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  1. 1. Elements of a Strategic Vision Defines present and future business make-up of company Charts a long-term path to follow Communicated in an inspiring and exciting manner
  2. 2. Defining a Company’s Business <ul><li>A good business definition incorporates three factors </li></ul><ul><ul><li>Customer needs -- WHAT is being satisfied </li></ul></ul><ul><ul><li>Customer groups -- WHO is being satisfied </li></ul></ul><ul><ul><li>Technologies used and functions performed -- HOW customer needs are satisfied </li></ul></ul>
  3. 3. Communicating the Vision <ul><li>An exciting, inspirational vision </li></ul><ul><ul><li>Inspires, challenges, and motivates workforce </li></ul></ul><ul><ul><li>Arouses strong sense of organizational purpose and induces employee buy-in </li></ul></ul><ul><ul><li>Brings workforce together and galvanizes people to live the business </li></ul></ul>
  4. 4. Managerial Value: Strategic Vision and Mission <ul><li>Crystallizes long-term direction </li></ul><ul><li>Reduces risk of rudderless decision-making </li></ul><ul><li>Conveys organizational purpose and identity </li></ul><ul><li>Keeps direction-related actions of lower-level managers on common path </li></ul><ul><li>Helps organization prepare for the future </li></ul>
  5. 5. Types of Objectives Required <ul><li>Outcomes that improve a firm’s financial performance </li></ul><ul><li>Outcomes that strengthen a firm’s competitiveness and long-term market position </li></ul>Financial Objectives Strategic Objectives $
  6. 6. The Concept of Strategic Intent <ul><li>A company exhibits STRATEGIC INTENT when it relentlessly pursues an ambitious strategic objective and concentrates its competitive actions and energies on achieving that objective! </li></ul>
  7. 7. The Concept of Strategic Intent <ul><li>Indicates firm’s intent to stake out a particular position over the long-term </li></ul><ul><li>Serves as a rallying cry for employees to do their very best </li></ul><ul><li>Signals deep-seated commitment to winning </li></ul>
  8. 8. Short-Range and Long-Range Objectives <ul><li>Short-Range objectives </li></ul><ul><ul><li>Targets to be achieved soon </li></ul></ul><ul><ul><li>Serve as stair steps for reaching long-range performance </li></ul></ul><ul><li>Long-Range objectives </li></ul><ul><ul><li>Targets to be achieved w ithin 3 to 5 years </li></ul></ul><ul><ul><li>Prompt actions now that will permit reaching targeted long-range performance later </li></ul></ul>
  9. 9. Strategizing Is HOW To . . . <ul><li>Achieve performance targets </li></ul><ul><li>Out-compete rivals </li></ul><ul><li>Achieve sustainable competitive advantage </li></ul><ul><li>Strengthen firm’s long-term competitive position </li></ul><ul><li>Make the strategic vision a reality </li></ul>Our game plan for running the company will be . . .
  10. 10. Characteristics of Strategy-Making <ul><li>Action-Oriented </li></ul><ul><li>Evolves Over Time </li></ul><ul><li>A Never-ending, Ongoing Task </li></ul>
  11. 11. Fig. 2-1(a): Levels of Strategy-Making: A Diversified Company Corporate Strategy Business Strategies Functional Strategies Operating Strategies Corporate-Level Managers Business-Level Managers Operating Managers Functional Managers Two-Way Influence Two-Way Influence Two-Way Influence
  12. 12. Levels of Strategy-Making: A Single-Business Company Business Strategy Functional Strategies Operating Strategies Executive-Level Managers Operating Managers Functional Managers Two-Way Influence Two-Way Influence
  13. 13. Corporate Strategy for a Diversified Company Corporate Strategy How Much Diversification Kind of Diversification Responses to Changing Conditions Efforts to Build Competitive Advantage Via Diversification Moves to Strengthen Positions and Profits in Present Businesses Moves to Add New Businesses Approach to Capital Allocation Moves to Divest Weak Units
  14. 14. Tasks of Corporate Strategy <ul><li>Moves to achieve diversification </li></ul><ul><li>Actions to boost performance of individual businesses </li></ul><ul><li>Capturing synergy among business units </li></ul><ul><ul><ul><li>2 + 2 = 5 effects! </li></ul></ul></ul><ul><li>Establishing investment priorities and steering corporate resources into the most attractive business units </li></ul>
  15. 15. Strategy Components of a Single-Business Company Business Strategy Strategic Alliances and Collaborative Partnerships Responses to Changing Conditions Basic Competitive Approach Moves to Secure Competitive Advantage Geographic coverage; approach to vertical integration Manufacturing Strategy Marketing Strategy R & D Strategy Human Resources Strategy Finance Strategy
  16. 16. What Business Strategy Involves <ul><li>Forming responses to changes in industry and competitive conditions, buyer needs and preferences, economy, regulations, etc. </li></ul><ul><li>Crafting competitive moves leading to sustainable competitive advantage </li></ul><ul><li>Building competitively valuable competencies and capabilities </li></ul><ul><li>Uniting strategic initiatives of functional areas </li></ul><ul><li>Addressing strategic issues facing the company </li></ul>
  17. 17. Functional Strategies <ul><li>Game plan for a strategically-relevant function, activity, or business process </li></ul><ul><li>Details how key activities will be managed </li></ul><ul><li>Provide support for business strategy </li></ul><ul><li>Specify how functional objectives are to be achieved </li></ul>
  18. 18. Operating Strategies <ul><li>Concern narrower strategies for managing grassroots activities and strategically-relevant operating units </li></ul><ul><li>Add detail to business and functional strategies but of lesser scope </li></ul>
  19. 19. Uniting the Company’s Strategy-Making Effort <ul><li>A company’s strategy is a collection of strategies and initiatives </li></ul><ul><li>Separate levels of strategy must be unified into a cohesive , company-wide action plan </li></ul><ul><li>Pieces of strategy should fit together like puzzle pieces </li></ul>
  20. 20. Networking of Missions, Objectives, and Strategies Level 1 Level 2 Level 3 Level 4 Corporate Level Objectives Overall Scope and Strategic Vision Corporate Level Strategy Business Level Objectives Business Level Strategic Vision Business Level Strategies Functional Objectives Functional Missions Functional Strategies Operating Objectives Operating Missions Operating Strategies Two-Way Influence Two-Way Influence Two-Way Influence Two-Way Influence Two-Way Influence Two-Way Influence Two-Way Influence Corporate-Level Managers Business-Level Managers Functional Managers Plant Managers, Lower-Level Supervisors Two-Way Influence Two-Way Influence
  21. 21. Factors Shaping the Choice of Company Strategy Competitive Conditions & Industry Attractiveness Societal, Political, Regulatory Factors Company Opportunities & Threats Company’s Strategic Situation Influences of Key Executives Resource Strengths & Weaknesses Shared Values & Culture Determine Relevance of Internal & External Factors Identify & Evaluate Alterna- tives Craft the Strategy External Factors Internal Factors
  22. 22. Corporate Social Responsibility <ul><li>Conduct company activities within bounds of what is considered ethical and in public interest </li></ul><ul><li>Respond positively to emerging societal priorities and expectations </li></ul><ul><li>Demonstrate willingness to take needed action ahead of regulatory confrontation </li></ul><ul><li>Balance stockholder interests against larger interest of society as a whole </li></ul><ul><li>Be a “good citizen” in community </li></ul>
  23. 23. Conditions and Industry Attractiveness <ul><li>A company’s strategy has to be responsive to </li></ul><ul><ul><li>Fresh moves of rival competitors </li></ul></ul><ul><ul><li>Changes in industry’s price-cost-profit economics </li></ul></ul><ul><ul><li>Shifting buyer needs and expectations </li></ul></ul><ul><ul><li>New technological developments </li></ul></ul><ul><ul><li>Pace of market growth </li></ul></ul>
  24. 24. Company Strengths, Competencies, and Competitive Capabilities <ul><li>A company must have or be able to acquire the resources, competencies, and competitive capabilities needed to execute the chosen strategy </li></ul><ul><li>Resource deficiencies, gaps in skills, and weaknesses in competitive position make pursuit of certain strategies risky or altogether unwise </li></ul>
  25. 25. Shared Values and Company Culture <ul><li>Values and culture can dominate strategic moves a company will </li></ul><ul><ul><li>Consider </li></ul></ul><ul><ul><li>Reject </li></ul></ul><ul><li>A company should not undertake strategic moves which conflict with </li></ul><ul><ul><li>Its culture </li></ul></ul><ul><ul><li>Values widely shared by managers and employees </li></ul></ul>
  26. 26. Ethical Responsibilities of Firm to Stakeholders <ul><li>Owners/shareholders - Expect some form of return on their investment </li></ul><ul><li>Employees - Expect respect for their worth and devoting their energies to firm </li></ul><ul><li>Customers - Expect reliable, safe product or service </li></ul><ul><li>Suppliers - Expect equitable relationship with firm </li></ul><ul><li>Community - Expect businesses to be good citizens in their community </li></ul>
  27. 27. Tests of a Winning Strategy <ul><li>GOODNESS OF FIT TEST </li></ul><ul><ul><li>How well is strategy matched to firm’s situation? </li></ul></ul><ul><li>COMPETITIVE ADVANTAGE TEST </li></ul><ul><ul><li>Does strategy lead to sustainable competitive advantage? </li></ul></ul><ul><li>PERFORMANCE TEST </li></ul><ul><ul><li>Does strategy boost firm performance? </li></ul></ul>