Transcript Strategic Management Competitiveness and Globalization

Strategic Management
Strategic Planning&
Competitiveness
Strategic Management –
Defined
Art & science of formulating,
implementing, and evaluating,
cross-functional decisions that
enable an organization to achieve
its objectives.
Adapting to Change – Key
Strategic Management
Questions
• What kind of business
should we become?
• Are we in the right fields
• Are there new competitors
• What strategies should we
pursue?
• How are our customers
changing?
Key Terms
Mission Statement –
What is our business?
Vision Statement –
What do we want to become?
Mission Statements: Examples
NASA
To Explore the Universe
and Search for Life
and to Inspire the
Next Generation of
Explorers
Does a good job of expressing the core values
of the organization. Also conveys unique
qualities about the organization.
Walt Disney
To Make People Happy
Too vague and and unclear. Need more
descriptive information about what makes the
organization special.
Vision
• How the organization wants to be perceived in the
future – what success looks like
• An expression of the desired end state
• Challenges everyone to reach for something
significant – inspires a compelling future
• Provides a long-term focus for the entire
organization
Key Terms
Opportunities & Threats (External)
Analysis of Trends:
•
Economic
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Social
Cultural
Demographic/Environmental
Political, Legal, Governmental
•
Technological
•
Competitors
Key Terms
Strengths & Weaknesses (Internal)
Typically located in functional areas of the firm
•
Management
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•
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Marketing
Finance/Accounting
Production/Operations
Research & Development
Computer Information Systems
Key Terms
Strategies
Means by which long-term objectives are
achieved
What is Strategy?
• An integrated and coordinated set of
commitments & actions designed to exploit
core competencies and gains and gain a
competitive advantage.
• A series of goal direceted decisions &
actions
• Strategies is use of engagements for the
object.
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What is Strategy in
different literature?
“A unified, comprehensive, and integrated plan designed to
ensure that the basic objectives of the enterprise are achieved.”
(Glueck, 1980:9)
“The pattern or plan that integrates an organization’s major goals,
policies, and action sequences into a cohesive whole.” (Quinn,
1980)
“A pattern of resource allocation that enables firms to maintain or
improve their performance.
“A good strategy… neutralizes threats and exploits opportunities
while capitalizing on strengths and avoiding or fixing
weaknesses.”
(Barney, 1997:17)
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• All successful strategies are based on
understanding of the organization’s
competitive environment.
• The competitive environment is complex,
and includes anything that can affect the
organization’s position relative to that of its
competitors.
• Competitive enviroment is related with
organizations’ products, services and
organizational resources.
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Why Strategy is important?
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To change on organizations needs
Burning platform
Mission
Vision
Leadership
Strategic management
Political management
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Strategy Formulation
Mission & Vision
External Opportunities & Threats
Internal Strengths & Weaknesses
Long-Term Objectives
Alternative Strategies
Strategy Selection
Assessment Model:
SWOT
Internal Assessment: Organizational assets,
resources, people, culture, systems,
partnerships, suppliers, . . .
External Assessment: Marketplace,
competitor’s, social trends, technology,
regulatory environment, economic cycles .
SWOT
SWOT
Good Points
Possible Pitfalls
• Easy to Understand
• Apply at any
organizational level
• Needs to be Analytical
and Specific
• Be honest about your
weaknesses
Matt H. Evans, [email protected]
Assessment
Strategic Manegement
involves;
• Organization goals
• Goal- oriened action
• Related decision and actions
• Internal strengts
• External oppotunities and threats
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Strategic manegement
Makes;
• Planning
• Organization
• Implementing
• Controlling
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Why is SM important?
• Given everyone a role
• Makes a difference in performance levels
• Provides systematic approach to
uncertainities
• Coordinates & focuses employess
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Basic of Strategic Manegement
There are four aspects are too important;
• Interdisciplinary
• External focus competition
• Internal factors
• Future direction
And make: Situation analysis (analsis current
situation)
Formulation of strategies (decision strategies)
Implementation of Strategies (putting strategies
in action)
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Evaluation of strategies( evaluating & changing)
Comprehensive strategic management
model
External
Audit
Mission
&
Vision
Long-Term
Objectives
Internal
Audit
Generate,
Evaluate,
Select
Strategies
Implement
Strategies:
Mgmt Issues
Implement
Strategies:
Marketing,
Fin/Acct,
R&D, CIS
Measure &
Evaluate
Performance
The Strategic Management Process
The full set of commitments, decisions,
and actions required for a firm to
achieve strategic competitiveness and
earn above-average returns.
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Strategic Management and Strategic
Competitiveness
Knowledge objectives
1.
2.
3.
4.
Define strategic competitiveness, competitive
advantage and above average returns.
Describe the 21st century competitive landscape and
explain how globalization and technological changes
shape it.
Use the industrial organization (I/O) model to explain
how firms can earn above average returns.
Use the resource-based model to explain how firms
can earn above-average returns.
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Strategic Management and Strategic
Competitiveness
Knowledge objectives – continued…
5.
6.
7.
8.
Describe strategic intent and strategic mission and
discuss their value.
Define stakeholders and describe their ability to
influence organizations.
Describe strategists’ work.
Explain the strategic management process.
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Achieving Sustained
Competitive Advantage
1. Adapting to change in external trends,
internal capabilities and resources
2. Effectively formulating, implementing &
evaluating strategies
Strategy Implementation
Annual Objectives
Policies
Employee Motivation
Resource Allocation
Strategy Evaluation
Internal Review
External Review
Performance Metrics
Corrective Actions
Desired Strategic Outcomes
Strategic Competitiveness
Achieved when a firm successfully formulates
and implements a value-creating strategy.
Sustained Competitive Advantage
Occurs when a firm develops a strategy that
competitors are not simultaneously implementing.
Provides benefits which current and potential
competitors are unable to duplicate.
Above-Average Returns
Returns in excess of what an investor expects to
earn from other investments with similar risk.
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Important definitions
Risk
An investor’s uncertainty about the economic
gains or losses resulting from a particular
investment.
Average returns
Returns equal to what an investor expects from
other investments with similar amount of risk.
Strategic management process
The full set of committee's decisions and actions
required for a firm to achieve strategic
competitiveness and earn above average returns.
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Intended, Emergent and Realized Strategies
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Alternative Models of Superior Returns
Industrial
Organization
Model
O
I
ResourceBased
Model
The External Environment
Resources
An Attractive Industry
Capabilities
Strategy Formulation
Competitive Advantage
Assets and Skills
An Attractive Industry
Strategy Implementation
Strategy Implementation
Superior Returns
Superior Returns
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Valuable
Rare
Costly to imitate
Organized to be
exploited
Resources and Capabilities
Four Attributes of Resources and
Capabilities (Competitive Advantage)
Allow the firm to exploit opportunities or
neutralize threats in its external
environment.
Possessed by few, if any, current and
potential competitors.
When other firms cannot obtain them or
must obtain them at a much higher cost.
The firm is organized appropriately to
obtain the full benefits of the resources in
order to realize a competitive advantage.
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Resources and capabilities that
meet these four criteria become a source
of:
Rare
Costly to imitate
Organized to be
exploited
Resources and Capabilities
Valuable
Core Competencies
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Core Competencies are the basis for
a firm’s
Competitive
advantage
Strategic
competitiveness
Core Competencies
Ability to earn
above-average
returns
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CEO’s ranking of business importance
1.
A strong & well thought out strategy
2.
Maximizing customer satisfaction & loyalty
3.
Business leadership, quality products & services
4.
Concern for consistent profits
5.
Strong & consistent profits
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21st Century Values
• Flexibility
• Speed to market
• Innovation
• Integration
• Handling challenges from constantly
changing conditions
• Hypercompetition
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The Global Economy
One in which goods, services, people, skills,
and ideas move freely across geographic
borders
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World competitiveness ratings
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Technology and Technological
Change
• Increasing rate of technological change and
diffusion
Perpetual innovation
• The information age
Personal computers, cellular phones, artificial
intelligence, virtual reality, massive databases,
electronic networks, e-business
• Increasing knowledge intensity
Information, intelligence, expertise, strategic
flexibility.
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Strategic Intent
Internally focused, it is the leveraging of
a firms resources, capabilities, and core
competencies to establish the firms
goals in the competitive environment.
Strategic Mission
Externally focused, it is a statement of a
firms unique purpose and the scope of
it’s operations in product and market
terms.
Together,
strategic intent
and strategic
mission yield the
insights required
to formulate and
implement
strategies.
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Stakeholders
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Organizational strategists
Top level managers, executives, top
management team, or general managers
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Organizational culture
A complex set of ideologies, symbols and
core values that influence how the firm
conducts it’s business.
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If we want to talk about
Strategic Management and
strategic plan:
We can say;
In essence, the strategic plan is a
company’s game plan and strategic
manegement is related with these
game plan .
Copyright 2007 Prentice Hall
Ch 1 -45
Figure 1
The Four Elements of Strategic Management
Strategy
Content
CONTEXT
46
(c)
Macmillan
Figure 2 - The Strategy Formulation Process
Strategic
Intent
Strategic
Assessment
47
Strategic
Choice
(c)
Macmillan
Figure 3 - The Strategy Implementation Process
Programme
& Project
Management
Change
Leadership
Culture Change
Structure Change
Transformed
Enterprise
Process Change
48
(c)
Macmillan
Figure 4 - Our complete model
Strategy
Content
CONTEXT
49
(c)
Macmillan
Predicting Outcomes
of Strategic Decisions
1.
2.
3.
4.
Define the profit pool’s boundaries.
Estimate the pool’s overall size.
Estimate the size of the value chain.
Reconcile the calculations.
The strategic management process calls
for disciplined approaches to the
development of competitive advantage.
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Strategic Management
achieves a firm’s success
through integration ––
Management
Marketing
Finance/Accounting
Production/Operations
Research & Development
MIS
Copyright 2007 Prentice Hall
Ch 1 -51
Thanks…
22.02.2011
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