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  • 7/27/2019 Ch-02 Crafting and Executing Strategy


    McGraw-Hill/Irwin Copyright 2010 by The McGraw-Hill Companies, Inc. All rights reserved.

    Chapter 2: Leading the

    Process of Crafting and

    Executing Strategy

    Screen graphics created by:Jana F. Kuzmicki, Ph.D.

    Troy University

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    Chapter Learning Objectives

    1. Grasp why it is critical for company managers to think long and

    hard about where a company needs to head and why.2. Understand the importance of setting both strategic and financial


    3. Recognize that the task of crafting a company strategy draws onthe entrepreneurial talents of managers at all organizationallevels.

    4. Understand why the strategic initiatives taken at variousorganizational levels must be tightly coordinated to achievecompanywide performance targets.

    5. Become aware of what a company must do to achieve operatingexcellence and to execute its strategy proficiently.

    6. Understand why the strategic management process is ongoing,not an every-now-and-then task.

    7. Learn what leadership skills management must exhibit to drivestrategy execution forward.

    8. Become aware of the role and responsibility of a companysboard of directors in overseeing the strategic management


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    Chapter Roadmap

    What Does the Strategy-Making, Strategy-Executingprocess Entail?

    Phase 1: Developing a Strategic Vision

    Phase 2:Setting Objectives

    Phase 3:Crafting a Strategy

    Phase 4:Implementing and Executing the Strategy

    Phase 5: Evaluating Performance and Initiating

    Corrective Adjustments Leading the Strategic Management Process

    Corporate Governance: The Role of the Board of

    Directors in the Strategy-Making, Strategy-Executing


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    Figure 2.1: The Strategy-Making, Strategy-Executing Process


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    Developing a Strategic Vision

    Involves thinking strategically about

    Future direction of company

    Changes in companys

    product/market/customer technology to improve

    Current market position

    Future prospects

    Phase 1

    A strategic vis iondescribes the route a companyintends to take in developing and strengtheningits business. It lays out the companys strategic

    course in preparing for the future.

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    Key Elements of a Strategic Vision

    Delineates managements aspirations for thebusiness

    Provides a panoramic view of where we are going

    Charts a strategic path

    Is dis t inct iveand speci f ictoa particular organization

    Avoids use of generic language thatis dull and boring and that couldapply to most any company

    Captures the emotions ofemployees and steers themin a common direction

    Is challenging and a bit beyond a

    companys immediate reach

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    Role of a Strategic Vision

    A well-conceived, well-communicated visionfunctions as a valuable managerial tool to

    Give the organization a sense of direction, moldorganizational identity, and create a commit tedenterprise

    Illuminate the companys directional path

    Provide managers with a reference point toMake strategic decisions

    Translate the vision into hard-edged

    objectives and strategies Prepare the company for the future

    A strategic vision exists only as words and has noorganizational impact unless and un t i l i twins the commitmentof com pany personneland energizes them to actin ways that

    move the company along the intended strategic path!

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    Table 2.2: Characteristics of an Effectively Worded Vision Statement


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    Table 2.3: Common Shortcomings in Company Vision Statements


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    Strategic Vision vs. Mission

    A strategic vis ionconcerns a firms fu ture

    business path - where

    we are going

    Markets to be pursued

    Future product/market/

    customer/technology focus

    Kind of company

    management istrying to create

    A companys miss ionstatementtypically

    focuses on its present

    business purpose - who

    we are and what we doCurrent product and

    service offerings

    Customer needs and

    customer groups being





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    Characteristics of a Mission Statement

    Identifies boundar iesof a companys currentbusiness and says something about

    Present products and services

    Types of customers served

    Geographic coverage


    Whowe are,

    Whatwe do, and

    Whywe are hereA good mission statement describes a companys business

    makeup and purposein language speci f ic enoug hto give

    the company i tsown ident i tyand dis t inguish i t f rom

    other enterpr isesin the same or other industries!

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    Key Elements of aMission Statement

    A complete mission statement should cover threethings:

    Customer needs being met

    What is being sat isf ied

    Customer groups or markets being served

    Who is being sat isf ied

    What the organization does (in terms of businessapproaches, technologies used, and activitiesperformed) to satisfy the targeted needs of the

    targeted customer groupsHow cus tomer needs are satisf ied

    A companys mission is notto make a profit! Its true

    mission is its answer to What will we do to make a profit?

    Making a profit is an object iveorin tended outcome!

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    Companies often develop a statement of valuesto guide a

    companys pursuit of its vision and strategy and paint the whitelines for how a companys business is to be conducted

    Company values statements typicallycontain four to eight beliefs, traits, andbehaviors relating to such things as

    Fair treatment, integrity, ethical behavior,innovation, teamwork, product quality, customer satisfaction,social responsibility, community citizenship

    But values statements remain a bunch of nice word s unti lespoused beliefs, traits, and behaviors are

    Incorporated into companys operations and work practices

    Used as benchmarks for job appraisal, promotions, andrewards

    Linking the Visionwith Company Values

    If company personnel are not held accountable

    fordisp lay ing company valuesin doing their jobs, then the

    company values statement is a bunch of empty words!

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    Winning suppor tfor the vision involves Putting where we are going and why in writing

    Distributing the statement organization-wide

    Having executives explain vision to employees

    An engaging , insp irat ionalvision

    Challenges and motivates workforce

    Articulates a compelling case

    for where company is headed

    Evokes positive support and excitement

    Arouses a committed organizational

    effort to move in a common direction

    Communicating the Strategic Vision

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    Recognizing Strategic Inflection Points

    Sometimes an order-of-magnitude change occurs in

    a companys environment that

    Dramatically alters its future prospects

    Mandates radical revision of its strategic course

    Critical decisions have to be made about where togo from here

    A major new directional path may have to be taken

    A major new strategy may be needed

    Responding quickly to unfolding changes in the

    marketplace lessons a companys chances of

    Becoming trapped in a stagnant business or

    Letting attractive new growth opportunities slip away

    O i R i

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    Mobilizing suppor tfor a new vis ionentails

    Reiterating basis for the new direction

    Addressing employee concerns head-on

    Calming fears

    Lifting spirits

    Providing updates and progress

    reports as events unfold

    Overcoming Resistance toa New Strategic Vision

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    Crystal l izesan organizations long-termdirection

    Reduces r iskof rudderless decision-making

    Creates a comm it ted enterpr isewhere organizational members

    enthusiastically pursue efforts to

    make the vision a reality

    Provides a beacon to keep strategy-related

    act ionsof all managers on common path

    Helps an organization prepare for the future

    Payoffs of a Clear Strategic Vision

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    Setting Objectives

    Purposeofsett ing ob ject ives

    Converts vision into specific performance targets

    Creates yardsticks to track performance

    Well-stated ob ject ivesare

    Quanti f iable


    Contain a deadl inefor achievement

    Spell-out how muchofwhat k ind


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