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str_mgnt_1comp_mode[2].ppt and its components
- 1. Strategic management courseis a bit different from other courses in the curriculum, most of the other courses focus on individual pieces of the business functional areas like : accounting, marketing, finance, operational or information systems… In contrast this course devoted to the entire business as a whole , by taking this holistic approach we’ll be asking the really big picture Q on how to run a business such as : what determines the total corporate performance of an entire business enterprise? Why do some companies succeed while others fail? And what if anything can managers do about it? I like to start by discussing what strategy is????
- 2. 1. What’s thecompany’s present situation? - industry conditions and competitive pressure - current performance and market standing - resource strength and capabilities and competitive weaknesses 2. Where does the company need to go from here? Business(es) to be in and market positions to stake out Buyer needs and groups to serve Direction to head 3. How should it get there? A company’s answer to “how will we get there?” is its strategy
- 3. The word “strategy”is derived from the Greek word “stratçgos”; stratus (meaning army) and “ago” (meaning leading/moving). . It defines the overall mission, vision and direction of an organization. The objective of a strategy is to maximize an organization’s strengths and to minimize the strengths of the competitors.
- 4. Strategy Strategy consistsof competitive moves and business approaches used by managers to run the company Strategy involves making analysis and choices The hows that define a firm's strategy How to grow the business How to please customers How to outcompete rivals How to manage each functional piece of the business (R&D, production, marketing, HR, finance, and so on) How to respond to changing market conditions How to achieve targeted levels of performance
- 5. Relationship Between Strategy andBusiness Model Strategy . . . Deals with a company’s competitive initiatives and business approaches Business Model . . . Concerns whether revenues and costs flowing from the strategy demonstrate a business can be amply profitable and viable
- 6. Art andscience of formulating, implementing, and evaluating, cross-functional decisions that enable an organisation to achieve its objectives. ___ strategic management is all about identification and description of the strategies that managers can carry so as to achieve better performance and a competitive advantage for their organisation
- 8. Strategic Management Process The steps by which management converts a firm’s vision, mission, and goals/objectives into a workable strategy FIVE TASKS OF STRATEGIC MANAGEMENT 1. Defining business, stating a mission, & forming a strategic vision 2. Setting measurable objectives 3. Crafting a strategy to achieve objectives 4. Implementing & executing strategy 5. Evaluating performance, reviewing new developments, & initiating corrective adjustments
- 9. Strategic management isa continuous process that evaluates and controls the business and the industries in which an organisation is involved; evaluates its competitors and sets goals and strategies to meet all existing and potential competitors. Goal of strategic management is to create above-average returns for investors. Returns exceeding those for alternative opportunities at equivalent risk. Earning above-average returns depends in part on the organization’s competitive environment.
- 10. Benefits of StrategicManagement Enhances firm’s ability to prevent problems Emphasizes group-based strategic decisions likely to be based on best available alternatives Improves understanding of employees of productivity-reward relationship Reduces gaps/overlaps in activities among employees as their participation clarifies differences in roles Reduces resistance to change
- 11. Components of theStrategic Management Model Mission Specifies unique purpose of company Identifies scope of operations Describes product, market, and technological areas of emphasis Reflects values and priorities of decision makers Expresses approach to social responsibility efforts Internal Analysis Depicts quantity and quality of company’s financial, human, and physical resources Assesses company’s strengths and weaknesses Contrasts past successes and concerns with current capabilities to identify future capabilities
- 12. Characteristics of aMission Statement Identifies the boundaries of the current business and highlights Present products and services Types of customers served Geographic coverage Conveys Who we are, What we do, and Why we are here A well-conceived mission statement distinguishes a company’s business makeup from that of other profit- seeking enterprises in language specific enough to give the company its own identify!
- 13. Features of aMission Mission must be feasible and attainable. It should be possible to achieve it. Mission should be clear enough so that any action can be taken. It should be inspiring for the management, staff and society at large. It should be precise enough, i.e., it should be neither too broad nor too narrow. It should be unique and distinctive to leave an impact in everyone’s mind. It should be analytical,i.e., it should analyze the key components of the strategy. It should be credible, i.e., all stakeholders should be able to believe it.
- 14. SPECIFIC QUESTIONS THATHELP FORM STRATEGIC VISIONS What business are we in now? What business do we want to be in? What will our customers want in future? What are expectations of our stakeholders? Who will be our future competitors? suppliers? partners? What should our competitive scope be? How will technology impact our industry? What environmental scenarios are possible?
- 15. An effective visionstatement must have following features- It must be unambiguous. It must be clear. It must harmonize with organization’s culture and values. The dreams and aspirations must be rational/realistic.
- 16. Microsoft corporation vision Empowerpeople through great software any time, anyplace, and on any device . mission is to help people and businesses throughout the world to realize their full potential. Microsoft corporation mission
- 17. A is adesired future state or objective that an organization tries to achieve. Goals specify in particular what must be done if an organization is to attain mission or vision. Well made goals have following features- These are precise and measurable. These look after critical and significant issues. These are realistic and challenging. These must be achieved within a specific time frame. These include both financial as well as non- financial components.
- 18. Objectives are definedas goals that organization wants to achieve over a period of time. These are the foundation of planning. Effective objectives have following features- These are not single for an organization, but multiple. Objectives should be both short-term as well as long-term. Objectives must respond and react to changes in environment, i.e., they must be flexible. These must be feasible, realistic and operational.
- 19. Analysis of objectives: Operatingobjectives direct activities toward key and specific performance results. Typical operating objectives: •Profitability •Market share •Human talent •Financial health •Cost efficiency •Product quality •Innovation •Social responsibility
- 20. SWOT Analysis InternalEnvironment Strengths Weaknesses External Environment Opportunities Threats
- 21. SWOT analysis ofstrengths, weaknesses, opportunities, and threats.
- 22. Analysis of organizationalresources and capabilities: Important goal of assessing core competencies. Potential core competencies: Special knowledge or expertise. Superior technology. Efficient manufacturing approaches. Unique product distribution systems. Analysis of industry and environment: Assessment of macro environment: Technology. Government. Social structures and population demographics. Global economy. Natural environment. Analysis of industry environment: Resource suppliers. Competitors. Customers.
- 24. Three levels ofstrategy in organizations—corporate, business, and functional strategies. Questions addressed by different strategic level: Corporate strategy In what industries and markets should we compete? Business strategy How are we going to compete for customers in this industry and market? Functional strategy How can we best utilize resources to implement our business strategy?
- 25. Growth and diversificationstrategies: Growth strategies Seek an increase in size and the expansion of current operations. Types of growth strategies: Concentration strategies Diversification strategies Related diversification Unrelated diversification Vertical integration Restructuring and divestiture strategies: Readjusting operations when an organization is in trouble. Retrenchment Correcting weaknesses by making changes to current operations. Liquidation Restructuring Downsizing and rightsizing Restructuring through divestiture
- 26. Restructuring and divestiturestrategies: Readjusting operations when an organization is in trouble. Retrenchment Correcting weaknesses by making changes to current operations. Liquidation Restructuring Downsizing and rightsizing Restructuring through divestiture
- 27. BCG matrix —business conditions and related strategies: •Stars High share/high growth businesses. Preferred strategy — growth. •Cash cows High share/low growth businesses. Preferred strategy — stability or modest growth. BCG matrix •Question marks Low share/high growth businesses. Preferred strategy — growth for promising question marks and restructuring or divestiture for others. •Dogs Low share/low growth businesses. Preferred strategy — retrenchment by divestiture.
- 28. Business level strategy Porter’sgeneric strategies for gaining competitive advantage: Differentiation strategy: offer unique products that are widely valued by customers Cost leadership strategy: goal is to become the lowest -cost producer in the industry Focused differentiation strategy: aims at a cost advantage or differentiation advantage in a narrow segment.
- 29. Porter’s model offive strategic forces affecting industry competition
- 34. Strategic Management Process Studythe external and internal environments. Identify marketplace opportunities and threats. Determine how to use core competencies. Use strategic intent to leverage resources, capabilities and core competencies and win competitive battles. Integrate formulation and implementation of strategies. Seek feedback to improve strategies.