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CHAPTER

The Strategic
Management Process

McGraw-Hill/Irwin

Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

LO 2-1 Explain the role of vision, mission, and values in the strategic
management process.
LO 2-2 Describe and evaluate the role of strategic intent in achieving
long-term goals.
LO 2-3 Distinguish between customer-oriented and product-oriented
missions and identify strategic implications.
LO 2-4 Critically evaluate the relationship between mission statements and
competitive advantage.
LO 2-5 Explain why anchoring a firm in ethical values is essential for longterm success.
LO 2-6 Compare and contrast strategic planning, scenario planning, and
strategy as planned emergence, and discuss strategic implications.

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ChapterCase 2 Teach For America: Inspiring Future Leaders


TFA Mission: Eliminate educational inequality
Started by an undergraduate student
Inspiring mission

Provide a meaningful service option for bright young people

Make teaching to the neediest high prestige


Over 40,000 applicants for 4,500 jobs

TFA Video
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VISION, MISSION, AND VALUES


What are visionary organizations?
Begin with the end in mind

Similar to designing & building a home

Vision what to ultimately accomplish?


Mission what is the firm about?
Values how to accomplish goals?

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VISION, MISSION, AND VALUES


What is forming strategic intent?
Staking out a desired leadership position in the long

term that far exceeds a company's current situation


Often used in Japanese corporate settings

Canon will "beat Xerox"

Effective use of stretch goals

Competitive advantage for tomorrow

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VISION,

MISSION, AND VALUES

CUSTOMER-ORIENTED MISSIONS
Define the firm in terms of solutions for customers
Disney: "Make People Happy"
Enhanced strategic flexibility
NOT the same as listening to customers

PRODUCT-ORIENTED MISSIONS
Define the firm in terms of products or services
U.S. Railroads: "Safest N. American railroad

Missed the chance to move into delivery before


UPS & Federal Express

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MISSION STATEMENTS AND


COMPETITIVE ADVANTAGE
Do mission statements help gain & sustain
competitive advantage?
Results are inconclusive
Need strategic commitments to succeed

Positive associations Visionary firms


Negative associations Better World Books
No associations Intel

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Living the Values


Ethical standards and norms that govern
behavior.
How do we accomplish our goals?

McKesson ICARE
Shared principles a framework for daily interactions

Dark side of values


Bernard Madoff

Ponzi scheme estimated at $65 billion in fraud

Enron
One of the largest bankruptcies in U.S. history
Over 50,000 jobs lost (Enron & Arthur Anderson)

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The Strategic Management


Process
1. Strategic Planning
2. Scenario Planning
3. Strategy as Planned Emergence

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Strategy as Strategic Planning


Top-down rational planning
Define mission, vision, & goal (strategic intent)
External analysis of opportunities and threats
Internal analysis of strengths and weaknesses
Create strategic fit through SWOT
Formulate appropriate strategy
Implement chosen strategy
Monitor performance & modify if necessary

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Strategy as Scenario Planning


Scenario planning
Envision different "what-if" plans
Generates a dominant plan

Must implement the most probable option

Keeps other scenarios in the event of changes

"Arab Spring" impact on the oil industry?

Good example of the AFI framework

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Strategy as Planned Emergence


Strategic Initiative
Google 50% from the "20% rule"
Enron wind investment

Mintzberg Planned Emergence


Strategy can come from top or bottom
Some intended strategies drop off in the process
Allows for new emerging ideas to become realized
Resource allocation process (RAP)
Serendipity can have dramatic effects

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Bottom-up Strategic Initiatives /


Autonomous Actions
Microsoft
Internet Explorer
Xbox

Intel
DRAM exit and entry into semiconductors

Starbucks
Frappuccino

Google
50% of new products come from 20% autonomous

time
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STRATEGY
STRATEGY HIGHLIGHT
HIGHLIGHT 2.3
2.3

Its Not What We Do!

Starbucks
Autonomous action of mid-level manager
Tenacity and persistence of a store manager

Risk of failure

Possible career-limiting action

Organization must be willing to accept new ideas


Frappuccino was born!

Contributing 20% of revenues for Starbucks recently

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CHAPTERCASE 2 /Consider This


Teach For America is TWENTY years old!
A $200 million dollar organization
Teacher effectiveness improves with

Studentoriented achievement course objectives

What role did TFAs vision statement have?


How have they recruited so many into teaching?
Could it have worked as a for-profit firm?
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