Strategic Management: Strategy and Mission

Strategic Management (CBME02)

• Strategy is a comprehensive plan for achieving long-term goals and objectives.
• Management involves planning, organizing, leading, and controlling resources to achieve organizational objectives efficiently and effectively.
• Strategic Management involves formulating, implementing, and evaluating strategies for competitive advantage and achieving organizational goals.

Organizational Mission

• A company's mission statement defines its purpose, core values, and long-term objectives.
• Purpose defines what the company seeks to achieve beyond profit.
• Values are principles guiding behavior and decision-making.
• Vision refers to aspirations that drive the company's strategic direction.
• Stakeholders are those who benefit from the company's actions (e.g., customers, employees, shareholders).
• Nike's mission is to bring inspiration and innovation to every athlete in the world.
• Starbucks aims to nurture limitless possibilities of human connection.
• Microsoft's mission is to empower every person and organization to achieve more.
• Social Responsibility is the obligation of businesses to contribute positively to society.
• Nike's "Move to Zero" campaign reduces carbon emissions and waste, involving recycled materials like Flyknit and Nike Grind.
• Starbucks shows commitment to becoming a resource-positive company, responsible sourcing of coffee through C.A.F.E. Practices.
• Microsoft shows commitment to becoming carbon negative by 2030 and aims to remove all historical carbon emissions by 2050.
• Pearce and Robinson imply companies should act ethically, consider environmental impact, ensure fairness and transparency.

Importance of General Environment Variables in Industry and World Analysis

• Understanding macroeconomic trends, identifying opportunities, and mitigating risks are key.

PESTEL Analysis

• Political aspects include government policies, trade regulations, and political stability.
• Economic aspects include inflation, interest rates, and economic growth.
• Social aspects includes cultural trends, demographics, and consumer behavior.
• Technological aspects include R&D activities, and innovation trends.
• Environmental aspects includes climate change, sustainability trends, and resource availability.
• Legal aspects includes laws, intellectual property rights, and industry regulations.

Michael Porter's Five Forces Framework

• Threat of New Entrants considers entry barriers like capital requirements, economies of scale, and brand loyalty.
• Threat of Substitutes assesses the risk posed by alternative products or services.
• Bargaining Power of Suppliers looks at the number of suppliers, uniqueness of inputs, and switching costs.
• Bargaining Power of Buyers relates to pressure from customers for better terms or lower prices.
• Industry Rivalry relates to competition among existing players.

SWOT Analysis

• Strengths are internal advantages, resources, skills, or capabilities that provide a competitive edge.
• Weaknesses are internal limitations or shortcomings that hinder performance.
• Opportunities are external trends or factors that can be leveraged for growth.
• Threats are external challenges or risks that may negatively impact goals.

Fishbone Analysis (Cause-and-Effect Diagram)

• A visual tool identifies and analyzes the root causes of a problem.
• The Head represents the problem or effect to be analyzed.
• Bones represent categories of potential causes (e.g., People, Methods, Machines, Materials, Environment, Measurements).

Assessment of Company Performance (Chapter 3)

• Company performance assessment evaluates how well a business achieves its objectives, including financial performance, operational efficiency, market position, and employee productivity.
• Assessment of company performance involves identifying strengths and weaknesses, guides strategic planning and improves accountability.
• Assessment of company performance also informs investment decisions, enhances risk management, boosts customer satisfaction and increases employee engagement.
• David Audit's Checklist is a tool used to evaluate and improve strategic planning and implementation processes.

Strategic Management Audit Checklist

• Includes Mission and Vision Statement, External Environment Analysis, Internal Environment Analysis, Strategy Formulation and Implementation plus Strategy, Evaluation and Control.

Advantages of David's Audit Checklist

• Ensures comprehensive coverage of all critical audit areas.
• Efficiency is enhanced by providing a structured framework that is time saving.
• Consistency is achieved using standardized checklists.
• Easy to use, which is suitable for less experienced auditors.
• Accountability is ensured by documenting steps.

Disadvantages of David's Audit Checklist

• Rigidity can be present.
• A false sense of security is possible.
• A lack of depth may be present.
• It may not fit all situations.
• Possible overload if too detailed.

Internal Analysis

• Internal analysis evaluates an organization's internal environment, including its resources, capabilities, and core competencies.
• This analysis helps businesses understand their strengths, weaknesses, and unique value propositions.

Internal Factors to Consider

• Tangible resources are easy to identify/evaluate, and are valued in financial statements.
• Intangible resources which can be more important over time.

Resources

• Refers to the firm's capacity for undertaking a particular productive activity.
• Includes human capital.

Data to Use in an Internal Analysis

• Includes Employee Surveys, Customer Surveys, Business Strategy of Record + Current Performance
• List of Resources & a List of Capabilities.

Tools to Conduct Your Internal Analysis

• SWOT Analysis
• VRIO Framework.

Internal Factors That Help a Company Evaluate Its Performance

• Include Leadership and Management, Financial Performance, Marketing and Brand Strength, Customer Satisfaction and Service Quality.
• Also includes operational efficiency, human Resources and Workforce Research and Development (R&D), as well as Corporate Social Responsibility (CSR) and Ethic.

IFE Matrix

• A strategy tool to evaluate firm's internal environment.
• Internal Factor Evaluation (IFE) Matrix is a strategy tool used to evaluate firm's internal environment and to reveal its strengths as well as weaknesses
• Weights can identify how important the factor is if a company wants to succeed in an industry,
• Ratings in internal matrix can refer to how strong or weak each factor is in a firm.
• Assign weights to each factor.
• Multiply each factor's weight in an IFE matrix with its rating

Strategy Analysis and Formulation Tools (Chapter 2)

• Including Conservative, Aggressive, Defensive and Competitive.

SPACE Matrix

• Explains what is our strategic position and what possible action can be taken in aggressive, conservative, defensive, or competitive strategies
• Space matrix identifies risk involved in the business, working capital condition, the rate of inflation, the technological know-how as examples.

Advantages of SPACE Matrix

• Simple and easy to understand
• Strategic Direction and Holisitc view
• Actionable insights

Disadvantages of SPACE Matrix

• Subjectivity

BCG Matrix

• The Boston Consulting Group (BCG) Box, also known as the Growth-Share Matrix, is a strategic planning tool used to analyze a company's portfolio of Strategic Business Units (SBUs)
• Relative Market Share & Market Growth Rate are key dimensions in the BCG Matrix.
• The term “dogs” refers to businesses or products that have low relative share in unattractive, low-growth markets.
• Cash cows are low-growth businesses or products with a relatively high market share.
• The Stars in the BCG matrix identifies high growth businesses or products competing in markets where they are relatively strong.
• Question marks are businesses or products with low market share but which operate in higher growth markets.

Advantages of BCG Matrix

• Easy to use
• Helps in resource allocation, allows long term planning.

Disadvantages of BCG Matrix

• Ignores market trends
• Over simplified, Static Model

TOWS Matrix

• Also named as SWOT analysis.
• A TWO’s analysis: A strategic planning tool used to evaluate threats, opportunities, strengths and weaknesses involved in a project, or business venture or in anyother situation requiring a decision. This Matrix is an important matching tool that helps managers develop four types of strategies. SO Strategies are strength-opportunities. WO Strategies are weakness- opportunities. ST Strategies are strength-threats. WT Strategies are weakness-threats.
• Strengths are attributes of the organization that are helpful to the achievement of the objective

Strengths

• Attributes helpful to the objective.
• Weaknesses: Attributes harmful to the achievement of the objective.
• Opportunities represent external conditions that are helpful to the achievement of the objective.
• Threats are external conditions that are harmful to the achievement of the objectives
• SO Strategies are pursued by firms to gain benefit.

TOWS

• WO Strategies developed to match weakness with opportunities.
• ST Strategies is an important strategy to overcome external threats.
• WT Strategies Every firm has a desire to overcome its weakness and reducing threats.

Advantages of Using the TOWS Matrix

• It gives you a clear, visual idea of the foundations of your strategy
• Easy to use across any industry, team, or individual
• Assesses internal elements, as well as external

Disadvantages of Using the TOWS Matrix

• Still need to build out a detailed strategy
• It doesn't offer any help in terms of priorities
• You need to be aware of all strengths, weaknesses, opportunities, and threats to make good decisions.