session 1 strategic management process 14 jun 11

8/6/2019 SESSION 1 Strategic Management Process 14 JUN 11

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STRATEGIC MANAGEMENTPROCESS

OVERVIEW, PROCESS, VISION, MISSION,

SOCIAL RESPONSIBILITY & THE FIVETASKS

14/06/2011 1Salah uddin IQRA


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1. DEFINITION: STRATEGIC MANAGEMENT

2. FIVE TASKS OF STRATEGIC MANAGEMENT

3. VISION & MISSION

4. SOCIAL RESPONSIBILITY

5. WHO PERFORMS THE FIVE TASKS

6. CRAFTING A STRATEGY

7. ROLE OF BOARD OF DIRECTORS

8. BENEFITS OF STRATEGIC MANAGEMENT

CONTENTS



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If a man takes no thought about what is distant,he will find sorrow near at hand. He who will notworry about what is far off will soon findsomething worse than worry.

Confucius If everyone is thinking alike, then somebody

isnt thinking. George Patton It is not the strongest of the species that

survive, nor the most intelligent, but the onemost responsive to change. CharlesDarwin

Notable Quotes



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1. Whats the companys present situation?2. Where does the company need to go from here?

Business(es) to be in and market positions tostake out

Buyer needs and groups to serveDirection to head

3. How should it get there?A companys answer to how

will we get there? is its strategy

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Thinking Strategically:3 Big Strategic Questions


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What is meant byStrategy?

Consists of competitive moves and business approaches used by managersto run the company

Managements action plan to:o

Grow the businesso Attract and please customerso Compete successfullyo Conduct operationso

Achieve the targeted levels of organizational performance


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The word Strategy was coined by ancientGreek writer, Xenophen.

Strategy implies understanding / knowing

the business one intends to do So Strategy is an action-oriented activity as

it involves:o Understanding / knowing the businesso A focus on futureo A step towards action

DEFINITION:Strategic Management



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Strategy can be defined as the determinationof basic long-term goals and objectives of anenterprise and adoption of courses of actionand the allocation of resources for carryingout these goals

Chandler




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Pursuit of superior performance by using astrategy that ensures a better or stronger matching of corporate strengths to customersneeds than is provided by the competitors

Ohmae




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Systematic analysis of the factors

associated with customers and competitors(the external environment)

and the organization itself (the internalenvironment)

to provide the basis for re-thinking

the current management practices.

Its objective is to achieve better alignment

of corporate policies and strategic priorities




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STRATEGIC MANAGEMENT: refers to themanagerial process of forming a strategicvision, setting objectives, crafting,implementing and executing the strategy,and then over time initiating whatevercorrective adjustments in the vision,objectives, strategy, and execution aredeemed appropriate.

CONCEPT:Strategic Management



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Strategy: a combination of competitive moves and businessapproaches that managers employ to please customers, competesuccessfully, and achieve organizational objectives.

Good strategy + good strategy execution= good management

Essence of good strategy making is to build a market positionstrong enough and an organization capable enough to producesuccessful performance despite unforeseeable events, potentcompetition, a rash of delays, or cost surprises.

Signs of Good Management



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Forming a strategic vision of where the organization is

headed ---- so as to provide long-term direction, delineatewhat kind of enterprise the company is trying tobecome, and infuse the organization with a sense of purposeful action.

Setting Objectives ----i.e. specific outcomes to achieve. Crafting a strategy to achieve the objectives. Implementing and executing the chosen strategy

efficiently and effectively. Evaluating performance and initiating corrective

adjustments in vision, long-term direction, objectives,strategy or execution in light of actual experience,changing conditions, new ideas and opportunities.

FIVE TASKS OFSTRATEGIC MANAGEMENT



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Three Elements of a Strategic Vision : Mission Statement that defines company business presently

and conveys the essence of WHO WE ARE, WHAT WE DO,and WHERE WE ARE NOW

Using the Mission Statement as a basis for deciding on along-term course, making choices about where we aregoing and charting a strategic path for company to pursue

Communicating the Strategic Vision in clear and excitingterms that arouses organization wide commitment.

The Strategic ManagementProcess:

VISION & MISSION



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VISION & MISSIONMISSION STATEMENT ---- A STARTING POINT FORFORMING A STRATEGIC VISION:

Many organizations develop both---- a missionstatement and a vision statement.

Mission Statement answers the question WHAT ISOUR BUSINESS.

Vision Statement answers the question WHAT DOWE WANT TO BECOME---- a possible and desirablefuture state of an organization.



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VISION & MISSION ROLE OF MISSION STATEMENT : To give the organization its

own special identity, business emphasis and path fordevelopment -----one that typically sets it apart from othersimilarly situated companies.

MISSION IS NOT TO MAKE PROFIT : Sometimes companiescouch their mission in terms of making profit. This ismisguided----profit is an objective and a result of what thecompany does----desire to make profit says nothing about thebusiness arena in which profits are to be made.



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VISION & MISSIONWHAT , WHO & HOWA strategically revealing Mission Statement

incorporates 3 elements:

WHAT is being satisfied---- customer needs WHO is being satisfied---- customer groups HOW the company goes about satisfying

their needs----companys activities,technologies and competencies



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COMPONENTS OF A MISSION STATEMENT:1. Customers ---- who are the firms customers?

2. Product or Services ----- what are the firms major productsor services?

3. Markets ---- geographically where does the firm compete?

4. Technology ---- is the firm technologically current?

5. Concern for survival, growth, and profitability ----- isthe firm committed to growth and financial soundness?


VISION & MISSION



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COMPONENTS OF A MISSION STATEMENT:6. Philosophy ---- what are the basic beliefs, values,

aspirations and ethical priorities of the firm?

7. Self-concept ----- what is the firms distinctivecompetence or major competitive advantage?

8. Concern for public image ---- is the firm responsiveto social, community and environmental concerns?

9. Concern for employees ---- are employees avaluable asset of the firm?


VISION & MISSION



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BROAD DEFINITION Furniture business

Telecom business

Beverage business

Global mail delivery business

Travel & Tourism business


VISION & MISSIONNARROWDEFINITION Wrought-iron lawn

furniture business

Long-distance telephoneservices business

Soft-drink business

Overnight packagedelivery business

Cruise Ship business14/06/2011 20Salah uddin IQRA


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Example of a Mission Statement:

To provide society with superior productsand services----innovations and solutions thatsatisfy customer needs and improve thequality of life


VISION & MISSION



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TCS Pakistan Mission Statement"To direct all our organizational efforts at building upon theexisting organizational strengths and brand recognition toachieve enhanced levels of profitable growth in the core

business, and diversify into new areas that compliment andsupplement the core business, with the diversificationaimed at achieving excellence and industry leader status inthe new areas. The TCS People will however be encouragedto be open to unconventional ideas and services andrecognize new trends at very early stages".


VISION & MISSION



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TCS Pakistan : Vision Statement"TCS will be recognized and respected as professional, innovative,

profitable information, and knowledge based logistics/servicesenterprise. TCS embeds internet based technologies into its internaloperating structures and as business solutions for customers; with

customer, employee and shareholder interests at the core of itsoperations; demonstrating a clear concern for ethical conduct andgood corporate citizenship; with the objective of growing into aregional and global player, with emphasis on the Middle East, Europeand North America".


VISION & MISSION



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VISION: UNI-LEVER PAKISTAN We work to create a better future every day

We help people feel good, look good and get more out of life with brandsand services that are good for them and good for others.

We will inspire people to take small everyday actions that can add up to abig difference for the world.

We will develop new ways of doing business with the aim of doubling thesize of our company while reducing our environmental impact.

We've always believed in the power of our brands to improve the qualityof peoples lives and in doing the right thing. As our business grows, so do

our responsibilities. We recognise that global challenges such as climatechange concern us all. Considering the wider impact of our actions isembedded in our values and is a fundamental part of who we are.


VISION & MISSION



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MISSION STATEMENT: PIAEmployee teams will contribute towards making

PIA a global airline of choice through:

Offering quality customer services andinnovative products. Using state-of-the-art technologies. Ensuring cost-effective measures in procurement

and operations. Developing Safety Culture.


VISION & MISSION



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VISION STATEMENT: PIA

PIAs vision is to be a world class airline meeting

customer expectations through excellent services,on-time performance, innovative products andabsolute safety


VISION & MISSION



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MISSION STATEMENT: BANK AL-HABIB: To be a strong and stable financial institution

offering innovative products and services whilecontributing towards the National economic andsocial development.

VISION STATEMENT: BANK AL-HABIB:

To be a quality financial service providermaintaining the highest standards in bankingpractices.


VISION & MISSION


Th S i M


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PROCESS OF DEVELOPING A MISSION STATEMENT:

Involve as many managers as possible, because throughinvolvement people become committed to an organization.

An opportunity for strategists to obtain needed support.

A facilitator or committee of top managers to short list one singledraft and distribute to all managers or a committee.

Hire out-side consultants, experts.

Decision on how best to communicate the final mission statement,down the line.

Process should create an emotional bond and sense of mission.


VISION & MISSION


Th St t i M t


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IMPORTANCE OF VISION & MISSION STATEMENTS: To ensure unanimity of purpose within the organization. To provide a basis or standard for allocating resources To establish organizational climate To serve as a focal point to identify with organizations

purpose and direction To facilitate the translation of objectives into a work

structure involving the assignment of tasks within theorganization

To specify organizational purpose and then translate it

into objectives in such a way that cost, time andperformance parameters can be assessed and controlled


VISION & MISSION


Th St t i M t


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STRATEGIC VISION:

Choosing a companys path requires attention to: Changes occurring in the market arena , and their

implications for the direction where a company needs tomove?

Customer needs to be satisfied? Different buyer segments to concentrate on? New geographic or product markets to be pursued? Companys business make up in five years? What kind of company should we be trying to become?


VISION & MISSION


Th St t gi M g t


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STRATEGIC VISION:ROLE OF ENTREPRENEURSHIP:

Good entrepreneurship is very essential inaddressing the above six questions.

Charting a promising strategic course enables

managers to think creatively and realisticallyabout changing market, competitive,technological, economic and regulatoryconditions and about the companys resources

and capabilities.


VISION & MISSION


Th St t gi M g t


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STRATEGIC VISION:

INFLECTION POINTS: Many successful organizations need to change direction not

only to survive but to maintain success-----STRATEGICINFLECTION POINTS

When a company reaches a strategic inflection point some

tough decisions are required about changing a companyscourse, so as to sustain companys success, not just to avoidpossible disaster. This may radically alter a companysprospects and require a radical revision of its strategiccourse.

Examples:Intels two strategic inflection pointsPIAs Far East route strategy


VISION & MISSION


The Strategic Management


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STRATEGIC VISION:COMMUNICATING THE STRATEGIC VISION:

Communicating down the line to lower level managers, Vision of thecompany should be presented in a manner that it reaches out, grabsattention and provokes excitement.

It should convey a larger sense of purpose so that employees seethemselves as building rather than laying stones.

An inspiring strategic vision arouses a committed organizational effort

in which people live in the business instead of just coming to work.E.g. International Red Cross mission statement :To serve the most vulnerable


VISION & MISSION


The Strategic Management


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STRATEGIC VISION:

BREAKING DOWN RESISTANCE :

Executives must provide a rationale for a new strategic vision.

Failure to understand or accept the need for re-directingorganizational effort often produces resistance.

It is extremely imperative to prepare an organization to move alonga new course by inducing employee buy-in, and calming fears.

Vision has to be repeated and reinforced at every occasion until it

gets organization-wide acceptance.


VISION & MISSION



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Social Responsibility is a critical consideration for acompanys strategic decision makers since theMission Statement must express how the companyintends to contribute to the societies that sustain it

Business does not function in a vacuum, it exists toserve, depends upon its environment, cannot beseparated from it , and therefore, has aresponsibility to ensure its well being.

The environment is represented by stock holders /owners & employees and also external stakeholders as customers, unions, suppliers,government agencies, society in general


SOCIAL RESPONSIBILITY


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Issues like pollution, disposal of solid and liquid waste,and the conservation of natural resources should beprincipal considerations in strategic decision making

Pollution prevention strategies include changing thematerials used or re-designing operations

Winning the loyalty of consumers will now require newmarketing strategies viz. adoption of 4Es:

I. Make it Easy for consumer to be green

II. Empower consumer with solutionsIII. Enlist the support of consumer

IV. Establish credibility with public to avoid backlash




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Conduct and publish annual social audits which evaluatea firm from the perspective of social responsibility e.g.Abbot Assoc, Dow Chemicals, Exxon & Bank of America

FOUR TYPES OF SOCIAL COMMITMENT:

I. ECONOMIC RESPONSIBILITIES requires managers tomaximize profits whenever possible; provide goods andservices at a reasonable cost; the company emergessocially responsible by providing productive jobs and taxpayments for governments

II. LEGAL RESPONSIBILITIES: to comply with laws thatregulate business particularly in the areas of pollutioncontrol and consumer safety




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III. ETHICAL RESPONSIBILITIES: companys notion of rightor proper business behavior; firms are expected tobehave ethically

IV. DISCRETIONARY RESPONSIBILITY: voluntarily assumedviz. public relations activities, good citizenship, andfull corporate social responsibility; to enhance theimage of their companies, products and services bysupporting worthy causes, supporting charities, public-service advertizing campaigns

CSR COSTS ARE MORE THAN OFFSET IN THE LONGRUN BY AN IMPROVED COMPANY IMAGE ANDINCREASED COMMUNITY GOODWILL




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Firms with a formalized mission statement havetwice the average return on shareholders equity ----Rarick & Vitton

There is a positive relationship between mission

statements and organizational performance----Bart & Baetz

Firms using mission statements have a 30 % higher return on certain financial measures than those

without such statements-----Business Week


VISION & MISSION


Who performs the Five


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Every company Manager has a strategy making / strategyimplementing role for his respective unit.

However, a CEO is the most visible and important strategymanager, as he is the chief direction setter, chief objectivesetter, chief strategy maker and implementer for the wholeorganization ; ultimate responsibility rests with the CEO whohammers out a consensus strategy and coordinates various

aspects of executing the strategy. VPs for Production, Marketing, Finance, Human Resources and

other functional departments have important strategymaking and implementing roles, who also delegate authorityto sub-unit heads.

Who performs the FiveTasks


Crafting a Strategy


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A companys strategy depends on:

Whether to concentrate on a single business orbuild a diversified group of businesses,

Whether to cater to broad range of customers orfocus on a particular market niche,

Whether to pursue competitive advantage basedon low cost or product superiority,

Response to changing buyer preferences,

Range of geographical market to cover, Reaction to newly emerging markets and

competitive conditions

Crafting a Strategy


Crafting a Strategy


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The Chief Architect Approach:

A single person, owner or the CEO, assumes the role of chief strategist and chief entrepreneur, single handedlyshaping strategy

One person functions as strategic visionary though theremay be much brain-storming with subordinates

Examples: Michael Dell at Dell Computers, Bill Gates atMicrosoft, Howard Shultz at Starbucks, Agha Hasan Abediat BCCI, Tariq Chaudhry at Air Blue, Yaqub Tabani at AeroAsia etc.

Strategies of small entrepreneurial companies, familyowned businesses

Works fine if the chief strategist has powerful vision of where to head and how to get there

Crafting a Strategy


Crafting a Strategy


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The Delegation Approach:

CEO or the Manager in charge delegates big chunks of strategymaking to trusted subordinates, down-the-line managers incharge of key business units, a high level task force of talentedpeople from many parts of the company or a team of consultants

Big Advantage in multi-product, multi-business enterpriseswhose operations are far-flung of fast- moving

Success hinges on the business judgments and strategy makingskills of lower echelons which may not be there

Delegation sends wrong signal: that strategy development isntimportant enough to warrant big boss time

Crafting a Strategy


Crafting a Strategy


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The Team Approach: A middle approach where the CEO or the Manager in

charge delegates and enlists the advice of key peersand subordinates in hammering out a consensusstrategy

Strategy teams also involve customers and suppliers in

assessing the future market situation and deliberatingvarious strategy options

Well suited to organizations where strategic issues cutacross departments, product lines and businesses andthere is a need to tap strategic thinking of people withdifferent expertise and experiences

Politics and exercise of power come into play wherethere is no consensus

Crafting a Strategy


Crafting a Strategy


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The Corporate Intrapreneur Approach:

Relies upon middle and lower level managers andteams to spot new business opportunities, developstrategic plans to pursue them and create newbusinesses

Essentially requires ambitious, entrepreneurial peoplein the organization who want to take on strategic andmanagerial responsibility for new products

Works well where technological advances are coming ata fast pace or compelling new opportunities are

opening up Strategic initiatives may be launched in directions that

have no integrating links with overall business

Crafting a Strategy


U d t di C


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ACTIONS&BUSINESSAPPROAC

HES

PLANNEDACTIONS &

INITIATIVES TO

OUTCOMPETERIVALS

MOVES TOREACT& RESPOND TOCHANGINGEXTERNALCIRCUMSTANCES

ACTIONS TOALTER

GEOG.COVERAGEMERGERS &ACQUISITIONS

TOSTRENGTHENBUSINESSPOSITION

STRATEGICALLIANCES& PARTNERSHIPSCAPITALIZE ONNEW

OPPORTUNITIES& DEFEND

HOW THECOMPANYMANAGESPRODUCTION,MARKETING,

ACTIONS TOSTRENGTHENRESOURCE

BASE &COMPETITIVECAPABILITIES

ACTIONS TODIVERSIFYCOMPANYSREVENUE BASE &ENTER NEWBUSINESSES

Unders tanding a CompanysStra tegy


Role of Board of Directors


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To exercise oversight and see that Five Tasks of Strategic management are done in a manner thatbenefits share holders. Holders of large blocks of shares, regulatory authorities and financial pressconsistently urge that board members be active intheir oversight of company strategy, actions and

capabilities of executives To approve companys strategic plans; but should not

play a hands-on role in formulating or implementingstrategy as they dont have detailed command of allthe strategic issues

To be supportive critics whether proposals have beenadequately analyzed, asking perceptive & incisivequestions





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To play a proactive role if the company is losing

market share or eroding profits and to expresstheir concerns about the validity of the strategy To evaluate senior executives strategy-making

and strategy-implementing skills

To exercise due diligence in evaluating thestrategic leadership skills of other seniorexecutives in line to succeed the CEO

Board oversight and vigilance is very much inplay in the strategic arena



Benefits of Strategic


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Providing better guidance to the entire organization onwhat it is we are trying to do

Making managers and organizational members more alertto new opportunities & threatening developments

Helping to unify the organization

Creating a more proactive management posture Developing a constantly evolving business model that will

produce sustained bottom line success

Enabling strategic offensives to out-innovate and out-maneuver rivals and secure sustainable competitiveadvantage

Aggressive pursuit of a creative, opportunistic strategycan propel a firm into a leadership position

Benefits of StrategicManagement



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Thank you

session 1 strategic management process 14 jun 11

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