous decline in operating costs and cost

of goods sold0.05 3 0.15

3 Well known brand name 0.05 3 0.15

4 Consumer Report as #1 0.1 4 0.4

5As a direct seller, Gateway holds high brand

recognition0.05 3 0.15

6 Co. is diversifying into non-PC products 0.1 3 0.3

7 Good Relationship with its suppliers 0.05 4 0.2

8Economies of scale, the sixth largest PC maker

in the world0.05 4 0.2

9 Co. retail stores excellent 0.05 3 0.15


97/100


98/100

98


99/100

99

IFE Analysis of E trade


100/100

IFE Analysis of E-trade

E-trade has major strengths in flat commission,banking accounts, and services to investors

E-trade has major weaknesses in declining

brokerage accounts and limited number ofbranches

Total weighted score of 2.67 indicates E-trade is

above average in its overall internal strength

Documents

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