Strategy :- Mission to Win

Strategy can be defined as the art and science of formulating, implementing, and evaluating cross-functional decisions that enable an organization to achieve its

objectives. Strategy focuses on integrating management, marketing, finance/accounting, production/operations, research and development, and information systems to achieve

organizational success

What is a Strategy

Why is it Needed ?

A strategic plan is, in essence, a company’s game plan. Just as a football team needs a good game plan to have a chance for success, a company

must have a good strategic plan to compete successfully.

Can Hope/Luck be a Strategy

Hope is not a Strategy

Why?

If you leave everything on HOPE, you’re liable to get what others think your value is”

Benefits of Strategic Planning

• Increased effectiveness• Increased efficiency• Improved understanding and better learning• Better decision making• Enhanced organizational capabilities• Improved communications and public relations• Increased political support

What does a company’sstrategy consist of?

War Strategy from Sun Tzu’s• War is a matter of vital importance to the state: a matter of life or death, the road either to survival or ruin. Hence, it is imperative that it be studied thoroughly. • Warfare is based on deception. When near the enemy, make it seem that you are far away; when far away, make it seem that you are near. Hold out baits to lure the

enemy. Strike the enemy when he is in disorder. Avoid the enemy when he is stronger. If your opponent is of choleric temper, try to irritate him. If he is arrogant, try to encourage his egotism. If enemy troops are well prepared after reorganization, try to wear them down. If they are united, try to sow dissension among them. Attack the enemy where he is unprepared, and appear where you are not expected. These are the keys to victory for a strategist. It is not possible to formulate them in detail beforehand.

• A speedy victory is the main object in war. If this is long in coming, weapons are blunted and morale depressed. When the army engages in protracted campaigns, the resources of the state will fall short. Thus, while we have heard of stupid haste in war, we have not yet seen a clever operation that was prolonged. • Generally, in war the best policy is to take a state intact; to ruin it is inferior to this. To capture the enemy’s entire army is better than to destroy it; to take intact a regiment, a company, or a squad is better than to destroy it. For to win one hundred victories in one hundred battles is not the acme of skill. To subdue the enemy without fighting is the supreme excellence. Those skilled in war subdue the enemy’s army without battle.

• The art of using troops is this: When ten to the enemy’s one, surround him. When five times his strength, attack him. If double his strength, divide him. If equally matched, you may engage him with some good plan. If weaker, be capable of withdrawing. And if in all respects unequal, be capable of eluding him. • Know your enemy and know yourself, and in a hundred battles you will never be defeated. When you are ignorant of the enemy but know yourself, your chances of winning or losing are equal. If ignorant both of your enemy and of yourself, you are sure to be defeated in every battle.

• He who occupies the field of battle first and awaits his enemy is at ease, and he who comes later to the scene and rushes into the fight is weary. And therefore, those skilled in war bring the enemy to the field of battle and are not brought there by him. Thus, when the enemy is at ease, be able to tire him; when well fed, be able to starve him; when at rest, be able to make him move. • Analyze the enemy’s plans so that you will know his shortcomings as well as his strong points. Agitate him to ascertain the pattern of his movement. Lure him out to reveal his dispositions and to ascertain his position. Launch a probing attack to learn where his strength is abundant and where deficient. It is according to the situation that plans are laid for victory, but the multitude does not comprehend this.

• An army may be likened to water, for just as flowing water avoids the heights and hastens to the lowlands, so an army should avoid strength and strike weakness. And as water shapes its flow in accordance with the ground, so an army manages its victory in accordance with the situation of the enemy. And as water has no constant form, there are in warfare no constant conditions. Thus, one able to win the victory by modifying his tactics in accordance with the enemy situation may be said to be divine.

• If you decide to go into battle, do not anounce your intentions or plans. Project “business as usual.” • Unskilled leaders work out their conflicts in courtrooms and battlefields. Brilliant strategists rarely go to battle or to court; they generally achieve their objectives through

tactical positioning well in advance of any confrontation. • When you do decide to challenge another company (or army), much calculating, estimating, analyzing, and positioning bring triumph. Little computation brings defeat. •

Skillful leaders do not let a strategy inhibit creative counter-movement. Nor should commands from those at a distance interfere with spontaneous maneuvering in the immediate situation.

• When a decisive advantage is gained over a rival, skillful leaders do not press on. They hold their position and give their rivals the opportunity to surrender or merge. They do not allow their forces to be damaged by those who have nothing to lose.

• Brillant strategists forge ahead with illusion, obscuring the area(s) of major confrontation, so that opponents divide their forces in an attempt to defend many areas. Create the appearance of confusion, fear, or vulnerability so the opponent is helplessly drawn toward this illusion of advantage

Stages of Strategic Management

a b c

Vision Statement –What do we want to become?

Mission Statement –What is our business?

Vision and Mission Statements

Can we get some

examples?

a.1

Mission Elements

Customers Markets

Employees

PublicImage Self-Concept Philosophy

SurvivalGrowthProfit

ProductsServices

Technology

Mission and Vision Statement a.1

a.1

Benefits of Having a Clear Mission and Vision

More Work for me ?

a.1

External Opportunities and Threats

Analysis of Trends– Economic– Social– Cultural– Demographic/Environmental– Political, Legal, Governmental– Technological– Competitors

a.2

Basic Tenet of Strategic Management

External Opportunities and Threats

Strategy Formulation

Take advantage of External Opportunities

Avoid/minimize impact ofExternal Threats

a.2

Controllable activities performed especially well or poorly

Determined relative to competitors

Internal Strengths and Weaknesses a.3

• Typically located in functional areas of the firm

– Management– Marketing– Finance/Accounting– Production/Operations– Research & Development– Management Information Systems

Internal Strengths and Weaknesses a.3

Assessing the Internal Environment

Internal Strengths and Weaknesses

Internal FactorsPerformance Measures

Financial Ratios

Industry Averages

Survey Data

a.3

Specific results that an organization seeks to achieve in pursuing its basic mission

Long-term means more than one year

Long-Term Objectives a.4

Long-Term Objectives

• Essential for ensuring the firm’s success– Provide direction– Aid in evaluation– Create synergy– Reveal priorities– Focus coordination– Provide basis for planning, organizing,

motivating, and controlling

a.4

Implementing Strategies: Management & Operations Issues

Strategy Formulation vs. Implementation

Strategy Formulation (SF)• Positioning forces

before the action• Focus on effectiveness• Primarily intellectual• Requires good intuitive

and analytical skills

• Requires coordination among a few people

Strategy Implementation (SI)

• Managing forces during the action

• Focus on efficiency• Primarily operational• Requires special

motivation and leadership skills

• Requires coordination among many people

• Shift in responsibility

Nature of Strategy Implementation

SI problems can arise because of the shift in responsibility, especially if SF decisions come as a surprise to middle- and lower-level managers. Therefore, it is essential to involve divisional and functional managers in SF.

Divisional or FunctionalManagers

Strategists

Management Issues Central to Strategy Implementation

• Establish annual objectives• Devise policies• Allocate resources• Alter existing

organizational structure• Restructure & reengineer• Revise reward & incentive

plans • Minimize resistance to

change

• Match managers to strategy• Develop a strategy-

supportive culture• Adapt production/operations

processes• Develop an effective human

resources function• Downsize & furlough as

needed• Link performance & pay to

strategies

Purpose of Annual Objectives

Basis for resource allocationMechanism for management evaluationMajor instrument for monitoring progress toward achieving long-term objectivesEstablish priorities (organizational, divisional, and departmental)

Resource Allocation

1. Financial resources

2. Physical resources

3. Human resources

4. Technological resources

Four Types of Resources

Ch 7 -26

Managing ConflictConflict – a disagreement between two or more parties. Interdependency of objectives and competition for limited resources can cause conflict.

Conflict not always “bad” Lack of conflict may signal apathy Can energize opposing groups to action May help managers identify problems

MATCHING STRUCTURE WITH STRATEGY

• Changes in strategy often require changes in the way an organization is structured because: (1) structure largely dictates how objectives and policies will be established (e.g., objectives and policies established under a geographic organizational structure are couched in geographic terms) and (2) structure dictates how resources will be allocated (e.g., if an organization’s structure is based on customer groups, then resources will be allocated in that manner).

• Structure should be designed to facilitate the strategic pursuit of a firm and, therefore, follow strategy.

• When a firm changes its strategy, the existing organizational structure may become ineffective. For example, new strategies to reduce payroll costs may require a change in span of control.

Basic Forms of Structure

Functional Structure Divisional Structure Strategic Business Unit Structure

(SBU) Matrix Structure

Functional Structure

• Groups tasks and activities by business function (e.g., production, finance, marketing, R&D, HR, IT, etc.).

Functional Structure

Divisional Structure

• Can be organized in one of four ways:–By geographic area–By product or service–By customer–By process

Divisional Structure

Strategic Business Unit Structure (SBU)

• Groups similar divisions into strategic business units and delegates authority and responsibility for each unit to a senior executive who reports directly to the chief executive officer.

Matrix Structure

• The most complex of all structures because it depends upon both vertical and horizontal flows of authority and communication.

Matrix Structure

Restructuring

Restructuring - reducing the size of an organization. Also called:

DownsizingRightsizingDelayering

These methods involve, respectively, reducing the number of employees, number of divisions, and number of hierarchical levels in a firm’s organizational structure. Reducing the size of an organization is intended to improve its efficiency and effectiveness.

Creating a Strategy-Supportive Culture

1. Formal statements of organizational philosophy

2. Design of physical spaces3. Deliberate role modeling, teaching,

and coaching4. Explicit reward and status system5. Stories, legends, myths, and parables

Creating a Strategy-Supportive Culture

6. What leaders pay attention to7. Leader reactions to critical incidents and

crises8. Organizational design and structure9. Organizational systems and procedures10.Criteria for recruitment, selection,

promotion, leveling off, retirement, and “excommunication” of people

Production/Operations Decision Examples

Plant sizeInventory / Inventory controlQuality controlCost controlTechnological innovation

Human Resource Concerns

Assessing staffing needs and costs.Selection Methods.Employee Training.Motivating Employees – Developing Performance Incentives; Work-Life Balance Issues; etc.Selecting Appropriate Leadership Styles.