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STRATEGIC MANAGEMENT
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STRATEGIC MANAGEMENT
2–4
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WHAT DOES THE STRATEGY-MAKING,
STRATEGY-EXECUTING PROCESS ENTAIL?
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Five-Step Strategic Management Process
3. Crafting a strategy
4. Implementing and executing it efficiently
and effectively
Annual Objectives, policies, employee
motivation, resource allocation
5. Evaluating performance, initiating
corrective adjustments in vision, long-term
direction, objectives, strategy, or execution,
based on actual experience, changing
conditions, new ideas and opportunities
Success today is no guarantee of success
tomorrow
Success creates new and different problems 2–8
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STAGE 1: DEVELOPING A STRATEGIC
VISION, A MISSION, AND A SET OF
CORE VALUES
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2.1 Wording a Vision Statement—the Dos and Don’ts
Indicate why the directional path makes Don’t rely on superlatives only
good business sense
2–11
PepsiCo
♦ "PepsiCo's responsibility is to continually improve all
aspects of the world in which we operate - environment,
social, economic - creating a better tomorrow than
today. Our vision is put into action through programs
and a focus on environmental stewardship, activities to
benefit society, and a commitment to build shareholder
value by making PepsiCo a truly sustainable company.”
Amazon
♦ "Our vision is to be earth's most customer centric
company; to build a place where people can come to
find and discover anything they might want to buy
online."
Prepared by: Prof. Romy Sebastian, CMS-GNU
2–12
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Vision Statement for Coca-Cola
Our vision serves as the framework for our Roadmap and guides every aspect of
our business by describing what we need to accomplish in order to continue
achieving sustainable, quality growth.
• People: Be a great place to work where people are inspired to be the best they
can be.
• Portfolio: Bring to the world a portfolio of quality beverage brands that anticipate
and satisfy people’s desires and needs.
• Partners: Nurture a winning network of customers and suppliers; together we
create mutual, enduring value.
• Planet: Be a responsible citizen that makes a difference by helping build and
support sustainable communities.
• Profit: Maximize long-term return to shareowners while being mindful of our
overall responsibilities.
• Productivity: Be a highly effective, lean and fast-moving organization.
Effective Elements Shortcomings
• Graphic • Makes good business sense • Long
• Focused • Flexible • Not forward-looking
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2–14
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Vision Statement for Walmart
2–15
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Putting the Strategic Vision in Place
2–17
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The Ideal Mission Statement
2–20
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Mission and Vision Statements examples
Unichem Laboratories
Vision
♦ "To be a global pharmaceutical company with
increasing focus on innovative research and developed
markets.“
Mission
♦ "To be a caring pharmaceutical company helping to
enhance health through quality products."
2–21
Lupin Pharmaceuticals
Mission
♦ Lupin Pharmaceuticals, Inc. is committed to bringing
innovative products for the healthcare professional to
improve the health and well being of individuals.
Our Vision
♦ Lupin’s vision is to become a transnational
pharmaceutical company through the development and
introduction of a wide portfolio of branded and generic
products in key markets.
2–22
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Linking Vision and Mission with Core Values
♦ Core Values
● Are the beliefs, traits, and behavioral norms that
employees are expected to display in conducting the
firm’s business and in pursuing its strategic vision
and mission.
● Become an integral part of the firm’s culture and
what makes it tick when strongly espoused and
supported by top management.
● Matched with the firm’s vision, mission, and strategy
contribute to the firm’s business success.
2–23
2–24
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Core Values for Amazon
♦ Customer We start with the customer and work backward.
Obsession
♦ Innovation If you don’t listen to your customers you will fail. But if you
only listen to your customers you will also fail.
♦ Bias for We live in a time of unheralded revolution and instrumental
Action opportunity–provided we make every minute count.
♦ Ownership Ownership matters when you’re building a great company.
Owners think long – term, please passionately for their
projects and ideas, and are empowered to respectfully
challenge decisions.
♦ High-Hiring When making a hiring decision we ask ourselves: ―Will I
Bar admire this person? Will I learn from this person? Is this
person a superstar?‖
♦ Frugality We spend money on the things that really matter and
believe that frugality breeds resourcefulness, self-
sufficiency and intention.
2–25
Follow-up
2–26
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Mission vs Vision Statement
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STAGE 2: SETTING OBJECTIVES
2–30
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SETTING FINANCIAL OBJECTIVES
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Good Strategic Performance Is the Key
to Better Financial Performance
♦ Good financial performance is not enough:
● Current financial results are lagging indicators of
past decisions and actions which does not translate
into a stronger competitive capability for delivering
better financial results in the future.
● Setting and achieving stretch strategic objectives
signals a firm’s growth in both competitiveness and
strength in the marketplace.
● Good strategic performance is a leading indicator
of a firm’s increasing capability to deliver improved
future financial performance.
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THE MERITS OF SETTING STRETCH
OBJECTIVES
2–35
♦ Short-Term Objectives:
● Focus attention on quarterly and annual
performance improvements to satisfy near-
term shareholder expectations.
♦ Long-Term Objectives:
● Force consideration of what to do now to
achieve optimal long-term performance.
● Stand as a barrier to an undue focus on
short-term results.
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THE NEED FOR OBJECTIVES AT ALL
ORGANIZATIONAL LEVELS
2–38
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STAGE 3: CRAFTING A STRATEGY
♦ Strategy Making:
● Addresses a series of strategic how’s.
● Requires choosing among strategic alternatives.
● Promotes actions to do things differently from
competitors rather than running with the herd.
● Is a collaborative team effort that involves
managers in various positions at all
organizational levels.
2–39
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Why Is Strategy-Making Often
a Collaborative Process?
♦ The many complex strategic issues involved and
multiple areas of expertise required can make the
strategy-making task too large for one person or a
small executive group.
♦ When operations involve different products, industries
and geographic areas, strategy-making authority must
be delegated to functional and operating unit managers
such that all managers have a strategy-making role—
ranging from major to minor—for the area they head!
Two-Way Influence
Two-Way Influence
Two-Way Influence
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A Company’s Strategy-
Making Hierarchy
2–43
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Characteristics of Strategic Intent
Elements of a Firm’s
Strategic Plan
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What Is a Strategic Plan?
♦ Strategic clarity
● Vision, Mission statement
♦ Strategic priorities
● What specific actions and activities must take place
to achieve the intended impact
♦ Resource implications
● To pursue the priorities, and the plan to secure them
♦ Performance measures
● Establishing the quantitative and qualitative
milestones to measure progress
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STAGE 4: EXECUTING THE STRATEGY
2–50
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Managing the Strategy Execution Process
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♦ Evaluating Performance:
● Deciding whether the enterprise is passing the
three tests of a winning strategy—good fit,
competitive advantage, strong performance.
♦ Initiating Corrective Adjustments:
● Deciding whether to continue or change the
firm’s vision and mission, objectives, strategy,
and/or strategy execution methods.
● Based on organizational learning.
2–52
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THE ROLE OF THE BOARD OF DIRECTORS
IN CORPORATE GOVERNANCE
2–54
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Reasons why strategic plans fail
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Reasons why strategic plans fail
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