STRATEGIC MANAGEMENT PROCESS

OVERVIEW, PROCESS, VISION, MISSION, SOCIAL RESPONSIBILITY & THE FIVE TASKS

Salah uddin

IQRA

14/06/2011

CONTENTS
1.

DEFINITION: STRATEGIC MANAGEMENT FIVE TASKS OF STRATEGIC MANAGEMENT VISION & MISSION SOCIAL RESPONSIBILITY WHO PERFORMS THE FIVE TASKS CRAFTING A STRATEGY ROLE OF BOARD OF DIRECTORS BENEFITS OF STRATEGIC MANAGEMENT
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3.

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7.

8.

Notable Quotes

If a man takes no thought about what is distant, he will find sorrow near at hand. He who will not worry about what is far off will soon find something worse than worry. Confucius If everyone is thinking alike, then somebody isnt thinking. George Patton It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change. Charles Darwin
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Thinking Strategically: 3 Big Strategic Questions

1. Whats the companys present situation?
2. Where does the company need to go from here? Business(es) to be in and market positions to stake out Buyer needs and groups to serve Direction to head 3. How should it get there? A companys answer to how will we get there? is its strategy

Salah uddin

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Consists of competitive moves and business approaches used by managers to run the company Managements action plan to:
o o o o o

What is meant by Strategy?

Grow the business Attract and please customers Compete successfully Conduct operations Achieve the targeted levels of organizational performance

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IQRA

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DEFINITION: Strategic Management

The word Strategy was coined by ancient Greek writer, Xenophen. Strategy implies understanding / knowing the business one intends to do So Strategy is an action-oriented activity as it involves: Understanding / knowing the business A focus on future A step towards action
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DEFINITION: Strategic Management

Strategy can be defined as the determination of basic long-term goals and objectives of an enterprise and adoption of courses of action and the allocation of resources for carrying out these goals Chandler

Salah uddin

IQRA

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DEFINITION: Strategic Management

Pursuit of superior performance by using a strategy that ensures a better or stronger matching of corporate strengths to customers needs than is provided by the competitors Ohmae

Salah uddin

IQRA

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DEFINITION: Strategic Management

Systematic analysis of the factors associated with customers and competitors (the external environment) and the organization environment) itself (the internal

to provide the basis for re-thinking the current management practices. Its objective is to achieve better alignment of corporate policies and strategic priorities
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CONCEPT: Strategic Management

STRATEGIC MANAGEMENT: refers to the managerial process of forming a strategic vision, setting objectives, crafting, implementing and executing the strategy, and then over time initiating whatever corrective adjustments in the vision, objectives, strategy, and execution are deemed appropriate.

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Signs of Good Management

Strategy: a combination of competitive moves and business approaches that managers employ to please customers, compete successfully, and achieve organizational objectives. Good strategy + good strategy execution= good management Essence of good strategy making is to build a market position strong enough and an organization capable enough to produce successful performance despite unforeseeable events, potent competition, a rash of delays, or cost surprises.

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Forming a strategic vision of where the organization is headed---- so as to provide long-term direction, delineate what kind of enterprise the company is trying to become, and infuse the organization with a sense of purposeful action. Setting Objectives----i.e. specific outcomes to achieve. Crafting a strategy to achieve the objectives. Implementing and executing the chosen strategy efficiently and effectively. Evaluating performance and initiating corrective adjustments in vision, long-term direction, objectives, strategy or execution in light of actual experience, changing conditions, new ideas and opportunities.
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FIVE TASKS OF STRATEGIC MANAGEMENT

FIVE TASKS OF STRATEGIC MANAGEMENT

VISIO N& MISSI ON

REVISE AS NEEDED REVISE AS NEEDED

OBJECTIVE S

CRAFTI NG STRATE GY

IMPLEMENTIN G STRATEGY

EVALUATI NG PERFORM ANCE

IMPROVE / CHANGE

IMPROVE / CHANGE

RECYCLE TO TASKS 1,2,3 & 4 AS NEEDED

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The Strategic Management Process:

Three Elements of a Strategic Vision:

VISION & MISSION

Mission Statement that defines company business presently and conveys the essence of WHO WE ARE, WHAT WE DO, and WHERE WE ARE NOW Using the Mission Statement as a basis for deciding on a long-term course, making choices about where we are going and charting a strategic path for company to pursue Communicating the Strategic Vision in clear and exciting terms that arouses organization wide commitment.

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The Strategic Management Process:

MISSION STATEMENT ---- A STARTING POINT FOR FORMING A STRATEGIC VISION:

VISION & MISSION

Many organizations develop both---- a mission statement and a vision statement. Mission Statement answers the question WHAT IS OUR BUSINESS. Vision Statement answers the question WHAT DO WE WANT TO BECOME---- a possible and desirable future state of an organization.

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The Strategic Management Process:

VISION & MISSION

ROLE OF MISSION STATEMENT: To give the organization its own special identity, business emphasis and path for development -----one that typically sets it apart from other similarly situated companies. MISSION IS NOT TO MAKE PROFIT: Sometimes companies couch their mission in terms of making profit. This is misguided----profit is an objective and a result of what the company does----desire to make profit says nothing about the business arena in which profits are to be made.

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WHAT , WHO &VISION HOW

The Strategic Management Process:

& MISSION

A strategically revealing Mission Statement incorporates 3 elements:

WHAT is being satisfied----customer needs WHO is being satisfied----customer groups HOW the company goes about satisfying their needs----companys activities, technologies and competencies

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The Strategic Management Process:

COMPONENTS OF A MISSION STATEMENT:
1.

VISION & MISSION

Customers----who are the firms customers? Product or Services-----what are the firms major products or services? Markets----geographically where does the firm compete? Technology----is the firm technologically current? Concern for survival, growth, and profitability-----is the firm committed to growth and financial soundness?

2.

3.

4.

5.

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The Strategic Management Process:

COMPONENTS OF A MISSION STATEMENT:
6.

VISION & MISSION

Philosophy----what are the basic beliefs, values, aspirations and ethical priorities of the firm? Self-concept-----what is the firms 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?

7.

8.

9.

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The Strategic Management Process:

BROAD DEFINITION

Furniture business Telecom business

NARROW VISION & MISSION DEFINITION

Beverage business Global mail delivery business Travel & Tourism business

Wrought-iron lawn furniture business Long-distance telephone services business Soft-drink business Overnight package delivery business Cruise Ship business
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Salah uddin

Example of aVISION & MISSION Mission Statement:

The Strategic Management Process:

To provide society with superior products and services----innovations and solutions that satisfy customer needs and improve the quality of life

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VISION & MISSION TCS Pakistan Mission Statement

"To direct all our organizational efforts at building upon the existing organizational strengths and brand recognition to achieve enhanced levels of profitable growth in the core business, and diversify into new areas that compliment and supplement the core business, with the diversification aimed at achieving excellence and industry leader status in the new areas. The TCS People will however be encouraged to be open to unconventional ideas and services and recognize new trends at very early stages".

The Strategic Management Process:

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The Strategic Management Process:

TCS Pakistan : Vision Statement
"TCS will be recognized and respected as professional, innovative, profitable information, and knowledge based logistics/services enterprise. TCS embeds internet based technologies into its internal operating structures and as business solutions for customers; with customer, employee and shareholder interests at the core of its operations; demonstrating a clear concern for ethical conduct and good corporate citizenship; with the objective of growing into a regional and global player, with emphasis on the Middle East, Europe and North America".

VISION & MISSION

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The Strategic Management Process:

VISION: UNI-LEVER PAKISTAN

VISION & MISSION

We work to create a better future every day We help people feel good, look good and get more out of life with brands and services that are good for them and good for others. We will inspire people to take small everyday actions that can add up to a big difference for the world. We will develop new ways of doing business with the aim of doubling the size of our company while reducing our environmental impact. We've always believed in the power of our brands to improve the quality of peoples lives and in doing the right thing. As our business grows, so do our responsibilities. We recognise that global challenges such as climate change concern us all. Considering the wider impact of our actions is embedded in our values and is a fundamental part of who we are.

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VISION MISSION STATEMENT: PIA

The Strategic Management Process:

& MISSION

Employee teams will contribute towards making PIA a global airline of choice through:

Offering quality customer services and innovative products. Using state-of-the-art technologies. Ensuring cost-effective measures in procurement and operations. Developing Safety Culture.

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VISION VISION STATEMENT: PIA

The Strategic Management Process:

& MISSION

PIAs vision is to be a world class airline meeting customer expectations through excellent services, on-time performance, innovative products and absolute safety

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VISION & MISSION MISSION STATEMENT: BANK AL-HABIB:

To be a strong and stable financial institution offering innovative products and services while contributing towards the National economic and social development. VISION STATEMENT: BANK AL-HABIB: To be a quality financial service provider maintaining the highest standards in banking practices.
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The Strategic Management Process:

The Strategic Management Process:

PROCESS OF DEVELOPING A MISSION STATEMENT:

Involve as many managers as possible, because through involvement people become committed to an organization. An opportunity for strategists to obtain needed support.

VISION & MISSION

A facilitator or committee of top managers to short list one single draft and distribute to all managers or a committee. Hire out-side consultants, experts. Decision on how best to communicate the final mission statement, down the line. Process should create an emotional bond and sense of mission.

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The Strategic Management Process:

IMPORTANCE OF VISION & MISSION STATEMENTS:

VISIONwithin the organization. & MISSION To ensure unanimity of purpose

To provide a basis or standard for allocating resources To establish organizational climate To serve as a focal point to identify with organizations purpose and direction To facilitate the translation of objectives into a work structure involving the assignment of tasks within the organization To specify organizational purpose and then translate it into objectives in such a way that cost, time and performance parameters can be assessed and controlled

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The Strategic Management Process:

STRATEGIC VISION: Choosing a companys path requires attention to: Changes occurring in the market arena , and their implications for the direction where a company needs to move? Customer needs to be satisfied? Different buyer segments to concentrate on? New geographic or product markets to be pursued? Companys business make up in five years? What kind of company should we be trying to become?

VISION & MISSION

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The Strategic Management Process:

STRATEGIC VISION: VISION

& MISSION

ROLE OF ENTREPRENEURSHIP: Good entrepreneurship is very essential in addressing the above six questions. Charting a promising strategic course enables managers to think creatively and realistically about changing market, competitive, technological, economic and regulatory conditions and about the companys resources and capabilities.

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The Strategic Management Process:

STRATEGIC VISION:
INFLECTION POINTS: Many successful organizations need to change direction not only to survive but to maintain success-----STRATEGIC INFLECTION POINTS When a company reaches a strategic inflection point some tough decisions are required about changing a companys course, so as to sustain companys success, not just to avoid possible disaster. This may radically alter a companys prospects and require a radical revision of its strategic course. Examples: Intels two strategic inflection points PIAs Far East route strategy

VISION & MISSION

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The Strategic Management Process: STRATEGIC VISION:

COMMUNICATING THE STRATEGIC VISION: Communicating down the line to lower level managers, Vision of the company should be presented in a manner that it reaches out, grabs attention and provokes excitement. It should convey a larger sense of purpose so that employees see themselves as building rather than laying stones. An inspiring strategic vision arouses a committed organizational effort in which people live in the business instead of just coming to work. E.g. International Red Cross mission statement : To serve the most vulnerable

VISION & MISSION

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The Strategic Management Process:

STRATEGIC VISION:

VISION & MISSION

BREAKING DOWN RESISTANCE :

Executives must provide a rationale for a new strategic vision. Failure to understand or accept the need for re-directing organizational effort often produces resistance. It is extremely imperative to prepare an organization to move along a new course by inducing employee buy-in, and calming fears. Vision has to be repeated and reinforced at every occasion until it gets organization-wide acceptance.

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SOCIAL RESPONSIBILITY

Social Responsibility is a critical consideration for a companys strategic decision makers since the Mission Statement must express how the company intends to contribute to the societies that sustain it Business does not function in a vacuum, it exists to serve, depends upon its environment, cannot be separated from it, and therefore, has a responsibility to ensure its well being. The environment is represented by stock holders / owners & employees and also external stake holders as customers, unions, suppliers, government agencies, society in general
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SOCIAL RESPONSIBILITY

Issues like pollution, disposal of solid and liquid waste, and the conservation of natural resources should be principal considerations in strategic decision making Pollution prevention strategies include changing the materials used or re-designing operations Winning the loyalty of consumers will now require new marketing strategies viz. adoption of 4Es: Make it Easy for consumer to be green Empower consumer with solutions Enlist the support of consumer Establish credibility with public to avoid backlash
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I.

II.

III.

IV.

SOCIAL RESPONSIBILITY

Conduct and publish annual social audits which evaluate a firm from the perspective of social responsibility e.g. Abbot Assoc, Dow Chemicals, Exxon & Bank of America ECONOMIC RESPONSIBILITIES requires managers to maximize profits whenever possible; provide goods and services at a reasonable cost; the company emerges socially responsible by providing productive jobs and tax payments for governments LEGAL RESPONSIBILITIES: to comply with laws that regulate business particularly in the areas of pollution control and consumer safety

FOUR TYPES OF SOCIAL COMMITMENT:

I.

II.

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SOCIAL RESPONSIBILITY
III.

ETHICAL RESPONSIBILITIES: companys notion of right or proper business behavior; firms are expected to behave ethically DISCRETIONARY RESPONSIBILITY: voluntarily assumed viz. public relations activities, good citizenship, and full corporate social responsibility; to enhance the image of their companies, products and services by supporting worthy causes, supporting charities, publicservice advertizing campaigns CSR COSTS ARE MORE THAN OFFSET IN THE LONG RUN BY AN IMPROVED COMPANY IMAGE AND INCREASED COMMUNITY GOODWILL

IV.

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The Strategic Management Process:

Firms with a formalized mission statement have twice the average return on shareholders equity ---Rarick & Vitton There is a positive relationship between mission statements and organizational performance ----Bart & Baetz Firms using mission statements have a 30 % higher return on certain financial measures than those without such statements----Business Week

VISION & MISSION

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Who performs the Five Tasks Every company Manager has a strategy making / strategy
implementing role for his respective unit. However, a CEO is the most visible and important strategy manager, as he is the chief direction setter, chief objective setter, chief strategy maker and implementer for the whole organization; ultimate responsibility rests with the CEO who hammers out a consensus strategy and coordinates various aspects of executing the strategy. VPs for Production, Marketing, Finance, Human Resources and other functional departments have important strategy making and implementing roles, who also delegate authority to sub-unit heads.

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Crafting a Strategy
A companys strategy depends on:

Whether to concentrate on a single business or build a diversified group of businesses, Whether to cater to broad range of customers or focus on a particular market niche, Whether to pursue competitive advantage based on low cost or product superiority, Response to changing buyer preferences, Range of geographical market to cover, Reaction to newly emerging markets and competitive conditions
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Crafting a Strategy
The Chief Architect Approach:

A single person, owner or the CEO, assumes the role of chief strategist and chief entrepreneur, single handedly shaping strategy One person functions as strategic visionary though there may be much brain-storming with subordinates Examples: Michael Dell at Dell Computers, Bill Gates at Microsoft, Howard Shultz at Starbucks, Agha Hasan Abedi at BCCI, Tariq Chaudhry at Air Blue, Yaqub Tabani at Aero Asia etc. Strategies of small entrepreneurial companies, family owned businesses Works fine if the chief strategist has powerful vision of where to head and how to get there
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Crafting a Strategy
The Delegation Approach:

CEO or the Manager in charge delegates big chunks of strategy making to trusted subordinates, down-the-line managers in charge of key business units, a high level task force of talented people from many parts of the company or a team of consultants Big Advantage in multi-product, multi-business enterprises whose operations are far-flung of fast- moving Success hinges on the business judgments and strategy making skills of lower echelons which may not be there Delegation sends wrong signal: that strategy development isnt important enough to warrant big boss time

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Crafting a Strategy
The Team Approach:

A middle approach where the CEO or the Manager in charge delegates and enlists the advice of key peers and subordinates in hammering out a consensus strategy Strategy teams also involve customers and suppliers in assessing the future market situation and deliberating various strategy options Well suited to organizations where strategic issues cut across departments, product lines and businesses and there is a need to tap strategic thinking of people with different expertise and experiences Politics and exercise of power come into play where there is no consensus
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Crafting a Strategy
The Corporate Intrapreneur Approach:

Relies upon middle and lower level managers and teams to spot new business opportunities, develop strategic plans to pursue them and create new businesses Essentially requires ambitious, entrepreneurial people in the organization who want to take on strategic and managerial responsibility for new products Works well where technological advances are coming at a fast pace or compelling new opportunities are opening up Strategic initiatives may be launched in directions that have no integrating links with overall business
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ACTIONS & REACT ACTIONS TO INITIATIVES & RESPOND TO DIVERSIFY TO CHANGING COMPANYS OUTCOMPETE EXTERNAL ACTIONS TO REVENUE BASE & RIVALS ALTER CIRCUMSTANCES ENTER NEW ACTIONS GEOG. ACTIONS TO BUSINESSES & COVERAGE & MERGERS STRENGTHE BUSINES ACQUISITION N S S RESOURCE APPROAC TO BASE & HES STRENGTHEN HOW THE STRATEGIC COMPETITIV BUSINESS ALLIANCES E COMPANY CAPITALIZE ON POSITION MANAGES & PARTNERSHIPS CAPABILITIE NEW S PRODUCTION, OPPORTUNITIES MARKETING, Salah uddin IQRA 14/06/2011 46 & DEFEND

U nd e rs t a nd i ng a Co m p a ny s St ra t e g y PLANNED MOVES TO

Role of Board of Directors

To exercise oversight and see that Five Tasks of Strategic management are done in a manner that benefits share holders. Holders of large blocks of shares, regulatory authorities and financial press consistently urge that board members be active in their oversight of company strategy, actions and capabilities of executives To approve companys strategic plans; but should not play a hands-on role in formulating or implementing strategy as they dont have detailed command of all the strategic issues To be supportive critics whether proposals have been adequately analyzed, asking perceptive & incisive questions
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Role of Board of Directors

To play a proactive role if the company is losing market share or eroding profits and to express their concerns about the validity of the strategy To evaluate senior executives strategy-making and strategy-implementing skills To exercise due diligence in evaluating the strategic leadership skills of other senior executives in line to succeed the CEO

Board oversight and vigilance is very much in play in the strategic arena

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Providing better guidance to the entire organization on what it is we are trying to do

Benefits of Strategic Management

Making managers and organizational members more alert to new opportunities & threatening developments Helping to unify the organization Creating a more proactive management posture Developing a constantly evolving business model that will produce sustained bottom line success Enabling strategic offensives to out-innovate and outmaneuver rivals and secure sustainable competitive advantage Aggressive pursuit of a creative, opportunistic strategy can propel a firm into a leadership position
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Thank you

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IQRA

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