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OVERVIEW, PROCESS, VISION, MISSION, SOCIAL RESPONSIBILITY & THE FIVE TASKS
Salah uddin
IQRA
14/06/2011
CONTENTS
1.
DEFINITION: STRATEGIC MANAGEMENT FIVE TASKS OF STRATEGIC MANAGEMENT VISION & MISSION SOCIAL RESPONSIBILITY WHO PERFORMS THE FIVE TASKS CRAFTING A STRATEGY ROLE OF BOARD OF DIRECTORS BENEFITS OF STRATEGIC MANAGEMENT
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Notable Quotes
If a man takes no thought about what is distant, he will find sorrow near at hand. He who will not worry about what is far off will soon find something worse than worry. Confucius If everyone is thinking alike, then somebody isnt thinking. George Patton It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change. Charles Darwin
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Consists of competitive moves and business approaches used by managers to run the company Managements action plan to:
o o o o o
Grow the business Attract and please customers Compete successfully Conduct operations Achieve the targeted levels of organizational performance
Salah uddin
IQRA
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The word Strategy was coined by ancient Greek writer, Xenophen. Strategy implies understanding / knowing the business one intends to do So Strategy is an action-oriented activity as it involves: Understanding / knowing the business A focus on future A step towards action
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to provide the basis for re-thinking the current management practices. Its objective is to achieve better alignment of corporate policies and strategic priorities
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Strategy: a combination of competitive moves and business approaches that managers employ to please customers, compete successfully, and achieve organizational objectives. Good strategy + good strategy execution= good management Essence of good strategy making is to build a market position strong enough and an organization capable enough to produce successful performance despite unforeseeable events, potent competition, a rash of delays, or cost surprises.
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Forming a strategic vision of where the organization is headed---- so as to provide long-term direction, delineate what kind of enterprise the company is trying to become, and infuse the organization with a sense of purposeful action. Setting Objectives----i.e. specific outcomes to achieve. Crafting a strategy to achieve the objectives. Implementing and executing the chosen strategy efficiently and effectively. Evaluating performance and initiating corrective adjustments in vision, long-term direction, objectives, strategy or execution in light of actual experience, changing conditions, new ideas and opportunities.
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OBJECTIVE S
CRAFTI NG STRATE GY
IMPLEMENTIN G STRATEGY
IMPROVE / CHANGE
IMPROVE / CHANGE
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Mission Statement that defines company business presently and conveys the essence of WHO WE ARE, WHAT WE DO, and WHERE WE ARE NOW Using the Mission Statement as a basis for deciding on a long-term course, making choices about where we are going and charting a strategic path for company to pursue Communicating the Strategic Vision in clear and exciting terms that arouses organization wide commitment.
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Many organizations develop both---- a mission statement and a vision statement. Mission Statement answers the question WHAT IS OUR BUSINESS. Vision Statement answers the question WHAT DO WE WANT TO BECOME---- a possible and desirable future state of an organization.
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ROLE OF MISSION STATEMENT: To give the organization its own special identity, business emphasis and path for development -----one that typically sets it apart from other similarly situated companies. MISSION IS NOT TO MAKE PROFIT: Sometimes companies couch their mission in terms of making profit. This is misguided----profit is an objective and a result of what the company does----desire to make profit says nothing about the business arena in which profits are to be made.
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& MISSION
WHAT is being satisfied----customer needs WHO is being satisfied----customer groups HOW the company goes about satisfying their needs----companys activities, technologies and competencies
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Customers----who are the firms customers? Product or Services-----what are the firms major products or services? Markets----geographically where does the firm compete? Technology----is the firm technologically current? Concern for survival, growth, and profitability-----is the firm committed to growth and financial soundness?
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5.
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Philosophy----what are the basic beliefs, values, aspirations and ethical priorities of the firm? Self-concept-----what is the firms distinctive competence or major competitive advantage? Concern for public image----is the firm responsive to social, community and environmental concerns? Concern for employees----are employees a valuable asset of the firm?
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Beverage business Global mail delivery business Travel & Tourism business
Wrought-iron lawn furniture business Long-distance telephone services business Soft-drink business Overnight package delivery business Cruise Ship business
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To provide society with superior products and services----innovations and solutions that satisfy customer needs and improve the quality of life
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We work to create a better future every day We help people feel good, look good and get more out of life with brands and services that are good for them and good for others. We will inspire people to take small everyday actions that can add up to a big difference for the world. We will develop new ways of doing business with the aim of doubling the size of our company while reducing our environmental impact. We've always believed in the power of our brands to improve the quality of peoples lives and in doing the right thing. As our business grows, so do our responsibilities. We recognise that global challenges such as climate change concern us all. Considering the wider impact of our actions is embedded in our values and is a fundamental part of who we are.
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& MISSION
Employee teams will contribute towards making PIA a global airline of choice through:
Offering quality customer services and innovative products. Using state-of-the-art technologies. Ensuring cost-effective measures in procurement and operations. Developing Safety Culture.
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& MISSION
PIAs vision is to be a world class airline meeting customer expectations through excellent services, on-time performance, innovative products and absolute safety
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Involve as many managers as possible, because through involvement people become committed to an organization. An opportunity for strategists to obtain needed support.
A facilitator or committee of top managers to short list one single draft and distribute to all managers or a committee. Hire out-side consultants, experts. Decision on how best to communicate the final mission statement, down the line. Process should create an emotional bond and sense of mission.
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& MISSION
ROLE OF ENTREPRENEURSHIP: Good entrepreneurship is very essential in addressing the above six questions. Charting a promising strategic course enables managers to think creatively and realistically about changing market, competitive, technological, economic and regulatory conditions and about the companys resources and capabilities.
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Executives must provide a rationale for a new strategic vision. Failure to understand or accept the need for re-directing organizational effort often produces resistance. It is extremely imperative to prepare an organization to move along a new course by inducing employee buy-in, and calming fears. Vision has to be repeated and reinforced at every occasion until it gets organization-wide acceptance.
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SOCIAL RESPONSIBILITY
Social Responsibility is a critical consideration for a companys strategic decision makers since the Mission Statement must express how the company intends to contribute to the societies that sustain it Business does not function in a vacuum, it exists to serve, depends upon its environment, cannot be separated from it, and therefore, has a responsibility to ensure its well being. The environment is represented by stock holders / owners & employees and also external stake holders as customers, unions, suppliers, government agencies, society in general
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SOCIAL RESPONSIBILITY
Issues like pollution, disposal of solid and liquid waste, and the conservation of natural resources should be principal considerations in strategic decision making Pollution prevention strategies include changing the materials used or re-designing operations Winning the loyalty of consumers will now require new marketing strategies viz. adoption of 4Es: Make it Easy for consumer to be green Empower consumer with solutions Enlist the support of consumer Establish credibility with public to avoid backlash
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IV.
SOCIAL RESPONSIBILITY
Conduct and publish annual social audits which evaluate a firm from the perspective of social responsibility e.g. Abbot Assoc, Dow Chemicals, Exxon & Bank of America ECONOMIC RESPONSIBILITIES requires managers to maximize profits whenever possible; provide goods and services at a reasonable cost; the company emerges socially responsible by providing productive jobs and tax payments for governments LEGAL RESPONSIBILITIES: to comply with laws that regulate business particularly in the areas of pollution control and consumer safety
II.
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SOCIAL RESPONSIBILITY
III.
ETHICAL RESPONSIBILITIES: companys notion of right or proper business behavior; firms are expected to behave ethically DISCRETIONARY RESPONSIBILITY: voluntarily assumed viz. public relations activities, good citizenship, and full corporate social responsibility; to enhance the image of their companies, products and services by supporting worthy causes, supporting charities, publicservice advertizing campaigns CSR COSTS ARE MORE THAN OFFSET IN THE LONG RUN BY AN IMPROVED COMPANY IMAGE AND INCREASED COMMUNITY GOODWILL
IV.
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Firms with a formalized mission statement have twice the average return on shareholders equity ---Rarick & Vitton There is a positive relationship between mission statements and organizational performance ----Bart & Baetz Firms using mission statements have a 30 % higher return on certain financial measures than those without such statements----Business Week
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Who performs the Five Tasks Every company Manager has a strategy making / strategy
implementing role for his respective unit. However, a CEO is the most visible and important strategy manager, as he is the chief direction setter, chief objective setter, chief strategy maker and implementer for the whole organization; ultimate responsibility rests with the CEO who hammers out a consensus strategy and coordinates various aspects of executing the strategy. VPs for Production, Marketing, Finance, Human Resources and other functional departments have important strategy making and implementing roles, who also delegate authority to sub-unit heads.
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Crafting a Strategy
A companys strategy depends on:
Whether to concentrate on a single business or build a diversified group of businesses, Whether to cater to broad range of customers or focus on a particular market niche, Whether to pursue competitive advantage based on low cost or product superiority, Response to changing buyer preferences, Range of geographical market to cover, Reaction to newly emerging markets and competitive conditions
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Crafting a Strategy
The Chief Architect Approach:
A single person, owner or the CEO, assumes the role of chief strategist and chief entrepreneur, single handedly shaping strategy One person functions as strategic visionary though there may be much brain-storming with subordinates Examples: Michael Dell at Dell Computers, Bill Gates at Microsoft, Howard Shultz at Starbucks, Agha Hasan Abedi at BCCI, Tariq Chaudhry at Air Blue, Yaqub Tabani at Aero Asia etc. Strategies of small entrepreneurial companies, family owned businesses Works fine if the chief strategist has powerful vision of where to head and how to get there
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Crafting a Strategy
The Delegation Approach:
CEO or the Manager in charge delegates big chunks of strategy making to trusted subordinates, down-the-line managers in charge of key business units, a high level task force of talented people from many parts of the company or a team of consultants Big Advantage in multi-product, multi-business enterprises whose operations are far-flung of fast- moving Success hinges on the business judgments and strategy making skills of lower echelons which may not be there Delegation sends wrong signal: that strategy development isnt important enough to warrant big boss time
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Crafting a Strategy
The Team Approach:
A middle approach where the CEO or the Manager in charge delegates and enlists the advice of key peers and subordinates in hammering out a consensus strategy Strategy teams also involve customers and suppliers in assessing the future market situation and deliberating various strategy options Well suited to organizations where strategic issues cut across departments, product lines and businesses and there is a need to tap strategic thinking of people with different expertise and experiences Politics and exercise of power come into play where there is no consensus
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Crafting a Strategy
The Corporate Intrapreneur Approach:
Relies upon middle and lower level managers and teams to spot new business opportunities, develop strategic plans to pursue them and create new businesses Essentially requires ambitious, entrepreneurial people in the organization who want to take on strategic and managerial responsibility for new products Works well where technological advances are coming at a fast pace or compelling new opportunities are opening up Strategic initiatives may be launched in directions that have no integrating links with overall business
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ACTIONS & REACT ACTIONS TO INITIATIVES & RESPOND TO DIVERSIFY TO CHANGING COMPANYS OUTCOMPETE EXTERNAL ACTIONS TO REVENUE BASE & RIVALS ALTER CIRCUMSTANCES ENTER NEW ACTIONS GEOG. ACTIONS TO BUSINESSES & COVERAGE & MERGERS STRENGTHE BUSINES ACQUISITION N S S RESOURCE APPROAC TO BASE & HES STRENGTHEN HOW THE STRATEGIC COMPETITIV BUSINESS ALLIANCES E COMPANY CAPITALIZE ON POSITION MANAGES & PARTNERSHIPS CAPABILITIE NEW S PRODUCTION, OPPORTUNITIES MARKETING, Salah uddin IQRA 14/06/2011 46 & DEFEND
U nd e rs t a nd i ng a Co m p a ny s St ra t e g y PLANNED MOVES TO
To exercise oversight and see that Five Tasks of Strategic management are done in a manner that benefits share holders. Holders of large blocks of shares, regulatory authorities and financial press consistently urge that board members be active in their oversight of company strategy, actions and capabilities of executives To approve companys strategic plans; but should not play a hands-on role in formulating or implementing strategy as they dont have detailed command of all the strategic issues To be supportive critics whether proposals have been adequately analyzed, asking perceptive & incisive questions
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To play a proactive role if the company is losing market share or eroding profits and to express their concerns about the validity of the strategy To evaluate senior executives strategy-making and strategy-implementing skills To exercise due diligence in evaluating the strategic leadership skills of other senior executives in line to succeed the CEO
Board oversight and vigilance is very much in play in the strategic arena
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Making managers and organizational members more alert to new opportunities & threatening developments Helping to unify the organization Creating a more proactive management posture Developing a constantly evolving business model that will produce sustained bottom line success Enabling strategic offensives to out-innovate and outmaneuver rivals and secure sustainable competitive advantage Aggressive pursuit of a creative, opportunistic strategy can propel a firm into a leadership position
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Thank you
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IQRA
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