strategic process and crafting str class 3

8/7/2019 Strategic Process and Crafting Str Class 3

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The Managerial Process ofThe Managerial Process ofCrafting and ExecutingCrafting and Executing

StrategyStrategy

The Managerial Process ofThe Managerial Process ofCrafting and ExecutingCrafting and Executing

StrategyStrategy

Strategic ManagementSession 3

AVR


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Fig. 2.1: The StrategyFig. 2.1: The Strategy- -Making,Making,StrategyStrategy- -Executing ProcessExecuting Process



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Developing a Strategic VisionDeveloping a Strategic VisionDeveloping a Strategic VisionDeveloping a Strategic Vision

Involves thinking strategically aboutFu t u re direction of company

C hanges in companys pro duct-market-customer-technology to improve

Current market position

Future prospects

Phase 1 of the StrategyPhase 1 of the Strategy- -Making ProcessMaking Process

A strategic vision is a road map show ing the route acompany intends to take in develop ing and strengthen ing

i ts bus iness. It pa ints a p icture of a companysdest inat ion and prov ides a rat ionale for go ing there.


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Factors affecting choice ofFactors affecting choice ofdirection of a companydirection of a company

Factors affecting choice ofFactors affecting choice ofdirection of a companydirection of a company

External consi derationsAttractiveness of present businessForecasts in competitive scenarioAre there any new business dimensions emerging customer groups /nee d-sets an d/or technologies?Which emerging opportunities are the companys cup of tea?

Internal consi derationsWhat are the ambitions of the company?How well the present businesses woul d maintain their attractivenessinto future, in changing scenarios?How well are its resources place d across a perio d of time into future?How much of a base e xists for the company in its technological focus

and roots?


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Delineates managements aspirations for the business Charts a strategic path for the futureW here are we going?

Steers energies of employeesin a common directionMol ds organizational i dentityIs d istinctive and specific toa particular organizationAvoi d s u se of generic lang u ageT riggers strong emotionsIs challenging, u ncomfortable, nail biting

Key Elements of aKey Elements of aStrategic VisionStrategic Vision

Key Elements of aKey Elements of aStrategic VisionStrategic Vision


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C haracteristics of a wellC haracteristics of a wellworded Vision Statementworded Vision StatementC haracteristics of a wellC haracteristics of a wellworded Vision Statementworded Vision Statement

G raphicDirectionalFocuse dFle xibleFeasibleDesirable

Easy to communicate


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Some shortcomings in aSome shortcomings in avision statementvision statement

Some shortcomings in aSome shortcomings in avision statementvision statement

IncompleteVagueBlan dNot distinctiveSuperlatives an d adjectives lea ding the statementG eneric

Broa d


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ExelonsExelonsStrategic VisionStrategic Vision

ExelonsExelonsStrategic VisionStrategic Vision

One C ompany, One Vision.Ex elon str ives to bu i ld e x cept ional value - by

becom ing the best and most cons istently prof i table

electr ici ty and gas company in the Un i ted States.To succeed, we must . . .

L ive up to our comm i tments . . .

Perform at world-class levels . . .

Invest in our consol idat ing industry . . .


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Examples of Strategic VisionsExamples of Strategic VisionsExamples of Strategic VisionsExamples of Strategic Visions

R ed Hat L inu xTo e x tend our pos i t ion as the most trusted L inu x and open source

prov ider to the enterpr ise. We intend to grow the market for

Linu

xthrough a complete range of enterpr

ise

R ed Hat L

inu

x software, a powerful Internet management platform, and

assoc iated support and serv ices.

Wells FargoWe want to sat isfy all of our customers f inanc ial needs,

help them success f inanc ially, be the prem ier prov iderof f inanc ial serv ices in every one of our markets, and

be known as one of A mer icas great compan ies.


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WyethOur v ision is to lead the way to a health ier world. By

carry ing out th is v ision at every level of our organ iz at ion,we w i ll be recogn iz ed by our employees, customers, andshareholders as the best pharmaceut ical company in the

world, result ing in value for all. We w i ll ach ieve th is by:Lead ing the world in innovat ion by l ink ing pharmaceut ical,b iotech, and vacc ines technolog iesMak ing qual i ty, integr i ty, and e x cellence hallmarksof the way we do bus inessA ttract ing, develop ing, and mot ivat ing the best peopleCont inually grow ing improv ing our bus iness


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D ental Products D ivision of 3M Corporat ionBecome TH E suppl ier of cho ice to the global dental profess ional

markets, prov id ing world-class qual i ty and innovat ive

products. [ A ll employees of the d ivision wear badges bear ingthese words, and whenever a new product or bus iness

procedure is be ing cons idered, management asks Is th isrepresentat ive of TH E lead ing dental company?]

N ikeTo br ing innovat ion insp i rat ion to every athlete in the world.


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IntelOur v ision: Gett ing to a b i ll ion connected computers

worldw ide, m i ll ions of servers, and tr i ll ions of dollarsof e-commerce. Intels core m iss ion is be ing the

bu i ld ing block suppl ier to the Internet economy andspurr ing efforts to make the Internet more useful.

Be ing connected is now at the center of peoples

comput ing e x per ience. We are help ing to e x pand thecapab i li t ies of the PC platform and the Internet . . .We have seen only the early stages of deployment of

d igi tal technolog ies.


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He in zOur v ision, qu i te s imply, is to be the worlds prem ier foodcompany, offer ing nutr i t ious, super ior tast ing foods to people

everywhere. Be ing the prem ier food company does not meanbe ing the b iggest but i t does mean be ing the best in terms of

consumer value, customer serv ice, employee talent, andcons istent and pred ictable growth.

General E lectr icWe w i ll become number one or number two in every market we

serve, and revolut ion iz e th is company to havethe speed and ag i li ty of a small enterpr ise.


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The mission statement of mostcompan ies focuses on cu rrent bus iness act ivi t ies - who weare an d what we d o

Current product andserv ice offer ingsCustomer needs be ingserved

Technologicaland bus iness

capab i li t ies

A strategic vision concerns af irms f u t u re bus iness path - where we are going

Markets to be pursuedFuture technology-product-customer focusK ind of companymanagement istry ing to create

Strategic Vision vs. MissionStrategic Vision vs. MissionStrategic Vision vs. MissionStrategic Vision vs. Mission


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Defines cu rrent business activities, highlighting bo u nd aries of current business

P resent pro ducts an d servicesT

ypes of customers serve dConveys

W ho we are,W hat we do, an d

W hy we are hereA companys m iss ion is not to make a prof i t! Its true m iss ion

is i ts answer to W hat will we d o to make a profit? Mak ing is prof i t is an object ive or intended outcome !

C haracteristics ofC haracteristics ofa Mission Statementa Mission Statement

C haracteristics ofC haracteristics ofa Mission Statementa Mission Statement


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Key Elements ofKey Elements ofa Mission Statementa Mission Statement

Key Elements ofKey Elements ofa Mission Statementa Mission Statement

T hree factors to consi der

Customer nee ds W

hat is being satisfie d

Customer groups W ho is being satisfie d

T echnologies/resources/business approaches use d and activities performe d H ow c u stomer nee d s are satisfie d


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Trader JoesTrader JoesMission StatementMission Statement

Trader JoesTrader JoesMission StatementMission Statement

To g ive our customers the best food and beveragevalues that they can f ind anywhere and to prov idethem w i th the informat ion requ ired for informed

buy ing dec isions. We prov ide these w i th a ded icat ionto the h ighest qual i ty of customer sat isfact ion

del ivered w i th a sense of warmth, fr iendl iness, fun,ind ividual pr ide, and company sp ir i t.

( a u niq u e grocery store chain)


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A statement of val u es is often provi ded to gui de thecompanys pursuit of its vision

Val u es Beliefs, business principles, an d ways of doing things

that are incorporate d intoCompanys operations

Behavior of workforce

Val u

es statementsContain between four an d eight values

Are i deally tightly connecte d to an d reinforce companys vision,strategy, an d operating practices

Linking the VisionLinking the VisionWith C ompany ValuesWith C ompany Values

Linking the VisionLinking the VisionWith C ompany ValuesWith C ompany Values


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Example: C ompany ValuesExample: C ompany Values

H ome Depot

Creat ingshareholder value

Bu i ld ing strongrelat ionsh ips

E ntrepreneur ialsp ir i t Ex cellent customer

serv ice

G iving back to thecommun i ty

R espect for allpeople

D oing the r ightth ing

Tak ing care of people


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D u Pont

Safety E th ics

E nv i ronmentalstewardsh ip

R espect forpeople

Example: C ompany ValuesExample: C ompany Values


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An exciting, inspirational visionContains memorable language

Clearly maps companys future direction

Challenges an d motivates workforceP rovokes emotion an d enthusiasm

Winning su pport for the vision involves

P utting where we are going an d why in writingDistributing the statement organization-wi de

Having e xecutives e x plain the visionto the workforce

C ommunicating theC ommunicating theStrategic VisionStrategic Vision

C ommunicating theC ommunicating theStrategic VisionStrategic Vision


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Examples: Vision SlogansExamples: Vision SlogansExamples: Vision SlogansExamples: Vision Slogans

Lev i Strauss & CompanyWe w i ll clothe the world by market ing the most appeal ing and

w idely worn casual cloth ing in the world.

M icrosoft Corporat ion E mpower people through great softwareany t ime, any

place, and on any dev ice.

Mayo Cl in icThe best care to every pat ient every day.


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Examples: Vision SlogansExamples: Vision SlogansExamples: Vision SlogansExamples: Vision Slogans

Scotland YardTo make London the safest major c i ty in the world.

GreenpeaceTo halt env i ronmental abuse andpromote env i ronmental solut ions.

Charles SchwabTo prov ide customers w i th the most useful and

eth ical f inanc ial serv ices in the world.


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O vercoming Resistance toO vercoming Resistance toa New Strategic Visiona New Strategic Vision

O vercoming Resistance toO vercoming Resistance toa New Strategic Visiona New Strategic Vision

Mobilizing su pport for a new vision entails

Reiterating basis for the new direction

Addressing employee concerns hea d-on

Calming fears

Lifting spiritsP rovi ding up dates an d progressreports as events unfol d


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Strategic Inflection PointsStrategic Inflection PointsStrategic Inflection PointsStrategic Inflection Points

T here are times when companies come to a ma jor fork in theroa d.

P erhaps because market con ditions are changing rapi dly in ways

that threaten or en danger the companys business prospectsP erhaps because the strategy simply runs out of streamP erhaps because the actions of competitors block the success of the companys present strategic course an d strategy

Critical decisions have to be ma de about where do we go fromhereA ma jor new directional path may have to be takenA ma jor new strategy may be nee ded


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Intels StrategicIntels StrategicInflection PointsInflection PointsIntels StrategicIntels StrategicInflection PointsInflection Points

Pr ior to m id-1980sFocus on memory chips

Start ing in m id-1980sAban don memory chip business ( due to lower-cost Japanese companiestaking over the market) an d

Become preeminent supplier of microprocessors to P C industryMake P C central appliance inworkplace an d homeBe un dispute d leader in drivingP C technology forwar d

1998Shift focus from P C technology to becoming the preeminent buil ding

block supplier to the Internet economy


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C rystallizes an organizations long-term direction

Red u ces risk of ru dderless decision-making

Assists in gaining s u pport of organizational members for changes to make the vision a reality

Helps keep strategy-relate d actionsof managers on common path

Helps an organization prepare for the f u t u re

Payoffs of aPayoffs of aC lear Strategic VisionC lear Strategic Vision

Payoffs of aPayoffs of aC lear Strategic VisionC lear Strategic Vision


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Setting Obj ectivesSetting Obj ectivesSetting Obj ectivesSetting Obj ectives

P u rpose of setting objectivesConverts vision into specific performance targets

Creates yar dsticks to track performanceP ushes firm to be inventive, intentional, an dfocuse d in its actions

S etting challenging, achievable

objectives g u ar d s against Complacency

Internal confusion

Status quo performance



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C haracteristics of Obj ectivesC haracteristics of Obj ectivesC haracteristics of Obj ectivesC haracteristics of Obj ectives

Represent commitment to achieve specific performancetargets

Spell-out how m u ch of what kin d

of performance by whenWell-state d ob jectives are

Qu antifiable

Meas u rable

Contain a d ea d line for achievement

E stabl ish ing object ives converts thevision into concrete performance o u tcomes!


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Outcomes focuse don improving financial

performance

Outcomes focuse d onimproving long-term

competitive b u siness position

F inanc ial Object ives Strateg ic Object ives

$

Types of Obj ectives RequiredTypes of Obj ectives RequiredTypes of Obj ectives RequiredTypes of Obj ectives Required


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X % increase in annual revenues X % increase annually in after-ta x profits X % increase annually in earnings per share

Annual dividend increases of X %P rofit margins of X %

X % return on capital employe d (RO CE)Increase d sharehol der value

Strong bon d and credit ratingsSufficient internal cash flows to fun d 100 % of new capitalinvestmentStable earnings during perio ds of recession

Examples: FinancialExamples: FinancialObj ectivesObj ectives

Examples: FinancialExamples: FinancialObj ectivesObj ectives


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Winning an X % market shareAchieving lower overall costs than rivalsOvertaking key competitors on pro duct performance or quality or customer service

Deriving X % of revenues from sale of new pro ducts intro duce d in past5 yearsAchieving technological lea dershipHaving better pro duct selection than rivals

Strengthening companys bran d name appealHaving stronger national or global sales an d distribution capabilitiesthan rivalsConsistently getting new or improve d pro ducts to market ahea d of rivals

Examples: StrategicExamples: StrategicObj ectivesObj ectives

Examples: StrategicExamples: StrategicObj ectivesObj ectives


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Unilvers Strategic andUnilvers Strategic andFinancial Obj ectivesFinancial Obj ectives

Unilvers Strategic andUnilvers Strategic andFinancial Obj ectivesFinancial Obj ectives

Grow annual revenues by 5-6% annually

Increase operat ing prof i t marg ins from 11% to 16%

w i th in 5 yearsTr im companys 1200 food, household, and personalcare products down to 400 core brands

Focus sales and market ing efforts on those brands w i thpotent ial to become respected,market-lead ing global brands

Streaml ine companys supply cha in


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The Kroger C ompanys StrategicThe Kroger C ompanys Strategicand Financial Obj ectivesand Financial Obj ectives

The Kroger C ompanys StrategicThe Kroger C ompanys Strategicand Financial Obj ectivesand Financial Obj ectives

R educe our operat ing and adm in istrat ivecost by $500 m i ll ion by year-end 2003

Leverage our $51 b i ll ion s iz e to ach ieve greatereconom ies of scale

R einvest in our core bus iness toincrease sales and market share

Grow earn ings per share by 10-12% in 2002-2003 andby 13-15% annually start ing in 2004.


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Seagate TechnologysSeagate TechnologysStrategic Obj ectivesStrategic Obj ectives

Seagate TechnologysSeagate TechnologysStrategic Obj ectivesStrategic Obj ectives

Sol id i fy the companys No. 1 pos i t ion inthe overall market for hard-d isk dr ives

Get more Seagate dr ives into popular consumerelectron ics products ( i .e. v ideo recorders)

Take share away from Western D igi tal in prov id ing

disk dr

ives for M

icrosofts Xbo

x

Capture a 10% share of the market for 2.5- inch harddr ives for notebook computers by 2004


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H einzs Financial andH einzs Financial andStrategic Obj ectivesStrategic Obj ectives

H einzs Financial andH einzs Financial andStrategic Obj ectivesStrategic Obj ectives

A ch ieve earn ings per share in the rangeof $2.15-$2.25 in 2004Increase operat ing cash flow by 45% to $750 m i ll ion

R educe net debt by $1.3 b i ll ion in 2003 and further strengthen thecompany balance sheet in 2004Cont inue to introduce new and improved food productsR emove the clutter in the company product offer ings by reduc ingthe number of SKUsIncrease spend ing on trade promot ion and advert ising by $200m i ll ion to strengthen the recogn i t ion and market shares of thecompanys core brandsD ivest non-core underperform ing product l ines


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DuPonts Financial andDuPonts Financial andStrategic Obj ectivesStrategic Obj ectives

DuPonts Financial andDuPonts Financial andStrategic Obj ectivesStrategic Obj ectives

To ach ieve annual revenue growth of 5 to 6% and annualearn ings-per-share growth averag ing 10%Grow per-share prof i ts faster than revenues by

(a) Increas ing product ivi ty,(b) Sell ing enough new products each year that average

pr ices and average marg ins r ise, and(c) Us ing surplus cash to buy back shares

Sell the companys low-marg in te x t i les and inter iorsd ivision (w i th sales of $6.6 b i ll ion and operat ing prof i ts of only $114 m i ll ion)


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3 M C orporations Financial3 M C orporations Financialand Strategic Obj ectivesand Strategic Obj ectives

3 M C orporations Financial3 M C orporations Financialand Strategic Obj ectivesand Strategic Obj ectives

To ach ieve annual growth in earn ings pershare of 10% or better, on average

A return on stockholders equ i tyof 20-25%A return on cap i tal employed

of 27% or betterHave at least 30% of sales come from productsintroduced in the past four years


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Strategic Performance FostersStrategic Performance FostersBetter Financial PerformanceBetter Financial PerformanceStrategic Performance FostersStrategic Performance FostersBetter Financial PerformanceBetter Financial Performance

A companys achievement of satisfactory financial performance, by itself,is not eno u gh

Financial performance measures are lagging in d icators reflectingresults of past decisions an d actions

Of equal or greater importance is a companys performance on measures of its strategic well-being its competitiveness and market position

Strategic performance measures are lea d ing in d icators of a

companys future financial performance an d business prospectsAchievement of strategic performance targets

Signals growing competitiveness

Signals growing strength in the marketplace


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Balanced Scorecard ApproachBalanced Scorecard Approach StrategicStrategic andand Financial Obj ectivesFinancial Obj ectives

Balanced Scorecard ApproachBalanced Scorecard Approach StrategicStrategic andand Financial Obj ectivesFinancial Obj ectives

Balance d scorecar d approach for measuringcompany performance req u ires both

Financial ob jectivesStrategic ob jectives

E mphasis on financial performance may ass u me priority over strategic performance when companys

Financial performance is dismal an d Survival is threatene d

O therwise, management is a dvise d to put more emphasis onachieving strategic objectives

The surest path to su staine d f u t u re profitabilityyear after year is to relentlessly pu rs u e strategic o u tcomes

that strengthen a companys bus iness pos i t ion andgive i t a grow ing competitive a d vantage over r ivals!


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ShortShort--Term vs.Term vs.LongLong- -Term Obj ectivesTerm Obj ectives

ShortShort--Term vs.Term vs.LongLong- -Term Obj ectivesTerm Obj ectives

S hort-term objectives

T argets to be achieve d soon

Milestones or stair steps for reaching long-range performance

Long-term objectives

T argets to be achieve d within3 to 5 years

P rompt actions now that will permit reaching targete dlong-range performance later


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A company e xhibits strategic intent when it relentlessly pursues an ambitio u s strategic objective and concentrates its

competitive actions an denergies on achieving that ob jective!

C oncept of Strategic IntentC oncept of Strategic IntentC oncept of Strategic IntentC oncept of Strategic Intent


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C haracteristics ofC haracteristics ofStrategic IntentStrategic Intent

C haracteristics ofC haracteristics ofStrategic IntentStrategic Intent

Indicates firms intent to making quantam gains in competingagainst key rivals an d to establishing itself as a winner in themarketplace, often against long o dds

Involves establishing a gran d iose performance target that isout of proportion to its imme diate capabilities an d market

position but then devoting the companysfull resources an d energies to achieving the target over time

Signals relentless commitment toachieving a partic u lar market positionand competitive stan d ing


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1. First, establish organization-wi d e ob jectives an d performance targets

2. Next, set bu siness and pro d u ct line ob jectives

3. T hen, establish f u nctional and d epartmental ob jectives

4. I nd ivi d u al ob jectives are establishe d last

Obj ectives Are NeededObj ectives Are Neededat All Levelsat All Levels

Obj ectives Are NeededObj ectives Are Neededat All Levelsat All Levels


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Importance ofImportance ofTopTop--Down Obj ectivesDown Obj ectives

Importance ofImportance ofTopTop--Down Obj ectivesDown Obj ectives

G u i d e ob jective-setting an d strategy-making at lower levels

E ns u res financial an d strategic performance targets for all business units, divisions, an d departments are d irectly

connecte d to achieving company-wi d e objectivesI ntegration of objectives has two a dvantages

Helps pro d u ce cohesion among ob jectives an dstrategies of different parts of organization

Helps u nify internal efforts to move acompany along the chosen strategic path


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C rafting a StrategyC rafting a StrategyC rafting a StrategyC rafting a Strategy

S trategy-making involves entreprene u rship searching for opportunities

To do new things or

T o do existing things in new or better ways

S trategizing involves

P icking up on happenings in the e xternal environment an d

Steering company activities in new directions dictate d byshifting market con ditions



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Activities Involved inActivities Involved inC rafting a StrategyC rafting a Strategy

Activities Involved inActivities Involved inC rafting a StrategyC rafting a Strategy

S t u d ying market tren ds an d actions of competitors

Listening to customers, anticipating their changing nee ds

S cr u tinizing business possibilities base d on new technology

Bu il d ing firms market position

via acquisitions or new pro ducts

P u rs u ing ways to strengthenfirms competitive capabilities

Our strategywill be . . .


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Who Participates in C raftingWho Participates in C raftinga C ompanys Strategy?a C ompanys Strategy?

Who Participates in C raftingWho Participates in C raftinga C ompanys Strategy?a C ompanys Strategy?

Chief e xecutive officer - CEO

Senior corporate e xecutives

Chief financial officer - CFO

Managers of business divisions an dma jor pro duct lines

Key V P s for pro duction, marketing, human resources, an d

other functional departments E very company manager has a strategy-making,

strategy-exec u ting role rang ing from m inor to major for the area he or she heads!


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Strategizing: An IndividualStrategizing: An Individualor Team Responsi b ility?or Team Responsi b ility?

Strategizing: An IndividualStrategizing: An Individualor Team Responsi b ility?or Team Responsi b ility?

T eams are increasingly use d because

Fin ding market- an d customer- driven solutions isnecessary

Comple x strategic issues cut acrossfunctional areas an d departmental units

Ideas of people with different backgroun ds an d ex periences

strengthen strategizing effortG roups charge d with crafting thestrategy often inclu de the peoplecharge d with implementing it


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Fig. 2.2: A Companys StrategyFig. 2.2: A Companys Strategy- -Making HierarchyMaking HierarchyFig. 2.2: A Companys StrategyFig. 2.2: A Companys Strategy- -Making HierarchyMaking Hierarchy


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Levels of StrategyLevels of Strategy- -MakingMakingin a Diversified C ompanyin a Diversified C ompanyLevels of StrategyLevels of Strategy- -MakingMakingin a Diversified C ompanyin a Diversified C ompany

CorporateStrategy

Bus iness Strateg ies

Funct ional Strateg ies

Operat ing Strateg ies

Two-Way Influence

Two-Way Influence

Two-Way Influence

Corporate-LevelManagers

Bus iness-LevelManagers

Funct ional

Managers

Operat ingManagers


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Levels of StrategyLevels of Strategy- -Making inMaking ina Singlea Single- -Business C ompanyBusiness C ompanyLevels of StrategyLevels of Strategy- -Making inMaking ina Singlea Single- -Business C ompanyBusiness C ompany

B usinessStrategy

Two-Way Influence

Functional Strategies

Operating Strategies

B usiness-LevelManagers

OperatingManagers

FunctionalManagers

Two-Way Influence


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Tasks of C orporate StrategyTasks of C orporate StrategyTasks of C orporate StrategyTasks of C orporate Strategy

Moves to achieve d iversification

Actions to boost performance of in dividual businesses

Capturing valuable cross-b u siness synergies to provi de1 + 1 = 3 effects!

Establishing investment priorities and steeringcorporate reso u rces into themost attractive businesses


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Initiating approaches to pro d u ce s u ccessf u l performance in aspecific business

Crafting competitive moves to bu il d su stainable competitive a d vantage

Developing competitively val u ablecompetencies and capabilities

U niting strategic activities of f u nctional areas

G aining approval of b u siness strategies by corporate-levelofficers an d directors

Tasks of Business StrategyTasks of Business StrategyTasks of Business StrategyTasks of Business Strategy


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G ame plan for a strategically-relevantfunction, activity, or business process

Detail how key activitieswill be manage d

P rovi de su pport for bu siness strategy

Specify how f u nctional objectivesare to be achieve d

Tasks of Functional StrategiesTasks of Functional StrategiesTasks of Functional StrategiesTasks of Functional Strategies


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Tasks of O perating StrategiesTasks of O perating StrategiesTasks of O perating StrategiesTasks of O perating Strategies

Concern narrower strategies for managing grassroots activities an dstrategically-relevant operating u nits

Add d etail to businessand functional strategies

Delegation of responsibilityto frontline managers


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Uniting the C ompanysUniting the C ompanysStrategyStrategy- -Making EffortMaking Effort

Uniting the C ompanysUniting the C ompanysStrategyStrategy- -Making EffortMaking Effort

A firms strategy is really a collection of initiativesundertaken by managers at all levels in the organizational

hierarchy

All the various strategic initiatives must be unifie d intoa cohesive, company-wi de action plan

P ieces of strategy shoul d fit together like the pieces of a pu zzle


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Its strategic visionand bu siness mission

Its strategy

Its strategic and financial objectives

What Is a Strategic Plan?What Is a Strategic Plan?What Is a Strategic Plan?What Is a Strategic Plan?

A CompanysStrateg ic

PlanCons ists

of


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Action-oriente d , operations- d riven activity aime d at shaping performance of core business activities in a strategy-supportivemanner

T ou gher and more time-cons u ming than crafting strategy

K ey tasks inclu de

Improving efficiency of the strategy being e xecute d

Showing measurable progress in achieving targete d results


Implementing and Executing StrategyImplementing and Executing StrategyImplementing and Executing StrategyImplementing and Executing Strategy


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Buil ding a capable organizationAllocating reso u rces to strategy-critical activitiesEstablishing strategy-s u pportive policiesInstituting best practices and programs for contin u ou s improvement Installing information, comm u nication, and operating systems

Motivating people to pursue the target ob jectivesT ying rewar d s to achievement of res u ltsCreating a strategy-s u pportive corporate c u lt u reExerting the lea d ership necessary to drive the process forwar d and keep improving

What Does StrategyWhat Does StrategyImplementation Involve?Implementation Involve?

What Does StrategyWhat Does StrategyImplementation Involve?Implementation Involve?


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C haracteristics of GoodC haracteristics of GoodStrategy ExecutionStrategy Execution

C haracteristics of GoodC haracteristics of GoodStrategy ExecutionStrategy Execution

Involves creating strong fits between strategy and

Organizational capabilities

Rewar d structure

Internal operating systems

Organizations work climate an d culture

T he stronger the fits the

Better the e xecution

Higher a companys o dds of achieving its performance targets


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T asks of crafting an d implementing the strategy are not a one-time exercise

Customer nee ds an d competitive con ditions change

New opportunities appear; technologyadvances; any number of other outsi de developments occur One or more aspects of e xecuting thestrategy may not be going wellNew managers with different i deas take over Organizational learning occurs

All these trigger the nee d for corrective actions an d ad j u stments on an as-nee d ed basis


Evaluating Performance andEvaluating Performance andMaking C orrective Ad justmentsMaking C orrective Ad justments

Evaluating Performance andEvaluating Performance andMaking C orrective Ad justmentsMaking C orrective Ad justments


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Monitoring, Evaluating, andMonitoring, Evaluating, andAd justing as NeededAd justing as Needed

Monitoring, Evaluating, andMonitoring, Evaluating, andAd justing as NeededAd justing as Needed

T aking actions to ad j u st to the march of events ten ds to resultin one or more of the following

Altering long-term direction an d/or redefining the mission/vision

Raising, lowering, or changing performance ob jectives

Mo difying the strategy

Improving strategy e xecution


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C orporate Governance: StrategicC orporate Governance: StrategicRole of a Board of DirectorsRole of a Board of Directors

C orporate Governance: StrategicC orporate Governance: StrategicRole of a Board of DirectorsRole of a Board of Directors

Exercise strong oversight to ensure the five tasks of strategicmanagement are e xecute d to benefit

Sharehol ders or

Stakehol dersMake sure exec u tive actions are not only proper but alsoaligne d with interests of stakehol d ers


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Ob ligations of aOb ligations of aBoard of DirectorsBoard of DirectorsOb ligations of aOb ligations of a

Board of DirectorsBoard of DirectorsBe inquiring critics and overseersE val u ate caliber of senior exec u tives strategy-making an d strategy-e xecuting skills

I nstit u

te a compensation plan for top e xecutives rewar ding them for results that serve interests of

Stakehol ders an d Sharehol ders

Have courage to intervene whenthings are not going well or to reinin a CEO who steps out of boun ds


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Good C orporateGood C orporateGovernance MattersGovernance Matters

Good C orporateGood C orporateGovernance MattersGovernance Matters

T he whole fabric of effective corporate governance is u nd ermine d when boar d s of d irectors shirk their responsibility to maintain ultimatecontrol over

Companys strategic direction,

Ma jor elements of its strategy, an d Business approaches management is using to implement an d executethe strategy

Boar d members are obligate d to rein in a CEO who oversteps the

boun ds of soun d business principles an d ethical behavior A rubber stamp boar d abdicates its responsibility to sharehol ders

Boar d s of d irectors have a very important oversight role inthe strategy-mak ing, strategy-e x ecut ing process!


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strategic process and crafting str class 3

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