A clear vision of what the organization will be; based on a sustainable competitive advantage; specifying what must be done and the resources required.
4 Strategy is War!
companies do compete aggressively - even viciously - for strategic advantage in a chaotic arena that is increasingly similar to the modern theater of war.
Source: E. K. Clemons & J. A. Santamaria, April 2002, Harvard Business Review 5 Strategy Should Include A Clear understanding of the Companys Competitive Advantage Specific Objectives - Growth and Profits Products and Services Markets and Customers Priority areas of Business Investment, Organization, Resources and Skills required Implementation Plan
6 The Five Elements of Strategy Staging What will be our speed and sequence of moves? Vehicles How we will get there?
Economic Logic How will we obtain our returns? Arenas Where will we be active? Differentiators How will we win? Source: D. C. Hambrick & J . W. Fredrickson, 2001 7 The Benefits of Strategy Clarity of Direction Rationale for Future Success Basis for Resource Allocation Decisions Basis for Operational Decisions Identifies Critical Issues Communication Improved Common Purpose Amongst Management
8 Strategic Management Something an organization needs or uses in order to win, or establish its legitimacy in a world of competitive rivalry strategy is what makes a firm unique, a winner, or a survivor.
Howard Thomas, 1993
9 Levels of Strategy HQ Corporate Office Business Unit Power Plant Corporate Strategy - where to invest - adding value by linking units Business Unit Hospital Business Unit Real Estates Functional strategies Business Strategy - what we sell to whom - competitive advantage Sales & Marketing Distribution Service 10 When Do You Need a Strategic Review External Changes Competitive Changes Environmental Changes
Internal Changes New Ownership New Technology New Management Team Poor Results Differences in Opinion
11 Vision Vision is simply an inner picture of something, which has not yet happened. The vision set by leading companies on Europe and US requires the transformational style adopted so successfully in much admired companies like Shell, GlaxoSmithKline and Cisco Systems. Each began with an idea. A clear vision.
12 Vision & Mission Vision is a possible and desirable future state of an organization. Mission is why a firm exists, its role in life. It is more associated with behavior and the present.
---A. Campbell and S. Yeung, 1991 13 Vision & Competitive Strategy For commercial companies the vision statement needs to define a definite competitive strategy and the key activities to be invested in to provide competitive advantage. 14 Compelling Vision Requires Three Components Sensitivity to the External Environment (important because every organization needs to adapt continuously to its situation).
Formulating a Compelling Vision (important because this provides a clear strategy for leadership).
Persuasively communicating the Vision (important because all employees need to be enrolled in fulfilling the compelling vision).
15 Vision Vision is where tomorrow begins, for it expresses what you and others who shares the vision will be working hard to create. Since most people dont take the time to think systematically about the future, those who do - and who base their strategies and actions on their visions - have inordinate power to shape the future. Burt Nanus Visionary Leadership
16 The Four Parameters of Mission Purpose Values Strategy Behavior Standards 17 Components of A Mission Statement
Mission statements can and do vary in length, content, format, and specificity. Most practitioners and academicians of strategic management feel that an effective statement exhibits nine components. Because a mission statement is often the most visible and public part of the strategic management process.
F. R. David, 2003. 18 Nine Components of A Mission Statement Customers: Who are the firm's customers? Products or Services: What are the firms major products or services? Markets: Geographically, where does the firm compete? Technology: Is the firm technologically current? Concern for Survival, Growth and Profitability: Is the firm committed to growth and financial soundness?
F. R. David, 2003. 19 Nine Components of A Mission Statement (cont.) Philosophy: What are the basic beliefs, values, and ethical priorities of the firm? Self-concept: What is the firm's major competitive advantage? Concern for Public Image: Is the firm responsive to social, community, and environmental concerns? Concern for Employees: Are employees a valuable asset of the firm?
F. R. David, 2003. 20 Long-term Growth in Shareholder Value A Mission-Driven Company A Values-Centered Organization An Adaptable Business Strategy
W. W. George, Academy of Management Executive, 2001, Vol. 15, No. 4, p. 41. 21 Why is Vision so Powerful? The key reason is that it grabs attention. It provides focus. Every organization has lots of ways to go. The outside world pulls it in every direction. Each has its own attractions. Yet, no organization can be all things to all people - not General Motors, not IBM, not even the United States of America.
Burt Nanus
22 Issues for Strategic Management Where Are We Now? S.W.O.T analysis Where Do We Want to Be? Vision Mission - Goals - Objectives. What is Stopping Us? Organizational blockages. What Should We Do? Strategic action.
24 Strategic Thinking Viewpoints Sustaining the Competitive Advantage:
Competitive Interaction. Competitors Gaps. Cost versus Value. Competitors Reaction.
25 Offensive Strategies Attack Competitors Strengths. Attack Competitors Weaknesses. Attack on Many Fronts Simultaneously. First-Mover Initiatives. Guerrilla Attacks. Pre-Emptive Strikes.
26 Strategy Generation Methods Redefine Product & Market Scope Seek Opinions of External Experts Imitate Competitors Create Variations on an existing theme. Differentiate using Competitive Advantage. Become Lowest cost operator Focus activities Change your size Give best Quality Use Different types of Portfolio Analysis. 27 Strategic Growth Based On New Levels of Services/Product/Distribution New Technologies New Applications Product Performance Differentiation Innovation Distinctive Skills or Resources
28 Selections of Strategies Must be Imaginative, Practical & Relevant. High Chance of Achieving Adequate Results. Does not Create Excessive Risk. Uses Organization's Major Strengths. Corrects or Neutralizes major Weaknesses. Exploits Major Opportunities Eliminate or Reduces Major Threats.
29 Final Thought Achieving maximum possible Differentiation over the Competition in Meeting Customer Needs.
Solution Manual For Strategic Management Concepts and Cases Competitiveness and Globalization 13th Edition Michael A Hitt R Duane Ireland Robert e Hoskisson 13 978