2 - sm overview contd....ppt

7/30/2019 2 - SM Overview contd....ppt

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Strategic Management ProcessComponents of SM:

Company Mission

&

Social Responsibility

External Environment

Remote

Industry

(global & domestic)

Operating

Internal Analysis

Strategic Analysis & Choice

Long Term Objectives Generic & Grand Strategies

Short Term Objectives Functional TacticsPolicies that empower

action

Restructuring, Reengineering &

Refocusing the organization

Strategic Control &Continuous Improvement

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Strategic Management

Company Miss ion:

Mission of a company is its unique purpose that sets itapart from other companies of its type & identifies the

scope of its operations.

In short, mission describes the companys product ,

market and technological areas of emphasis in a way

that reflects the values & priorities of the strategic

decision makers.

The mission statement must express how the company

intends to contribute to the societies that sustain it.


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Internal Analys is:

The company analyses the quantity & quality of the

companys financial, human & physical resources.

It also assess the strengths & weaknesses of thecompanys management & organizational structure.

It analyses the company's past success with the

companys current capabilities in an attempt to identify

the companys future capabilities.


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External Environment:

A firms external environment consist of all the conditions

& forces that affect its strategic options & define its

competitive situation.

Remote :Economic, Social, Political, Technological,

Ecological

Industry : Entry Barriers, Supplier Power ,Buyer Power,

Substitute Availability, Competitive RivalryOperating Environment : Competitors, Creditors,

Customers, Labour, Supplier


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Strategic Analysis & Choice:

Simultaneous assessment of the external environment

and the company profile, enables a firm to identify a

range of possibly attractive interactive opportunities.

These opportunities are possible avenues for

investment.

Options in line with company mission is generated fromwhich strategic choice is made.


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The process is meant to provide the combination of long

term objectives & generic & grand strategies that

optimally position the firm in its external environment to

achieve the company mission.


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Long Term Object ives:

The result the organisation seeks over a multi year

period are its long term objectives.


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Generic & Grand Strategies:

Many businesses adopt one or more generic strategiescharacterizing their competitive orientation in the market

place.

Low Cost, differentiation or focus strategies are the three

fundamental options.

Intelligent managers seek to create ways their firmspossess both low cost and differentiation competitive

advantage as part of their overall generic strategy.


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Companies combine these capabilities with a

comprehensive, general plan of major actions throughwhich their firm intends to achieve its long term

objectives in a dynamic environment called the Grand

Strategy.

Every grand strategy is a unique package of long term

strategies : concentration, marker development, product

development, innovation, horizontal integration. vertical

integration, joint venture, strategic alliances,

diversification, liquidation.


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Ac t ion Plans & Short Term Object ives:

Action Plans translate generic & grand strategies intoaction by incorporating four elements.

First : they identify specific functional tactics & actions

to be undertaken in the next week, month or quarter as

part of the business effort to build Competitive

Advantage.

The second element is a clear time frame for

completion.


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Third, action plans create accountability by identifying

who is responsible for each action in the plan.

Fourth, each action in an action plan has one or more

specific immediate objectives that are identified asoutcomes that the action should generate.


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Func t ional Tact ics:

Business functions need to identify & undertake

activities unique to the function that help build a

sustainable competitive advantage.

Functional tactics are detailed statements of the means

or activities that will be used to achieve short term

objectives & establish Competitive Advantage.

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Pol ic ies that Empower Ac t ion:

Policies guide & preauthorize the thinking, decisions

and actions of operating managers and their

subordinates in implementing the business strategy is

essential for establishing & controlling the ongoingoperating process of the firm in a manner consistent with

the firms strategic objectives.

Policies often increase managerial effectiveness bystandardizing routine decisions & empowering or

expanding the discretion of managers & subordinates in

implementing business strategies.

St t i M t


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Restruc tur ing , Reeng ineer ing & Refocus ing the

organisat ion:

Until this point in the SM process, managers have

maintained a decidedly market oriented, focus as they

formulate strategies & begin implementation through

action plans & functional tactics.

Now the process stakes an internal focus, getting work

of the business done effectively & efficiently so as tomake the strategy successful.

- What is the best way to organise ourselves to

accomplish the mission?

St t i M t


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- What values should guide our daily activities - what

should the organisation & its people be like?

- How can we shape rewards to encourage

appropriate action?

The intense competition in the global market place has

made this tradition internally focused set of questions.

The company's structure, leadership, culture and rewardsystem may all be changed to ensure cost

competitiveness and quality demanded by unique

requirements of its strategies.

St t i M t


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Strategic Contro l & Cont inuous Improvement:

Strategic Control is concerned with tracking a strategy

as it is being implemented, detecting problems or

changes in its underlying premises & making necessary

adjustments.

Continuous improvement provides a way for strategic

control that allow their organisation to respond more

proactively and timely to rapid development in hundredsof areas that influence a business success.

St t i M t


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SM as a Process:

A process is the flow of information through interrelated

stages of analysis towards the achievement of an aim.

Thus, SM is a process. the flow of information involveshistorical, current & forecast data on the operations &

environment of the business.

Managers evaluate these data in light of the values andpriorities of influential individuals & groups (often called

stake holders) that are vitally interested in the actions of

the business.

St t i M t


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The aim of the process is the formulation &

implementation of strategies, that work achieving the

companys long term mission & short term objectives.

Viewing SM as a process has several important

implications:First a change in any component will affect several; or all

of the other component.

Most of the arrows in the model point two ways,suggesting that the flow of information is reciprocal.

St t i M t


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The second implication is that strategy formulation and

implementation are sequential.

The process begins with development or reevaluation of

the company mission.

Followed by development of a company profile &

assessment of the external environment.

Then follow in order, strategic choice, definition of longterm objectives, design of the grand strategy, definition

of short term objectives, design of operating strategies,

institutionalisation of the strategy ,review & evaluation

St t i M t


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The third implication is the necessity of feedback from

institutionalisation, review and evaluation to the early

stages of the process.

Feedback can be defined as the collection of postimplementation results to enhance future decision

making.

St t i M t


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The fourth implication is the need to regard it as a

dynamic system.

The term dynamic characterizes the constantly

changing conditions that affect interrelated andinterdependent strategic activities.

Since change is continuous, the dynamic strategic

planning must be monitored constantly for significantshifts in any of its components as a precaution against

implementing an obsolete strategy.

2 - sm overview contd....ppt

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