Key terms in strategic management

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Session 2 (7/12/2010)
Strategic Management

The reMARK Team

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Key terms in strategic management

  1. 1. Strategists Vision Mission statement Opportunities Threats Strengths Weakness Goals Objectives Strategies
  2. 2. <ul><li>Values </li></ul><ul><li>Beliefs </li></ul><ul><li>Culture </li></ul><ul><li>Policies </li></ul>
  3. 3. <ul><li>Most responsible for the success or failure of an organization </li></ul>
  4. 4. <ul><li>“ Vision refers to the goals that are broadest most general and all-inclusive. A vision describes aspirations for the future without specifying the means necessary to achieve those desired ends”. </li></ul><ul><li>Alex Miller </li></ul><ul><li>A vision is an image of its desired future </li></ul>
  5. 5. A vision refers to the category of intensions that are board, all inclusive and forward thinking. A vision describes aspirations for the future without specifying the means that will be used to achieve these desired ends. In short “ vision is the desired future state “ the most successful consumer package goods company in the world.”
  6. 6. <ul><li>Include </li></ul><ul><li>What the organization is to become. </li></ul><ul><li>Broad and general purpose. </li></ul><ul><li>Examples, </li></ul><ul><li>1 A world class manufacture </li></ul><ul><li>2 A quality organization </li></ul><ul><li>3 A provider of so-called legendary service </li></ul>
  7. 7. <ul><li>The visioning process addresses the fundamental question “ where do we want to be ?” </li></ul><ul><li>This question is relevant to </li></ul><ul><li>Individuals </li></ul><ul><li>Organizations </li></ul><ul><li>Nations </li></ul>
  8. 8. <ul><li>“ To be a fully developed nation on par with USA and Japan” </li></ul><ul><li>Nation’s vision of Malaysia – 2020 </li></ul><ul><li>Characteristics of vision </li></ul><ul><li>Futuristic </li></ul><ul><li>Positive </li></ul><ul><li>Inspiring and challenging </li></ul><ul><li>Not a fantasy or a wild dream </li></ul><ul><li>(It is a dream in action) </li></ul>
  9. 9. <ul><li>Achievable </li></ul><ul><li>Broad and general </li></ul>
  10. 10. <ul><li>Hemel and Prahalad have suggested five criteria for judging the relevance of the vision. </li></ul><ul><li>Foresight – what imagination </li></ul><ul><li>Breadth – how broad </li></ul><ul><li>Uniqueness – will it cause our competitors to be surprised </li></ul><ul><li>Consensus </li></ul><ul><li>Actionability </li></ul>
  11. 11. <ul><li>“ A vision becomes tangible as a mission statement. Writing such a statement specifies a leader’s values, beliefs about an organization and the directions in which should move. It can also identify what is unique about the character of the organization” </li></ul><ul><li>Gregory G Dess, Miller </li></ul>
  12. 12. <ul><li>A mission statement is a generalized statement of the overriding purpose of an organization. It can be through of as an expression of its reason for exist. </li></ul><ul><li>There should be an agreement within the organization or with stakeholders. </li></ul><ul><li>ORIGINS OF MISSION STATEMENT </li></ul><ul><li>Set by senior managers </li></ul><ul><li>Developed as the result of a consultation exercises with shareholders, staff, consumers, suppliers and others </li></ul><ul><li>Developed by consultants </li></ul>
  13. 13. <ul><li>A mission statement is a generalized statement of the overriding purpose of an organization. It can be through of as an expression of its reason for exist. </li></ul><ul><li>There should be an agreement within the organization or with stakeholders. </li></ul><ul><li>ORIGINS OF MISSION STATEMENT </li></ul><ul><li>Set by senior managers </li></ul><ul><li>Developed as the result of a consultation exercises with shareholders, staff, consumers, suppliers and others </li></ul><ul><li>Developed by consultants </li></ul>
  14. 14. <ul><li>To provide a basis for consistent planning decisions </li></ul><ul><li>To assist in translating purpose and direction into objectives suitable for assessments and control </li></ul><ul><li>To provide consistent purpose between interest groups connected to the firm </li></ul><ul><li>To establish organizational goals and ethics </li></ul><ul><li>To improve understanding and support from key groups outside the firm. </li></ul>
  15. 15. <ul><li>What is our reason for being? What is our basics purpose ? </li></ul><ul><li>What is unique about our organization? </li></ul><ul><li>Who are , or who should be our major customers, clients or key market segments ? </li></ul><ul><li>What is our principal goods and services, present and future ? </li></ul><ul><li>What are the basic values, aspirations and philosophical priorities of the firm ? </li></ul>
  16. 16. <ul><li>Pierce and David suggest that </li></ul><ul><li>Target customers and market </li></ul><ul><li>Principal products and services </li></ul><ul><li>Geographical domain </li></ul><ul><li>Core technologies </li></ul><ul><li>Concern for survival, growth and profitability </li></ul><ul><li>Company philosophy </li></ul><ul><li>Desire for public image </li></ul>
  17. 17. The mission of the American Red Cross is to improve the quality of human life; to enhance self-reliance and concern for others; and to help people avoid, prepare for, and cope with emergencies. American Red Cross
  18. 18. <ul><li>Mission statement establishes boundaries to guide strategy formulation </li></ul><ul><li>Mission statement acknowledges responsibilities to various stakeholders and establishes standards for organizational performance along corresponding dimensions </li></ul><ul><li>Mission statement suggested standards of individual behavior. </li></ul>
  19. 19. <ul><li>They are often full of meaningless statements such as the “best” or “Quality” which are open to interpretation and can not be formulated as precise objectives </li></ul><ul><li>They can not constrain action because they can easily be written and in any case no one take them seriously </li></ul><ul><li>They are commonly not shared by staff and other influential stakeholders. </li></ul>
  20. 20. <ul><li>A mission statement focuses on current business activities -- “who we are and what we do” </li></ul><ul><ul><li>Current product and service offerings </li></ul></ul><ul><ul><li>Customer needs being served </li></ul></ul><ul><ul><li>Technological and business capabilities </li></ul></ul><ul><li>A strategic vision concerns a firm’s future business path -- “where we are going” </li></ul><ul><ul><li>Markets to be pursued </li></ul></ul><ul><ul><li>Future technology-product-customer focus </li></ul></ul><ul><ul><li>Kind of company that management is trying to create </li></ul></ul>
  21. 21. <ul><li>These are qualitative statement about what the company likes to achieve. </li></ul><ul><li>Examples </li></ul><ul><li>Customer service, profitability, innovation etc. </li></ul><ul><li>The following features help goals to be effective. </li></ul>
  22. 22. <ul><li>A. Consistency </li></ul><ul><li>Vertically </li></ul><ul><li>Vision </li></ul><ul><li>mission </li></ul><ul><li>goals </li></ul><ul><li>objectives </li></ul><ul><li>operating targets </li></ul>
  23. 23. <ul><li>Highest quality, widest distribution and least cost may will be inconsistency. </li></ul><ul><li>B. Feasibility </li></ul><ul><li>C. Understandable </li></ul><ul><li>D. acceptability </li></ul>
  24. 24. <ul><li>Specific results that an organization seeks to achieve…….. </li></ul><ul><li>Long-term objectives </li></ul><ul><li>…… in pursuing its basic mission. </li></ul><ul><li>Short-term objectives </li></ul><ul><li>…… in order to achieve its long-term objectives </li></ul>
  25. 25. <ul><li>SMART objectives </li></ul><ul><li>Specific Precise and understandable </li></ul><ul><li>Measurable in order to confirm achievement </li></ul><ul><li>Agreed with those responsible </li></ul><ul><li>Realistic achievable </li></ul><ul><li>Times deadline </li></ul>
  26. 26. <ul><li>Forecast of Value system, power </li></ul><ul><li>Future envi relation within the org. </li></ul><ul><li>Analysis of opportunities for and </li></ul><ul><li>The present threats to the org. </li></ul><ul><li>Environment mix </li></ul><ul><li>of </li></ul><ul><li>Analysis of strengths and objec </li></ul><ul><li>The Org weaknesses </li></ul>
  27. 27. <ul><li>Product </li></ul><ul><li>Productivity </li></ul><ul><li>Market </li></ul><ul><li>Profitability </li></ul><ul><li>Research and innovation </li></ul><ul><li>Human resources </li></ul><ul><li>Financial resources </li></ul><ul><li>physical resources </li></ul>
  28. 28. <ul><li>Customer services </li></ul><ul><li>Structural development </li></ul><ul><li>Social responsibility </li></ul>
  29. 29. <ul><li>Type of goals Responsibility </li></ul><ul><li>Mission Top management </li></ul><ul><li>L/R objectives Top management </li></ul><ul><li>S/R objectives Top management </li></ul><ul><li>SBU L/R S/R objective SBU management </li></ul><ul><li>Functional Functional Mgt </li></ul><ul><li>Sub units Sub units Mgt </li></ul><ul><li>Individuals individual employees </li></ul>
  30. 30. <ul><li>Opportunities & threats </li></ul><ul><li>Economic, social, political, demographics, natural, technological and competitive trends events that could significantly benefit (favorable) or harm (unfavorable) an organization in the future </li></ul>
  31. 31. <ul><li>Strengths & weaknesses </li></ul><ul><li>Controllable activities within an organization that are performed especially well or poorly. </li></ul><ul><li>Policies </li></ul><ul><li>Guidelines rules and procedures established for support to implement selected strategy. </li></ul><ul><li>Policies are rules that are explicitly stated or implicitly understood </li></ul><ul><li>Eg. </li></ul><ul><li>We will not be undersold </li></ul><ul><li>We will not operate east and north of the Sri Lanka </li></ul>
  32. 32. <ul><li>We will not question why an item is returned. </li></ul><ul><li>We will not depend upon outside suppliers for the most critical components for the assembly of our products. </li></ul>
  33. 33. <ul><li>System of shared values and beliefs that shape a company’s people, organizational structures and control systems to produce behavioral norms Alex Miller </li></ul><ul><li>Value </li></ul><ul><li>What is important </li></ul><ul><li>Belief </li></ul><ul><li>How things works </li></ul><ul><li>Behavioral norms </li></ul><ul><li>The way we do things around here. </li></ul>
  34. 34. <ul><li>Shared philosophies, expectations, attitudes and norms that knit an organization together </li></ul><ul><li>Kilmann </li></ul><ul><li>Basic assumptions and beliefs shared by organization members. </li></ul><ul><li>Schein </li></ul>

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