sm process

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Alice in Wonderland Chesire Puss, she [Alice] began . would you tell me, please, which way Iought to go from here?

That depends a good deal on whereyou want to get to said the Cat

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Peter Drucker Strategic management is not a box of

tricks or a bundle of techniques. It isanalytical thinking and commitment of resources to action

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Strategic Management Process Unify organisations

More alert to environment (opportunities and threats)

To steer resources to desirable areaspromising growth and profits

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Characteristics of Strategy Typical strategic moves:

Alter geographical coverage

Mergers and acquisitions Strategic and/or collaborative alliances Managing internal R&D, production, finance and

other key functions Strengthen competitive capabilities

New industries or business entry React to external changes Turn around a company in crises Double digit growth

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Characteristics of Strategy Typical types:

Planned strategy new initiative (proactive)

Reactive strategy- emerging circumstances Abandoned strategy

Company strategies are partly visible andpartly hidden to outside view

Strategies develop over time to matchinternal and external factors in congruencewith company values

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Characteristics of Strategy Developing strategy is partly an

exercise in entrepreneurship

Seeking new opportunities

Doing existing things in new ways

Risk taking capabilities

Strategy making is an ongoing process

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Performers of Strategic

Management Tasks Ultimate responsibility for leading the tasks of

forming, planning and implementing strategic

plan for the whole organisation rests withCEO

Every major organisational unit of a company business unit, division, plant, regional

office-has leading/supportive role in evolvingand implementing strategic plan

Every manager is strategy maker &implementer for area he/she supervises

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Management Tasks For diversified companies, usually there are 4

levels of strategy managers

CEO & senior level officers have primaryresponsibility for critical strategic decisionseffecting total enterprise

Managers who are profit centre heads

Functional area heads within a given or acrossbusiness unit who have direct authority

Managers of major operating units (plants,regional centres, country heads) who have on the

scene responsibility

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Management Tasks Proprietorships, partnerships and owner

managed enterprises, typically have one or

two strategy managers Strategy managers are also relevant in non-

profit organisation and Government bodies

Managers approach to strategic management process depends on different roles:

Chief architect of strategy for his division

Team member when it comes to corporate

strategy

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Crafting a Strategy Business Strategy:

Match companys/businesss/divisions internal

resources to external environment so as toproduce sustainable competitive advantage

Functional Strategy: Preparing plans for key functional areas like R&D,

Marketing, HR, Materials, IT etc.

Operating Strategy: Plans for Plants, Distribution Centres, Regions and

sets targets for such key activities as inventorycontrol, advertising, maintenance etc

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Different Approaches to

Strategy Development Chief architect approach:

Generally seen in companies founded byentrepreneurs, family-owned businesseswith contribution from key employers andoutside advisers

Weakness - -depends on one personsacumen

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Strategy Development Delegation approach:

CEO delegates to trusted subordinates

Through a high-level task force of knowledgeable & talented executives, withthe help of outside consultant, if needed

Allows for broader participation, useful in

multi-product, multi-business enterprises Weakness: Its success depends on

business judgement of junior level Execs

Lacks breadth of vision or experience

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Strategy Development Collaborative or team approach:

Middle of the road approach

Involve peers and subordinates

Helps win participants commitment toimplementation

Weakness: politics & power are most likelyto play

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Strategy Development Corporate Intrapreneur approach:

Management encourages individuals andteams, hand picked, having drive andentrepreneurship bent of mind

Suitable where technological changes are

rapid Weakness: resistance to get accepted and

implement

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Role of BOD Critical review of Strategy

Guide Strategy Team and CEO Evaluate strategic leadership of CEO /

key executives

Take care of interest of share holdersand stakeholders

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Strategic Management Process Five Task Process

1

2

3

4

5

Developing Strategic Vision & Business Mission

Setting Objectives

Crafting Strategy to achieve Objectives

Implementing & Executing Strategy

Feedback LoopMonitoring, Evaluation

And Control

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Strategic Management Process Vision: Managements aspiration for

Organisation and its Business Where weare going

Mission: is a statement of Companys present Business Scope who we are and what wedo

Objectives: Specific performance targets Two important dimensions measurement value

and time period Financial Objectives Strategic Objectives

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Mission Statement Give organisation its own identity, business

emphasis and path for development

Mission statement sets company apart fromother similarly situated company

Incorporate in mission statement:

What is being satisfied Who is being satisfied (customer groups)

How the company delivers value to customers

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Mission Statement Good mission statements are highly

unique to the company for which theyare developed

Diversified companies have broadermission statements

Large organisations (Corporates) havemission statements for key functionalareas / departments / divisions

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Mission Statements We are in picture business Eastman Kodak Our business is renting cars. Our business is total

customer satisfaction Our mission is to provide any customer a means of

moving people and things up and down, andsideways over short distances with higher reliabilitythan any other similar enterprises in the world

Our vision: Getting to a billion connected computers

worldwide, millions of servers and trillions of dollarsof e-commerce. Our mission: Being the building blocksupplier to the Internet economy and spurring effortsto make the Internet more useful

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Mission Statements A computer on every desk and in every home using

great software as an empowering tool changed to:Empower people through great software, any time,

any place and on any device. Vision: Our vision of persuasive networking is of a

world where connections are simpler, more powerful,more affordable, more global and more available toall. Mission: To connect more people andorganisations to information in more innovative,simple and reliable ways than any other networkingcompany in the world

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Developing Strategic Vision To take the organisation in the desired

direction

Defining mission statement

Deciding on long-term course and actionplan

Communicating to elicit commitment

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Mission to Strategic Vision Entrepreneurial ability to force market

growth, development/change, technology

impact and buyer needs Develop a vision to help create a roadmap

Warn about inflection points threats/opportunities that will come alongneeding strategic corrections

A well articulated vision creates enthusiasm

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Establishing Objectives Objectives represent managerial commitment

to achieving specific performance targets

within specific time Financial Vs Strategic Objectives

Aim is to have both on the above priority, but more often trade-off situations are common

Objectives should aim at building strongerlong term competitive position than havingshort term priority

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Establishing Objectives Establish SMART goal/objectives

S Stretched

M Measurable A Agreed

R Realistic

T Time bound

Top down Vs bottom up objective setting Long term & short term objectives

Corporate objectives are split intodivisional/functional/operational objectives

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