Strategy Mgmt Ppt 1

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Strategic Management


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STRATEGIC MANAGEMENT & BUSINESS POLICY12TH EDITION

THOMAS L. WHEELEN J. DAVID HUNGER


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What is Strategy?

The term strategy is derived from the Greekword strategos, which means generalship- theactual direction of military force, as distinct from

the policy governing its deployment. According to Alfred D Chandler , Strategy is

the determination of the basic long term goalsand objectives of an enterprise and the adoption

of the courses of action and the allocation ofresources necessary for carrying out thesegoals.
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Strategic Management: a set of managerial decisions and actions thatdetermines the long-run performance of a corporation. Strategicmanagement as a discipline originated in the 1950s and 60s. Althoughthere were numerous early contributors to the literature, the most influentialpioneers were Alfred D. Chandler, Philip Selznick, Igor Ansoff, and Peter

Drucker.

Includes:

Internal and external environment scanning

Strategy formulation

Strategy implementation Evaluation and control


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Phases of Strategic Management:

Phase 1: Basic financial planning

Phase 2: Forecast-based planning Phase 3: Externally oriented strategic planning

Phase 4: Strategic management


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Benefits of Strategic Management:

Clearer sense of strategic vision for the

firm Sharper focus on what is strategically

important

Improved understanding of a rapidlychanging environment


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Improved organizationalperformance

Achieves a match

between theorganizationsenvironment and itsstrategy, structure andprocesses

Important in unstableenvironments

Strategic thinking

Organizational learning

Additional Benefits of Strategic Management:


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Impact of Globalization:

Globalization:the integration and internationalization ofmarkets and corporations


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M CDONALD S PLAN TO WIN

After 50 years of operation, McDonald s is revitalizing its products, and pushing innovationthrough a variety of initiatives. This foodservice giant with more than 30,000 restaurantsin 100 countries provides food to nearly 50 million customers each day, but decadesof expansion, sales growth, and profits ts made the burger giant complacent. By focusingon getting bigger, not better, the company stumbled in 2002, recording its first losingquarter. By 2003, U.S. sales had flattened, as many consumers were turning to healthieroptions and restaurants with more upscale menu items, a segment sometimes referred

to as fast - casual . Morgan Spurlock s fi lm Super Size Me, released in 2004, also seriouslydiminished the public image of the quick - service chain, as moviegoers watched Spurlockbecome ill and gain 25 pounds after eating only McDonald s food for one month.With pressure to get back on track, it was time for McDonald s to rethink the business.The chain devised a recovery strategy that included new menu items, redesigned restaurants,and a focus on the consumer experience. Through a program titled Plan to Win, McDonald s focused on making a deeper connection with customers through the fivebusiness drivers of people, products, place, price, and promotion. Using its own five P s,the company is developing and refi ning new strategies to deliver value, offering productvariety, developing updated and contemporary stores, balancing the delivery of value pricingwith more expensive items, and marketing through bold and innovative promotions.


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Execution of this strategy has included mystery shoppers and customer surveys, alongwith grading restaurants to help the company deliver on its people goals. New menuitems like the Fruit & Walnut Salad in the United States and deli sandwiches in Australiaare part of the commitment to serve high - quality products to satisfy customer demandfor choice and variety. Restaurants are staying open longer, accepting credit and debitcards, enabling wireless Internet access, and even providing delivery service in parts ofAsia. As part of the program, franchisees and suppliers are asked to provide their opinions

and ideas on facility design, while the company benchmarks retail leaders, such asCrate & Barrel, to help produce cleaner and smarter restaurants. The company is testingsmall handheld devices to use on what it calls travel paths, a process for checkingoperational failures such as the temperature inside the refrigerators. Experiments witha new grilling concept from Sweden, which grills burgers vertically instead of horizontally,offers space - saving possibilities for the chain. Product offerings like the McCaf ,a concept developed in the Australian market that provides gourmet coffee inside 500existing restaurants, are proving to be successful.The trouble experienced in the early part of the millennium has


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The trouble experienced in the early part of the millennium has abated, and executives atMcDonald s have declared success after several years of progress under the Plan to

WinCompany revenues are up, and the fi rm plans to remain focused on its core business.One

indication of its commitment to fast food was the divestiture of its seven - year ownershipstake in Chipotle Mexican Grill, a highly successful fast - casual burrito chain. With thesale of around 5 millioAttracting more customers to McDonald s remains its goal for growth.

In the U.S.

market, the strategy is to leverage menu innovation; in Europe, upgrading the customerexperience and enhancing local relevance have driven management efforts; and theAsia/Pacifi c, Middle East, and Africa markets have focused on building sales throughextended hours. The question remains whether focusing on the core business will yieldmaximum return. At McDonald s, the executives are betting on the core brand and hopingthat this strategy will pay off. 1


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Prentice Hall, Inc. 2009 1-12

Impact of Environmental Sustainability:

Environmental Sustainability: the use of business

practices to reduce a companys impact on the natural,physical environment


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Regulatory risk

Supply chain risk

Product and technology

risk

Litigation risk

Reputational risk

Physical risk

Risks of Climate Change include:

Impact of Environmental Sustainability


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Impact of E-commerce

The internet is forcing companies to transformthemselves.

New Channels are changing market access andbranding causing the disintermediation of traditional

distribution channels. The balance of power is shifting to the consumer.

Companies are becoming more innovative and efficient.

The pace of business is increasingly drastically.

Corporations are being pushed out of the traditionalboundaries.

Knowledge is becoming a key asset and a source ofcompetitive advantage.


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Population ecology: established organizations areunable to adapt to change

Institution theory: organizations adapt by imitatingsuccessful organizations


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Strategic choice perspective: organizations adapt tochange and have the ability to reshape theirenvironment

Organizational learning theory: organizations adaptdefensively and use knowledge to improve theirrelationship with the environment


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Strategic flexibility:the ability to shift from onedominant strategy to another and requires:

Long-term commitment to the development andnurturing of critical resources

Learning organization


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Learning organization: an organization skilled atcreating, acquiring, and transferring knowledge and at

modifying its behavior to reflect new knowledge andinsights


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Main activities of a learning organization include:

Solving problems

systematically

Experimenting with newapproaches

Learning from pastexperience, history andexperiences of others

Transferring knowledgequickly and easilythroughout theorganization


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Basic Elements of Strategic Management

1. Environmental scanning

2. Strategy formulation3. Strategy implementation

4. Evaluation and control


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Environmental Scanningis the monitoring, evaluatingand disseminating of information from the externaland internal environments to key people within theorganization

SWOT Analysis


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Strategy Formulation: the development of long-range

plans for the effective management of environmentalopportunities and threats in light of organizationalstrengths and weaknesses (SWOT)



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Mission- the purpose or reason for the organizationsexistence

Vision- describes what the organization would like tobecome

Objectives- the end results of planned activity



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Strategies- form a comprehensive master plan thatstates how the corporation will achieve its missionand objectives

Corporate (Stability, growth and retrenchment) Business ( competitive or cooperative)

Functional (distinctive competence)

Policies- the broad guidelines for decision making

that links the formulation of a strategy with itsimplementation



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Strategy implementation: the process by whichstrategies and policies are put into action through the

development of:

Programs: It is a statement of the activities or stepsneeded to accomplish a single use plan.

Budgets: It is a statement of a corporation'sprograms in terms of money.

Procedures/Standing operating procedures: These area system of sequential steps or techniques that

describe in detail how a particular task is to be done.


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Evaluation and control: the process in whichcorporate activities and performance results are

monitored so that actual performance can becompared to desired performance


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Performance: the end result of organizational activities

Feedback/Learning Process: revise or correctdecisions based on performance


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Triggering event: something that acts as a stimulus fora change in strategy and can include:

New CEO

External intervention

Threat of change of ownership

Performance gap Strategic inflection point
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What Makes a Strategic Decision?

Strategic decision making focuses on the long-run

future of the organization

Characteristics of strategic decision making include:

Rare

Consequential

Directive
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Mintzbergs Modes of Strategic Decision Making

Entrepreneurial

Adaptive (Muddling through) Planning

Logical incrementalism (Quinn)


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Strategic Decision Making Process:

1. Evaluate currentperformance results

2. Review corporategovernance

3. Scan and assess theexternal environment

4. Scan and assess theinternal corporateenvironment

5. Analyze strategic(SWOT) factors

6. Generate, evaluate andselect the bestalternative strategy

7. Implement selected

strategies8. Evaluate implemented

strategies


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Strategic audit provides a checklist of questions, by

area or issue, that enables a systematic analysis to bemade of various corporate functions and activities


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Strategy Mgmt Ppt 1

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