The Strategic Management Process An Overview.ppt

7/29/2019 The Strategic Management Process An Overview.ppt

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Without a strategy the organizationis like a ship without a rudder, goingaround in circles.

Joel Ross and Michael Kami

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2001 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Copyright


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2 2001 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Copyright

The Strategic Management Process:

An Overview

Chapter 1


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Chapter Outline

Five Tasks of Strategic ManagementDeveloping a Strategic Vision and MissionSetting Objectives

Crafting a StrategyImplementing and Executing the StrategyEvaluating Performance and InitiatingCorrective Adjustments


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What is Strategy?

What is strategy?

What are the major elements of a Firms strategy?

Think of two firms in the same industry and identify elements of each firms strategy.


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Characteristics of a Strategic Vision

A roadmap of a companysfuture

Future technology-product-customer focus

Geographic and productmarkets to pursue

Capabilities to be

developedKind of companymanagement is trying tocreate


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Missions vs. Strategic Visions

A mission statementfocuses on current business activities --who we are and

what we do Current product andservice offeringsCustomer needsbeing servedTechnological andbusiness capabilities

A strategic visionconcerns a firms futurebusiness path --where we are going

Markets to be pursuedFuture technology-product-customer focusKind of company thatmanagement istrying to create


7/197 2001 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Copyright

Examples: Mission and Vision Statements

Empower peoplethrough great software

anytime, anyplace, andon any device.

Microsoft Corporation


8/198 2001 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Copyright

Examples: Mission and Vision Statements

Our vision : 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 spurringefforts to make the Internet more useful. Being

connected is now at the center of peoples computingexperience. We are helping to expand the capabilities

of the PC platform and the Internet.

Intel


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Setting Objectives

Converts strategic vision andmission into specificperformance targets

Creates yardsticks to trackperformance

Pushes firm to be inventiveand focused on resultsHelps prevent complacencyand coasting

Second Task of Strategic Management


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Types of Objectives Required

Outcomes focused onimproving financial performance

Outcomes focused onimproving long-term, competitive businessposition

Financial Objectives Strategic Objectives

$


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Examples of Financial Objectives

Grow earnings per share 15% annuallyBoost annual return on investment (or EVA)from 15% to 20% within three years

Increase annual dividends per shareto stockholders by 5% each year

Strive for stock price appreciation

equal to or above the S&P 500 averageMaintain a positive cash flow every year

Achieve and maintain a AA bond rating


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Examples of Strategic Objectives

Increase firms market shareOvertake key rivals on quality or customer service or product performance

Attain lower overall costs than rivalsBoost firms reputation with customers

Attain stronger foothold in international markets

Achieve technological superiorityBecome leader in new product introductions

Capture attractive growth opportunities


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Examples: Strategic Objectives

Banc One Corporation

To be one of the top three banking companiesin terms of market share in all significant

markets we serve.

Dominos Pizza

To safely deliver a hot, qualitypizza in 30 minutes or less at a fair

price and a reasonable profit.


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Example: Financial andStrategic Objectives

Annual growth in earnings per share of 10% or

better, on average;A return on stockholders equity of 20 -25%;

A return on capital employed of 27% or better;and

Have at least 30% of sales come fromproducts introduced in the past four years.

3M Corporation


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Crafting a Strategy

Strategy involves determining whether to Concentrate on a single business or severalbusinesses (diversification)

Cater to a broad range of customers or focuson a particular nicheDevelop a wide or narrow product linePursue a competitive advantage based on

Low cost or Product superiority or Unique organizational capabilities

Third Task of Strategic Management


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Involves deciding how toRespond to changingbuyer preferences

Respond to newmarket conditionsGrow the businessover the long-term

Achieve performancetargetsOutcompete rivals

Our strategywill be . . .

Crafting a Strategy


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Figure 1- 3: Understanding a CompanysStrategy -- What to Look For

Patternof Actions

That DefineStrategy

Actions to strengthenresources &capabilities

Actions to diversify Actions to outcompete rivals

Responses tochanging externalcircumstances

Actions to alter geographiccoverage

Actions to form strategicalliances and collaborative

partnerships

How functionalactivities are

managed

Efforts to pursuenew opportunities or defend against threats

Actions to merge or acquire rival companies


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What is a Strategic Plan?

Where firm is headed --Strategic vision andbusiness mission

Action approaches to achievetargeted results -- Acomprehensive strategy

Short and long term performancetargets -- Strategic andfinancial objectives


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19 2001 by The McGraw-Hill Companies Inc All rights reservedMcGraw-Hill/Irwin Copyright

Figure 1-1: The Five Tasksof Strategic Management

Craft aStrategy

to Achieve

Objectives

SetObjectives

Develop aStrategic

Vision

andMission

Implementand

Execute

Strategy

Improve/Change

Revise asNeeded

Revise asNeeded

Improve/Change

Recycleas Needed

Task 1 Task 2 Task 3 Task 4 Task 5

Monitor,Evaluate,and Take

CorrectiveAction

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The Strategic Management Process An Overview.ppt