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Value Chain Firm infrastructure Human resource management Support Activities Technology development Margin Procurement Inbound logistics Operations Outbound logistics Marketing & sales Primary Activities Service Strategy What should they do? Operational Managers and Staff Gather and report information Incorporate plans into operations Understand/support the strategy Participate in implementation planning Contribute to development/review “DOING” Chief Executive and Senior Managers “TARGETING” The Board of Directors “POSITIONING” Own, articulate and “sell” strategy Plan and manage implementation Develop and recommend alternatives Maintain, amend, review strategic plans Identify and evaluate new directions Consider, review and authorise Monitor implementation Set vision, values and key policies Assess alternatives and evaluate risk Suggest or initiate new directions Strategy How might they do that? Operational Managers and Staff Routine reporting and analysis Routine operational management Maintain awareness, identify issues Help check relevance and feasibility Develop new ideas and proposals “DOING” Chief Executive and Senior Managers “TARGETING” The Board of Directors “POSITIONING” Apply their skills/experience Link strategy with business plans Analyse environment, set objectives Monitor and respond to progress Generate ideas internally/externally Receive reports, debate, decide Agree on objectives and measures Workshop, test and challenge Apply broader context and experience Seek external views and reviews Strategy Responsible for? Operational Managers and Staff Info accuracy and completeness Achieving controllable goals Aligning activities with strategy Anticipating problems/opportunities Adding value in the agreed ways “DOING” Chief Executive and Senior Managers “TARGETING” The Board of Directors “POSITIONING” Clarity, coherence, relevance Defined goals/accountabilities Translation into effective tactics Tuning and tacking appropriately Leading creativity and innovation Maximising “shareholder value” Strategic success or failure Making accountability effective Taking the wider and longer view Appropriate organisational culture Board Functions Matrix Key Result Areas (KRAs) Strategy and Direction Key Projects & Communication Risk Management & Compliance Key Performance / Predictive Indicator (KPI) Knowledge, Skills & Experience Mix Suggested % of board time dedicated to Key Result Areas 40% 20% 15% 15% 10% Legal • Competition law • Employment law • Health and Safety • Product safety Political • Government stability • Taxation and trading policy • Foreign trade regulations • Social welfare policies regulatory bodies and processes Economic factors • Business cycles • GMP trends • Interest rates • Money supply • Inflation • Unemployment • Disposable income The Organisation Environmental • Environmental protection laws • Waste disposal • Energy consumption • Carbon trading Technological • Government spending on research and development • Government and industry focus on technological effort • New discoveries/developments • Speed of technology transfer • Intellectual property issues Sociocultural factors • Population demographics • Income distribution • Social mobility • Lifestyle changes • Attitudes to work and leisure • Consumerism • Levels of education BCG Product Portfolio Matrix Reallocates Resources High Question Mark Stars Growth Cash Cow Dogs Low Low Type of Business Market Share Description High How Resources Should be Moved Question Mark Has low current performance but high potential Use resource to build into a star Pet Has low current performance and low potential Exit this business Cash Cow Cash cow has high current market share and usually cash flow associated with it but is not likely to grow in the future Use the money generated for stars and question marks Star Has high performance and high potential Keep investing in this Don’t forget strategic alignment The aim of any good strategy is to first set the strategic direction and then ensure that all the other nine dimensions are aligned so that they are pushing in the same direction. If any of the dimensions are not aligned they will become barriers. More concrete, Easier to change More difficult to change, Less concrete Process Structure Technology Structure Organisational Structure Motivation Structure Measurement Systems Management Methods Organisational Culture Political Power Individual Beliefs Strategic Direction Balanced Scorecard • • • • • • Makes strategy operational Focuses organisation on breakthrough performance Integrates corporate programmes Can be broken down into lower levels Links KPIs to strategy Facilitates strategic feedback and learning Balanced Scorecard - BSC Financial Customer Strategy Processes Learning BSC example of common measures Financial Internal Processes • EVA • ROI • Net income • R & D expenditure • Sales from new products • Productivity Learning and Growth Customer • Employee satisfaction • Dollars spent on training • Voluntary turnover • Customer satisfaction survey • Customer loyalty • Customer retention How to construct a balanced scorecard 1. Establish objectives 2. Decide who will be involved in the development process 3. Decide on the organisation unit to which the scorecard will apply 4. Decide on the structure • • • Review existing measures to see if can be turned into KPIs Develop additional KPIs Relate all KPIs back to original objective 5. Finalise the scorecard Three types of performance measures • Key result indicators Tells you what you have done • Performance Indicators Tell you what to do • Key Performance Indicators Tell you what to do to increase performance dramatically FI N A N C I A L L EA R N I N G & GR OWT H C U S T OM ER / M A R K ET I N G I N T ER N A L P R OC ES S ES THIS MTH LAST MTH TARGET 10.0 7.5 5.0 2.5 0.0 FINANCIAL CUSTOMER / MARKETING INTERNAL PROCESSES LEARNING & GROWTH