bp- jasmeeet

8/8/2019 BP- jasmeeet

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THE PROCESS OF STRATEGIC MANAGEMENT

1. Different forms of strategy2.

Incrementalist perspective

3. Rational planning perspective4. Organisational learning perspective

DIFFERENT FORMS OF STRATEGY


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El t tu i t d d & li d t t

El t i t d d tu

t t

l t qui i

t t i

R ulti l t liz d

tu t t

Economy vehicle ($6000).

Fuel efficient subcompact,

G.M.s product-line extension

Heavy automation, emphasis

on robots

Scale: $5billion; annual

output 500,000 cars per year

Concern for fuel efficiency

diminishes after 1970s energy

crisis; G.M. loses 11% m.s. in

US; target shifts to more

sporty cars

G.M. understoodlimitation of

automation,importance of

human factors& workforce

involvement

More global competitors enter

US market; G.M. loses m.s.;

develops concern about sales

poten-tial of new Saturn line

Sporty compact with $8000 to

12000; look& feel of an

import

Balanced mix of advanced&

traditional manufacturing

technologies; greater emphasis

on employee training

$3billion investmentin aplant with annual output of

240,000 cars


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RATIONAL PLANNING PERSPECTIVE

Hierarchy of strategic intent Strategic programming

Hierarchy of Strategic Intent

By strategic intent we refer to the p rpose(s) of the organisation the en s it p rs es

These parameters as a hierarchy of strategic intent:

1. A roa vision of what the organisation sho l e2. The organisation s mission to3. Specific goals that are operationalise as4. Vario s strategic o jectives to e reache y acting accor ing to specific5. Plans


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THE ELEMENTS OF THIS HIER RCHY SET FORTH THE IDEALS & IDEAS THAT

SER E TO UNIFY THE ENERGY & FORCES SCAT-TERED THROUGHOUT AN

ORGANISATION.

THEY ARE BEGINNING POINTS FORANY FORMAL PLANNING PROCESS, BUT

THEY ALSO PROVIDE THE SENSE OF DIRECTION NECESSARY TO ASSURE THE

INCREMENTAL BEHAVIOURCULMINATES IN

OVERALL PROGRESS

Vision refers to the category ofintentions that arebroad, allinclusive, and forward-thinking:

Describe aspirations forthe future specifying means that willbe usedto to achievedthose desired ends:

- foresight

- shared vision

Most effective visions are those thatinspire,usually asking employees forthebest,the most, orthe greatest

STEVE JOBS OF BUILDING AN INSANELY GREATCOMPUTERINSPIRED

THOSE WORKING ON THE INVENTION OF THE FIRSTMACINTOSH TO REACH

LEVELS OF PERSONAL ACHIEVEMENTMOST HAD NEVERBELIEVED POSSIBLE

Mission

A VISION BECOMES MORE TANGIBLE IN THE FORM

OF A MISSION STATEMENT.

SUCH A STATEMENTCAN VERBALISE THE BELIEFS

& DIRECTIONS IN WHICH A VISIONARY MQANGER

WANTS TO

LEAD AN ORGANISATION


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Goals

JUST AS MISSION STATEMENTS TRY TO MAKE

VISION MORE SPECIFIC, GOALS ARE ATTEMPTS TO IMPROVE

AN ORGANISATIONS PERFORMANCE BY MAKING MISSION

STATEMENTS MORE CONCRETE:

The strategic goals i entifie y most organisations share

several feat res:

They a ress oth financial non financial iss es They can e reache with a stretch They c t across f nctional areas


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Examples of strategic goals

Financial goals:

Boeing:Profita ility as meas re against o r a ility to achieve then maintain a 20% average

ann al ret rn on stockhol er s e ity

Non-financial goals:

General Electric:We will r n only siness that are that are n m er two in their glo al glo al

markets

O jectives

OB ECTIVES REPRESENT THE OPERATIONAL DEFINITIONS OF GOALS OR

EXPLANATIONS OF THE CONCEPTS THAT ARE CONCRETE ENOUGH TO

SUGGEST SPECIFICATIONS;

Goals escri e in fairly general terms what the organisation hopes to accomplish t O jectives etail in more precise terms what nee s to e accomplishe in or er to

reach the goals

Most helpf l o jectives have

Can e meas re Incorporate a time imension Re ce conflict

PlansTYPICALLY DESCRIBE SPECIFIC TACTICS ASSIGN RESPONSIBILITIES

IDENTIFY HOW RESOURCES WILL BE ALLOCATED SCHEDULE ACTIVITIES

EFFORTS

AND SPECIFY TARGETS


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THE CONTENT OF STRATEGY

1. Meeting the nee s of M ltiple Stakehol ers2. Fiscal responsi ility as a pre re isite for a ressing social responsi ilities3.

Val e ase management creating economic val e

4. Competitive a vantage: focal point of strategy:* Differentiation

* Cost lea ership

* ick response

5. Overview of how companies achieve competitive a vantage: the architect re of

strategy

MEETING NEEDS OF MULTIPLE STA EHOLDERS

Managers responsi le to a iverse set of stake hol ers have responsi ilities to all of them:

Owners/stockhol ers Tra e associations

C stomers

P lic at large Employees Governments S ppliers Local comm nity


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meeting stakehol ers nee s oes not prevent an organisation from meeting the nee sof other stakehol ers

RESEARCH ON THE DETAILS OF SIXTY ONE MISSION STATEMENTS FROM

FORTUNE 500 FIRMS REVEALS THAT 90% MENTION FINANCIAL

SOUNDNESS PROFITABILITY OR GROWTH OF THE FIRM.

PROBABLY THE ONLY REASON THE OTHER 10% DID NOT MENTION FINANCIALGOALS IS THAT THEIR WRITERS ASSUMED FINANCIAL INTEGRITY TO BEUNDERSTOOD

VALUE BASED MANGEMENT CREATING ECONOMIC VALUE

EVA IS WHAT S LEFT OVER AFTER A FIRM HAS COVERED ALL ITS FACTORS OFPRODUCTION INCLUDING OPERATING AND OVERHEAD EXPENSES

INTEREST EXPENSES TAXES AND

A FAIR RETURNS FOR INVESTORS

Those experience with the EVA attri te s ch s ccesses to

the fo r Ms:1. Meas rement2. Motivation3. Management system4. Min set


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OVER THE LONG RUN, THE TOTAL AMOUNT OF VALUE A FIRM CAPTURES FOR ITS

INVESTORS

(IN THE FORM OF EVA) CANNOT EXCEED THE VALUE IT CREATES FOR ITS CUSTOMERS ( IN

THE FORM OF COMPETITIVE ADVANTAGE )

THE PROCESS OF STRATEGIC MANAGEMENT IS COMING TO BE DEFINED, IN FACT,

AS THE MANAGEMENT FOR

COMPETITIVE ADVANTAGE THAT IS, AS A PROCESS OF IDENTIFYING, DEVELOPING, AND

TAKING ADVANTAGE OF ENCLAVES IN WHICH A TANGIBLE & PRESERVABLE BUSINESS

ADVANTAGE CAN BE ACHIEVED

DIFFERENTIATION

Pro ct feat res After sales service Desira le image Technological innovation Rep tation Managing consistency Stat s sym ol

COST LEADERSHIP

Economies of scale Learning c rve effects


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QUIC RESPONSE

Refers to the spee with which a new pro ct a pro ct improvement or even amanagerial ecision that affects the c stomer can e ma e rather than a firm s

relative level of ifferentiation or low cost

A ing val e to a pro ct consists of any activity that increases the pro ct s worthto the c stomer s ch as esign man fact ring packaging elivery

STRATEGY EVALUATION SELECTION

STRATEGIC MANAGEMENT

INTRODUCTION EVALUATION CRITERIA

3 types of eval ation criteria se :

1. S ita ility2. Accepta ility3. Feasi ility

ASSESSING SUITABILITY

Screening efore etaile analysis for accepta ility s ita ility 2 stage process for esta lishing for each option:

1.

Rationale/strategic logic

2. Relative merits


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Esta lishing rationale

WHY IS IT A GOOD IDEA?

It would, for example, consist of assessing the extent to which a strategy: Exploits an opportunity in the environment & avoids threats Capitalises on the organisations strengths & core compete ncies & avoids or

remedies weaknesses

Addresses cultural & political contexts


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