Strategic Management for teachersCh 1&2 ppt.pptx

Instructor: Biniyam D
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Strategic Management
RIFT VALLEY UNIVERSITY
HAWASSA CAMPUS

OVERVIEW OF STRATEGIC MANAGEMENT
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Chapter One

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After studying this chapter, you will be ableto:
 Elucidate the nature of strategic management
 Explain the concepts of strategic management
 State strategic management process
 Elaborate the strategic management model
 Describe the benefits of strategic management
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OVERVIEW OF STRATEGIC MANAGEMENT

 Strategy is a tactical course of action which is designed to
achieve long term objectives. It is an art and science of planning
and marshaling resources for their most efficient and effective
use in a changing environment.
 Strategy of business enterprise consisits of what management
decides about the future direction and scope of the business. It
entails managerial choice among alternative action programmes,
competitive moves and different business apporoaches to
achieve enterprise objectives.

Conti…
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 Strategy once formulated has long term implications and is
framed by top management in an organization. In short, it may
be called as the “game plan of management”

Definition of Strategy
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 Strategy is unified, comprehensive and integrated plan relating
the strategic advantage of the firm to the challenges of the
environment.
the enterprise
It is designed to ensure that the basic objectives of
are achieved. (Glueck)
 Strategy is “the determination of basic long-term goals and
objectives of an enterprise and the adoption of the courses of
action and the allocation of resources necessary for carrying out
these goals. (Chandler)

Features of strategy
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 Top management responsibility
 Allocation of large amount of resources
 Impact on long-term prosperity of the firm
 Future oriented
 Multi-functional or multi-business consequences
 Consideration of factors in the external environment

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 At this level, strategic decisions relate to organization-wide
policies and are taken care by top-level management(BOD) with a
vision of determining “Where the company wants to be?”
 It has two main aspects:- Formulation of strategy (strategic
planning) and strategy implementation
 The nature of strategy at this level tend to be value-oriented,
conceptual and than other levels.
 There is also greater risk, cost and profit potential as well as
greater need of flexibility associated with this level.
Corporate level strategy

Conti...
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 Major financial policy decisions involving acquisition,
diversification and structural redesigning belong to this level.

Business-Level Strategy
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Business-level strategy is more likely related to a unit within the
whole. It is concerned with competition in a market.

The concerns are about what products or services should be

developed and offered to which markets in order to meet
customer needs and organizational objectives.
At this level, multi-functional strategies developed at corporate
level are formulated and implemented for specific product market

in which the business operates. Thus, managers at this level
translate general directions and intent into concrete functional
objectives.

Conti...
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 Decisions at this level include policies involving new product
development,
personnel, etc.
marketing mix, research and development,

Functional/Operational-level strategy
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Functional strategy involves decision-making with respect to

specific functional areas: production, marketing, personnel, finance,
etc.
While corporate and business level strategies are concerned with

“Doing the right things”, functional strategies stress on “Doing
things right”.
Operational level strategy is concerned with strategic approaches

for managing frontline operating units (like plants, sales, etc) and
for handling day to day tasks of strategic significance (like
advertising campaign, purchasing materials, inventory control,
maintenance, etc.). Thus, it focuses on how the different functions of
the enterprise contribute to the other levels of strategy.

Conti…
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 Thus, functional level strategic management is the management
of relatively narrow areas of activity, which are of vital,
pervasive or continuing importance to the total organization.

Step 1: Strategic Intent
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Vision: Vision is the statement that expresses organization's

ultimate long-run objectives. It is
become. Vision once formulated
what the firm ultimatly like to
is for forever and long lasting
for years to come. Vision is closely related with strategic intent
and is a forward thinking process. Example: Microsoft - “A
computer software on every desk and in every home”.
Mission: It tells who we are and
had like to become. Mission of
unique purpose that set it apart
what we do as well as what we
a business is the fundamental,
from other firms of its kind and

identifies the scope of its operations in product and market terms.
Example: Microsoft- “Empower every person and every
organization on the planet to achieve more”.

Conti…
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 Objectives: These are the end results of planned activity that
state what is to be accomplished by when and should be
quantified if possible and their achievement should result in the
fulfillment of a corporation's mission. Objectives state
specifically how the goals shall be achieved. Following are the
areas for setting objectives - profit objective, marketing objective,
production objective, etc.

Step 2: Strategy Formulation
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 Strategy formulation refers to the process of choosing the most
appropriate course of action for the realization of
organizational
goals and objectives and thereby achieving the organizational
vision. For choosing most appropriate course of
organization and environmental is done with
analysis.
action, appraisal of
the help of SWOT
 Enviromental Appraisal: The enviroment of any organization is
influences that
of External and
includes all the
“the aggregate of all conditions, events and
surround and affect it”. It is dynamic and consists
Internal Environment. The external environmental
factors outisde the organization which provide opportunities or
pose threats to the organization. The internal environment refers
to all the factors within an organization which imparts stengths
or cause weaknesses of a strategic nature.

Conti…
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 Organizational Appraisal: It is the prcess of observing an
organizational internal environment
and weaknesses that may influence
to achieve goals.
to identify the strengths
the organization's ability
 The analysis of corporate capabilities
successful
and weaknesses
becomes a pre-requisite for formualtion and
reformulation of corporate strategies. This analysis can be
done at various levels: functional, divisional and corporate.

Step 3: Strategy Implementation
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 Strategy implementation is the action stage of strategic man. It
refers to decisions that are made to install new strategy or
reinforce existing strategy.
 Designing structure, process and system: strategy
implementation includes the making of decisions with regard
to organizational structure, developing budgets, programs and
procedures in order to accomplish certain activities.
 Functional implementation: functional implementation is
five
and
carried
differen
t
out through functional plan and policies in
areas-marketing, finance, operation, personnel
information management.

Conti…
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 Behavioral implementation: it denotes mobilizing employees
and managers to put and vote strategies into action and
require personal discipline, commitment and sacrifice. It
depends upon manager's ability to motivate employees.
 Operationalizing strategy: it includes establishing annual
objectives, devising policies, and allocating resoures.

Step 4: Strategy Evaluation and control
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 Strategy evaluation: it is the primary means to know when and
why particular strategies arenot working well. It is the process in
which corporate activities and performance results are monitored
so that actual performance can be compared with desired
performance.
 Thus strategic evaluation activities include reviewing external
and internal factors that are the basis for current strategies.

Conti…
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 Strategic control: in this step, organizations detemine what to
control that is
set
which objectives the organization hopes to
accomplish,
compare the
control standards, measure performance,
actual with the standard determine the reasons for
the deviations and finally taking corrective actions and review
the policies and activities if needed.

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MISSION, VISION, GOALS AND OBJECTIVES
Chapter Two

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MISSION, VISION, GOALS AND OBJECTIVES
After pursuing this chapter, you should be able to:
 State the Importance of a Clear Mission
 Explain the Nature of Business Mission
 Describe the Components of a Mission Statement

Introduction
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 Vision is “description of something in the future”. And it is the
mental perception of the kind of environment an individual, or an
organization, aspires to create within a broad time horizon and
the underlying conditions for the actualization of this perception”.
 Vision
like?”.
people
statement answers the question, “What will success look
The pursuit of this image of success is what motivates
to work together.

Conti...
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 A vision provides a strong foundation for developing a
comprehensive mission statement.
 Strategic vision addresses the “where are we going” questions
and explains the course and direction chartered by management.
 A strategic vision should provide a clear understanding of what
the business should look like and provide help to take strategic
decisions.

Vision
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 Strategic intent should lead to an end and that end is the vision
an organization or an individual.
of
 It is what the firm or a person would ultimately like to become.
 It should be short and specific and is
organization.
based on overall purpose of

Characteristics of Vision
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 1. It is a blue print of the kind of business organization the
management is trying to
occupy.
create and the market position it would
 2. It should be forward looking that provide strategic course the
management will adopt to help the company prepare the future.
 3. It is specific and provide guidelines to managers for making
decisions and allocating resources.
 4. It is flexible to changing environment and with in the realm of
companies hope to achieve.

Conti…
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 5. Appeal to emotions and motivate employees.
 6. Narrow and can focus effort and excite people.
 7. It maynot fit to present circumstance, but contributes to future
and shows picture of future.
 8. It should be easy to explain to all stakeholders and preferably
short.

Benefits of Vision
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 Good visions are inspiring and exhilarating
 Help the organization to prepare for the future
 Clarifies and crystallizes the senior executives
companies long term direction
views about the
 Good vision reduces risk-taking and experimentation
 Good vision help to motivate and morale boosting of employess

Conti…
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 Good visions are competitive, original and unique.
 Good visions represent integrity, they are truly genuine and can
be used for the benefit of people.

Limitations of a vision statement
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 Vague and incomplete
 Not forward looking
 Too broad
 Uninspiring
 Not distinctive

 Examples
 1. BSNL Vision Statement: “To become the largest telecom
service provider in Asia.”
 2.Walt Disney vision statement: “Make people happy”
 3.
to
Stokes Eye Clinic, Florence, South Carolina: “Our vision is
take care of your vision.”
Conti…

Mission
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 Organizations relate their existence to satisfying a particular
need of the society. They do it in terms of their mission.
 Mission is a statement which defines the role that an
organization plays in a society.
 It refers to the particular need of
information needs.
that society for instance, its

Defining Mission
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 It is “essential purpose of the organization, concerning
particularily why it is in existence, the nature of the business it is
in, and the customers it seeks to serve and satisfy.”
 “Purpose or reason for the organization's existence.”
 “Mission is an enduring statement of purpose that distinguishes
one firm from other similar firm.”

Conti...
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 Different from vision by it is more focused on “What is our
business” as compared to the “where are we headed” or what
we want to become” nature of vision.

Characterstics
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 1.
 2.
 3.
Declaration of attitude
Customer orientation
Declare of social
policy

1. Declaration of attitude
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Not designed to specific or to have a concrete end

is declaration of attitude and outlook

is meant to provide motivation, general direction,
a philosophy to guide the organization.
an image and

should be flexible, even vague to provide room for adapting to
changing environments and ways of operations.


2. Customer orientation
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 refletcs the anticipation of customer. Here, the operating philosophy
of the organization is to identify customer needs
product or service that fulfill those needs.
and then provide a
 It defines
 1. “What organization is and what is aspiring to be”
 2. “be limited enough to exclude some exclude some
and broad enough to allow for creating growth”
ventures
 3. “Have its own identity that distinguish it from others”

Conti…
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 4. “Have its own identity that distinguish it from
others”
 5. It serve as a framework to evaluate both current and
prospective activities
 6. “be stated interms sufficiently clear to be widely
understood throughout the organization”

 Socially oriented policy suggest that the company takes into
consideration not only profit owed to shares and what it owes to
major stakeholders, but also seriously responds to responsibilities
towards consumer, environmentalists, minorities.
3. Declaration of social policy

Mission statement
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 “A mission statement is an enduring statement of purpose that
distinguishes one business from other similar firms. A
in
mission
product
statement identifies the scope
and market terms.”
of a firm's operations
 For example: BSNL misssion
 “To provide world class state of art technology telecom
services to its customers on demand at competitive prices.”
 “To provide world class telecom infrastructure in its area of
operation and
economy.”
to contribute to the growth of country's

Conti...
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 The mission statement of an organization is normally short, to
the point, and contains the following elements:
 Provides a concise statement of why the organization
and what it is to achieve;
exists,
 States the purpose and identity of the organization;
 Defines institution's values and philosophy and
 Describes how the organization will serve those objectives

Formulating mission
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 1. What is the basic purpose of your organization?
 2. What is unique about your organization?
 3. What is in your company that will make it stand out in a
crowd?
 4. What are, and who should be, your principal customers?
 5.
of
What are the basic beliefs, values and philosophical priorities
your firm?

Conti…
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 1.
or
Product or service: invariabily includes mention of the product
service the company offers to customers.
 2. Customers: information in the mission statement describes the
profiles of customers and the organization it serves.
 3. Technology: components of the mission statement generally
refers to means of production, operations and organizational
functions which include elements such as equipments, materials,
techniques, processes.

Conti…
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 4. Survival, growth and profitability: make a general reference to
the company's survival and healthy functioning, which include
growth and profitability.
 5. Company philosophy: it reflects the basic believes, values,
aspirations and ethical priorities of company that guide the
employee in conditioning organizational function.

Conti...
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 6. Public
company
image: elements of the
wishes to be viewed by
company deals with how the
external constituencies and to
create a positive
refers
public image, the mission statement could
explicitly to the responsiveness of the company to
concerns about the company and the society.
 7. Employees: to develop a public image a company could
include concerns for recognition of the value of employees in the
statement.

Need for an explicit mission
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 To ensure agreement of purpose within the organization
 To provide a basis for
resources
motivating the use of the organizations
 To develop a basis, or standard, for allocating organizational
resources
 To establish a general tone or organization climate
 To serve as a focal point for those who can identify with the
organization's purpose and direction

Conti...
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 Mission “To achieve our objectives in an environment of fairness,
honesty, and courtesy towards our clients, employees, vendors
and society at large.”
 A vision statement describes
become.
what the organization would like to
 A mission statement describes what the organization is now.
 “What the company is providing”

Difference between vision and mission
57
Mission statement Vision statement
• A mission statement talks about • A vision statement outlines WHERE
How you will get to where you you want to be. Communicates
want to be. Defines about the both the purpose and values of
purpose and primary objectives your business.
related to your customer needs and
team values.
• It answers the question, What do we • It answers the question, “Where do
do? What makes us different?” we aim to be?”

• A mission statement talks • A vision statement talks about
about the time present leading your future
to its future
• It lists the broad goals for which the • It lists where you see yourself some
organization is formed. Its prime years from now. It inspires you to
function is internal; to define the key give your best. It shapes your
measure or measures of the understanding of why you are
organization's success and its prime working here.
audience is the leadership, team and
stockholders.
Conti…

Conti...
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• Your mission statement may • As your organization evolves, you
change, but it should still tie might feel tempted to change
your
back to your core values, vision. However, mission or vision
customer needs and vision statements explain your organization's
foundation, so change should be kept
to a minimum
• What do we do today? For • Where do we want to be going
whom do we do it? What is the forward? When do we want to reach
benefit? In other words, Why we that stage? How do we want to do it?
do what we do? What, for
Whom and Why?

Conti...
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• Purpose and values of the
• Clarity and lack of ambiguity:
organization: Who are the Describing a bright future (hope);
organization's primary “clients” Memorable and engaging
(stakeholders)? What are the expression; realistic aspirations,
responsibilities of the organization achievable; alignment with
towards the clients? organizational values and culture

Objectives
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 Objectives represent a managerial commitment to achieve
specified results
out the quantity
time period, the
the achievement
in a specified period, of time. They clearily spell
and quality of performance to be achieved, the
for
process and the person who
of the objective.
is responsible
 Objectives are end results of planned activity.
 Objectives state what is to be accomplished by when and should
be quantified if possible.

Conti...
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 Objectives are more specific and narrower
 Objectives are always measurable and particular
 Objectives
becoming
vary
more
with the hierarchical level in the organization,
focused and short term going down from top
managers
level to frontline
 Objectives
efficiency,
are
and
critical for organizational effectiveness and
it has been shown that managers who
aggressively pursue objectives perform better that managers
who are not driven by them

Importance of objectives
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 1. Objectives help to define the organization in its environment
 2. Objectives help in coordinating decisions and decision-maker
 3. Objectives help in formulating strategies
 4. Objectives provide standards for assessing organizational
performance

Conti…
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 1. Specific and unambiguous
 Help to remove confusion
should be directed
about the target at which efforts
 Help to determine reward structure in fair and equitable
manner
 Example: objective of almost every business would have
increased profitability, but it should be
10% increase in profit
explicitly explained, as

Conti...
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 2. Time horizon
 Should be stated in terms of a time frame within which they
should be attained
 Without a timeframe, an objective would be ineffective
almost meaningless.
and
 Example: A 10% increase in
is a different, objective than
horizon, this objective
would
profit being targeted over a year
over 2 years, if there is no time
serve no purpose

Conti…
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 3. Flexible: Since objectives are set in the future, which cannot
be predicted, exactly there should be room for altering an
objective to the environment change.
 4. Attainable: Objectives are balanced act between being too
easy and too difficult
 Should be challenging enough in that they give rise to
innovation
achievable
and fresh approaches, yet they should be
with not too much increase in resource

Conti...
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 5. Measurable: should be stated in quantifiable, measurable
terms
 So everyone can clear about objectives, progress can be
measured towards the objectives and employees morale can
be tied to number rather than personalities

Conti…
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 6. Multiple objective
 rare to have just one objective that all employees work
towards.
 Example: An objective such as increasing in number of
customers served would directly with either a cost
minimization or quality improvement objective.
 Even when the management aligns different objectives, even
seemingly opposing ones, but all efforts is coordinated in the
same direction

Factors affecting Objectives
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 1. Size of the organization: Bigger size makes that objective
formulation process complex
 2. Level of management:
organizational
objectives are set
set different kinds
by
of
managers. Different levels of
objectives
managers
 3. Organization culture: Culture is a system of shared set of
values, beliefs and norms that guide behavior

Conti…
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 1. Market share: Healthy market share should sustain even as an
organization tries to increase its share.
 Sustainable market share is important in stable
competitive environment
markets and in
 2. Leadership in innovation and productivity: innovation is
needed for success and in some cases for survival
 Innovation must be translated into objectives indicate what the
orgainzation is aiming for.

Conti…
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 3. Product quality and productivity: designing and ensuring
quality has been shown to be critical competitive strength.
 Constant balance between achieving efficiency
cost-cutting objective and maintaining quality.
as related to
 4. Resource level: resources includes inventory, equipments,
capital, human capital
 resources imply cost, their use should be minimized without
any compromise in aspects such as quality and service

Conti...
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 5. Customer satisfaction: maintaining customer relationships and
building customer loyalty and goodwill are highly desirable.
 6. Performance level: related to productivity and effectiveness
and performance objectives can also include innovation and
professional development
 7. Social responsibilities: business
explicit
respond to society and
community by specifying objectives for socially
beneficial activities

Goals
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 Goal is defined as an “intermediate result to be achieved by a
can, therefore
certain time as part of the grand plan. A plan
have many goals.”
 Goal is a specific target that a firm intend to reach in long term.
 Goal describes clearily the activities and task to be completed by
an individual, a department or an organization.
 Goals should be measurable, quantitative, challenging, realistic,
consistent and prioritized.

Conti…
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 Provide
process
basics for measuring companies performance and the
it is making towards the vision.
 Strategic goals help managers to establish end result of activities
in general without getting bogged down in details, such as issues
of measurement and timing.

Types of Goals
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 1. Financial goals: these goals focus on achieving a certain level
of financial performance, measured interms of return in
investment or growth of revenues
 2. Strategic goals: the goals focus on achieving strategic or
competitive
leadership,
service
advantages within the industry, like technology
creativity and innovation and superior customer

 According to M.D.Richards:
 1. Specific: so that they are precise and measurable, would
assist management in monitoring the progress
point of time
towards
achievement of goals at each specific
 2. Issues of goal: short-term goals and objectives should be
left to lower level managers to identify, plan and achieve
 issues like lowering of cost and improving quality should be
included in goals of middle level managers
Characterstics of goal

Conti...
 3. Should be well constructed, realistic and challenging:
challenging goals motivates managers to be innovative, creative
and ambitious in improving operations, marketing, sales, etc.
 4. Specification of time period

Examples of goals “El paso Electrical
operations
Company' in various
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 Customer service:
 provide quality service to customer
standard in the industry
at least equal to the highest
 Maintain
99%
reliability of service to customer at a level above
 ensure that customer are educated
using electricity
about the safety aspects of

Conti...
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 Community service:
 promote economic growth and increased development of
company's total service area
the
 provide job opportunities and investment in the service area
which promotes a higher standards of living for all citizens
 cooperate with and serve the educational institutions located in
the service area in a manner consistent with other leaders in
the industry

Conti...
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 Shareholders relations:
 assure that all expenditure are made in such a way as to
protect and enhance shareholders investment
 provide a rate of return to the shareholders which is
competitive with other investments
 base all company involvement in new programmes
on solid economic principles
or projects

Conti...
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 Employee-management obligations:
 monitor and strive to
supervision
improve the quality of management and
 attract, develop and retainable and loyal employees
 provide equal employment opportunities and a high degree of
training along with professional tools

Conti...
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 Corporate communication:
 make an assertive effort to provide information communication
on relevant company issues
 keep senior management appraised
topics of interest
and educated on current
 enhance the community image of the company by being
receptive to the needs of customer and the community

Goal vs Objectives
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 Goals are an expected or desired outcome of a planning process.
Goals are usually broad, general expressions of the guiding
principles and aspirations of an organization
 Objectives are precise targets that are necessary to achieve goals.
Objectives are detailed statements of quantitatively or
qualitatively measurable results the plan hopes to accomplish

Conti...
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Goal Objectives
• The purpose toward which an • something that one's efforts
endeavor is directed or actions are intended to
attain or accomplish, purpose;
target
Generic action, or better still, an • Specific action-the objective
outcome towards which we supports attainment of the
strive associated goal
• Goals maynot be strictly • Must be measurable and
measurable or tangible tangible
• Longer term • Mid to short term

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