Strategic Management Process

1. Strategic Management Process Conducted by S.K. Lal Ranjith

2. What does this story mean to you?

3. Every morning in Asia, A deer wakes up. It knows it must out run The fastest tiger, Or it will be killed. Every morning in Asia, a deer wakes up. It knows it must out run the fastest tiger, or it will be killed.

4. Every morning in Asia, a tiger wakes up. It knows it must run faster than the slowest deer, or it will starve.

5. It doesn’t matter whether you’re a tiger or a deer- When the sun comes up, you’d better be running.

6. “ Strategic Management is not a box of tricks or a bundle of techniques. It is analytical thinking and commitment of resources to action” - Peter Drucker-

7. The Five Tasks of Strategic Management Process • 1. Forming a strategic vision of where the organization is headed – so as to provide long-term direction, delineate what kind of enterprise the company is trying to become, and infuse the organization with a sense of purposeful action. • 2. Setting objectives – converting the strategic vision into specific performance outcomes for the company to achieve. • Crafting a strategy to achieve the desired outcomes. • Implementing and executing the chosen strategy efficiently and effectively. • 5. Evaluating performance and initiating corrective adjustments in vision, long-term direction, objectives, strategy, or execution in light of actual experience, changing conditions, new ideas, and new opportunities.

8. Strategic Management The theme Strategic Management refers to the managerial process of forming a strategic vision, setting objectives, crafting a strategy, implementing and executing the strategy, and then over time initiating whatever corrective adjustments in the vision, objectives, strategy, and execution deemed appropriate.

9. The Five Tasks of Strategic Management Task 2 Task 3 Task 4 Task 1 Task 5 Developing a Strategic Vision and a Business Mission Setting Objectives Crafting a Strategy to Achieve the Objectives Implementing and Executing the Strategy Evaluating Performance, Monitoring New Developments, and Initiating Corrective Adjustments Revise as Needed Revise as Needed Improve/Change as Needed Improve/Change as Needed Recycle to Tasks1,2,3 or 4 as Needed

10. Task – 1 Strategic Vision • What is the organization’s long term direction • Technology – product – customer focus it intends to pursue • Future business scope • “Where we are going ? ”

11. Mission Statement • Present business scope • Stress company’s product & services are • What type of customers it serves • What technological business capabilities it has • “ Who we are and what we do ? ”

12. Strategic Vision Definition A strategic vision is a roadmap of a company’s future-providing specifics about technology and customer focus, the geographic and product markets to be pursued, the capabilities it plans to develop, and the kind of company that management is trying to create.

13. Mission Statement Definition A company’s mission statement is typically focused on its present business scope-”who we are and what we do”; mission statements broadly describe an organization’s present capabilities, customer focus, activities, and business makeup.

14. The Difference between Strategic Vision & Mission Statement A strategic vision portrays a company’s future business scope (where we are going) where as company mission statement describe it’s present business scope (who we are, what we do)

15. Examples of Strategic Vision and Company Mission Statement Microsoft Corporation For years, one vision drove what Microsoft did: “A computer on every desk and in every home using great software as an empowering tool.” But the emergence of the Internet and non-PC devices like handheld computers and TV-set-top boxes as increasingly integral parts of everyday life prompted Microsoft in 1999 to broaden its vision to “Empower people through great software anytime, anyplace, and on any device. “Bill Gates observed: “We see a world where people can use any computing device to do whatever they want to do anytime, anywhere. The PC will continue to have a central role… but it will be joined by an incredibly rich variety of digital devices accessing the power of the Internet.”

16. Examples of Strategic Vision and Company Mission Statement Intel “Our vision: Getting to a billion connected computers worldwide, millions of servers, and trillions of dollars of e-commerce. Intel’s core mission is being the building-block supplier to the Internet economy and spurring efforts to make the Internet more useful. Being connected is now at the center of people’s computing experience. We are helping to expand the capabilities of the PC platform and the Internet.”

17. Examples of Strategic Vision and Company Mission Statement 3Com “3Com’s mission is to connect more people and organizations to information in more innovative, simple, and reliable ways than any other networking company in the world. Our vision of pervasive networking is of a world where connections are simpler, more powerful, more affordable, more global, and more available to all.”

18. SLT Vision & Mission Vision To lead Sri Lanka to become the hub of telecommunications in South Asia Mission “To anticipate and fulfill the communications requirements of all sectors of the nation, in a service oriented work ethic which will provide total customer satisfaction through the most modern telecommunication facilities”

19. Direction Vision & Mission

20. Task – 2 Setting Objectives • Convert management statement of strategic Vision and Business Mission into specific performance target • Results and outs comes the organization wants to achieve • It help managers to track an organizations progress

21. Objectives should be SMART S – Specific M– Measurable A – Attainable R – Realistic T – Time

22. Objective stetting is required of all managers. Every unit in company needs concrete, measurable performance target that contribute meaningfully toward achieving company objectives

23. Two Types of Performance Yard Stick • Financial Performance  Financial Objectives • Strategic Performance  Strategic Objectives

24. Strategic & Financial Objectives Strategic objectives relate to outcomes that strengthen an organization’s overall business position and competitive vitality; Financial Objectives relate to the financial performance targets management has established for the organization to achieve

25. Examples of Strategic & Financial Objectives Domino’s Pizza (Strategic objectives) “To safely deliver a hot, quality pizza in 30 minutes or less at a fair price and a reasonable profit”

26. Examples of Strategic & Financial Objectives Ford Motor Company (Strategic objectives) “To satisfy our customers by providing quality cars and trucks, developing new products, reducing the time it takes to bring new vehicles to market, improving the efficiency of all our plants and processes, and building on our teamwork with employees, unions, dealers, and suppliers.”

27. Examples of Strategic & Financial Objectives 3M Corporation (Financial and Strategic objectives) “To achieve annual growth in earnings per share of 10 percent or better, on average; a return on stockholders’ equity of 20-25 percent; a return on capital employed of 27 percent or better; and have at least 30 percent of sales come from products introduced in the past four years”

28. Task – 3 Crafting Strategy A company’s Strategy consists of the competitive efforts and business approaches that managers employ to please customers, compete successfully, and achieve organizational objectives.

29. Crafting Strategy • How to achieve the targetedresults in light of the organization’s situation and prospects • Objectives are the “ends” and strategy is the “means” of achieving them

30. Basic Concept A company’s strategy consists of the competitive efforts and business approaches that managers employ to please customers, compete successfully, and achieve organizational objectives

31. Company Strategy Consists of • How to grow the business ? • How to satisfy customers ? • How to out compete rivals ? • How to respond to changing market conditions ? • How to manage each functional piece of the business and develop needed organizational capabilities ? • How to achieve strategic & financial benefits ?

32. Strategy-Making Pyramid Strategic direction (Stability,Growth Retrenchment) Corporate Strategy Emphasizes Improvement Of the competitive position Business Strategies Develop Competence To provide Competitive advantage Functional Strategies (R&D, manufacturing marketing, finance, human resources, etc.) Achieve Operational efficiency Operational Strategies (regions and districts, plants, departments within functional areas)

33. Understanding a Company’s Strategy Moves to react and respond to changing external circumstances Planned actions and initiatives to out compete rivals Actions to diversify the company’s revenue base and enter altogether new industries or businesses Actions to alter geographic coverage The pattern of actions and business approaches that define a company’s strategy Actions to strengthen the company’s resource base and competitive capabilities Actions to merge with or acquire a rival company to strengthen the company’s business position Actions and approaches that define how the company manages R & D, production, sales and marketing, finance, and other key functions Actions to capitalize on new opportunities or to defend against threats to the company’s well-being Actions to form strategic alliances and collaborative partnerships

34. A Strategy Example – Mc Donald’s - Growth Strategy * Penetrate the market not currently serviced by adding 1,750 restaurants annually (an average of one every five hours), some company-owned and some franchised, with about 90 percent outside the United states. Establish a leading market position in foreign countries ahead of competitors * Promote more frequent customer visits via the addition of attractive menu items, low-price specials, Extra Value Meals and children’s play areas * Explore opportunities to exploit the company’s global supplier infrastructure and its core competencies in multiunit management, site location and unit construction and product marketing

35. A Strategy Example – Mc Donald’s • Franchising Strategy • Store Location and Construction Strategy • Product Line Strategy

36. Task – 4 Implementing & Executing the Strategy Concerns the managerial exercise of putting a freshly chosen strategy into place. Strategy execution deals with the managerial exercise of supervising the ongoing pursuit of strategy, making it work, improving the competence with which it is executed, and showing measurable progress in achieving the targeted results.

37. Managing the Strategy Execution Process • primarily a hands-on, close-to-the-scene administrative task that includes the following principal aspects: • Building an organization capable of carrying out the strategy successfully • Allocating company resources so that organizational units changed with performing strategy-critical activities and implementing new strategic initiatives have sufficient people and funds to do their work successfully Cont….

38. Cont…. • Establishing strategy-supportive policies and operating procedures • Putting a freshly chosen strategy into place • Motivating people in ways that induce them to pursue the target objectives energetically and, if need be, modifying their duties and job behavior to better fit the strategy requirements of successful execution • Tying the reward structure to the achievement of targeted results Cont….

39. Cont…. • Creating a company culture and work climate conductive to successful strategy implementation and execution • Installing information, communication, and operating systems that enable company personnel to carry out their strategic roles effectively day in, day out. • Instituting best practices and programs for continuous improvement • Exerting the internal leadership needed to drive implementation forward and to keep improving on how the strategy is being executed

40. Task – 5 Evaluating Performance, Monitoring New Developments and Initiating Corrective Adjustment • Check Weather things are going well internally • Monitoring out side development closely • Check corrective actions or adjustment needed for long term direction, objectives, business model & strategy

41. The Benefits of a Strategic Approach to Management • Providing better guidance to the entire organisation • Making managers and organisational members more alert to new opportunities and threatening developments • Helping to unify the organisation • Creating a more proactive management posture • Promoting the development of a constantly evolving business model, that will produce sustained bottom line success for the enterprise • Providing managers with a rationale for evaluating and competing budget requests (steering resources into strategy – supportive, result producing areas) Cont….

42. Why Strategic Management is an Ongoing Process, not a Start Stop Event • Managers’ responsibility is to track progress, spot problems and issues early • Monitor the winds of the market & customer change • Initiate adjustment needed Cont….

43. Readings • Strategic Management / concepts & cases Fred R David • Strategic Management Theory – An Integrated Approach Charles W L / Gareth R Jones • Essential Challenges of Strategic Management William B Rouse • Exploring Corporate Strategy Text and cases Gerry Johnson / Kevan Scholes • Strategic Management / concepts & cases Thompson /Strickland

44. The End Thank you