The Process of Strategic Management: How Firms Create And Maintain Competitive Advantages

1. The Process of Strategic Management:How Firms Create And MaintainCompetitive Advantages Learning Objectives: Understand the definition, key processes, attributes and generic model of strategic management Understand the concept of coherence in strategic direction Gain awareness of the importance and limits of corporate social responsibility

2. Definitions of Strategic Management …consists of the analysis, decisions and actions an organization undertakes to create and sustain competitive advantage… Dess, Lumpkin & Taylor …should develop and exploit valuable, rare and costly-to-imitate resources, leading to sustained competitive advantage and above normal performance… Barney …a unified , comprehensive and integrated plan designed to ensure that the basic objectives of the enterprise are achieved… Glueck

3. Key Attributes Of Strategic Management What characteristics define a quality strategic management process? • Guides the organization toward goals and objectives • Recognizes the demands of multiple stakeholders • Incorporates both short-term and long-term perspectives • Recognizes trade-offs between effectiveness and efficiency

4. General Model of Strategic Management Vision Strategy Formulation Mission SWOT Analysis(company profile)(Ind. / Env. Analysis) Objectives Strategies Strategy Implementation Tactics

5. General Model of Strategic Management • Vision statement – fundamental statement of an organization’s values, aspirations, goals • Mission statement – describes the purpose of the organization, basis of competition, competitive advantage • Objectives - Measurable performance targets, financial and/or strategic • Strategies – means, plans or commitments to achieve a firm’s mission and objectives • Tactics - Actions or policies to implement strategy

6. Vision & Mission Statements Benefits of having vision and mission statements • unanimity of purpose • employee motivation • culture / focal identity • allocating resources Improved performance? Are there disadvantages of vision and mission statements? Why don’t all companies have vision and mission statements? Do you know your company’s vision/mission statement?

7. The Vision Statement “…inspiring, overarching and long-term view of the organization’s primary directive…” • Typical components: • organization’s values, aspirations, goals • Slogan or “mental picture” that grabs one’s attention • Examples: “…restoring patients to full life…” (Medtronic) “…the worlds best quick service restaurant (McDonald’s)

8. The Mission Statement “…more specific and focused statement on how the firm plans to operate and compete…” • Typical components: • Primary market or technology • Goals: growth, profitability, survival • Basic beliefs, company philosophy • Public image, self-concept • Customers • Quality • Examples:

9. Geisinger’s Mission Statement “Enhancing quality of life through an integrated health service organization based on a balanced program of patient care, education, research and community service.”

10. Nike’s Mission Statement “To bring inspiration and innovation to every athlete in the world.”

11. Southwest Airline’s Mission Statement “The mission of Southwest Airlines is dedication to the highest quality of customer service delivered with a sense of warmth, friendliness, individual pride, and company spirit”.

12. Dell’s Mission Statement Dell's mission is to be the most successful computer company in the world at delivering the best customer experience in markets we serve. In doing so, Dell will meet customer expectations of: • Highest quality • Leading technology • Competitive pricing • Individual and company accountability • Best-in-class service and support • Flexible customization capability • Superior corporate citizenship • Financial stability

13. UNLV’s Mission Statement The University of Nevada, Las Vegas, located in the vibrant and dynamic city of Las Vegas and surrounded by the Mojave Desert, is emerging as a premier urban university. UNLV’s development embraces the traditional values of higher education adapted for the global community of the 21st century. The university increasingly will concentrate its resources on programs that are student centered, demonstrably excellent, and responsive to the needs of the local and regional community. UNLV promotes an environment that encourages the full personal and professional development of those it serves and of those who serve the university. UNLV assists students in meeting the intellectual and ethical challenges of responsible citizenship and a full and productive life through opportunities to acquire the knowledge and common experiences that enhance critical thinking, leadership skills, aesthetic sensitivity, and social integrity. The university provides traditional and professional academic programs for a diverse student body and encourages innovative and interdisciplinary approaches to teaching, learning, and scholarship. Recognizing the individuality of each student, UNLV simultaneously engenders collegial relationships and a sense of community among its members. UNLV embraces the interdependence of quality instruction, scholarly pursuits, and substantive involvements in campus and community life. The university offers artistic, cultural, and technical resources and opportunities to the broadest possible community. It promotes research programs and creative activities by students and faculty that respond to the needs of an urban community in a desert environment. UNLV is committed to developing a synergy between professional and liberal studies, between undergraduate education and graduate programs, and between superior teaching and meaningful research. UNLV increasingly is a dynamic resource for, and partner with, the community that it serves.

14. Setting Objectives • Purpose of setting Objectives is to: • convert mission into performance targets • create yardsticks to track performance • establish goals that require stretch • push firm to be inventive, focused • Criteria for strategic objectives: • Measurable • Specific • Appropriate • Realistic • Timely • Financial and strategic objectives

15. Financial Objectives “…objectives that relate to improving firm’s financial performance…” • Examples • increase ROI from 15% to 20% • maintain AA bond rating • increase earnings growth from 10% to 15% • Other examples?

16. Strategic Objectives “…objectives that consider improvement in competitiveness or market position…” • Examples • Increase market share from 15% to 18% • Surpass rivals on customer service • Achieve lower cost than competitors • Achieve technological superiority • Other examples?

17. Types of Strategies • Business strategies (competitive) • Corporate strategies (alliances, M & A) • Porter’s generic strategies – “ …the general strategic orientation of the firm.” • Cost leadership • Differentiation • Focus or niche • Emergent strategies

18. Tactics • Actions to implement strategy • Policies and procedures to get line employees to follow the firm’s strategy • “Messy” issues of strategy implementation, not formulation

19. Ensuring Strategic Coherence “…employees and managers throughout the organization striving for common goals and objectives…” “…a hierarchy of goals and objectives…” Vision Mission Objectives

20. Strategic Management and Social Responsibility “…corporate social responsibility is the expectation that firms will proactively attempt to improve the overall welfare of society…” Is this a reasonable expectation? How can we best hold businesses accountable? Have we (US firms) gotten better or worse?