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Lecture 2   the 3 strategy making tasks
Lecture 2   the 3 strategy making tasks
Lecture 2   the 3 strategy making tasks
Lecture 2   the 3 strategy making tasks
Lecture 2   the 3 strategy making tasks
Lecture 2   the 3 strategy making tasks
Lecture 2   the 3 strategy making tasks
Lecture 2   the 3 strategy making tasks
Lecture 2   the 3 strategy making tasks
Lecture 2   the 3 strategy making tasks
Lecture 2   the 3 strategy making tasks
Lecture 2   the 3 strategy making tasks
Lecture 2   the 3 strategy making tasks
Lecture 2   the 3 strategy making tasks
Lecture 2   the 3 strategy making tasks
Lecture 2   the 3 strategy making tasks
Lecture 2   the 3 strategy making tasks
Lecture 2   the 3 strategy making tasks
Lecture 2   the 3 strategy making tasks
Lecture 2   the 3 strategy making tasks
Lecture 2   the 3 strategy making tasks
Lecture 2   the 3 strategy making tasks
Lecture 2   the 3 strategy making tasks
Lecture 2   the 3 strategy making tasks
Lecture 2   the 3 strategy making tasks
Lecture 2   the 3 strategy making tasks
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Lecture 2 the 3 strategy making tasks

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Strategic Making task.

Strategic Making task.

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  • 1. The 3 strategy making tasks Vision/Mission Objectives Strategic choice
  • 2. outline • Developing a Strategic Vision & Mission • Establishing Financial & Strategic Objectives • Crafting a Strategy • Factors Shaping a Companys Strategy • Tests of a Winning StrategyKaushal Mehta
  • 3. 1 Direction setting task stDeveloping a vision and mission
  • 4. Developing a Vision and Mission • Forming a VISION involves – UNDERSTANDING what business firm is in – COMMUNICATING vision and mission in clear & inspiring ways – DECIDING when to alter firm’s strategic course & change missionKaushal Mehta
  • 5. Examples of Strategic vision • Jet Airways Jet Airways will be the most preferred airline in the world.Kaushal Mehta
  • 6. Examples of Strategic vision • Jet Airways It will be the automatic first choice carrier for the traveling public and set standards, which other competing airlines will seek to match.Kaushal Mehta
  • 7. Examples of Strategic vision • Jet Airways Jet Airways will achieve this pre- eminent position by offering a high quality of service and reliable, comfortable and efficient operations.Kaushal Mehta
  • 8. Examples of Strategic vision • Jet Airways Jet Airways will be an airline which is going to upgrade the concept of airline travel - be a world class airline.Kaushal Mehta
  • 9. Examples of Strategic vision • Jet Airways Jet Airways will achieve these objectives whilst simultaneously ensuring consistent profitability, achieving healthy, long term returns for the investors and providing its employees with an environment for excellence andKaushal Mehta
  • 10. Defining the firms business • Three factors to consider – WHAT - Needs being satisfied – WHO - is being satisfied (Customer) – HOW - these needs are getting satisfied • Processes used & functions performedKaushal Mehta
  • 11. Defining the firms business • Looking OUTWARD at customer needs makes the business definition – CUSTOMER-DRIVEN – MARKET-DRIVEN • Looking INWARD at technologies & functions indicates scope of firm’s operations – SPECIALIZED – FULLY INTEGRATED – PARTIALLY INTEGRATEDKaushal Mehta
  • 12. Examples of Business Definitions • POLAROID Perfecting and marketing instant photography to satisfy the needs of more affluent U.S. and West European families for affection, friendship, fond memories, and humor. • McDONALD’S Serving a limited menu of hot, tasty food quickly in a clean, friendly restaurant for a good value to a broad base of fast-food customersKaushal Mehta
  • 13. Broad or narrow mission statements • A well-crafted mission statement – Must be narrow enough to specify real arena of interest – Serve as boundary for what to do & not do – Serve as beacon of where top management intends to take firm • Overly broad mission statements provide no practical guidance in strategy-making -- • Diversified companies have broader business definitions than single business enterprisesKaushal Mehta
  • 14. Mission Statement of a diversified Company • ICICI At ICICI , we are determined not just to compete but to advance, building our market share by offering individuals and institutions the broadest possible range of products and services. Apart from insurance, ICICI encompasses banking products, full brokerage services and institutional investment, to cite only a few of our diversified activities. We believe these new directions constitute the right moves . . . the steps that will drive our growth throughout the remainder of this century.Kaushal Mehta
  • 15. Changing the Mission • Knowing when events require revising mission to avoid – Getting trapped in a stagnant core business or – Letting new growth opportunities slip away • Good strategy-makers are alert to – Shifting customer wants & needs – Emerging technological capabilities – Changing international trade conditions – Signs of growing or shrinking opportunitiesKaushal Mehta
  • 16. 2 Direction setting task nd Establishing Objectives
  • 17. Establishing Objectives • Objectives – Represent managerial commitment to achieve SPECIFIC & MEASURABLE PERFORMANCE TARGETS by a certain time – Spell-out HOW MUCH of WHAT KIND of performance BY WHEN – Direct attention & energy to WHAT NEEDS TO BE ACCOMPLISHED Establishing objectives converts firm’s mission into concrete performanceKaushal Mehta outcomes!
  • 18. What kind of objectives to set • FINANCIAL OBJECTIVES – Relate to firm’s financial performance – Acceptable financial performance is critical to firm’s survival • STRATEGIC OBJECTIVES – Relate to firm’s competitiveness & market position – Tend to be competitor focused – Acceptable strategic performance is essential for long-term competitive successKaushal Mehta
  • 19. Example: Objectives • Citigroup To attain 1 billion customers worldwide • Motorola – Self funding revenue growth of 15% annually – An average return on assets of 13 to 15 % – An average return on share holders equity investment of 16 to 18 % – A strong balance sheet • Federal Express To continue global expansion by providing service to additional countries, increasing number of flight destinations, expanding fleet of aircraft, adding new hubs, adding U.S. distribution gateways, and merging dissimilar networks.Kaushal Mehta
  • 20. 3 rules for setting objectives 1. Spell out in QUANTIFIABLE or MEASURABLE terms 2. Specify DEADLINE for achievement 3. Be CHALLENGING but ACHIEVABLEKaushal Mehta
  • 21. 3 Direction setting task rd Crafting a Strategy
  • 22. Crafting a strategy • Strategy-Making is all about HOW to – Reach performance targets – Out-compete rivals – Achieve sustainable competitive advantage – Maneuver through threatening environments – Capture market opportunities – Strengthen firm’s long-term competitive position – Make the strategic vision a realityKaushal Mehta
  • 23. Characteristics of strategy making • ACTION ORIENTED, concerning WWW – WHAT to do – WHEN to do it – WHO should be involvedKaushal Mehta
  • 24. Characteristics of strategy making • EVOLVES over time, responding to – Dynamics of competition – Changing customer needs & expectations – Changes in costs – New regulations & changes in trade barriers – Other opportunities & threats • NEVERENDING, resulting in firm’s actual strategy being a blend of its – INTENDED or PLANNED strategy – AS-NEEDED REACTIONS to new developments and unforeseen conditionsKaushal Mehta
  • 25. Factors shaping choice of company strategy • External – Societal, political, regulatory, citizenship considerations – Industry attractiveness & competitive conditions – Specific company opportunities & threats • Internal – Company strengths & weaknesses – Personal ambitions, business philosophies, & ethical principles of key executives – Influence of shared values & company cultureKaushal Mehta
  • 26. Tests of winning strategies • GOODNESS OF FIT TEST – How well is strategy matched to firm’s situation? • COMPETITIVE ADVANTAGE TEST – Does strategy lead to sustainable competitive advantage? • PERFORMANCE TEST – Does strategy boost firm performance?Kaushal Mehta

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