Strategic Making task.

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 Company's
Strategy
• Tests of a Winning Strategy
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3. 1 Direction setting task
st
Developing 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 mission
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5. Examples of Strategic vision
• Jet Airways
Jet Airways will be the most
preferred airline in the world.
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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.
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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.
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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.
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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 and
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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 performed
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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 INTEGRATED
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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 customers
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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
enterprises
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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.
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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 opportunities
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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 performance
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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
success
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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.
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20. 3 rules for setting objectives
1. Spell out in QUANTIFIABLE or
MEASURABLE terms
2. Specify DEADLINE for achievement
3. Be CHALLENGING but ACHIEVABLE
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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 reality
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23. Characteristics of strategy making
• ACTION ORIENTED, concerning
WWW
– WHAT to do
– WHEN to do it
– WHO should be involved
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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 conditions
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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 culture
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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?
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