Session 3

Strategic Management (Part 1)

Evolution of StrategyStrategic VisionStrategic Mission

Strategy

Strategy is concerned with deciding what business an organisation should be in, where it wants to be, and how it is going to get there.

Strategic Management

Strategic management is an organisation-wide task involving both the development and implementation of strategy.

It demands the ability to steer the organisation as a whole through strategic change under conditions of complexity and uncertainty.

Strategos The word strategy came from the

Greek word strategos, which means a General.

At that time strategy meant the art and science of directing military forces.

Today, the term strategy is used in business to describe how an organisation is going to achieve its mission and objectives.

Evolution Of Business Strategy

Business policy can be traced back to 1911, when Harvard business school introduced an integrative course in management for GM based on case study.

Introduction in B schools came in 1959 with publication of Gordon and Howell reports sponsored by Ford foundation.

Long Term Planning (In the ‘60s )

Organisations focused on setting clear long term goals and working towards them. The growth was to come from the same line of business in which the companies were operating.

Capability – Opportunity Fit (In the ’70s)

Environment threats and opportunities started assuming greater importance in strategy planning.

Resource constraints, particularly the oil shock, and limited opportunities in the traditional line of business were mainly responsible for the shift in focus.

Growth through integration and diversification formed the core of strategic plans of many companies.

Planning to Gain Competitive Advantage (In the ’80s)

With severe competition from the Japanese and the newly industrialised countries, the emphasis in the 80s shifted to competitive advantages and offering better value to the customer then the competitor could.

Mergers, acquisitions and takeovers to gain the advantage of size also became popular.

Capability in a Turbulent Environment (In the ’90s)

In the 90s onwards the trend became more complex with unprecedented uncertainty.

Global competition, path breaking technology, shifting consumer tastes and ever changing exchange rates are making it a tough proposition for planners.

Hence the shift from matching capability to coping ability in a turbulent environment (copability).

Adaptive Planning-(Day 1990)

One major outcome is that many companies are doing away with long term plans. They have now started managing with intuition and experience. There is a greater emphasis on issues management.

That is in order to cope with the environment, companies continuously monitor the environment (both internal and external) to identify issues that may have significant bearing on company operations.

Globalisation Era

Individual companies do not posses all the skills and technology required to exploit the global market.

As a coping mechanism, companies are moving in the direction of strategic alliances and joint ventures to be able to compete on a global scale. There is a clear shift from competition to collaboration.

Five Tasks Of Strategic Management

Vision & Mission Craft ImplementObjectives

Evaluate

Revise Improve Recycle

What Is a Vision?

"Every organization has a destiny: a deep purpose that expresses the organization's reason for existence. Visions exist on different levels of the organization's identity”. P. Senge

What Is a Vision?

"To choose a direction, an executive must have developed a mental image of the possible and desirable future state of the organization. This image, which we call a vision, may be as vague as a dream or as precise as a goal or a mission statement." Warren Bennis

Vision Tips

A well-stated vision statement: Is brief. Is catchy and easy to remember. Is inspiring and a challenge to future

achievement.

Vision Tips Is believable and consistent with your

strategic values and your mission. Serves as a rallying point with all important

stakeholders. Clearly states the essence of what your

organization must become. Allows for flexibility and creativity in

execution.

Vision Examples: Matsushita

In full awareness of our responsibilities as manufacturer, we will devote ourselves to the progress and development of society and the well-being of people, thereby contributing to the growth of human civilization.

Vision Examples At General Electric (GE) the vision is

'We bring good things to life'. The Ford Motor Company vision is 'to

become the world's leading consumer company for automotive products and services'.

To be the world’s best in chemicals and electronic imaging. Eastman Kodak

Vision Ought to Be Compelling In order for you to get your employees

passionate about your vision, it has to be compelling. It has to matter… not just to your management team, but also to your employees. “To triple sales revenue next year,” doesn’t do it. For, who cares? Only a few.

To make a difference to customers, to the community, to the world. To improve the lives of human beings. That matters.

Live the Vision It’s also important for management not just

to speak the vision, but also to live the vision. Apple computer did this.

The entire design team for the apple II GS computer signed their name on the artwork for the computer’s mother board? So that on each and every apple II GS computer, the team’s signatures appear in copper script.

That’s involving employees in living the vision.

Mission Statement: Definition

The company mission embodies the strategic decision-makers business philosophy, and also reveals the image the company seeks to project, and indicates the principal product or service areas, and the primary customers needs the company attempts to satisfy.

Business Philosophy

Company philosophy reflects basic values, aspirations and philosophical priorities that the strategic decision-makers are committed to emphasize in the management of their firms.

(Generally unwritten-yet pervasive code of behaviour).

Mission Statement: Presumed Benefits

To communicate a sense of the firm’s direction & purpose so that coherent short-term & long-term objectives are developed. Employees, stockholders & customers come to know where the firm is headed.

To inspire & motivate.

Mission Statement: Presumed Benefits

To serve as a control mechanism to keep the firm “on track”, to keep it from wandering into unrelated businesses.

They serve as boundary lines to make decisions. Neither too narrow(rigid) nor too wide (without clear goals & direction).

Mission Statement Dimensions

“Clayton Instruments Company designs and manufactures highly reliable monitoring equipment for use in harsh or unusual environments within the process industries.”

Note that this mission statement has both an internal and an external dimension.

Mission Statement Internal Dimension

• Internally, it describes the products which the company offers: “highly reliable monitoring equipment.” And it also lists the functions the company performs: “design and manufacturing.”

Mission statement components

• Externally, it identifies the customer: “the process industries.” And it sites the company’s “market position” - the reason why customers would prefer to buy products and services from the company. Specifically, the company’s products are “for use in harsh or unusual environments.”

Mission a Strategic Tool

Developing your mission statement is the step which moves your strategic planning process from the present to the future.

Your mission statement must “work” not only today but for the intended life of your strategic plan of which your mission statement is a part.

Mission Statements Examples

Our business is renting cars. Our mission is total customer satisfaction. (Avis Rent-a-Car)

We are committed to improve health care throughout the world. (Baxter Travenol)

Mission Statements Examples

Our mission is to provide any customer a means of moving people and things up, down, and sideways over short distances with high reliability than any similar enterprise in the world. (Otis Elevator)

Mission Statements Examples

We believe our first responsibility is to the doctors, nurses and patients, mothers and all who use our products and services. (Johnson & Johnson)

Mission

“Absolutely Positively Overnight”

MindTree Consulting Mission

Its mission is to deliver business enabling solutions and technologies, by creating partnerships with its customers, in a joyous environment for its people.

Helping them stand tall

“I took a paint brush, suddenly I got an idea,

Blue is limitless imagination,

Yellow is bubbles of joy and

Red is action.”

 Chetan K.S, a student with motor and speech disability about his creation, the famous red, blue and yellow logo.

MindTree Values

These values are caring, learning, achieving, sharing and social responsibility, the CLASS values in short.

Every employee is assessed for these values during the annual appraisal process.

MindTree Values

MindTree believes that these five values bind the employees of MindTree as one large family.

The CLASS values act as the common chord among the employees who belong to nine different nations cutting across three continents.

Difference between Mission & Vision

Your Mission Statement describes what business you’re in and who your customer is. As such, it captures the very essence of your enterprise.

Unlike your mission statement, your vision statement is a projection in the future. Your vision is your dream, your aspiration, your "hope to accomplish."

AMD's Vision

We at AMD share a vision of a world that is enhanced through information technology, which liberates the human mind and spirit.

AMD's Vision

With a strong commitment to our core values and mission, we anticipate and respond quickly to changing customer needs while preserving a culture that brings out the best in each of us.

AMD's Mission

AMD produces integrated circuits, providing programmable products in concert(design) with applications solutions to manufacturers of equipment for personal and networked computation(calculations) and communication.

AMD's Mission

Successful accomplishment of this mission will enable AMD to grow faster and earn a higher return on equity than the semiconductor industry.