Strategic Mgt Processs special case

8/11/2019 Strategic Mgt Processs special case

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Business Policy

Strategy Formulation

Topic 1: The Concept of Strategy and the

Strategic Management Process


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Lecture Plan

What is a strategy?

The strategic management process

Why strategic management is an ongoing

process

Who performs the tasks of SM?

Benefits of a strategic approach


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What is a strategy?

determination of the basic long-term goals and

objectives of an enterprise, and the adoption of

courses of action and the allocation of

resources necessary for carrying out these

goals Chandler

a commitment to undertake one set of actions

rather than another Oster


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What is a Strategy? (2)

...the game plan management has for

positioning the company... entails choice

among alternatives and signalsorganisational commitment to specific

markets, competitive approaches, and ways

of operating. Thomson and Strickland


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The strategy

pyramidInfluence

Operating

Function

Business

Corporate

Uniting the strategy-making effort through

vertical and horizontal linkages.

Co-ordination through mutually reinforcing

vision, objectives & strategies.


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Different Levels of Strategy

Corporate - what business?

Business - how to compete in each business Functional - in support of business level


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The Strategic Management Process

Identify

currentmission,

objectives

& strategies

Analyze

Environment

Analyze

Resources

Identify

opps / threats

Identify

strengths &

weaknesses

Formulate

Strategies

Implement

Strategies

Evaluate

Results

SWOT ANALYSIS

Management, Robbins, S. & Coultar, M. 1996p. 259


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Strategy Making - Process or Event?

Strategy making is an ongoing process

Boundaries between tasks:conceptual not

real

Managers have many other responsibilities

Crafting/ implementing happens erratically


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Intended and Adaptive Strategy

strategy is a combination of planned actions

and on-the-spot adaptive reactions to freshly

developing industry and competitive events.

Respond to external/internal environment

Emergent Strategy


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Who Performs the five tasks?

CEO and other managers

Strategic planners

Board of directors


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The Three Strategy Making

Tasks Develop a strategic vision/ business mission

Set objectives

Craft a strategy


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Chesire Puss she (Alice) began ...

Would you please tell me which way I

ought to go from here

That depends on where you want to get

to, said the cat.

Lewis Carroll

If you dont know where youre going,

any old road will take you there.

Anonymous


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Defines the current boundaries

Defines the business position

-Who are we?

- What do we do?Mission

Present


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What Business are you in: Coca

Cola

soft drinks?

Competition is Pepsi,

Finches

beverages?

Competition is tea, coffee,

softdrinksthirst -quenching?

Competition is water & all

liquids!


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Objectives

Strategic vs. Financial?

Long range vs. short range?

Challenging but achievable

Measurable


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Strategic vs. financial objectives?

Strategic focus is on competitors

eg. becoming the top company in the industry

Financial focus is on financial performance

eg. acceptable profit margin/ ROI

Both are neccessary company must survive in both short and

long term


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Long vs. Short term?

Long term forces

early action

long term implications

considered

Short term encourages

speedy progress


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Challenging but Achievable

objectives must be

realistic

but should stretch funds/ resources must

be available to execute

the strategy


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Measurable

Objectives must be

measureable

eg. growth in market shareof 5%

Deadlines must be set

eg. by December next

You cannot manage what

you cannot measure


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Objectives needed at all levels

Parts supporting the whole

Top-down objective-setting

- cohesion

- leadership


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Approaches to performing the

strategy making tasksMaster strategist: manager is chief architect

Delegate to others

Collaborative approach

Champion approach


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Factors that

shape strategy

Craft a

Strategy

Industry

Attractive-

ness

Society

political

regulatory

Opportunity

threat

Companys strategic situation

Strengths

weaknessManager

values /

ambitions

Culture

Evaluation

Choice

External

Internal


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Societal, Political, Regulatory

Conditions Limit the strategic actions that a company

can or should take

May cause company to change strategy

anti-smoking lobby (direct mkg/advertising)

lead-free petrol (eg Pura)

recycling


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Industry Attractiveness

Strategy must be matched to industry and

competitive conditions eg.

technology shift

change in cost structure of industry


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Market Opportunities and Threats

Be open to opportunities

Aim at capturing best growth opportunities

Defend against threats to well-being and

future performance


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Organisational Strengths and

Weaknesses Strategy must be well-matched to the

companys strengths

strategy should be grounded in what companyis good at doing

perilous to depend on what its not good at


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Managers Values, Beliefs and

Ambitions

Management play a pivotal role

Strong leadership builds commitment

Management communication - buy-in


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Strategy formulation:

deciding what to do

what you mightdo: opportunity

what you cando: resources

what youd l iketo do: values/ambitions

what you oughtto do: ethics


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Tests for a good strategy

Goodness of fit test matches well the companys situation

internal

external Competitive advantage test

leads to sustainable competitive advantage

Performance testleads to superior performance

profitability

long term business/ market position strength


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Benefits of a Strategic Approach

Direction

Adaptable / in-tune with environment

Basis for budget/resource allocation

Unifies decisions across organisation

Encourages pro-active managementRequires strategic thinking rather than gut-

feel/drift

Strategic Mgt Processs special case

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