Critical Success factors

Strategic factors or key factors for success Specific to an industry Can be identified along various functional areas Vary with firms position relative to its rivals Affected by changes in external environment
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Critical Success factors

Industry Airline Critical Success factors Fuel efficiency; load factors; on the board comfort; reservation system Fuel efficiency; design; maneuverability; aesthetics; Inventory turnover; product mix; pricing; sales promotion

Automobile
Retail chain

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Critical Success factors

Important to identify CSFs while framing objectives Generate CSF:
what does it take to be successful in this business?

Draw CSF into objectives

What should the organisations goal and objectives be with regard to CSFs?

Identify performance standards

How to know whether organisation is successful on this factor?
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Strategic decisions
Rare
No precedent Need broad perspective (beyond functional skills) Taken at top level

Consequential
Long term future depends on these decisions Involve substantial resources May require resource reallocation Need strong commitment of top level
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Strategic decisions
Directive
Guide actions Govern functional decisions Have enduring effects

Future orientation
Long term Based on forecasts Strong environment scanning needed
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Strategic Decision Makers

Board of Directors
Apex Governing body

Top management
Apex Executive body

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Board of Directors
Responsibilities of Board of Directors
Setting corporate strategy Deciding succession Controlling and monitoring Reviewing and approving resources Caring for shareholders

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Board of Directors
Low

High

Phantom Rubber stamp Minimal Review Nominal Participation Active Participation Catalyst

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Involvement

Board of Directors
Internal Directors: senior executives
from among top management

External Directors: independent directors

from other organisations /individuals

Cross Directors:
same director and two boards

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Top Management
Characteristics
Few tasks are continuous but responsibility always present Require wide range of capabilities Analytical Awareness of events Interest in multiple actions Ability to pursue abstract ideas

Effects
Have unplanned free time May have tendency to pursue activities which suit temperament

Good business leaders create vision, articulate vision, own the vision and relentlessly drive it to completion - John Welch
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Top Management
Responsibilities of Top Management
Fulfill key roles Provide executive leadership Manage strategic planning process

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Key Roles
Mintzberg identified ten key roles which vary in importance and time needed for each

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Figurehead Leader Liaison Monitor Disseminator Spokesperson Entrepreneur Disturbance handler Resource allocator negotiator

Executive Leadership
Articulate a transcendent goal Present a role to others to follow Communicate high performance standards for self and others Show confidence in followers abilities

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Strategic Planning Process

Take long range view Use information provided by
Strategic planning staff Divisional managers Functional managers

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Modes of strategy formulation

Entrepreneurial: proactive search
Environment is a force to be used and controlled

Adaptive: reactive solutions

Environment is too complex

Planning: proactive search and reactive solutions

Environment scanning to acquire key information
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