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“The essence of strategy lies in creating tomorrow’s
competitive advantage faster than competitors mimic
the ones you possess today.”
Gary Hamel C. K. Prahalad
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LEARNING OBJECTIVES
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Understand difference etween !lanned" #mergent$ %eali&ed 'trategy
Understand 'trategic (ecisions
(ifferent 'trategic )anagement !rocesses
Understand difference etween *ision $ )ission
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WHAT MAKES DECISIONS STRATEGIC
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1. )agnitude2. Time+scale
3. ,ommitment
Rare, Consequential and directive
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IDENTIFYING DECISIONS
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-$) was founded y #rling !ersson in 14/ in*0sters" 'weden. t started off life as a retailer of
women’s clothing" -ennes. n 1 it ac5uired
another 'wedish clothing retailer" )aurit& 6idfors"
which sold menswear" and changed its name to
-ennes $ )aurit&.
This was a strategic decision: it involved a major
outlay of caital, it increased the si!e and
comle"ity of the #usiness$ and it involved most ofthe comany. %nd it #rou&ht Hennes into contact
with a whole new customer se&ment 'men(
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n 1/4 it went pulic and was 5uoted on the 'toc8holm stoc8 e9change.
This is not a strate&ic decision. )t
was a means of o#tainin& funds for
e"ansion. The e"ansion may well
have #een a strate&ic decision, #ut
&oin& u#lic in itself was not.
*imilarly, later statements that H+ma-es a#out e"ansion #ein&
financed entirely from the firms own
internal funds are an indication of
how it intends to imlement any
strate&ies it adots, #ut are not
themselves strate&ies.
IDENTIFYING DECISIONS
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#ach year" for the past several years" -$) has
e9panded into a new international mar8et or
mar8ets.
/or other comanies, that have not reviouslye"anded internationally, and H+ in the 0123s
when it oened its first store a#road 4in
5orway6, this would almost certainly #e
a strate&ic decision$ for H+ nowadays it is
ar&ua#ly not always a strategic decision.
7"andin& into new &eo&rahic areas is art ofits current strate&y
IDENTIFYING DECISIONS
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STRATEGIC MANAGEMENT PROCESS
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External
Audit
InternalAudit
Long-TermObjectives
Generate,
Evaluate,SelectStrategies
Implement
Strategies:Mgmt Issues
Implement
Strategies:Mar!eting,"in#Acct,$%&, 'IS
Measure %Evaluate
(er)ormance
*ision
% Mission
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1+
,opyright : 2;;1 -oughton )ifflin ,ompany.
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,opy g t : ;; oug to ,o pa y g ts ese ed
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THREE OVERARCHING THEMES
mplementing a goodstrategy is at least as
important as creating
one" yet many
managers give too
little thought to
implementation
'trategic leadershipis responsile for
ma8ing
sustantive resource
allocation decisions
and
developing 8ey+
sta8eholder support
of the strategy
Firms and
indusri!s ar!
d"nami# in
naur!
T$ su##!!d%&! '$rmu(ai$n
$' a )$$d sra!)"
and is im*(!m!na+
i$n s&$u(d ,!
in!-ri#a,("
#$nn!#!d
Sra!)i# (!ad!r+
s&i* is !ss!nia( i' a
'irm is a,(! $ ,$&
'$rmu(a! and im*(!+
m!n sra!)i!s &a
#r!a! .a(u!
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IMPORTANCE OF E/EC0TION
“The important decisions" the
decisions that really matter" are
strategic . . . =>ut? more important
and more difficult is to ma8eeffective the course of action
decided upon.”
8 Peter 9ruc-er
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STRATEGY AND IMPLEMENTATION ITERATE 6
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THE STRATEGIC MANAGEMENT PROCESS
Sra!)i# ana("s!s
B nternal
B #9ternal
Visi$n and
missi$n
B Cundamentalorgani&ational
purpose
B Drgani&ationalvalues
Sra!)"B
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RES0LT1 INTENDED AND EMERGENT STRATEGIES
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In!nd!d $r P(ann!d Sra!)i!sB Sra!)i!s an $r)ani2ai$n *(ans $ *u in$ a#i$n
B T"*i#a((" &! r!su( $' a '$rma( *(annin) *r$#!ss
B 0nr!a(i2!d sra!)i!s ar! &! r!su( $' un*r!#!d!n!d #&an)!s andun*(ann!d !.!ns a'!r &! '$rma( *(annin) is #$m*(!!d
Em!r)!n Sra!)i!sB 0n*(ann!d r!s*$ns!s $ un'$r!s!!n #ir#umsan#!s
B S!r!ndi*i$us dis#$.!ri!s and !.!ns ma" !m!r)! &a #an $*!n u* n!3un*(ann!d $**$runii!s
B Mus ass!ss 3&!&!r &! !m!r)!n sra!)" 'is &! #$m*an"4s n!!ds and#a*a,i(ii!s
R!a(i2!d Sra!)i!sB T&! *r$du# $' 3&a!.!r in!nd!d sra!)i!s ar! a#ua((" *u in$ a#i$n
and $' an" !m!r)!n sra!)i!s &a !.$(.!
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INTENDED AND EMERGENT STRATEGIES
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1+1/
'ourceF
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0NPLANNED ACTIONS CAN DRIVE STRATEGY
In!(4s $ri)ina( '$#us
56789s : 67;9s<
(esign and manufacture
of (ynamic" %andom+
?
$' In!( r!.!nu!
#am! 'r$m &!
mi#r$*r$#!ss$r
s!)m!n
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B0SINESS STRATEGY DIAMOND
Sa)in)
Di''!r!nia$rs
E#$n$mi#
($)i#V!&i#(!s
Ar!nas
B 6hat will e our speed andse5uence of movesL M 'peed of e9pansionL M 'e5uence of initiatives
Sa)in)
B -ow will returns e otainedL M @owest costs through scale
advantagesL M @owest costs through scope
and replication advantages M !remium prices due to
unmatchale serviceL M !remium prices due to
proprietary product featuresL
E#$n$mi# ($)i#
B -ow will we get thereL M nternal developmentL M Ioint venturesL M @icensingNfranchisingL M #9perimentationL M
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JET BL0E STRATEGY
O,@!#i.!
To “ring
humanity
ac8 to air
travel”
Ar!nasAr!nas
B @ow fare commercial air carrier B Underserved ut over+priced U' cities
V!&i#(!sV!&i#(!s
B 'tart from scratch and achieve all growthinternally Ji.e." do not purchase a regional airlineK
Di''!r!nia$rsDi''!r!nia$rs
B -igh level of service compared to low fare competitors
Je.g." leather seating" satellite T*K
Sra!)"Sra!)"B Grow from one route etween two cities to serving 2;
cities in Eust 3 years
E#$n$mi# ($)i#E#$n$mi# ($)i#B 'ecure cost advantage y eing willing and ale to
perform 8ey tas8s differently M Dne type of plan M ICO home ase M 'econdary location
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FRAMEWORK FOR STRATEGY IMPLEMENTATION
In!nd!d
Sra!)"
R!a(i2!d
and
Em!r)!n
Sra!)i!s
K!" Fa#$rs $' Sra!)" Im*(!m!nai$n
Im*(!m!nai$n (!.!rs
B Drgani&ational structure
B 'ystems and processes
B !eople and rewards
Sra!)i# (!ad!rs&i*
B @ever+ and resource+allocation decisions
B (ecision support among sta8eholders
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The Environment -
“Threats & Opportunities”
Management’s values &
attitude toward risk
Organization’s resources
and capabilities -
“Strengths & Weaknesses”
GOAL
Performance
Implementation Levers:
Organization structure!stems and processesPeople and re"ards
trategic Leadership:
Lever and resource
allocation decisions#evelop support among
stakeholders
T$ATEG%
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P0LLING A 0SD 6> BILLION COW O0T OF A DITCH
B Aero9 introducesthe Aero9 14copier in 17.This copiertransformed the
wor8 placeB Aero9 was charter
memer of the“nifty 7;”+7; stoc8smost favored yinstitutionalinvestors
B 'ince 1/;s"however" Aero9has een crippledy competitionJmostly IapaneseK
B Dctoer 2;;1" Aero9reports first 5uarterlyloss in1 years.)ulcahy is notovious choice for
top positionB 'he lac8s product
development andfinancial e9pertise
B 'he gets it ecausethe oard hasconfidence in her
“strategic mind”.
B %efines Aero9 visionand reminds peopleof core values
B 9
Mu(#a&" a!s
$.!r
S&! (!nds a
urnar$und
/!r$-r!a#&!s*r$'ia,i(i"
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0P STATE TO0RISM DEVELOPMENT CORPORATION
The mission of the corporation as laid down in its memorandum of association areF
BTo promote" ta8e over" develop" start" purchase" construct" ta8e on lease" maintain"manage and operate hotels" restaurants" motels" travelers" lodges" guest houses and
other places for the purpose of oarding" lodging and stay of the tourists.
BTo enter into any arrangement for ta8ing over any or all of the assets and liailities ofany department of the Government of U! connected with the development of tourism.
BTo estalish and manage transport units" travel and transport counters" import"purchase lease and run or otherwise operate uses" truc8s" aircraft" helicopter etc. and
to act as travel agents for airlines" railways etc.
BTo produce" distriute and sell tourist pulicity materialF edit design" print" pulish" sellor otherwise deal with oo8s" maga&ines" periodicals and other materials for the
purpose of giving pulicityP.
http://video-1%20organization%20vision%20values.dat/http://video-1%20organization%20vision%20values.dat/