Strategic Management & Business

Planning

Overview
Why do some firms succeed while others fail?
A central objective of strategic management is to learn
why this happens.

What is strategy?
An action a company takes to attain superior performance.

What is the strategic management process?

The process by which managers choose a set of strategies
for the enterprise to pursue its vision.

Company
Experiences,
Know-how,
Resource
Strengths and
Weaknesses,
and Competitive
Capabilities

Actual
Company
Strategy

A Companys Strategy is Partly Planned and

Partly Reactive

Social, political,
regulatory and
community
factors

Competitive
conditions and
industry
attractiveness

Company
opportunities
and threats to
companys wellbeing

Determine
relevance of
internal and
external
factors

Companys Strategic Situation

Resource
strengths,
capabilities, and
weaknesses

Influences of
key executives

External Factors

Shared values
and company
culture

Identify and
evaluate
alternatives

Craft
the
strategy

Internal Factors

Factors Shaping the Choice of Company Strategy

Strategy as an Emergent Process

Strategy making in an unpredictable world
Creates the necessity for flexible strategic approaches.

Strategy making by lower-level managers

Strategy evolves through autonomous action.

Serendipity and strategy

Accidental discoveries and happenstances can have
dramatic effects on strategic direction.

Intended and emergent strategies

Realized strategies are combinations of intended and
emergent strategies.

Why Do Strategies Evolve?

A companys strategy is a work in progress
Changes may be necessary to react to

Shifting market conditions

Technological breakthroughs
Fresh moves of competitors
Evolving customer preferences
Emerging market opportunities
New ideas to improve strategy
Crisis situations

Strategic Management
Set of decisions and actions that result to the
formulation and implementation of plans
designed to achieve a companys objectives
Strategic
management
represents
decisions which impact the future of the firm.
It defines the relationship between an
organization and its environment & between
a firm and its competitors

Purpose of Strategic Management

To exploit and create new and different opportunities
for tomorrow

Benefits of Strategic Management

Strategy formulation activities enhance the firms ability
to prevent problems.
Group-based strategic decisions are likely to be drawn
from the best available alternatives.
The involvement of employees in strategy formulation
improves their understanding of the productivity-reward
relationship in every strategic plan and, thus, heightens
their motivation.
Gaps and overlaps in activities among individuals and
groups are reduced as participation in strategy
formulation clarifies differences in roles.
Resistance to change is reduced.

Approaches to Strategic Management

Entrepreneurial
Mode
The informal,
intuitive, and
limited
approach to
strategic
management
associated with
ownermanagers of
smaller firms.

Planning Mode
The strategic
formality
associated with
large firms that
operate under a
comprehensive,
formal planning
system.

Adaptive Mode
The strategic
formality
associated with
medium-sized
firms that
emphasize the
incremental
modification of
existing
competitive
approaches.

3 Stages of the Strategic Management Process

Strategy
formulation

Strategy
implementation

Strategy
evaluation

Strategy Formulation
Vision & Mission
External Opportunities & Threats
Internal Strengths & Weaknesses
Long-Term Objectives
Alternative Strategies
Strategy Selection

Issues in Strategy Formulation

Businesses to enter
Businesses to abandon
Allocation of resources
Expansion or diversification
International markets
Mergers or joint ventures
Avoidance of hostile takeover

Strategy Implementation

Annual Objectives

Policies

Employee Motivation

Resource Allocation

Strategy Implementation Steps

Developing a strategy-supportive culture

Creating an effective organizational structure
Redirecting marketing efforts
Preparing budgets
Developing and utilizing information systems
Linking employee compensation to organizational
performance

Issues in Strategy Implementation

Action Stage of Strategic

Management

Mobilization of employees &

managers
Most difficult stage
Interpersonal skills critical

Strategy Evaluation

Internal Review

External Review
Performance Measurement
Corrective Action

Prime Task of Strategic Management

Peter Drucker: Think through the

overall mission of a business. Ask the
key question:
What is our Business?

Integrating Intuition & Analysis

The strategic management process

attempts to organize quantitative and
qualitative information under conditions of
uncertainty

Integrating Intuition & Analysis

Intuition is based on:
Past experiences
Judgment
Feelings

Intuition is useful for decision making in

conditions of:
Great uncertainty
Little precedent
Highly interrelated variables
Several plausible alternatives

Integrating Intuition & Analysis

Intuition & Judgment

Involve management at all levels

Influence all analyses

Adapting to Change

Organizations should continually monitor

internal and external events and trends so
that timely changes can be made as needed

Key Terms in Strategic Management

Competitive advantage
Strategists
Vision and mission statements
External opportunities and threats
Internal strengths and weaknesses
Long-term objectives
Strategies
Annual objectives
Policies

Strategic Management is Gaining

and Maintaining Competitive
Advantage

Anything that a firm does especially well

compared to rival firms

Achieving Sustained Competitive Advantage

1. Continually adapting to changes in external
trends and events and internal capabilities,
competencies, and resources

2. Effectively formulating, implementing, and

evaluating strategies that capitalize on those
factors

Mintzberg's 5 Ps of Strategy

Vision and Mission Statements

Vision Statement
What do we want to become?

Mission Statement
What is our business?

External Opportunities and Threats

Analysis of Trends
Economic
Social
Cultural
Demographic/Environmental
Political, Legal, Governmental
Technological
Competitors

External Opportunities and Threats

Basic Tenet of Strategic Management

Take advantage of
External Opportunities
Strategy Formulation

Avoid/minimize impact
of
External Threats

Internal Strengths and Weaknesses

Controllable activities performed

especially well or poorly
Determined relative to competitors

Internal Strengths and Weaknesses

Typically located in functional areas of the firm
Management
Marketing
Finance/Accounting
Production/Operations
Research & Development
Management Information Systems

Internal Strengths and Weaknesses

Assessing the Internal Environment
Ratios

Performance Measures

Internal Factors
Industry Averages

Survey Data

Long-Term Objectives

Specific results that an organization seeks

to achieve in pursuing its basic mission
Long-term means more than one year

Long-Term Objectives
Essential for ensuring the firms success
Provide direction
Aid in evaluation
Create synergy
Reveal priorities
Focus coordination
Provide basis for planning, organizing,
motivating, and controlling

Task 1

Task 2

Task 3

Task 4

Task 5

Develop
Vision
and
Mission

Set
Goals &
Objectives

Formulate
Strategy
to Achieve
Goals &
Objectives

Implement
and
Execute
Strategy

Monitor,
Evaluate,
and Take
Corrective
Action

Revise as
Needed

Revise as
Needed

Improve/
Change

Improve/
Change

Recycle
as Needed

Develop Mission and Vision

What is a Company Mission?
This is the fundamental purpose that sets a firm apart from
other firms of its type and identifies the scope of its
operations in product and market terms.

It sets out why the organization exists and what it should be

doing.
It broadly outlines the organizations future course and serves
to communicate who we are, what we do, and where were
headed

Coca-Cola Company
Mission
Everything we do is inspired by our enduring mission:
To Refresh the World... in body, mind, and spirit.
To Inspire Moments of Optimism... through our brands and
our actions.
To Create Value and Make a Difference... everywhere we
engage.

Develop Mission and Vision

What is a Vision?
This is a general statement of the
organizations intended direction that evokes
emotional feelings in organization members.
A strategic vision describes the route a
company intends to take in developing and
strengthening

Coca-Cola Company
Vision
To achieve sustainable growth, we have established a vision with clear
goals.
Profit: Maximizing return to shareowners while being mindful of our
overall responsibilities.
People: Being a great place to work where people are inspired to be the
best they can be.
Portfolio: Bringing to the world a portfolio of beverage brands that
anticipate and satisfy peoples desires and needs.
Partners: Nurturing a winning network of partners and building mutual
loyalty.
Planet: Being a responsible global citizen that makes a difference.

Linking the Vision with Company Values

Companies often develop a statement of values to guide a
companys pursuit of its vision and strategy and paint the
white lines for how the companys business is to be
conducted
Values statements remain a bunch of nice words until the
espoused beliefs, traits, and behaviors are incorporated into
companys operations and work practices and are used as the
benchmark for job appraisal, promotions, and rewards.

Coca-Cola Company
Values
We are guided by shared values that we will live by as a
company and as individuals.
Leadership: "The courage to shape a better future"
Passion: "Committed in heart and mind"
Integrity: "Be real"
Accountability: "If it is to be, its up to me"
Collaboration: "Leverage collective genius"
Innovation: "Seek, imagine, create, delight"
Quality: "What we do, we do well"

Our Culture
Its really the people that make Google the kind of
company it is. We hire people who are smart and
determined, and we favor ability over experience.
Although Googlers share common goals and visions for
the company, we hail from all walks of life and speak
dozens of languages, reflecting the global audience that
we serve. And when not at work, Googlers pursue
interests ranging from cycling to beekeeping, from
frisbee to foxtrot.

What We believe?

Focus on the user and all else will follow.

Its best to do one thing really, really well.
Fast is better than slow
Democracy on the web works
You dont need to be at your desk to need an answer
You can make money without doing evil
Theres always more information out there
The need for information crosses all borders
You can be serious without a suit
Great just isnt good enough