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This strategic management model covers the key elements of scanning, formulation, implementation, and measurement. It provides a comprehensive framework for organizations to assess their current state, set goals, develop strategies, and measure progress.
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Strategic Management Model • Scanning • Where are we now? • Strategy Formulation • Where do we want to be? • Strategy Implementation • How do we get there? • Measurement/Performance • How do we measure our progress?
Strategic Management Model • Strategy Formulation • Where do we want to be? • Vision • Mission • Values • Goals • Objectives
VISION Vision without Action is a Daydream Action without Vision is a Nightmare • Not Optional • Stretch – 30+ Years • 8-10 Words in length • Future State • Brief and Memorable
VISION (Continued) • Inspiring and Challenging • Descriptive of the Ideal
Vision Examples • “Light the Fire Within” • “A Safer Future for All Communities” • “See the Mountains – Breathe Freely” • To Be the Happiest Place on Earth • To Be the World’s Best Quick Service Restaurant
Vision Levels of People • Some people never see it. (Wanderers) • Some people see it but never pursue it on their own. (Followers) • Some people see it and pursue it. (Achievers) • Some people see it and pursue it and help others see it. (Leaders) John Maxwell, Developing The Leader Within You, 1993.
Mission Statement In the absence of a clearly defined direction one is forced to concentrate on confusion that will ultimately consume you.
MISSION • What is our purpose? • Describes current state • Timeline is 3-5 Years • Builds on our distinctive competencies • Tends to focus on Core Business • 30-35 Words in length
Mission Examples • “To Lead All Communities in Disaster Preparedness, Mitigation, and Recovery by Maximizing Assistance and Support.” • “Caltrans Improves Mobility Across California.” • To produce superior financial returns for our shareholders as we serve our customers with the highest quality transportation, logistics, and e-commerce.
Corporate Governance • What is it? • Codes of Governance • Role of the Board of Directors • Role of Top Management Team • Executive Compensation
Corporate Governance • System by which a firm’s owners control its affairs. • Does it work?
Codes of Governance • The Cadbury Code: 1992 • Sarbanes-Oxley Act: 2002 • Public Company Accounting Oversight Board • “Triple bottom line” • Four major issues: • Ownership structure and influence • Fianacial Stakeholder rights and relations • Financial transparency and information disclosure • Board structure and processes (audit)
Role of the Board of Directors • Monitor • Evaluate and influence • Initiate and determine • Organization of Board • Insiders versus outsiders • CEO/chair position • Committees’ Effectiveness
Role of Top Management Team • Who is the TMT? • Executive Leadership and Strategic Vision • Articulates strategic vision for corporation • Sets the model for others to identify and follow • Communicates high performance standards and builds confidence in followers’ abilities to meet standards • Managing strategic planning process
Executive Compensation • Incentive alignment • Executive Ownership • Incentive compensation • Salary • Bonus • Stock Options • LT Bonus
VALUES • Guiding Principles • Help establish Culture • Part of Preserving the Core • Core Ideology
Value Examples • CHP PRIDE • HP WAY • J & J Credo • “Build the Spirit of the Place”
Ethical Awareness Model • Organizational Ethics • Individual Ethics • Personal Values
Strategic Management Model • Scanning: • Where are we now? • Macro Analysis (STEP, PESTEL, ETC.) • Industry Analysis – Competitive Intelligence • SWOT Analysis • Internal versus External Elements
Why Scan? • To know your position in the environment • To respond effectively to constant change • To see the organization as a whole • To avoid surprises • To survive • To lay the foundation for strategic issues
SCANNING: Key Environmental Variables • Macro Environment: STEP, PESTEL • Task Environment: Industry • Internal Environment: Focal Organization
Socio-Cultural Variables • Lifestyle Changes • Career Expectations • Regional Shifts in Population • Life Expectancies • More women in workforce • Greater concern for fitness • Postponement of family formation • Increase in temporary workers
Technological Variables • Total Federal Spending for R&D • Total Industry Spending for R&D • Focus of Technological Efforts • Patent Protection • Wireless Communications • Nanotechnology • Productivity Improvements • Genetic engineering
Economic Variables • GDP Trends • Interest Rates • Money Supply • Inflation Rates • Unemployment Levels • Wage/Price Controls • Energy Availability & Cost • Disposable & Discretionary Income
Political-Legal Variables • Antitrust Regulations • Tort Reform • Environmental Protection Laws • Taxation at local, state, federal levels • Hiring and Promotion Laws • Americans Disabilities Act of 1990 • Sarbanes-Oxley Act of 2002
Demographic Variables • Aging Population • Rising affluence • Changes in Ethnic Composition • Geographic distribution of population • Disparities in income levels
Global Variables • Increasing Global Trade • Currency Exchange Rates • Emergence of Indian and Chinese Economies • Trade agreements (NAFTA, EU, ASEAN) • Creation WTO
STEP EXERCISE • Socio-Cultural • Technological • Economic • Politico-Legal
Industry Analysis • 6 Forces Analysis • Industry Competitors • Suppliers/Vendors • Customers/Clients • Potential New Entrants • Substitutes • Other Stakeholders • Role of Complementors
New Entrants and Entry Barriers • Absolute cost advantages • Access to inputs • Government policy • Economies of scale • Capital requirements • Brand identity • Switching costs • Access to distribution • Proprietary products
Buyer Power (Channel and End Consumer) • Buyer volume and information • Brand identity • Price sensitivity • Threat of backward integration • Product differentiation • Substitutes
Supplier Power • Supplier concentration • Differentiation of inputs • Switching costs • Threat of forward integration • Cost relative to total purchases in industry
Substitutes • Switching costs • Buyer inclination to substitute • Variety of substitutes • Price-performance tradeoff of substitutes • Necessity for product or service
Degree of Rivalry • Exit barriers • Industry concentration • Fixed costs • Industry growth • Intermittent overcapacity • Switching costs • Brand identity • Diversity of rivals • Corporate stakes
Other Stakeholders • Employees • Unions • Government • Trade and Professional Associations • Other Direct Influencers
Role of Complementors • Number of complements • Relative value added • Difficulty of engaging complements • Buyer perception of complements • Complement exclusivity • Tend to increase profits by increasing demand for an industry’s products
Competitive Profile Analysis • Identify Key Competitive Factors • Identify key Competitors
Industry Foresight Customer Needs Unarticulated Articulated Customer Served UnservedTypes Unexploited Opportunities
Internal Environment • Internal Profile Analysis • SWOT Analysis
Internal Profile Analysis • Identify Key Core Functions • Identify Key Measures for Core Functions • Build Matrix
SWOT Analysis • Internal Environment • Strengths • Weaknesses • External Environment • Opportunities • Threats
Strategic Management Model • Strategy Formulation • Where do we want to be? • Vision • Mission • Values • Goals • Objectives
GOAL • Supports the Mission • Deals with One Issue or Item of Focus • Reflects a primary activity or strategic direction • Describes the “To Be” State • “BHAG” • Encompasses a long period, i.e. at least 3 years