Transportation Strategy – SCMN 4780 Leadership in Business

Transportation Strategy – SCMN 4780 Transportation Strategy – SCMN 4780

Leadership in Business Leadership in Business

Transportation Strategy Transportation Strategy SCMN 4780SCMN 4780

Corporation

Division A

Division B

Division C

Business Unit A-1

Business Unit A-2

Business UnitB-1

Business UnitB-2

Business Unit C-1

Business Unit C-2

Plants &Factories

Plants & Factories

Plants & Factories

Plants & Factories

Plants & Factories

Plants & Factories

Organization: Business Alignment Organization: Business Alignment

Leadership in BusinessLeadership in Business22


Shareholder Value Roll-Up Shareholder Value Roll-Up

Leadership in BusinessLeadership in Business


BUSINESS Marketing & Operating Strategy

MISSION & VISION

CORPORATE Management System

Sales & Ops Planning

New Product Planning

Sourcing Management

Transportation Management

Strategic Management Framework Strategic Management Framework

Leadership Model

Strategizing and

Directing


Performing and

Delivering


BUSINESS Marketing & Operating Strategy

MISSION & VISION

CORPORATE Management System



Sourcing Management



Leadership Model

Corporate structure (overhead) must

contribute value to the collection of

businesses



ITT Corporation HistoryITT Corporation HistoryInternational Telephone & Telegraph was formed in 1920 by the Behn brothers merging acquisitions of the Pueto Rico Telephone Company, the Cuban-American Telephone & Telegraph Company and half-interest in the Cuban Telephone Company.

During the 1960s and 1970s, under the leadership of its CEO Harold Geneen the company rose to international prominence as the archetypal conglomerate, deriving its growth from hundreds of acquisitions in diversified industries. By 1989, ITT had sold all international telecommunications.

ITT Educational Services (ESI) was spun off through an IPO in 1994. In 1996, ITT Corporation split into 3 separate public companies:

• ITT Corporation (lodging & gaming) — By 1997, this business merged its operations with Starwood Hotels & Resorts. By 1999, ITT Corp. dropped the ITT name in favor of Starwood.

• ITT Hartford (insurance) — ITT Hartford is a major insurance company and has dropped the ITT from its name altogether. The company is now known as Hartford Financial Services.

• ITT Industries (manufacturing) — A major manufacturing and defense contractor. In 1998, ITT Industries sold its automotive businesses. The company operated under this name until 2006 when it reverted back to ITT Corporation to protect the brand.



2011 ITT Corporate Breakup2011 ITT Corporate BreakupJan 12, 2011 (Reuters) - U.S. manufacturer ITT Corp plans to split itself into three publicly traded companies to take advantage of growing water management and industrial markets as its defense unit braces for U.S. military spending cuts.

ITT Chairman and Chief Executive Steve Loranger said the break-up had been considered for six months and was made by the management and board with no investor pressure. But activist investor Relational Investors' Ralph Whitworth told Reuters in an interview that the group has amassed a 4% stake in ITT and urged a break-up of the industrial conglomerate. Whitworth said that ITT's announcement will likely have averted a proxy fight with Relational Investors, which had nominated three directors in a November letter and had urged a sale of the defense business.

After the split, ITT Corp will continue as an aerospace, transportation, energy and industrial engineering company. Another company will make water pumps, and the third will supply defense equipment. Last month, ITT said the businesses that supply water pumps and products for transportation markets would drive earnings in 2011. It said revenue and operating income would rise in those two segments, but fall in defense, the company's largest unit. Skibitski said uncertainty about ITT's defense business because of expected U.S. budget cuts held back the share performance. With the share rise on Wednesday, ITT's value is about $11 billion.



What is a Strategy? What is a Strategy? "Strategy is the direction and scope of an organization over the long-term which achieves advantage for the organization through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfill stakeholder expectations". **• Where is the business trying to get to in the long-term (direction)?

• Which markets should a business compete (market scope)?

• How can the business perform better than competition in the market (advantage)?

• What resources are required in order to be able to compete (resources)?

• What external factors affect the businesses' ability to compete? (environment)?

• What are the power broker’s values / expectations (stakeholders / shareholders)?

** Johnson and Scholes (Exploring Corporate Strategy)



Integrated Management FrameworkIntegrated Management Framework

MISSION core

purpose of the enterprise

VALUES timeless guiding principles

VISION word picture of ideal future business model

STRATEGY game plan for success

KEY PERFORMANCE INDICATORS presentation of enterprise key / critical strategic objectives

BALANCED SCORECARD enterprise performance measures, goals / targets, initiatives

CASCADING MEASURES performance measures common to all businesses / functions aligned to enterprise objectives

GOALS DEPLOYMENT link balanced scorecard to business processes such as budgeting, reporting, compensation

99Leadership in BusinessLeadership in Business

Operational Excellence BUSI Operational Excellence BUSI 7220 / 72267220 / 72261010

Statements created by inspiring leaders to clearly and concisely convey the direction of the enterprise include: • A MISSION STATEMENT defines organizational

purpose and primary business objectives. Its prime function is internal communication – to define key measures of success to the leadership team.

Make it as succinct as possible Make it memorable Make it unique to you Make it realistic Make sure it's current

Business Directional Statements Business Directional Statements


Transportation Strategy Transportation Strategy SCMN 4780SCMN 47801111Leadership in Business3Leadership in Business3


COMPANY

PepsiWal-MartWalt Disney

Honda CyclesCoca Cola3M

ReebokNike

Sony

General Electric

MISSION

1. To solve unsolved problems innovatively2. To make people happy3. To experience the joy of advancing and applying

technology to benefit the public 4. Crush, squash and slaughter Yamaha5. Beat Coke6. Bring refreshment, value, joy and fun to our stakeholders,

then we will successfully nurture and protect our brands.

7. Crush Reebok8. Ignite a passion for winning, to do extraordinary and to

capture the customer’s heart and mind 9. Give ordinary folk the chance to buy the same things as

rich people 10. Boundaryless … Speed … Stretch

Mission Statement Match GameMission Statement Match GameMATC

H

592

461

87

3

10



Corporate Culture: What is it?Corporate Culture: What is it?Culture is a system of values, beliefs and attitudes that shape and influence perception and behavior; it is an abstract “mental blueprint” or “mental code” and must be assessed by the actions and customs of the group. It is … • Learned • Shared• Patterned • Mutually constructed • Symbolic • Arbitrary

It is the answer to the question “How do things get done around here?



Corporate CultureCorporate CultureAt General Electric, corporate values are so important to the company that they are inscribed and distributed to all employees, at every level.

The sum is greater than its parts at GE as both business and people diversity is utilized in a most effective way. A massive American enterprise with a diverse group of large businesses, GE is steeped in a corporate culture and it is this fact that makes it unique.

"What sets GE apart is a culture that uses diversity as a limitless source of learning opportunities, a storehouse of ideas whose breadth and richness is unmatched in the world of business. At the heart of this culture is an understanding that an organization's ability to learn, and translate that learning into action rapidly, is the ultimate competitive business advantage.”

Jack Welsh, Retired CEO @ General Electric



Corporate Belief System Corporate Belief System

Corporate beliefs … • are a statement of its values • must meet its organizational and community goals • are a public / visible declaration of its expected outcomes • must be precise and practical • will guide the actions of employees • reflect the knowledge, philosophy and actions of all • are a key component of strategic planning



Created by inspiring leaders to clearly and concisely convey the direction of the enterprise. • A MISSION STATEMENT defines organizational purpose and

primary business objectives. Its prime function is internal communication – to define key measures of success to the leadership team.

• A VISION STATEMENT defines organizational purpose in terms of values (belief system). It gives direction to external shareholders and internal stakeholders as to how they are expected to behave and inspires them to do their best .

Business Directional Statements Business Directional Statements



Management System Management System



Strategic Planning FrameworkStrategic Planning Framework



Importance of Strategic PlanningImportance of Strategic Planning



Strategic Vision ParametersStrategic Vision Parameters



Managerial Competencies Managerial Competencies Senior Management Primarily focused on the strategic, managing change, understanding power, reading cultures Middle ManagementGive up your area of expertise, manage areas that you know little or nothing about, solve problems and make critical decisions First-Line Manager Promoted because of expertise, people are complex and can be difficult to motivate and manage

0% 100%

STRATEGY

TACTICS

Manager Time Allocation

Senior

1st Line

Middle



People (Human Resources) management approaches: • Theory X: Assumes employees dislike / avoid work; managers

must use coercion, threats, control schemes to motivate workers • Theory Y: Assumes employees consider work as natural and

enjoy the satisfaction of esteem and self-actualization needs• Theory Z: Japanese team-based approach to motivate workers;

focus on trust, quality, collective decision making, cultural values

Managing People – MotivationManaging People – Motivation



Successful Managers Successful Managers Qualifications ●Ambitious●Made sacrifices ●Intelligent ●Good track record ●Identified early

Differentiators ●Diversified track record ●Able to maintain composure●Handle problems with poise ●Focus on problem solving ●Able to foster relationships



Ability to Influence People Ability to Influence People The boss has the power and/or influence through ….● Authority: legitimate hierarchical right to issue orders● Penalty: ability to cause discipline● Assignment: ability to influence future assignments● Budget: ability to authorize use of discretionary funds● Promotion: improve a worker's position (grade level) ● Money: increase a worker's pay and benefits● Friendship: facilitate relationships between team members● Work Challenge: assign work that capitalizes on a

employee’s enjoyment of doing a particular task● Expertise: use special knowledge deemed important

Diminishing importance

Increasing importance



Employee CompensationEmployee Compensation● Hourly: paid for hours worked (overtime / holiday rules) ● Individual Incentive (aka piece rate): employees paid

for the number of units they produce during the workday● Exempt vs. Non-Exempt: applies to eligibility to receive

overtime pay ● Salaried: compensated a fixed salary, common form of

payment for management employees ● Commissions: usually applied to sales and salespeople● Profit / Gain Sharing: compensate employees over and

above salary for team-based successes ● Bonus: quarterly, annual, long-term, stock options



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Business / Operating Strategy

Mission & Vision

Corporate

Management System



Sourcing Management



Leadership Model



Integrated Management FrameworkIntegrated Management Framework

MISSION core

purpose of the enterprise

VALUES timeless guiding principles

VISION word picture of ideal future business model

BUSINESS STRATEGY game plan for success

KEY PERFORMANCE INDICATORS presentation of enterprise key / critical strategic objectives

BALANCED SCORECARD enterprise performance measures, goals / targets, initiatives

CASCADING MEASURES performance measures common to all businesses / functions aligned to enterprise objectives

GOALS DEPLOYMENT link balanced scorecard to business processes such as budgeting, reporting, compensation



Plan Element Strategic Tactical

Operational Execution

Business Planning

Time “Bucket”Years

Months Weeks

Days / Hours


Integrated Business Planning ModelIntegrated Business Planning Model

Horizon3 – 5

12 – 15 1 – 13

TBD

Transportation Strategy Transportation Strategy SCMN 4780SCMN 47802929Leadership in BusinessLeadership in Business


Strategy: SWOT Analysis Strategy: SWOT Analysis



The benchmarking process provides … • a company's comparative performance to

that of other companies using both objective and subjective criteria

• the strategic positions of competitors for use as reference points in the formation of decisions and objectives

• A performance assessment for a specific activity relative to the methods of a competitor doing the same thing

• a comparative methodology for lowering costs, reducing defects, increasing quality, and / or improving outcomes linked to operational excellence

BenchmarkingBenchmarking



● Benchmarking provides a competitive analysis and also creates the basis for company change

● Benchmarking commonly takes one of four forms: 1. Generic benchmarking investigates activities that are or can be

used in most businesses 2. Functional benchmarking looks at similar practices and processes

in organizations or companies in other industries 3. Competitive benchmarking compares the organization's processes

to those of direct competitors (peer group) 4. Internal benchmarking compares business processes and / or

practices over time in light of established goals

BenchmarkingBenchmarking


Maturity will be reached when: ●industry best practices are incorporated into all the business processes, thus ensuring superiority

●benchmarking becomes an ongoing, essential and self-initiated facet of the management process

●benchmarking becomes institutionalized and is done at all levels of the organization (not by specialists)

Benchmarking Process Benchmarking Process



• Competitive

• Best Practice

• Best-in-Class

• World-Class

Business ExcellenceBusiness Excellence Performance Descriptors Performance Descriptors



BusinessStrategy

OperatingStrategy

MarketingStrategy

Supply ChainStrategy

Business Strategy

Corporate Vision / Mission / Goals

Strategic Planning Strategic Planning


Transportation Strategy Transportation Strategy SCMN 4780SCMN 47803636Leadership in BusinessLeadership in Business

Key Performance Indicators (KPIs) Key Performance Indicators (KPIs)


Business measurements, agreed to beforehand, that: reflect the objectives / goals of an organization must be key to the enterprise’s success (critical success factor) must be quantifiable (measureable)

Focused on the long-term (strategic) considerations – the what’s and how’s do not change often

Number of KPIs is 3 – 5 at each organizational level (typ) Availability / ease of access to data to produce the KPIs is

critical in designing the system

Key Performance Indicators (KPIs) Key Performance Indicators (KPIs)


Class Exercise – AU College of Business KPIs


Balanced Scorecard Balanced Scorecard A strategic planning and management system used

extensively in business to: align business activities to the vision and strategy improve internal and external communications monitor organization performance against strategic goals

Originated in 1990s by Drs. Robert Kaplan and David Norton as a performance measurement framework

Adds strategic non-financial performance measures to traditional financial metrics to give management a 'balanced' view of organizational performance

Roots of the BSC system were pioneered at GE in 1950’s



Balanced Scorecard Balanced Scorecard Financial Perspective

Strategy for growth, profitability and risk from the shareholder’s perspective

Customer Perspective Strategy for creating value and differentiation from the perspective of the customer

Internal Business Perspective Strategic priorities for various business processes that create customer and shareholder satisfaction

Learning and Growth Perspective Priorities to create a climate that supports organizational change, innovation and growth



Supply Chain DashboardSupply Chain Dashboard



Goals DeploymentGoals Deployment

Goals Deployment 1.) creates alignment and accountability; 2.) stops the leak between strategic plans and action plans; and 3.) ensures that we are realizing the full potential of our strategies.”

Steve Loranger, CEO ITT Corporation

Goals Deployment Process (GDP) includes: • Cascading goals through all levels of an organization • Involving all managers in the goal deployment process • Linking goals with performance management and appraisal systems • Extensive communication of goals throughout the organization



Goals Deployment Process Goals Deployment Process

Identify critical issues and imperatives

Define strategic business goals

Deploy Goals: • Metrics • Targets • Ownership

Create and execute Action Plan to achieve targets

Achieve sustainable results

Performance Dialogue

Repeat Annually



Operating Strategy – WalMartOperating Strategy – WalMart

Provide Value for Our Customer

Low Prices, Everyday

Reduced Cycle Time

Efficient Logistics System

Low Inventory Levels

Integrated Supply Chain

EDI Cross Docking Focused Sites RFID



1. Identify the company’s competitive essence

2. Establish the right structure 3. Out execute (the competition) 4. Balance structure and execution 5. Choose the right journey (strategy)

Hallmarks of Business Excellence Hallmarks of Business Excellence


Documents

Transportation Strategy – SCMN 4780 Leadership in Business