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Establishing company direction

Establishing company direction






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  • Key Messages : Customer focus begins at the top Our Top and Senior Management are encouraged to spend as much time face-to-face with our customers in a constant effort to improving the quality of our products and services
  • Human Values : Means we are sensitive to our customers and are constantly attempting to find out his / her wants and needs Example : Responsive customised service options to suit your specific needs across 170 service centres Innovative Solutions : Design and deploy products and solutions that effectively meets the wants and teeds of the customer Example : comes with leading edge technology to suit rugged Indian conditions. Incidence based extended service window and software usage support Value for money : Implies that we focus on continuous improvement of our products, services and solutions deployed Example : consistently delivers lower lifetime cost of ownership. Experienced IT Service infrastructure providing effective problem resolution Integrity : Deliver what we commit to the customers / comply with the law of the land / ethical dealings at all times / be able to stand up to public scrutiny and self scrutiny Example : Uses 100 % genuine components carefully selected to meet stringent quality standards. Committed service norms across service centres

Establishing company direction Establishing company direction Presentation Transcript

  • Strategic Management Establishing Company Direction
  • Strategy Implementation Strategic Entrepreneurship Organizational Structure and Controls Corporate Governance Strategic Leadership Strategy Formulation Strategic Competitiveness Above-Average Returns Strategic Vision Strategic Mission The External Environment The Internal Environment The Strategic Management Process Feedback Strategic Inputs Strategic Actions Strategic Outcomes Corporate- Level Strategy Cooperative Strategy Competitive Rivalry and Competitive Dynamics International Strategy Business-Level Strategy Acquisition and Restructuring Strategies
  • Developing strategic vision
    • Three tasks of a strategic vision
      • Develop mission statement defining what business the company is in presently
        • “ who we are” “what we do” “where we are”
      • Use mission statement as basis for deciding long term course and charting strategic path
        • “ where we are going”
      • Communicate strategic vision in clear, exciting terms that arouse organization-wide commitment
  • Mission statement
    • Give organization its own special identity, business emphasis, and path for development
      • Sets it apart from similar companies
      • Not “to make money”
  • Vision & Mission (Cont’d)
    • Mission statement answers the question:
    • “ What is our business?”
  • Vision & Mission (Cont’d)
    • Vision statement answers the question:
    • “ What do we want to become?”
  • Developing a Strategic Vision
    • Involves thinking strategically about
      • Future of company
      • Where are we going?
    • Tasks include
      • Creating a roadmap of the future
      • Deciding future business position to stake out
      • Providing long-term direction
      • Giving company a strong identity
  • Characteristics of a Strategic Vision
    • Well-stated vision statements
      • Are distinctive and specific to a particular organization
      • Avoid generic language
      • Excite strong emotions
      • Are challenging, nail biting
  • Example: Vision Statement To be the customer’s first choice for communications and information services in every market we serve, domestic and international. Verizon Communications
  • Example: Vision Statement We will clothe the world by marketing the most appealing and widely worn casual clothing in the world. Levi Strauss & Company
  • Example: Vision Statement Empower people through great software -- anytime, anyplace, and on any device. Microsoft Corporation
  • Example: Vision Statement We want to set the tone for the era . . . Green and affordable . . . That means establishing a new paradigm for harmonizing personal transport with the environment. It means revolutionary cost savings in products and production processes. Toyota
  • Example: Vision Statement Our vision : Getting to a billion connected computers worldwide, millions of servers, and trillions of dollars of e-commerce. Intel’s core mission is being the building block supplier to the Internet economy and spurring efforts to make the Internet more useful. Being connected is now at the center of people’s computing experience. We are helping to expand the capabilities of the PC platform and the Internet. Intel
  • Example: Vision Statement We will become number one or number two in every market we serve, and revolutionize this company to have the speed and agility of a small enterprise. General Electric
  • Mission vs. Strategic Vision
    • A mission statement focuses on current business activities -- “who we are and what we do”
      • Current product and service offerings
      • Customer needs being served
      • Technological and business capabilities
    • A strategic vision concerns a firm’s future business path -- “where we are going”
      • Markets to be pursued
      • Future technology-product-customer focus
      • Kind of company management is trying to create
  • Characteristics of a Mission Statement
    • Defines current business activities, highlighting boundaries of current business
      • Present products and services
      • Types of customers served
    • Conveys
      • What we do,
      • Why we are here, and
      • Where we are now
    A company’s mission is not to make a profit! The real mission is always — “What will we do to make a profit?”
  • Customer Orientation
    • A good mission statement reflects the anticipations of customers.
    • Identify customer needs
    • Provide product/service to satisfy needs
        • AT&T’s mission focuses on communications, not telephones
        • Exxon’s mission focuses on energy, not on oil and gas
  • Components of Mission (Cont’d)
    • Customers
    • Products or services
    • Markets
    • Technology
    • Survival, growth, and profitability
    • Philosophy
    • Self-concept
    • Concern for public image
    • Concern for employees
  • Components of Mission (Cont’d)
    • Components of mission and corresponding questions to be answered:
    • Customers:
      • “ Who are the firm’s customers?”
    • Products or services:
      • “ What are the firm's major products or services?”
  • Components of Mission (Cont’d)
    • Markets:
      • “ Geographically, where does the firm compete?”
    • Technology:
      • “ Is the firm technologically current?”
  • Components of Mission (Cont’d)
    • Concern for survival, growth, and profitability:
      • “ Is the firm committed to growth and financial soundness?”
    • Philosophy:
      • “ What are the basic beliefs, values, aspirations, and ethical priorities of the firm?”
  • Components of Mission (Cont’d)
    • Self-concept:
      • “ What is the firm’s 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?”
  • Communicating the Vision
    • An exciting, inspirational vision
      • Contains memorable language
      • Clearly maps company’s future direction
      • Challenges and motivates workforce
      • Provokes emotion and enthusiasm
  • Examples
    • Vision Statement
    • “ The Apollo Hospital is the LEADER in providing resources necessary to realize the community’s highest level of HEALTH throughout life.”
  • Examples (Cont’d)
    • Mission Statement
    • “ The Apollo Hospital, with respect , compassion , integrity, and courage , honors the individuality and confidentiality of our patients, employees, and community, and is progressive in anticipating and providing future health care services.”
  • At the centre of your vision has to be the Customer, his/her changing expectations and demands Azim H Premji Chairman and Managing Director, Wipro Limited WIPRO VISION
  • Our Mission With utmost respect to Human Values , we promise to serve our Customer with Integrity , through a variety of Innovative , Value for Money Products and Services, by Applying Thought , day after day Our Promise is a commitment to our Customer
    • To become a Global player of reckoning in the specialized area of business branding - across every industry sector
    • To be the ultimate authority in creating and evolving a process to enhance the brand value of the business
    • To be the foremost global repository of knowledge on brand-building skills and practices
    • “ Partnering clients in enhancing their business brand value , through a process-oriented , profitable , business branding approach. ”
  • Setting Objectives
    • Converts strategic vision and mission into specific performance targets
    • Creates yardsticks to track performance
    • Pushes firm to focus on results
    • Helps prevent complacency and coasting
    • Represent commitment to achieve specific performance targets
    • Well-stated objectives are
      • Quantifiable
      • Measurable
      • Contain a deadline for achievement
    • Spell-out how much of what kind of performance by when
    Characteristics of Objectives
  • Types of Objectives Required
    • Outcomes focused on improving financial performance
    • Outcomes focused on improving long-term, competitive business position
    Financial Objectives Strategic Objectives
  • Examples: Financial Objectives
    • X % increase in annual revenues
    • X % increase annually in after-tax profits
    • X % increase annually in earnings per share
    • Regular dividend increases
    • Larger gross profit margin
    • Larger operating profit margin
    • Larger net profit margin
    • X % return on capital employed (ROCE)
    • X % return on assets (ROA)
    • X % return on shareholder investment (ROE)
    • Upward-trending stock price that builds significant shareholder value over time
    • Strong bond and credit ratings
    • Reduced levels of debt
    • Sufficient internal cash flows to fund new capital investment
    • Diversified revenue base
    • Winning additional market share (or reaching X % market share)
    • Consistently getting new or improved products to market ahead of rivals
    • Overtaking key competitors on product performance or quality or customer service
    • Achieving lower overall costs than rivals
    • Deriving X % of revenues from sale of new products introduced in past 5 years
    • Being a recognized technological leader
    • Achieving national or global market coverage for firm’s products
    • Having broader or more attractive product selection than rivals
    • Deriving X % of revenues from online sales
    • Having a better-known or more respected brand name than rivals
    • Improving global sales and distribution capabilities
    Examples: Strategic Objectives
  • Example: Strategic and Financial Objectives HLL
    • Grow revenues by 5-6 % annually;
    • Increase operating profit margins from 11 % to 16 % within five years;
    • Trim the company’s 119 food, household, and personal care products down to 40 core brands;
    • Focus sales and marketing efforts on those brands with potential to become respected, market-leading global brands; and
    • Streamline the company’s supply chain.
  • Example: Strategic Objectives
    • To satisfy our customers by
      • Providing quality cars and trucks,
      • Developing new products,
      • Reducing the time it takes to bring new vehicles to market,
      • Improving the efficiency of all our plants & processes, and
      • Building on our teamwork with employees, unions, dealers, and suppliers .
    Ford Motor Company
  • Example: Strategic and Financial Objectives
    • Annual growth in earnings per share of 10% or better, on average;
    • A return on stockholders’ equity of 20-25%;
    • A return on capital employed of 27% or better; and
    • Have at least 30% of sales come from products introduced in the past four years .
    3M Corporation
  • Short-Range Versus Long-Range Objectives
    • Short-Range objectives
      • Targets to be achieved soon
      • Serve as stair steps for reaching long-range performance
    • Long-Range objectives
      • Targets to be achieved within 3 to 5 years
      • Prompt actions now that will permit reaching targeted long-range performance later
  • Concept of Strategic Intent
    • A company exhibits strategic intent when it relentlessly pursues an ambitious strategic objective and concentrates its competitive actions and energies on achieving that objective!
  • Characteristics of Strategic Intent
    • Indicates firm’s intent to stake out a particular position over the long-term
    • Involves establishing a “big, audacious goal” and then devoting the company’s full resources and energies to achieving it over time
    • Signals relentless commitment to winning in the marketplace
  • Objectives Are Needed at All Levels
    • Objective-setting process is mostly top-down, not bottom-up!
    • 1. First, establish organization-wide objectives and performance targets
    • 2. Next, set business and product line objectives
    • 3. Then, establish functional and departmental objectives
    • 4. Individual objectives are established last
  • Network of strategic visions, missions, objectives, and strategies Level 1. Responsibility of corporate level managers Level 2. Responsibility of business level general managers Level 3. Responsibility of heads of functional areas with business units Level 4. Responsibility of plant managers, geographic unit managers, operating unit managers Two-way influence Two-way influence Two-way influence Two-way influence Two-way influence Two-way influence Two-way influence Two-way influence Two-way influence Overall corporate scope and vision Corporate level objectives Corporate level strategy Business level scope and vision Business level objectives Business level strategy Functional area missions Functional objectives Functional strategies Operating unit missions Operating unit objectives Operating strategies