Organisational Strategic Framework

& Road Map

Dr. Elijah EzenduFIMC, FCCM, FIIAN, FBDI, FAAFM, FSSM, MIMIS, MIAP, MITD, ACIArb, ACIPM,

PhD, DocM, MBA, CWM, CBDA, CMA, MPM, PME, CSOL, CCIP, CMC, CMgr

Learning Objectives

At the end of this course, participants should be able to do the following:

Craft appropriate vision and mission statements, as well as shared values and motto

Establish clearly structured objectives Identify the right tools for conducting environmental

scanning Identify suitable strategies for repositioning a firmEstablish a feasible strategic road map for a firm

“If we could first know where we are, then wither we are tending, we could then decide what to do and how to do it.”

- Abraham Lincoln

“Strategic planning is the process that comprises the procedures of defining objectives and creating strategies to attain those objectives.”

- Qadar Baloch & Maria Inam, Strategic Thinking: Catalyst to Competitive Advantage

“The strategic planning process helps an organisation clarify, consolidate or establish its strategic framework. Embedded in the strategic framework are the values and vision of the organisation.”

- Janet Shapiro, Strategic Planning Toolkit

Strategic Plan is the outcome of Strategic Planning Process and serves as

Organisational Road Map for leading a firm from current to desired future state.

Strategic Plan

A strategic plan maps out the short and long range performance targets and necessary action points of management for achievement of outcomes.

It consists of a vision, mission strategic and financial objectives, in addition to comprehensive strategy for accomplishing the objectives.

The Strategic Planning Process

Develop Vision, Mission, Shared Values, Motto,

Goals and Objectives

Strategy Implementation Crafting Strategy Environmental

Scanning Evaluation and

Control

Developing Vision and Mission

Think strategically about the organisation’s future in 5 to 10 years.

Build a sense of purposeResolve the firm’s identityAscertain who we are, what we do, and where

we are going to.

“Vision is the art of seeing things invisible.” - Jonathan Swift

Vision

This is the greatest aspiration of a firm, which shows what it intends to be.

It stands for a view of supposed or assumed destiny that signifies a Big Hairy Audacious Goal.

Mission

It describes a firm in terms of its business, showing the purpose of its existence, and serves as a means of inspiration to the top management and other employees.

Vision Statement Versus Mission Statement

Vision towers as instrument of guidance for a firm over long period, while mission may change after periodic attainment. Therefore, mission statements are timely hurdles that need to be attained in order to advance towards the timeless target expressed by the vision.

Example of Vision/ Mission (Sony)

Vision: Become the company most known for changing the worldwide poor quality image of Japanese products.

Mission: To experience the joy of advancing and

applying technology for the benefit of the public.

Example of Vision/ Mission (Volvo Car Corporation)

Vision: To be the world’s most desired and successful premium car brand.

Mission: We create the safest most exciting car experience for modern families.

Example of Vision/ Mission(Pfizer)

Vision: At Pfizer, we're inspired by a single goal: your health. That's why we're dedicated to developing new, safe medicines to prevent and treat the world's most serious diseases. And why we are making them available to the people who need them most. We believe that from progress comes hope and the promise of a healthier world.

Mission: We will become the world's most valued company to patients, customers, colleagues, investors, business partners, and the communities where we work and live.

Example of Vision/ Mission(Avon Products)

Vision: To be the company that best understands and satisfies the product, service and self-fulfillment needs of women - globally.

Mission: We will build a unique portfolio of Beauty and related brands, striving to surpass our competitors in quality, innovation and value, and elevating our image to become the Beauty company most women turn to worldwide.

Benefits of Communicating Vision/Mission

Inspire, challenge and motivate workforceArouse strong sense of organisational

purpose, and induce employee buy-inFosters unity of purpose in the firmInfluences adherence to pragmatic

organisational culture

Shared Values

These are acceptations of a firm and its people pertaining to the right way to act in relation to people, situations and other things.

They represent acceptable behaviour in an organisation, and determine standard organisational culture, business philosophy and leadership principles therein.

They provide driving force for evolution of corporate character and serve as compass for code of ethics.

Shared Values in Practice

Shared values should be linked to vision and mission, thereby providing enabling platform for accomplishment.

Shared values of a firm should be accepted, imbibed and practiced so as not to become a dead-print.

Albeit, the shared values of Enron were respect, integrity, communication and excellence, it sank due to disregard and malpractice by top management.

Example of Shared Values(Molson Coors Brewing Company)

1. Integrity and Respect2. Quality3. Excelling4. Creativity5. Passion

Example of Shared Values(Fuji Xerox)

1. Customer Satisfaction2. Environmental Consciousness3. High Ethical Standards4. Scientific Thinking5. Professionalism6. Team Spirit7. Cultural Diversity8. Trust and Consideration9. Joy and Fulfillment10. Adventurous/ Pioneer Spirit

Motto

This is also known as a Slogan.

It should be a brief and impressive phrase or sentence which is used for projecting a firm’s identity and indicating its character.

This aids effective branding, customer experience management, differentiation of character and evolution of shared values.

Example of Motto(Boeing)

Forever New Frontiers

Example of Motto(Google)

Google is the closest thing the web has to an ultimate answer machine

Example of Motto(Nike)

Just do it

Example of Motto(Sun Microsystems)

We put the dot in dot-com

Goal

This is a preferred achievement, on which efforts should be focused.

Objectives

These are desired results which must be achieved within a specific period.

They must be S.M.A.R.T.

Criteria For Setting Objectives

• Objectives should further the purpose and strategic aims of the organisation.• They should also conform to the organization's values and policies.• Objectives should be realistic in the circumstances.• Their achievement (or otherwise) should also be measurable (in terms of

time, quantity, quality, cost or a relevant ratio).• Objectives should preferably be set by agreement, so that those responsible

for carrying them out have some ‘ownership’ of them.• Objectives should set clear and challenging targets for individuals.• Objectives should be open to adaptation in the light of changing

circumstances, especially where these are unforeseen.• Groups of objectives set for individuals, or groups, should not be in conflict

with each other, but should serve a common purpose and direction.

Source: G.A. Cole, Strategic Management

Setting Objectives

The rationale for setting objectives:• Convert goals/ mission to performance targets• Establish yardsticks to track performance• Establish stretched targets• Enable the firm to be resourceful, purposeful

and focused• Avoid internal confusion• Keep away from complacency and vagueness

Clearly Structured Objective

A clearly structured objective highlights critical success factors for its achievement, key performance indicators, and target.

CSF ObjectiveKPI Target+ + =

“Critical Success Factors are the limited number of areas in satisfactory results will ensure successful competitive performance for the individual, department or organisation. Critical Success Factors are the few key areas where things must go right for the business to flourish and for the manager’s goals to be attained.”

- Christine Bullen & Jack Rockart, A Primer on Critical Success Factors

Critical Success Factors are few key features that must be adequately obtained in order for objectives to be achieved.

Sources of Critical Success Factors for a Manager

• Industry• Strategy• Environmental Factors• Pressing Situation • Manager’s Job Position

CSF and KPI Process

• Determine vision of a firm.• Set-up the firm’s goals and objectives.• Identify key factors (CSF) that influence each

objective.• Establish a measure (KPI) for each CSF.• Determine target for each CSF.

Process of Identifying and Monitoring Critical Success Factors

How to Identify Industry Related Critical Success Factors

• Use industry analysis to determine critical success factors of the industry in which a firm operates.

• Evaluate the CSF and rate them in terms of degree of influence to the firm.

• Identify the 3 topmost CSF.

Deriving Objective, Target, KPI, and Critical Success Factors from A Goal

Goal Increase in customer loyalty

Critical Success Factors1. Increase innovative response to customer needs2. Positioning to fulfill customer needs3. Keeping product cost at a low level4. Increasing value deliverables to customer5. Boosting effective customer service and response to feedback6. Increase brand image and awareness7. Increase magnitude and impact of promotion

Key Performance Indicator for “Increase innovative response to customer needs” Rate of product enhancement for catching up with changing customer needs

Target100% integration of identified key-features requirements of customers within a period of 6 months

First ObjectiveIncrease innovative response to customer needs by ensuring rate of product enhancement catches up with

customer needs through 100% integration of identified key-features requirements of customers within a period of 6 months.

Group Task

Evaluate the other critical success factors and identify Key Performance Indicators, Targets and ensuing Objective.

Performance Indicator

It’s a tool enabling the effectiveness of an operation or organisation to be measured, and allows an achieved result to be gauged or evaluated in relation to a set of objectives.

Source: OECD

Properties of Performance Indicators

i. Relevant to the purpose, policy and practiceii. Clearly definediii. Reliableiv. Worth measuringv. Measurablevi. Galvanize actionvii. Reflect results of actionviii. Precisely defined as possibleix. Readily available within a reasonable time frame

Advantages of Performance Indicators

i. Means of measuring organizational progress toward set objectives.

ii. Give room for benchmarking and comparing various units, sections, departments and subsidiaries.

Disadvantages of Performance Indicators

i. Act as bad measures if not well defined

ii. Some vital indicators cant be easily measured

iii. Issuance of complexity due to number of indicators

Criteria for Selecting KPI

i. Strong linkage to objectives

ii. They should be connected to areas of the business that can be controlled

iii. They should be quantifiable

Types of KPI

1. Directional Indicators2. Quantitative Indicators3. Actionable Indicators4. Practical Indicators

Developing Targets based on KPI

A Key Performance Indicator should drive managerial effort towards a mark of achievement, which is a target in accordance with set objective.

KPI…….Reduce waste Target……50% by end of March

Two Types of Objectives

Financial Objectives: These are outcomes that relate to improving a firm’s financial performance.

Strategic Objectives: These are outcomes that will result in greater competitiveness and stronger long-term market position

Examples of Elementary Financial and Strategic Objectives

Financial Objectives1. Increase earnings growth from 5% to 10% per year.2. Increase return on equity from 8% to 15% per year.3. Increase return on asset from 4% to 11% per year.

Strategic Objectives1. Increase firm’s market share from 13% to 25%.2. Overtake rivals on quality or customer service effectiveness.3. Achieve lower overall costs than rivals.4. Become leader in introduction of new products.5. Achieve technological superiority.

Examples of Combined Objectives

Quaker Oats CompanyTo achieve return on equity at 20% or above, “real

earnings growth averaging 5% or better over time, be a leading marketer of strong consumer brands, and improve the profitability of low-return businesses or divest them.

Apple ComputerTo offer the best possible personal computing

technology, and to put that technology in the hands of as many people as possible.

Environmental Scanning

Environmental Scanning consist of the following:• Internal analysis of the firm• Analysis of the task environment (industry and

sector)• External Analysis (STEEPLED)

Using Root Cause Analysis For Identification of Causalities

DecliningSales

Marketing Production

Human Resource Materials Management

Dull Product Image

Deficiency in Promotion

Reduced Quality

Inappropriate Planning

High Staff Turnover

Lack of Vital Expertise

Poor Inventory

Using SWOT Analysis

Environmental Scan

Internal Analysis External Analysis

Strengths Weaknesses Opportunities Threats

Conducting SWOT Analysis

• Indicate objectives of analysis• Identify all the strengths and weaknesses of the firm

(weighing resources and competencies) in line with stated objectives.

• Identify all the opportunities and threats pertaining to stated objectives.

• Examine the interplay of strengths and weaknesses versus opportunities and threats (SO, WO, ST & WT).

• Identify action points for achievement of stated objectives.• Assess & Align

Problems of SWOT Analysis

• The structure stresses occurrence of all opportunities and threats must be external, meanwhile in reality some are within a firm.

• Contradictory inputs give rise to error

• It’s too mechanistic

Porter’s Five Forces This tool was developed by Michael Porter for

analysing a firm’s industry structure in strategic processes.

Wherefore, it provides room for ascertainment of market attractiveness by assessing total effect of the five forces on a firm’s ability to make profit while relating with its customers.

PotentialEntrants

Substitutes

Suppliers BuyersCompetitiveRivalry

Using Porter’s Five Forces for Industry Mapping

Threat of Entrants

Threat of Substitutes

BargainingPower

BargainingPower

Source: Michael Porter, Competitive Strategy

Applying The Five Forces

Bargaining Powerof Buyers

Threat of Entrants

Bargaining Powerof Suppliers

Threat of Substitutes

Extent of Competitive Rivalry

Force Factors for Consideration•Concentration of Customers•Level of Fixed Cost in Industry•Size of Customers•Switching Cost•Ease of Substituting Product

•Availability of Substitutes•Switching Cost•Ease of Forward Integration•Network among Suppliers

•Dearth of key resources•Economies of Scale•Customer Loyalty•Initial Investment Level

•Intellectual Property•Control of Channels•Legislation•Switching Cost

•Quantity of Goods Purchased•Importance of Product to Buyers

•Level of Customer Relationship•Customer Loyalty•Switching Cost•Price to Performance Ratio

•Exit Barriers•Level of Differentiation•Growth Rate of Market•identicalness of Strategy

Problems of Porter’s Five Forces

• It can’t be easily used for very complex industries with diverse and hidden networks.

• It can’t cope with the cuff of dynamic markets.• It can’t fit into a highly regulated industry

STEEPLED Analysis

• Social Factors• Technological Factors• Economic Factors• Ecological Factors• Political Factors• Legal Factors• Ethical Factors• Demographic Factors

Steepled Analysis is used for identifying attributes of keystone variables that make up an organization's external environment, in terms of current and future operations.

In application of STEEPLED Analysis, the implication of each factor would be ascertained, then rating system deployed to mark impact on the firm.

Impact by type and impact over time would be determined.

Crafting Strategy

This focuses on the following:1. Achieving desired strategic and financial objectives.2. Out-compete rivals and obtain competitive

advantage.3. Respond to changing industry and competitive

conditions.4. Defend against threats to firm’s well-being.5. Grow the business.

“If you don’t have a competitive advantage, don’t compete.”

- Jack Welch

Three Levels of Strategy

1. Corporate Level Strategy2. Business Unit Level Strategy3. Functional/Operational Level Strategy

Corporate Level Strategy

This comprises overall strategy elements for the firm. Resolving issues pertaining to mix of businesses and means for coordination and integration of individual unit strategies.

It’s concerned with the following:Managing Activities and Business Interrelationships.Corporate Responsibilities.Management Practices.Competitive Contact.

Business Unit Level Strategy

This involves translation of the corporate level strategy into suitable strategies for individual business divisions or portfolios, required to develop and sustain competitive advantage for products or services of the firm.

This is concerned with the following: Influencing the layout of competition by means of action such

as vertical integration. Positioning the firm’s business against competitors. Modifying actions to cope with changes in demand, supply,

regulations and technology. Developing useful partnerships with customers and other

business units.

Functional/ Operational Level Strategy

This involves development of strategies for functional catchments such as business development, production, finance, human resource and materials management.

This is concerned with implementation of the strategic plans established at corporate and business unit levels.

Developing Strategic Options

A strategy portfolio consists of strategic options which enable a firm to take advantage of distinctive leveraging points in order to ensure appropriate alignment to objectives while reacting to competitors or exploring opportunities.

Examples of leveraging points are as follows:

Talent Alliances Financial Linkage Intellectual Property Organizational Culture Processes

Channels Cost Efficiency Technology Economies of Scale Assets Innovation

Classes of StrategyAttack Strategy Defense Strategy

1. Guerilla Attack2. Bypass3. Flanking Attack4. Frontal Attack5. Undifferentiated Circle6. Differentiated Circle

1. Signaling Defense2. Creating Entry Barriers3. Global Service4. Pre-emptive Strike5. Blocking Entry6. Counter-Attack7. Holding the Ground8. Withdrawal

Adapted from Jorge Vasconcellos, Strategy Moves

“Never follow the crowd” -Bernard Baruch

Growth Strategies

Concentration• Vertical Integration• Horizontal Integration

Diversification• Related (Concentric) Diversification• Unrelated (Conglomerate) Diversification

Organic and Inorganic Growth

Organic GrowthThis occurs when the growth strategy is

executed internally.

Inorganic GrowthThis occurs when a firm opts to implement

growth strategy externally through merger, acquisition or alliance.

Motivations for Global Strategies

GLOBAL STRATEGIES

Access Strategic Markets

Access National Incentives

Cross- Subsidize

Create Global Associations

Obtain Scale Economies

Access Low-Cost Labour/Materials

Dodge Trade Barriers

Source: David Aaker, Developing Business Strategies

Situation

Audit

Data

Base

Strengths

Weaknesses

Opportunities

Threats

Mission

Goals

Cash Flow

Product Line

Competition

Facilitiesetc

Suggest Strategies TestedAgainst

Source: George Steiner and John Miner

Using SWOT Analysis to Suggest and Test Strategies

Mintzberg & Quinn Model for Strategy ImplementationMintzberg & Quinn Model for Strategy Implementation

Strategic Choice(The Strategy)

Organizational Structure

(Framework)

Managerial Authority& Power

(Leadership)

Financial & PhysicalResources

( Resources)

Organizational & Individual Values

( Culture)

Personnel Skills &Development( Resources)

Strategy Implementation

Cole’s Model for Strategy Implementation

Evaluating PerformanceBalanced Scorecard or Performance Prism can be

used for evaluating performance.

At the corporate level, the following measures are useful for ascertaining performance.

i. Return on equityii. Return on salesiii.Return on assetiv.Return on capital employedv. Compound asset growthvi.Average market to book value

Case Study

Crevice & Annuity is a manufacturing firm operating in the food & Beverages subsector. The turbulence which forced some operators in the same subsector into moribundity became its reason to opt for a new CEO, who would provide appropriate leadership for organisational excellence and overhaul the status quo. As the new CEO, you are required to establish a strategic road map for the firm to escape from that quandary.

Dr Elijah Ezendu is Award-Winning Business Expert & Certified Management Consultant with expertise in HR, OD, Competitive Intelligence, Strategy, Restructuring, Business Development, Sales & Marketing, Interim Management, CSR, Leadership, Project & Programme Management, Cost Management, Outsourcing, Franchising, Intellectual Capital, eBusiness, Social Media, Software Architecture, Cloud Computing, eLearning & International Business. He holds proprietary rights of various systems. He is currently CEO, Rubiini (UAE) and Hon. President, Worldwide Independent Inventors Association. He functioned as Chair, International Board of GCC Business Council (UAE); Senior Partner, Shevach Consulting, Nigeria; Chairman (Certification & Training), Lead Assessor & Council Member, Institute of Management Consultants, Nigeria; Lead Resource, Centre for Competitive Intelligence Development; Lead Consultant, JK Michaels; Technical Director, Gestalt; Chief Operating Officer, Rohan Group; Director, Fortuna, Gambia; Director, The Greens; Director of Programmes & Council Member, Institute of Business Development, Nigeria; Member of TDD Committee, International Association of Software Architects, USA; Member of Strategic Planning and Implementation Committee, Chartered Institute of Personnel Management of Nigeria; Adjunct Faculty, Regent Business School, South Africa; Adjunct Faculty, Ladoke Akintola University of Technology, Nigeria; Editor-in-Chief, Cost Management Journal; Council Member, Institute of Internal Auditors of Nigeria. He holds Doctoral Degree in Management, Master of Business Administration and Fellowship of Several Professional Institutes in North America, UK & Nigeria. He is an author & widely featured speaker in workshops, conferences & retreats. He was involved in developing Specialist Master’s Degree Course Content for Ladoke Akintola University of Technology (Nig) and Jones International University (USA). He also works as Adjunct & Visiting Professor of Universities and holds Interim Management Assignments on Boards of Companies.

Thank You