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Strategic
Management
Process
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PPT 1-3
What is Strategy?
PPT 1-5
Exercise
Why should fluorescent tubes be long
and narrow?
Strategic Leadership
Task of most effectively managing a
companys strategy-making process
Strategy Formulation
Task of determining and selecting strategies
Strategy Implementation
Task of putting strategies into action to improve a
companys efficiency and effectiveness
Competitive Advantage
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Net profit
Competitive Advantage
When a companys profitability is greater than the average of all
other companies in the same industry & competing for the same
customers
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Determinants of
Shareholder Value
Figure 1.1
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A Business Strategy
Where to Compete
The product-market investment decision
A Business
Business Strategy
Strategy
A
How to Compete
Value
Assets &
proposition competencies
Business Strategy: The Concept and Trends in Its
Function area
strategies and programs
Figure 1.1
PPT 1-15
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Differences in Industry
and Company Performance
A Companys Profitability and
Profit Growth are determined
by two main factors:
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Performance in Nonprofit
Enterprises
Nonprofit entities such as government
agencies, universities, and charities:
Are not in business to make a profit
Should use their resources efficiently
and effectively
Set performance goals unique to the
organization
Set strategies to achieve goals and compete
with other nonprofits for scarce resources
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Strategic Managers
Corporate Level Managers
Oversee the development of strategies for the
whole organization
The CEO is the principle general manager who
consults with other senior executives
General Managers
Responsible for overall company, business
unit, or divisional performance
Functional Managers
Responsible for supervising a particular task
or operation
e.g. marketing, operations, accounting, human resources
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Figure 1.4
Main
Components
of the
StrategyMaking
Process
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Vision
A statement of some desired future state
Values
A statement of key values that an organization is
committed to
Major Goals
The measurable desired future state that an
organization attempts to realize
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The Mission
The mission is a statement of a companys
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The Mission
Customer-Oriented Examples
The mission of Kodak is to provide customers
with the solutions they need to capture, store,
process, output, and communicate images
anywhere, anytime.
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Abells Framework
for Defining the Business
Figure 1.5
The Vision
What would the company like to achieve?
A good vision is meant to stretch a company by
articulating an ambitious but attainable future state.
The vision of Ford is to become the worlds
leading consumer company for automotive
products and services.
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Values
The values of a company should state:
How managers and employees should
conduct themselves
How they should do business
What kind of organization they need to build
to help achieve the companys mission
Organizational culture
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Values at Nucor
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Major Goals
A goal is a precise and measurable desired
future state that a company must realize
if
it is to attain its vision or mission.
Key characteristics of well-constructed goals:
1.
2.
3.
4.
to provide a
yardstick or standard to judge performance
Address crucial issues with a limited
number of key goals that help to maintain focus
Challenging but realistic to provide
employees with incentive for improving
Specify a time period to motivate and
inject a sense of urgency into goal attainment
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External Analysis
Purpose is to identify the strategic opportunities and
threats in the organizations operating environment
that will affect how it pursues its mission.
Legal
International
Technological
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Internal Analysis
Purpose is to pinpoint the strengths and weaknesses
of the organization. Strengths lead to superior
performance and weaknesses to inferior performance.
Responsiveness to customers
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Strategy Implementation
After choosing a set of congruent strategies to
achieve competitive advantage, managers must
put those strategies into action:
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Emergent Strategies
Unplanned responses to unforeseen circumstances
Serendipitous discoveries and events may emerge that can
open up new unplanned opportunities
Must assess whether the emergent strategy fits the
companys needs and capabilities
Realized Strategies
The product of whatever intended strategies are actually put
into action and of any emergent strategies that evolve
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Scenario Planning
Recognizes that the future is inherently unpredictable
Develops strategies for possible future scenarios
Decentralized Planning
Involves the functional managers
Avoids the ivory tower approach
Perceives procedural justice in the decision making
Strategic Intent
Avoids the strategic fit model, which focuses too much on the
current state
Sets ambitious vision and goals that stretch a company and
then finds ways to build to attain those goals
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Cognitive biases:
Rules of thumb or heuristics resulting in systematic errors
Groupthink:
Decisionmakers embark on a course of action without
questioning the underlying assumptions
Group coalesces around a person or policy
Decisions based on an emotional rather than an objective assessment
of the correct course of action
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Strategic Leadership
Good leaders of the strategy-making process
have a number of key attributes:
Self-awareness
Self-regulation
Motivation
Empathy
Social skills
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End of Chapter
PPT 1-42