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Strategic Management Establishing Company Direction
43

Stratergic Mgmt Ppt

Apr 21, 2015

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Page 1: Stratergic Mgmt Ppt

Strategic Management

Establishing Company Direction

Page 2: Stratergic Mgmt Ppt

Strategy ImplementationStrategy Implementation

StrategicStrategicEntrepreneurshipEntrepreneurship

OrganizationalOrganizationalStructure and Structure and

ControlsControls

CorporateCorporateGovernanceGovernance

StrategicStrategicLeadershipLeadership

Strategy FormulationStrategy Formulation

StrategicStrategicCompetitivenessCompetitivenessAbove-AverageAbove-Average

ReturnsReturns

Strategic VisionStrategic VisionStrategic MissionStrategic Mission

The ExternalThe ExternalEnvironmentEnvironment

The InternalThe InternalEnvironmentEnvironment

The Strategic The Strategic Management Management ProcessProcess

FeedbackFeedback

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Corporate-Corporate-Level StrategyLevel Strategy

CooperativeCooperativeStrategyStrategy

Competitive RivalryCompetitive Rivalryand Competitiveand Competitive

Dynamics Dynamics

InternationalInternationalStrategyStrategy

Business-LevelBusiness-LevelStrategyStrategy

Acquisition andAcquisition andRestructuringRestructuring

StrategiesStrategies

Page 3: Stratergic Mgmt Ppt

Developing strategic vision Three tasks of a strategic vision

Develop mission statement defining what business the company is in presently

“who we are” “what we do” “where we are” Use mission statement as basis for deciding

long term course and charting strategic path “where we are going”

Communicate strategic vision in clear, exciting terms that arouse organization-wide commitment

Page 4: Stratergic Mgmt Ppt

Mission statement Give organization its own special

identity, business emphasis, and path for development Sets it apart from similar companies Not “to make money”

Page 5: Stratergic Mgmt Ppt

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Vision & Mission (Cont’d)Vision & Mission (Cont’d)

Mission statement answers the question:

“What is our business?”

Page 6: Stratergic Mgmt Ppt

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Vision & Mission Vision & Mission (Cont’d)(Cont’d)

Vision statement answers the question:

“What do we want to become?”

Page 7: Stratergic Mgmt Ppt

Developing a Strategic Vision

Involves thinking strategically about Future of company Where are we going?

Tasks include Creating a roadmap of the future Deciding future business position to stake

out Providing long-term direction Giving company a strong identity

Page 8: Stratergic Mgmt Ppt

Characteristics of a Strategic VisionCharacteristics of a Strategic Vision Well-stated vision

statements

Are distinctive and specific to a particular organization

Avoid generic language

Excite strong emotions

Are challenging, nail biting

Page 9: Stratergic Mgmt Ppt

Example: Vision StatementExample: Vision Statement

To be the customer’s first

choice for communications and

information services in every

market we serve,

domestic and international.

Verizon Communications

Page 10: Stratergic Mgmt Ppt

We will clothe the world by

marketing the most appealing

and widely worn casual

clothing in the world.

Levi Strauss & Company

Example: Vision StatementExample: Vision Statement

Page 11: Stratergic Mgmt Ppt

Empower people through

great software -- anytime,

anyplace, and on

any device.

Microsoft Corporation

Example: Vision StatementExample: Vision Statement

Page 12: Stratergic Mgmt Ppt

We want to set the tone for the era . . . Green and affordable . . . That means

establishing a new paradigm for harmonizing personal transport with

the environment. It means revolutionary cost savings in products

and production processes.

Toyota

Example: Vision StatementExample: Vision Statement

Page 13: Stratergic Mgmt Ppt

Our vision: Getting to a billion connected computers

worldwide, millions of servers, and trillions of dollars

of e-commerce. Intel’s core mission is being the

building block supplier to the Internet economy and

spurring efforts to make the Internet more useful.

Being connected is now at the center of people’s

computing experience. We are helping to expand the

capabilities of the PC platform and the Internet.

Intel

Example: Vision StatementExample: Vision Statement

Page 14: Stratergic Mgmt Ppt

We will become number one or

number two in every market we

serve, and revolutionize this

company to have the speed and

agility of a small enterprise.

General Electric

Example: Vision StatementExample: Vision Statement

Page 15: Stratergic Mgmt Ppt

Mission vs. Strategic Vision A mission

statement focuses on current business activities -- “who we are and what we do” Current product and

service offerings Customer needs

being served Technological and

business capabilities

A strategic vision concerns a firm’s future business path -- “where we are going” Markets to be pursued Future technology-

product-customer focus

Kind of company management is trying to create

Page 16: Stratergic Mgmt Ppt

Characteristics of a Mission Statement

Defines current business activities, highlighting boundaries of current business Present products and services Types of customers served

Conveys What we do, Why we are here, and Where we are now

A company’s mission is not to make a profit! The real mission is always — “What will we do to make a profit?”

Page 17: Stratergic Mgmt Ppt

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Customer OrientationCustomer Orientation

A good mission statement reflects the anticipations of customers.

Identify customer needs Provide product/service to satisfy

needs AT&T’s mission focuses on communications,

not telephones Exxon’s mission focuses on energy, not on

oil and gas

Page 18: Stratergic Mgmt Ppt

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Components of Mission Components of Mission (Cont’d)(Cont’d) Customers Products or services Markets Technology Survival, growth, and profitability Philosophy Self-concept Concern for public image Concern for employees

Page 19: Stratergic Mgmt Ppt

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Components of Mission Components of Mission (Cont’d)(Cont’d)

Components of mission and corresponding questions to be answered:

Customers: “Who are the firm’s customers?”

Products or services: “What are the firm's major products or

services?”

Page 20: Stratergic Mgmt Ppt

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Components of Mission Components of Mission (Cont’d)(Cont’d)

Markets: “Geographically, where does the firm

compete?”

Technology: “Is the firm technologically current?”

Page 21: Stratergic Mgmt Ppt

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Components of Mission Components of Mission (Cont’d)(Cont’d) Concern for survival, growth, and

profitability: “Is the firm committed to growth and

financial soundness?”

Philosophy: “What are the basic beliefs, values,

aspirations, and ethical priorities of the firm?”

Page 22: Stratergic Mgmt Ppt

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Components of Mission Components of Mission (Cont’d)(Cont’d) Self-concept:

“What is the firm’s distinctive competence or major competitive advantage?”

Concern for public image: “Is the firm responsive to social, community,

and environmental concerns?”

Concern for employees: “Are employees a valuable asset of the firm?”

Page 23: Stratergic Mgmt Ppt

Communicating the Vision

An exciting, inspirational vision Contains memorable language

Clearly maps company’s future direction

Challenges and motivates workforce

Provokes emotion and enthusiasm

Page 24: Stratergic Mgmt Ppt

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ExamplesExamples

Vision Statement

“The Apollo Hospital is the LEADER in providing resources necessary to realize the community’s highest level of HEALTH throughout life.”

Page 25: Stratergic Mgmt Ppt

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Examples Examples (Cont’d)(Cont’d)

Mission Statement

“The Apollo Hospital, with respect, compassion, integrity, and courage, honors the individuality and confidentiality of our patients, employees, and community, and is progressive in anticipating and providing future health care services.”

Page 26: Stratergic Mgmt Ppt

At the centre of your vision has to be the Customer, his/her changing expectations and demands

Azim H Premji

Chairman and Managing Director, Wipro Limited

WIPRO VISIONWIPRO VISION

Page 27: Stratergic Mgmt Ppt

Our MissionOur Mission

With utmost respect to Human Values,

we promise to serve our Customer with Integrity,

through a variety of Innovative,

Value for Money Products and Services,

by Applying Thought, day after day

Our Promise is a commitment to our Customer

Page 28: Stratergic Mgmt Ppt
Page 29: Stratergic Mgmt Ppt

THE VERTEBRAND VISION

To become a Global player of reckoning in the specialized area of business branding - across every industry sector

To be the ultimate authority in creating and evolving a process to enhance the brand value of the business

To be the foremost global repository of knowledge on brand-building skills and practices

Page 30: Stratergic Mgmt Ppt

THE VERTEBRAND MISSION

“Partnering clients in enhancing their business brand value,

through a process-oriented, profitable, business branding

approach.”PROFITABLE, PROCESS-ORIENTED,

PARTNERSHIP

Page 31: Stratergic Mgmt Ppt

Setting Objectives

Converts strategic vision and mission into specific performance targets

Creates yardsticks to track performance

Pushes firm to focus on results Helps prevent complacency

and coasting

Page 32: Stratergic Mgmt Ppt

Represent commitment to achieve specific performance targets

Well-stated objectives are Quantifiable Measurable Contain a deadline for achievement

Spell-out how much of what kind of performance by when

Characteristics of ObjectivesCharacteristics of Objectives

Page 33: Stratergic Mgmt Ppt

Types of Objectives Required

Outcomes focusedon improving financial performance

Outcomes focused on improving long-term, competitive business position

Financial Objectives Strategic Objectives

Page 34: Stratergic Mgmt Ppt

Examples: Financial Objectives

X % increase in annual revenues

X % increase annually in after-tax profits

X % increase annually in earnings per share

Regular dividend increases

Larger gross profit margin

Larger operating profit margin

Larger net profit margin X % return on capital

employed (ROCE)

X % return on assets (ROA) X % return on shareholder

investment (ROE) Upward-trending stock

price that builds significant shareholder value over time

Strong bond and credit ratings

Reduced levels of debt Sufficient internal cash

flows to fund new capital investment

Diversified revenue base

Page 35: Stratergic Mgmt Ppt

Winning additional market share (or reaching X % market share)

Consistently getting new or improved products to market ahead of rivals

Overtaking key competitors on product performance or quality or customer service

Achieving lower overall costs than rivals

Deriving X % of revenues from sale of new products introduced in past 5 years

Being a recognized technological leader

Achieving national or global market coverage for firm’s products

Having broader or more attractive product selection than rivals

Deriving X % of revenues from online sales

Having a better-known or more respected brand name than rivals

Improving global sales and distribution capabilities

Examples: Strategic ObjectivesExamples: Strategic Objectives

Page 36: Stratergic Mgmt Ppt

HLL

Example: Strategic and Financial Objectives Example: Strategic and Financial Objectives

Grow revenues by 5-6 % annually; Increase operating profit margins from 11 % to 16 %

within five years; Trim the company’s 119 food, household, and

personal care products down to 40 core brands; Focus sales and marketing efforts on those brands

with potential to become respected, market-leading global brands; and

Streamline the company’s supply chain.

Page 37: Stratergic Mgmt Ppt

To satisfy our customers by Providing quality cars and trucks, Developing new products, Reducing the time it takes to bring new vehicles

to market, Improving the efficiency of all our plants &

processes, and Building on our teamwork with employees,

unions, dealers, and suppliers.

Ford Motor Company

Example: Strategic Objectives

Page 38: Stratergic Mgmt Ppt

Annual growth in earnings per share of 10% or better, on average;

A return on stockholders’ equity of 20-25%;

A return on capital employed of 27% or better; and

Have at least 30% of sales come from products introduced in the past four years.

3M Corporation

Example: Strategic and Financial Objectives Example: Strategic and Financial Objectives

Page 39: Stratergic Mgmt Ppt

Short-Range Versus Long-Range Objectives

Short-Range objectives Targets to be achieved soon Serve as stair steps for reaching

long-range performance

Long-Range objectives Targets to be achieved within

3 to 5 years Prompt actions now that will

permit reaching targetedlong-range performance later

Page 40: Stratergic Mgmt Ppt

Concept of Strategic Intent

A company exhibits strategic intent when it relentlessly pursues an ambitious strategic objective and concentrates its competitive

actions and energies on achieving that objective!

Page 41: Stratergic Mgmt Ppt

Characteristics of Strategic Intent

Indicates firm’s intent to stake out a particular position over the long-term

Involves establishing a “big, audacious goal” and then devoting the company’s full resources and energies to achieving it over time

Signals relentless commitment to winning in the marketplace

Page 42: Stratergic Mgmt Ppt

Objectives Are Needed at All Levels

Objective-setting process is mostly top-down, not bottom-up!

1. First, establish organization-wide objectives and performance targets

2. Next, set business andproduct line objectives

3. Then, establish functionaland departmental objectives

4. Individual objectives are established last

Page 43: Stratergic Mgmt Ppt

Network of strategic visions, missions, objectives, and strategies

Two-way influenc

e

Two-wayinfluence

Two-way

influence

Two-way influenc

e

Two-wayinfluence

Two-way

influence

Two-way influenc

e

Two-wayinfluence

Two-way

influence

Overall corporate scope and

vision

Corporate level

objectives

Corporate level

strategy

Business level scope and vision

Business level

objectives

Business level

strategy

Functional area

missions

Functional

objectives

Functional

strategies

Operating unit

missions

Operating unit

objectives

Operating

strategies

Level 1.Responsibility of corporate level managers

Level 2.Responsibility of business level general managers

Level 3.Responsibility of heads of functional areas with business units

Level 4.Responsibility of plant managers, geographic unit managers, operating unit managers