STRAMA

• Strategic Management


  The art and science of formulating, implementing, and evaluating cross-functional decisions that enable an organization to achieve its objectives
• Strategy Formulation


  It includes, developing a vision and mission, identifying an organization's external opportunities and threats, determining internal strengths and weaknesses, establishing long-term goals, generating alternative strategies, and choosing particular strategies to pursue
• Strategy Formulation Issues


  • What new business to enter?
  • What business to abandon?
  • How to allocate resources?
  • Should we expand operations or diversify?
  • Are we going to enter international markets?
  • Should we merge or form a joint venture?
  • How to avoid a hostile takeover?
• Strategy Implementation


  Often called as the "action stage." It includes developing a strategy-supportive culture, creating an effective organizational structure, redirecting marketing efforts, preparing budgets, developing and utilizing information systems, and linking employee compensation to organizational performance
• Strategy Implementation Issues


  • What must we do to implement our part of the organization's strategy?
  • How best can we get the job done?
• Strategy Evaluation


  Primary means for obtaining information on knowing when particular strategies are not working well
• Strategy Evaluation Activities


  • Reviewing external and internal factors that are the base for current strategies
  • Measuring performance
  • Taking corrective actions
• Integrating Intuition and Analysis

  Strategic-management process is an attempt both to duplicate what goes on in the mind of a brilliant, intuitive person who knows the business and to couple it with analysis
• Reasons for integrating intuition and analysis

  • Intuition is particularly useful for making decisions in situations of great uncertainty or little precedent
  • Intuition is helpful when highly interrelated variable exist or when it is necessary to chose from several plausible alternatives
• Adapting to Change, Key Strategic-Management Questions

  • What kind of business should we become?
  • Are we in the right field(s)?
  • Should we reshape are business?
  • What new competitors are entering our industry?
  • What strategies should we pursue?
  • How are customer changing?
  • Are new technologies being develop that could put us out of business?
• "Success today is no guarantee of success tomorrow!"
• Competitive Advantage


  • Anything that a firm does especially well compared to rival firms
  • Something that a firm can do that rival firms cannot do, or something that a firm own that rival firms desire
• Sustained Competitive Advantage


  • A firm must strive to achieve a sustained competitive advantage by:
  • Continually adapting to changes in external trends and events and internal capabilities, competencies, and resources;
  • Effectively formulating, implementing, and evaluating strategies that capitalize upon those factors
• Strategist


  • The individuals who are most responsible for the success or failure of an organization
  • They help the organization gather, analyze, and organize information
• Vision Statement


  "What do we want to become?"
• Mission Statement


  "What is our business?"
• External Opportunities and Threats


  Economic, social, cultural, demographic, environmental, political, legal, governmental, technological, and competitive trends and events that could signify benefit or harm an organization in the future
• External Opportunities and Threats

  • Global markets offer the highest growth in revenues
  • Unemployment rates continue to rise to 10 percent on average
  • Discretionary spending has fallen dramatically; consumers buy only essential items
  • Demand for health service does not change much in a recession
• Internal Strengths and Weaknesses

  • Organization's controllable activities that are performed especially well or poorly
  • Superiority or deficiency relative to competitors
• Long-Term Objectives


  Specific results that an organization seeks to achieve in pursuing its basic mission
• Strategies


  Means by which long-term objectives will be achieved
• Annual Objectives


  Short-term milestones that organizations must achieve to reach long term objectives
• Policies


  Means by which annual objectives will be achieved. It includes guidelines, rules, and procedure established to support efforts to achieve stated objectives
• Three Important Questions to Answer in Developing a Strategic Plan

  • Where are we now?
  • Where do we want to go?
  • How are we going to get there?
• Benefits of Strategic Management

  Allows an organization to be more proactive than reactive in shaping its own future; it allows an organization to initiate and influence (rather than just respond to) activities – and thus to exert control over its own destiny
• Vision Statement


  What do we want to become?
• Other Benefits that Strategic Management Offers

  • It allow for identification, prioritization, and exploitation of opportunities
  • It provides an objective view of management problems
  • It represents a framework for improved coordination and control of activities
  • It minimizes the effects of adverse condition and changes
  • It allows major decisions to better support established objectives
  • It allows more effective allocation of time and resources to identified opportunities
  • It allows fewer resources and less time to be devoted to correcting erroneous or ad hoc decisions
  • It creates a framework for internal communication among personnel
  • It helps integrate the behavior of individuals into a total effort
  • It provides a basis for clarifying individual responsibilities
  • It encourages forward thinking
  • It provides a cooperative, integrated, and enthusiastic approach to tackling problems and opportunities
  • It encourages a favorable attitude toward change
  • It gives a degree of discipline and formality to management of business
• Pitfalls in Strategic Planning

  • Using strategic planning to gain control over decisions and resources
  • Doing strategic planning only to satisfy accreditation or regulatory requirement
  • Too hastily moving from mission development to strategy formulation
  • Failing to communicate the plan to employees, who continue working in the dark
  • Top mangers making many intuitive decisions that conflict with the formal plan
  • Top managers not actively supporting the strategic-planning process
  • Failing to use plans as a standard for measuring performance
  • Delegating planning to a "planner" rather than involving all managers
  • Failing to involve key employees in all phases of planning
  • Failing to create a collaborative climate supportive of change
  • Viewing planning as unnecessary or unimportant
  • Becoming so engrossed in current problems that insufficient or no planning is done
  • Being so formal in planning that flexibility and creativity are stifled
• Vision Statement Examples


  • General Motors - to be the world leader in transportation products and related service.
  • PepsiCo - continually improve all aspects of the world in which we operate–environment, social, economic–creating a better tomorrow than today.
  • Dell - to create a company culture where environmental excellence is second nature.
  • Samsonite - to provide innovative solutions for the traveling world.
  • Royal Caribbean - to empower and enable our employees to deliver the best vacation experience for our guests, thereby generating superior returns for our shareholders and enhancing the well-being of our communities.
• "People and organizations that plan ahead are much more likely to become what they want to become than those that do not plan"
• Mission Statement


  What is our business?
• • Knowing your purpose gives meaning to your life.
  • Knowing your purpose simplifies your life.
  • Knowing your purpose focuses your life.
  • Knowing your purpose motivates your life.
  • Knowing your purpose prepares you for eternity.
• The man without a purpose is like a ship without a rudder–a waif, a nothing, a no man.
• Mission Statement


  • Define what the organization is and what the organization aspires to be
  • Be limited enough to exclude some ventures and broad enough to allow for creative growth
  • Distinguish a given organization from all others
  • Serve as a framework for evaluating both current and prospective activities
  • Be stated in terms sufficiently clear to be widely understood throughout the organization
• Characteristics of a Mission Statement

  • Broad in scope
  • Less than 250 words in length
  • Inspiring
  • Identify the utility of a firm's product
  • Reveal the firm is socially responsible
  • Reveal that the firm is environmentally responsible
  • Include nine components
  • Reconciliatory
  • Enduring
• Mission Statement: Identifying the Utility of Firm's Products to Customers


  • Do not offer me things. Offer me ideas, emotions, ambiance, feelings, and benefits.
  • Do not offer me CDs. Offer me leisure and the sound of music.
  • Do not offer me tools. Offer me the benefits and the pleasure that come from making beautiful things.
  • Do not offer me furniture. Offer me comfort and quietness of a cozy place.
• Nine Essential Components of a Mission Statement

  • Customers - Who are the firm's customers?
  • Products or services - What are the firm's major products or services?
  • Markets - Geographically, where does the firm compete?
  • Technology - Is the firm technology current?
  • Concern for survival, growth and profitability - is the firm committed to growth and financial soundness?
  • Philosophy - What are the basic beliefs, values, aspirations, and ethical priorities of the firm?
  • Self-concept - What is the firm's distinctive competence or major competitive advantage?
  • Concern for public image - Is the firm responsive to social, community, and environmental concern?
  • Concern for employees - Are employees a valuable asset of the firm?
• Mission Statement Examples


  • PepsiCo - We aspire to make PepsiCo the world's premier consumer products company, focused on convenient foods and beverages. We seek to produce healthy financial rewards for investors as we provide opportunities for growth and enrichment to our employees, our business partners and the communities in which we operate. And in everything we do, we strive to act with honesty, openness, fairness and integrity.
  • Dell - Dell's mission is to be the most successful computer company in the world at delivering the best customer experience in markets we serve. In doing so, Dell will meet customer expectations of highest quality; leading technology; competitive pricing; individual and company accountability; best-in-class service and support; flexible customization capability; superior corporate citizenship; financial stability.
  • Procter & Gamble - will provide branded products and services of superior quality and value that improve the lives of the world's consumers. As a result, consumers will reward us with industry leadership in sales, profit, and value creation, allowing our people, our shareholders, and the communities in which we live and work to prosper.
  • L'Oreal - At L'Oreal, we believe that lasting business success is built upon ethical standards which guide growth and on a genuine sense of responsibility to our employees, our consumers, our environment and to the communities in which we operate.
• Importance (Benefits) of Vision and Mission Statements

  • To ensure unanimity of purpose within the organization.
  • To provide a basis, or standard, for allocating resources.
  • To establish a general tone or organizational climate.
  • To serve as a focal point for individuals to identify with the organization's purpose and direction, and to deter those who cannot from participating further in the organization's activities.
  • To facilitate the translation of objectives into a work structure involving the assignment of tasks to responsible elements within the organization.
  • To specify organizational purposes and then to translate these purposes into objectives in such a way that cost, time, and performance parameters can be assessed and controlled.
• Ten Benefits of Having a Clear Mission and Vision

  • Achieve clarity of purpose among all managers and employees.
  • Provide a basis for all other strategic planning activities, including the internal and external assessment, establishing the objectives, developing strategies, choosing among alternative strategies, devising policies, establishing organizational structure, allocating resources, and evaluating performance.
  • Provide direction.
  • Provide a focal point for all stakeholders of the firm.
  • Resolve divergent views among managers.
  • Promote a sense of shared expectations among all managers and employees.
  • Project a sense of worth and intent to all stakeholders.
  • Project an organized, motivated organization worthy of support.
  • Achieve higher organizational performance.
  • Achieve synergy among all managers and employees.