Copyright 2005 PrenticeStrategic Management HallIn essence, the strategic plan is a company’s gameplan. Ch 1 -4
THE PERFORMANCE GAP GoalOutcome Gap Current Path TODAY Time
HOW DO WE CLOSE THE GAP? Define our current position .... withrespect to customer needs, competitors, the general market situation Determine our goal .... where should our firm be in 5, 10, …, years? Evaluate our firm and our market …. Strengths, Weaknesses, Opportunities, Threats Start down the path that will lead to our goal short - long-term action steps to move toward our target
Copyright 2005 PrenticeStrategic Management –Defined Hall Art & science of formulating, implementing, and evaluating, cross-functional decisions that enable an organization to achieve its objectives. Ch 1 -8
Benefits of Strategic Management • Proactive in shaping firm’s future • Initiate and influence firm’s activities • Formulate better strategies •Systematic, logical, rationalCopyright 2005 Prentice Hall Ch 1 -10
Copyright 2005 PrenticeBenefits of StrategicManagement HallFinancial Benefits Ch 1 -11 • Improvement in sales • Improvement in profitability • Productivity improvement
Copyright 2005 PrenticeBenefits of StrategicManagement HallNon-Financial Benefits Ch 1 -12• Improved understanding of competitors strategies• Enhanced awareness of threats• Reduced resistance to change• Enhanced problem-prevention capabilities
Why Some Firms Do No Strategic Planning Poor reward structures Fire-fighting Waste of time Too expensive Laziness Content with successCopyright 2005 Prentice Hall Ch 1 -13
Why Some Firms Do No Strategic Planning Fear of failure Overconfidence Prior bad experience Self-interest Fear of the unknown SuspicionCopyright 2005 Prentice Hall Ch 1 -14
PROCESSES ARE NEEDED TOENSURE THAT STRATEGIESARE: Aligned: A company’s strategies must fit with its mission, vision, competitivesituation and operating strengths. Goal-oriented: Strategies are the means by which a company sets out toachieve its goals.( Making a link between company outcomes and its Goals)
PROCESSES ARE NEEDED TOENSURE THAT STRATEGIES ARE:(CONT.) Fact-based: The best strategies are based on and supported by real data . and must be educated guesses, based on facts—for example,The logic behind the strategy must be clear Effective strategies tell believable stories.
PROCESSES ARE NEEDED TO ENSURETHAT STRATEGIES ARE: (CONT.) Based on Broad Thinking: Companies that are strategically thinking are able to consider multiple alternatives at once and to consider a range of scenarios in making strategic choices. Focused: No company can do everything or be all things to all people. Strategy setting involves making choices about what company will do and—as important—what it will not do. Strategies provide clear guidance about how a company’s activities will be prioritized, and how its limited resources will be deployed.
Agreed upon: Especially in large, complex organizations, successful strategies must gain the support of multiple stakeholders. Implementable
FORMING A STRATEGIC VISION What’s the over vision for the Company What Kind of enterprise do we want become
SETTING OBJECTIVES Converting managerial statements of strategic vision and business mission into specific outcome the company want to achieve
STRATEGY IMMPLEMENTATIONAND EXECUTION Putting Chosen Strategy Into Place
STRATEFY EVALUATION ANDMONITORING Evaluating Performance , Monitoring New Developments and initiating Corrective Actions and Adjustments
THE GOODNESS OF FIT TEST A good strategy has to be well matched with the company, and its external environmental condition , and market opportunities and threats. At the same time it has to be tailored to organization resources , weakness , strengths , competencies and competitive capabilities.
THE COMPETITIVE ADVANTAGETEST. A good strategies leads to sustainable competitive advantage . The bigger the competitive edge that the strategy build , the more powerful and effective it is .
THE PERFOMANCE TEST A good strategy boosts the company performance Two Kind of performance improvements are :1- gain profitability2- gain company competitive strengths and long term market position .
THE MASTER KEY FOR BEINGSTRATEGIC IS Keeping and showing positive attitude always